SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
ý | | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2001
OR
o | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to _________
Commission file number 0-10777
CPB INC.
(Exact name of registrant as specified in its charter)
Hawaii | | 99-0212597 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
| | |
220 South King Street, Honolulu, Hawaii | | 96813 |
(Address of principal executive offices) | | (Zip Code) |
| | |
(808) 544-0500 |
(Registrant's telephone number, including area code) |
| | |
None |
(Former name, former address and former fiscal year, if changed since last report) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Common Stock, No Par Value;
Outstanding at November 9, 2001: 7,912,036 shares
PART I. FINANCIAL INFORMATION
Overview
CPB Inc. (the "Company") posted third quarter 2001 net income of $8.722 million, an increase of 76.5% over the $4.943 million reported in the third quarter of 2000. Included in the results for the third quarter was the recognition of a $2.242 million tax credit relating to the issuance of preferred stock in the real estate investment trust of the Company. Excluding this adjustment, third quarter earnings totaled $6.480 million, an increase of 31.1% over the same quarter last year. Increases in net interest income and fee income, as well as a decrease in the provision for loan losses drove this overall increase.
Net income for the first nine months of 2001 was $19.824 million, an increase of 38.4% over the $14.319 million earned in 2000. Excluding the tax credit mentioned previously, year-to-date net income was $17.582 million, a 22.8% increase over the $14.319 million reported last year.
Total assets as of September 30, 2001 were $1.83 billion, an increase of $13.1 million or 0.7% over year-end 2000. Net loans of $1.25 billion decreased by $15.3 million or 1.2%, primarily due to the sale of $54 million in residential mortgage loans during the first quarter of 2001. Total deposits of $1.42 billion increased by $57.9 million or 4.2% from year-end 2000.
The following table presents annualized returns on average assets and average stockholders' equity, and basic and diluted earnings per share for the periods indicated.
| | Three Months Ended | | Nine Months Ended | |
| | September 30, | | September 30, | |
| | 2001 | | 2000 | | 2001 | | 2000 | |
Annualized return on average assets | | 1.93 | % | 1.17 | % | 1.48 | % | 1.16 | % |
| | | | | | | | | |
Annualized return on average stockholders' equity | | 23.07 | % | 13.90 | % | 17.91 | % | 13.30 | % |
| | | | | | | | | |
Basic earnings per share | | $ | 1.06 | | $ | 0.56 | | $ | 2.39 | | $ | 1.59 | |
Diluted earnings per share | | $ | 1.04 | | $ | 0.55 | | $ | 2.35 | | $ | 1.56 | |
Excluding the impact of the $2.242 million tax credit recorded in the third quarter of 2001, the annualized ratios and earnings per share were as follows:
| | Three Months Ended | | Nine Months Ended | |
| | September 30, | | September 30, | |
| | 2001 | | 2000 | | 2001 | | 2000 | |
Annualized return on average assets | | 1.44 | % | 1.17 | % | 1.31 | % | 1.16 | % |
| | | | | | | | | |
Annualized return on average stockholders' equity | | 17.23 | % | 13.90 | % | 15.91 | % | 13.30 | % |
| | | | | | | | | |
Basic earnings per share | | $ | 0.79 | | $ | 0.56 | | $ | 2.12 | | $ | 1.59 | |
Diluted earnings per share | | $ | 0.77 | | $ | 0.55 | | $ | 2.08 | | $ | 1.56 | |
The initial effects of the terrorist attacks on September 11, 2001, especially in the travel and tourism sectors, have had a significant impact on Hawaii’s economy. State economists have estimated that Hawaii could lose up to 10% of total visitor arrivals through the end of 2001, $0.5 billion to $1.3 billion in gross state product, and up to 24,000 jobs. In September, total domestic and international visitor arrivals were down 28.0% and 43.5%, respectively, compared to the same period last year. On a year-to-date basis, domestic arrivals were down 4.3% and international arrivals were down 6.6% compared to 2000. Hotel occupancy rates have fallen from 74% reported in June to approximately 60% in October. More than 16,000 workers in Hawaii have filed for unemployment benefits in the weeks following the September 11th events. The statewide unemployment rate for September was 4.5%, compared to 4.2% for the same period last year. However, this rate does not fully reflect the effects of the September 11th events.
On the national level, the unemployment rate increased to 5.4% in October, compared to 4.9% in September, and reflected the highest unemployment level since December 1996.
The results of operations of the Company for the remainder of the year may be directly impacted by the ability of the Hawaii economy to rebound from the effects of the September 11th events. Loan demand, deposit growth, provision for loan losses, noninterest income, and noninterest expense will be affected by economic conditions through the end of the year.
Certain matters discussed in this report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, net interest income, net interest margin, the levels of nonperforming loans, loan losses and the allowance for loan losses, noninterest income and noninterest expense. Important factors that could cause the results to differ from those discussed in this report include, but are not limited to, changes in market interest rates, general business conditions in the state of Hawaii, the real estate market in Hawaii, competitive conditions among financial institutions, regulatory changes in the financial services industry, and other risks detailed in the Company's reports filed with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the year ended December 31, 2000.
Results of Operations
Net Interest Income
A comparison of net interest income for the three and nine months ended September 30, 2001 and 2000 is set forth below on a taxable equivalent basis using an assumed income tax rate of 35%.
Net interest income, when expressed as a percentage of average interest earning assets, is referred to as "net interest margin."
| | Three Months Ended | | Nine Months Ended | |
| | September 30, | | September 30, | |
(Dollars in thousands) | | 2001 | | 2000 | | 2001 | | 2000 | |
Interest income | | $ | 32,162 | | $ | 32,923 | | $ | 99,832 | | $ | 93,242 | |
Interest expense | | 12,139 | | 14,552 | | 41,347 | | 39,446 | |
Net interest income | | $ | 20,023 | | $ | 18,371 | | $ | 58,485 | | $ | 53,796 | |
| | | | | | | | | |
Net interest margin | | 4.82 | % | 4.59 | % | 4.68 | % | 4.62 | % |
Interest income decreased by $0.8 million or 2.3% in the third quarter of 2001. This decrease was primarily the result of three Federal Reserve Board interest rate decreases during the quarter. For the first nine months of 2001, interest income increased by $6.6 million or 7.1% compared to the same period in 2000, primarily attributable to an increase in average loan volume. Average interest earning assets were $1.660 billion for the third quarter, a 3.6% increase over the same period last year. On a year-to-date basis, average interest-bearing assets were $1.668 billion, a 7.5% increase over the $1.552 billion reported for the same period last year. The yield on interest earning assets was 7.75% for the third quarter of 2001, a decrease from 8.22% for the same period in 2000. The yield on interest earning assets was 7.98% for the first nine months of 2001, a decrease from 8.01% for the first nine months of 2000.
For the quarter ended September 30, 2001, interest and fees on loans decreased by $1.0 million or 3.7% from the same period last year. On a year-to-date basis, interest and fees on loans increased $4.4 million or 5.9% over the same period last year. Interest and dividends on investment securities decreased by $101,000 or 1.8% from the same quarter last year, and increased $1.1 million or 7.0% on a year-to-date basis. Income from both loans and investment securities were impacted by lower rates resulting from U.S. monetary policy offset by higher average balances. Interest on federal funds sold totaled $222,000 for the quarter, compared to $1,000 for the same quarter last year. For the first nine months of 2001, interest on federal funds sold was $284,000, compared to $8,000 for the same period last year. The significant variances from prior periods were primarily the result of higher average balances.
Interest expense for the third quarter and first nine months of 2001 decreased $2.4 million or 16.6%, and increased $1.9 million or 4.8%, respectively, compared to the same periods in 2000 primarily due to lower interest rates offset by higher average interest-bearing liabilities. Average interest-bearing liabilities totaled $1,403.0 million in the third quarter of 2001 and $1,401.2 million in the first nine months of 2001, increasing by $60.6 million or 4.5%, and $108.7 million or 8.4%, respectively, due to increases in time deposits and long-term debt. The average rate on interest-bearing liabilities for the third quarter of 2001 decreased to 3.46% from 4.34% in the third quarter of 2000, due to the decline in market interest rates in 2001. The average rate for the first nine months of 2001 decreased to 3.93% from 4.07% in 2000. As discussed earlier, this year-to-date decrease was due primarily to declining interest rates.
The resultant net interest income for the third quarter and first nine months of 2001 increased by $1.7 million or 9.0%, and $4.7 million or 8.7%, respectively, over the same periods in 2000. The net interest margin increased to 4.82% for the third quarter and 4.68% for the first nine months of 2001 from 4.59% and 4.62%, respectively, in 2000. Recent interest rate decreases have favorably impacted net interest income and net interest margin. However, strong competition for both loans and core deposits is expected to continue, and may create additional pressure on net interest margin.
Provision for Loan Losses
Provision for loan losses is determined by Management's ongoing evaluation of the loan portfolio and assessment of the ability of the allowance for loan losses to cover inherent losses. The Company, considering current information and events regarding a borrower's ability to repay its obligations, treats a loan as impaired when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. When a loan is considered to be impaired, the amount of impairment is measured based on the present value of expected future cash flows discounted at the loan's effective interest rate or, if the loan is considered to be collateral dependent, based on the fair value of the collateral. Impairment losses are included in the allowance for loan losses through a charge to the provision for loan losses. For smaller-balance homogeneous loans, primarily residential real estate and consumer loans, the allowance for loan losses is based upon Management's evaluation of the quality, character and risks inherent in the loan portfolio, current and projected economic conditions, and historical loan loss experience. The allowance is increased by provisions charged to operating expense and reduced by loan charge-offs, net of recoveries.
The following table sets forth certain information with respect to the Company's allowance for loan losses as of the dates and for the periods indicated.
| | Three Months Ended | | Nine Months Ended | |
| | September 30, | | September 30, | |
(Dollars in thousands) | | 2001 | | 2000 | | 2001 | | 2000 | |
Allowance for loan losses: | | | | | | | | | |
Balance at beginning of period | | $ | 24,090 | | $ | 22,390 | | $ | 22,612 | | $ | 20,768 | |
| | | | | | | | | |
Provision for loan losses | | 1,050 | | 1,500 | | 2,700 | | 3,500 | |
| | | | | | | | | |
Loan charge-offs: | | | | | | | | | |
Real estate: | | | | | | | | | |
Mortgage-commercial | | - | | 1,101 | | 200 | | 1,101 | |
Mortgage-residential | | 120 | | 102 | | 561 | | 870 | |
Commercial, financial and agricultural | | 103 | | 111 | | 103 | | 230 | |
Consumer | | 84 | | 17 | | 313 | | 233 | |
Other | | 1 | | 2 | | 2 | | 14 | |
Total loan charge-offs | | 308 | | 1,333 | | 1,179 | | 2,448 | |
| | | | | | | | | |
Recoveries: | | | | | | | | | |
Real estate: | | | | | | | | | |
Mortgage-commercial | | 22 | | 2 | | 266 | | 515 | |
Mortgage-residential | | 444 | | 42 | | 518 | | 94 | |
Commercial, financial and agricultural | | 31 | | 3 | | 349 | | 75 | |
Consumer | | 27 | | 53 | | 90 | | 153 | |
Other | | - | | - | | - | | - | |
Total recoveries | | 524 | | 100 | | 1,223 | | 837 | |
| | | | | | | | | |
Net loan charge-offs (recoveries) | | (216 | ) | 1,233 | | (44 | ) | 1,611 | |
| | | | | | | | | |
Balance at end of period | | $ | 25,356 | | $ | 22,657 | | $ | 25,356 | | $ | 22,657 | |
| | | | | | | | | |
Annualized ratio of net loan
charge-offs (recoveries) to
average loans | | (0.07 | )% | 0.40 | % | 0.00 | | 0.18 | % |
The provision for loan losses of $1,050,000 for the third quarter and $2,700,000 for the first nine months of 2001 decreased by 30.0% and 22.9%, respectively, from the amounts provided in the same periods in 2000. For the third quarter, net loan recoveries of $216,000 in 2001 and net loan charge-offs of $1,233,000 in 2000, when expressed as an annualized percentage of average total loans, were (0.07)% and 0.40%, respectively. There were no significant loan charge-offs during the third quarter. Loan recoveries during the third quarter included one residential real estate loan totaling $406,000.
Following the events of September 11th, Management identified certain borrowers in the travel and tourism sectors who may be impacted by the downturn in Hawaii’s economy. As of September 30, 2001, the total credit exposure to these borrowers was approximately $99 million. These loans will be closely monitored for deterioration in quality.
The allowance for loan losses expressed as a percentage of total loans was 1.98% at September 30, 2001, increasing from 1.75% at December 31, 2000. This increase was due to anticipated losses relating to the downturn in the economy. Considering the relatively low level of net loan charge-offs and decrease in total nonaccrual and delinquent loans during the year, Management believes that the allowance for loan losses is adequate to cover the credit risks inherent in the loan portfolio. Continued deterioration of Hawaii’s economy could adversely affect borrowers' ability to repay, collateral values and, consequently, the level of nonperforming loans and provision for loan losses.
Nonperforming Assets
The following table sets forth nonperforming assets and accruing loans delinquent for 90 days or more at the dates indicated.
| | September 30, | | December 31, | | September 30, | |
(Dollars in thousands) | | 2001 | | 2000 | | 2000 | |
Nonaccrual loans: | | | | | | | |
Real estate: | | | | | | | |
Mortgage-commercial | | $ | 3,461 | | $ | 5,913 | | $ | 6,007 | |
Mortgage-residential | | 542 | | 2,069 | | 2,643 | |
Commercial, financial and agricultural | | - | | 542 | | 998 | |
Consumer | | 12 | | - | | - | |
Total nonaccrual loans | | 4,015 | | 8,524 | | 9,648 | |
| | | | | | | |
Other real estate | | 1,522 | | 1,792 | | 1,382 | |
Total nonperforming assets | | 5,537 | | 10,316 | | 11,030 | |
| | | | | | | |
Loans delinquent for 90 days or more: | | | | | | | |
Real estate: | | | | | | | |
Mortgage-commercial | | - | | - | | 1,774 | |
Mortgage-residential | | 540 | | 653 | | 401 | |
Commercial, financial and agricultural | | 40 | | 850 | | 222 | |
Consumer | | 12 | | 24 | | 6 | |
Other | | 141 | | - | | - | |
Total loans delinquent for 90 days or more | | 733 | | 1,527 | | 2,403 | |
| | | | | | | |
Restructured loans still accruing interest: | | | | | | | |
Real estate: | | | | | | | |
Mortgage-commercial | | 434 | | 466 | | 475 | |
Total restructured loans still accruing interest | | 434 | | 466 | | 475 | |
| | | | | | | |
Total nonperforming assets, loans delinquent for 90 days or more and restructured loans still accruing interest | | $ | 6,704 | | $ | 12,309 | | $ | 13,908 | |
| | | | | | | |
Total nonperforming assets as a percentage of loans and other real estate | | 0.43 | % | 0.80 | % | 0.86 | % |
| | | | | | | |
Total nonperforming assets and loans delinquent for 90 days or more as a percentage of loans and other real estate | | 0.49 | % | 0.92 | % | 1.05 | % |
| | | | | | | |
Total nonperforming assets, loans delinquent for 90 days or more and restrucutred
loans still accruing interest as a percentage of loans and other real estate | | 0.52 | % | 0.95 | % | 1.08 | % |
Nonperforming assets, loans delinquent for 90 days or more and restructured loans still accruing interest totaled $6.7 million at September 30, 2001, a decrease of $5.6 million or 45.5% from year-end 2000. Nonaccrual loans totaled $5.5 million at September 30, 2001, a decrease of 46.3% from year-end 2000. Nonaccrual commercial mortgage loans totaled $3.5 million, a decrease of $2.5 million from year-end 2000 due to a $1.5 million loan payoff and a $0.5 million charge-off. Nonaccrual residential mortgage loans totaled $0.5 million at September 30, 2001, a decrease of 73.8% from year-end 2000. This decrease was primarily attributed to a loan payoff of $1.0 million and a transfer of a $0.5 million loan to other real estate. Loans delinquent for 90 days or more and still accruing interest totaled $0.7 million at September 30, 2001, a 52.0% decrease from year-end 2000, primarily due to a commercial loan that has since been brought current. Impaired loans, representing six loans, totaled $6.4 million at September 30, 2001, a decrease from the thirteen loans totaling $11.3 million at year-end 2000.
Management continues to closely monitor loan delinquencies, and work with borrowers to resolve loan problems. As of September 30, 2001, there was no significant impact on nonperforming assets due to the September 11th events. Continued deterioration of Hawaii’s economy may impact loan quality, and may result in increases in delinquencies, nonperforming assets, and restructured loans.
Other Operating Income
For the third quarter of 2001, total other operating income was $3.3 million, an increase of 19.2% over the same period last year. Excluding the impact of securities transactions, total other operating income was $3.1 million, an increase of 8.7% over the third quarter of 2000. This increase was primarily due to a $329,000 or 19.2% increase in service charges on deposit accounts and other service charges.
On a year-to-date basis, other operating income, excluding securities gains and losses, totaled $9.6 million for 2001, decreasing by 10.2% from $10.7 million for the same period last year. This decrease was primarily attributed to the $1.9 million non-recurring gain on the sale of the merchant portfolio in the first quarter of last year. Additionally, loan sales generated $700,000 in gains in 2001.
Other Operating Expense
Total other operating expense was $11.8 million for the third quarter of 2001, an increase of 1.1% over the same period last year. Salaries and benefits totaled $6.8 million, an increase of 8.6% over the same quarter last year. This increase was primarily due to increased employee benefits expense in 2001. Offsetting this increase was a $587,000 reduction in occupancy expense from the same period last year. This reduction was primarily the result of the acquisition of the remaining interest in CKSS partnership during the second quarter. Rental income from the partnership, which was being recorded in other operating income prior to the acquisition, is now a component of occupancy expense.
On a year-to-date basis, total other operating expense was $37.9 million, an increase of 1.8% over the same period last year. Salaries and benefits totaled $20.2 million for the first nine months of 2001, an increase of 9.2% over the same period last year. This increase was primarily due to increases in incentive accruals in 2001 and the reversal of restructuring charges in the second quarter of 2000 due to revised estimates of severance payments in connection with staff downsizing. In the first quarter of 2001, an expense of $642,000 was recorded due to an early payoff of $20 million in borrowings from the Federal Home Loan Bank of Seattle. In the first quarter of 2000, expenses of $358,000 related to merchant servicing fees and $480,000 related to early termination of a servicing agreement for the sold merchant services portfolio were recognized.
Income Taxes
The effective tax rates for the third quarter and first nine months of 2001 were 14.11% and 27.74%, respectively. Excluding the impact of the tax credit mentioned earlier, the effective tax rates were 36.19% and 35.92%, respectively. For 2000, the comparable rates were 35.50% and 35.34%.
Financial Condition
Total assets at September 30, 2001 were $1.83 billion, an increase of $13.1 million or 0.7% from year-end 2000. In the second quarter of 2001, the Company acquired the remaining interest in CKSS Associates, a partnership in which the Company already held a 50% partnership interest, for $18.5 million in cash. This transaction accounted for the majority of the increase noted in premises and equipment from year-end. Also occurring in 2001 was the sale of $54 million in residential mortgage loans. These loans were sold to adjust the Company’s interest rate profile and to enhance liquidity. Proceeds from the sale were used to reduce short-term borrowings by $40 million and long-term debt by $20 million. The early payoff of long-term debt generated a prepayment penalty of $642,000, which is included in other expense. The debt prepayment was part of the Company’s strategy to increase the repricing of its liabilities in the declining interest rate environment. Net loans totaled $1.25 billion as of September 30, 2001, a decrease from $1.27 billion reported at year-end 2000. Investment securities totaled $374.2 million, a decrease of $10.4 million or 2.7%. Total deposits at September 30, 2001 were $1.42 billion, an increase of $57.9 million or 4.2%. Core deposits (noninterest-bearing demand, interest-bearing demand and savings deposits, and time deposits under $100,000) at September 30, 2001 were $1,017.4 million, an increase from $1,005.4 million at June 30, 2001. Competition for deposits remains strong, and will continue to challenge the bank's ability to gather low-cost retail funds.
Capital Resources
Stockholders' equity was $149.49 million at September 30, 2001, an increase of $6.2 million or 4.3% from December 31, 2000. When expressed as a percentage of total assets, stockholders' equity increased to 8.17% at September 30, 2001, from 7.89% at year-end 2000. Book value per share at September 30, 2001 was $18.62, compared to $16.93 at year-end 2000.
Repurchases of the Company’s common stock during the first nine months of 2001 totaled $13.4 million, and offset increases due to earnings accumulation and unrealized gains on the available for sale investment securities portfolio. In the first nine months of 2001, the Company repurchased 466,750 shares of its common stock, and is currently in the sixth segment of its repurchase program which began in 1998.
During the third quarter of 2001, the Company issued $10.0 million in preferred stock securities through its real estate investment trust. These securities qualify as minority interest, and are included in Tier 1 capital.
On September 17, 2001, the board of directors declared a third quarter cash dividend of $0.17 per share, a 13.3% increase over the dividend declared in the third quarter of 2000. Dividends declared in the third quarter of 2001 totaled $1,365,000, compared with $1,314,000 in the third quarter of 2000.
The Company's objective with respect to capital resources is to maintain a level of capital that will support sustained asset growth and anticipated risks. Furthermore, the Company seeks to ensure that regulatory guidelines and industry standards for well-capitalized institutions are met.
Regulations on capital adequacy guidelines adopted by the Federal Reserve Board (the "FRB") and the Federal Deposit Insurance Corporation (the "FDIC") are as follows. An institution is required to maintain a minimum ratio of qualifying total capital to risk-adjusted assets of 8% and a minimum ratio of Tier 1 capital to risk-adjusted assets of 4%. In addition to the risk-based guidelines, federal banking regulators require banking organizations to maintain a minimum amount of Tier 1 capital to total assets, referred to as the leverage ratio. For a banking organization rated in the highest of the five categories used by regulators to rate banking organizations, the minimum leverage ratio of Tier 1 capital to total assets must be 3%. In addition to these uniform risk-based capital guidelines and leverage ratios that apply across the industry, the regulators have the discretion to set individual minimum capital requirements for specific institutions at rates significantly above the minimum guidelines and ratios.
The following table sets forth the Company’s capital ratios and capital adequacy requirements applicable to the Company as of the dates indicated.
| | Minimum required | |
| | for capital | |
| | Actual | | adequacy purposes | | Excess | |
(Dollars in thousands) | | Amount | | Ratio | | Amount | | Ratio | | Amount | | Ratio | |
At September 30, 2001: | | | | | | | | | | | | | |
Leverage capital | | $ | 153,071 | | 8.52 | % | $ | 71,842 | | 4.00 | % | $ | 81,229 | | 4.52 | % |
Tier 1 risk-based capital | | 153,071 | | 10.10 | | 60,600 | | 4.00 | | 92,471 | | 6.10 | |
Total risk-based capital | | 172,088 | | 11.36 | | 121,200 | | 8.00 | | 50,888 | | 3.36 | |
| | | | | | | | | | | | | |
At December 31, 2000: | | | | | | | | | | | | | |
Leverage capital | | $ | 140,222 | | 7.97 | % | $ | 70,362 | | 4.00 | % | $ | 69,860 | | 3.97 | % |
Tier 1 risk-based capital | | 140,222 | | 9.63 | | 58,215 | | 4.00 | | 82,007 | | 5.63 | |
Total risk-based capital | | 158,469 | | 10.89 | | 116,431 | | 8.00 | | 42,038 | | 2.89 | |
| | | | | | | | | | | | | | | | | | |
In addition, FDIC-insured institutions such as the Bank must maintain leverage, Tier 1 and total risk-based capital ratios of at least 5%, 6% and 10%, respectively, to be considered "well capitalized" under the prompt corrective action provisions of the FDIC Improvement Act of 1991.
The following table sets forth the Bank’s capital ratios and capital requirements to be considered "well capitalized" as of the dates indicated.
| | Minimum required to be | |
| | Actual | | well-capitalized | | Excess | |
(Dollars in thousands) | | Amount | | Ratio | | Amount | | Ratio | | Amount | | Ratio | |
At September 30, 2001: | | | | | | | | | | | | | |
Leverage capital | | $ | 150,448 | | 8.39 | % | $ | 89,674 | | 5.00 | % | $ | 60,774 | | 3.39 | % |
Tier 1 risk-based capital | | 150,448 | | 9.92 | | 91,042 | | 6.00 | | 59,406 | | 3.92 | |
Total risk-based capital | | 169,494 | | 11.17 | | 151,737 | | 10.00 | | 17,757 | | 1.17 | |
| | | | | | | | | | | | | |
At December 31, 2000: | | | | | | | | | | | | | |
Leverage capital | | $ | 136,563 | | 7.77 | % | $ | 87,837 | | 5.00 | % | $ | 48,726 | | 2.77 | % |
Tier 1 risk-based capital | | 136,563 | | 9.38 | | 87,356 | | 6.00 | | 49,207 | | 3.38 | |
Total risk-based capital | | 154,817 | | 10.63 | | 145,594 | | 10.00 | | 9,223 | | 0.63 | |
| | | | | | | | | | | | | | | | | | |
Asset/Liability Management and Liquidity
The Company's asset/liability management and liquidity are discussed in the 2000 Annual Report to Shareholders. No significant changes have occurred during the three and nine months ended September 30, 2001.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company discussed the nature and extent of market risk exposure in the 2000 Annual Report to Shareholders. No significant changes have occurred during the three and nine months ended September 30, 2001.
PART II. OTHER INFORMATION
Items 1 to 5.
Items 1 to 5 are omitted pursuant to instructions to Part II.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the third quarter of 2001.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | CPB INC. |
| | (Registrant) |
| | |
| | |
Date: | November 9, 2001 | /s/ Joichi Saito |
| | Joichi Saito |
| | Chairman of the Board and |
| | Chief Executive Officer |
| | |
| | |
Date: | November 9, 2001 | /s/ Neal K. Kanda |
| | Neal K. Kanda |
| | Vice President and Treasurer |
| | (Principal Financial and |
| | Accounting Officer) |
CPB INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| | September 30, | | December 31, | |
(Dollars in thousands, except per share data) | | 2001 | | 2000 | |
ASSETS | | | | | |
Cash and due from banks | | $ | 41,872 | | $ | 52,207 | |
Interest-bearing deposits in other banks | | 41,868 | | 11,506 | |
Federal funds sold | | - | | 15,000 | |
Investment securities: | | | | | |
Held to maturity, at cost (fair value of $79,263 at September 30, 2001 and $86,566 at December 31, 2000) | | 77,048 | | 86,056 | |
Available for sale, at fair value | | 297,162 | | 279,714 | |
Available for sale securities pledged to creditor, at fair value | | - | | 18,849 | |
Total investment securities | | 374,210 | | 384,619 | |
| | | | | |
Loans | | 1,278,679 | | 1,291,190 | |
Less allowance for loan losses | | 25,356 | | 22,612 | |
Net loans | | 1,253,323 | | 1,268,578 | |
| | | | | |
Premises and equipment | | 60,652 | | 23,319 | |
Accrued interest receivable | | 9,638 | | 10,646 | |
Investment in unconsolidated subsidiaries | | 1,330 | | 8,924 | |
Due from customers on acceptances | | 42 | | - | |
Other real estate | | 1,522 | | 1,792 | |
Other assets | | 45,591 | | 40,327 | |
| | | | | |
Total assets | | $ | 1,830,048 | | $ | 1,816,918 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | |
Deposits: | | | | | |
Noninterest-bearing deposits | | $ | 214,549 | | $ | 199,625 | |
Interest-bearing deposits | | 1,206,388 | | 1,163,441 | |
Total deposits | | 1,420,937 | | 1,363,066 | |
| | | | | |
Short-term borrowings | | 3,663 | | 56,720 | |
Long-term debt | | 201,412 | | 220,970 | |
Bank acceptances outstanding | | 42 | | - | |
Minority interest | | 10,261 | | 65 | |
Other liabilities | | 44,248 | | 32,785 | |
| | | | | |
Total liabilities | | 1,680,563 | | 1,673,606 | |
| | | | | |
Stockholders' equity: | | | | | |
Preferred stock, no par value, authorized 1,000,000 shares, none issued | | - | | - | |
Common stock, no par value; authorized 50,000,000 shares; issued and outstanding 8,027,788 shares at September 30, 2001, and 8,464,468 shares at December 31, 2000 | | 6,281 | | 6,172 | |
Surplus | | 45,848 | | 45,848 | |
Retained earnings | | 91,031 | | 88,232 | |
Accumulated other comprehensive income, net of taxes | | 6,325 | | 3,060 | |
| | | | | |
Total stockholders' equity | | 149,485 | | 143,312 | |
| | | | | |
Total liabilities and stockholders' equity | | $ | 1,830,048 | | $ | 1,816,918 | |
See accompanying notes to consolidated financial statements.
CPB INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| | Three Months Ended | | Nine Months Ended | |
| | September 30, | | September 30, | |
(In thousands, except per share data) | | 2001 | | 2000 | | 2001 | | 2000 | |
Interest income: | | | | | | | | | |
Interest and fees on loans | | $ | 25,785 | | $ | 26,777 | | $ | 80,060 | | $ | 75,623 | |
Interest and dividends on investment securities: | | | | | | | | | |
Taxable interest | | 4,592 | | 4,779 | | 14,631 | | 13,573 | |
Tax-exempt interest | | 637 | | 600 | | 1,836 | | 1,805 | |
Dividends | | 364 | | 315 | | 1,042 | | 992 | |
Interest on deposits in other banks | | 219 | | 127 | | 990 | | 268 | |
Interest on Federal funds sold and securities purchased under agreements to resell | | 222 | | 1 | | 284 | | 8 | |
| | | | | | | | | |
Total interest income | | 31,819 | | 32,599 | | 98,843 | | 92,269 | |
| | | | | | | | | |
Interest expense: | | | | | | | | | |
Interest on deposits | | 9,561 | | 11,381 | | 32,075 | | 31,283 | |
Interest on short-term borrowings | | 33 | | 911 | | 603 | | 2,356 | |
Interest on long-term debt | | 2,545 | | 2,260 | | 8,669 | | 5,807 | |
| | | | | | | | | |
Total interest expense | | 12,139 | | 14,552 | | 41,347 | | 39,446 | |
| | | | | | | | | |
Net interest income | | 19,680 | | 18,047 | | 57,496 | | 52,823 | |
Provision for loan losses | | 1,050 | | 1,500 | | 2,700 | | 3,500 | |
Net interest income after provision for loan losses | | 18,630 | | 16,547 | | 54,796 | | 49,323 | |
| | | | | | | | | |
Other operating income: | | | | | | | | | |
Income from fiduciary activities | | 342 | | 275 | | 912 | | 773 | |
Service charges on deposit accounts | | 961 | | 770 | | 2,759 | | 2,304 | |
Other service charges and fees | | 1,081 | | 943 | | 3,088 | | 3,160 | |
Equity in earnings of unconsolidated subsidiaries | | - | | 155 | | 217 | | 457 | |
Fees on foreign exchange | | 106 | | 104 | | 332 | | 385 | |
Investment securities gains (losses) | | 276 | | (16 | ) | 893 | | (683 | ) |
Gain on sale of merchant servicing portfolio | | - | | - | | - | | 1,850 | |
Other | | 573 | | 571 | | 2,289 | | 1,758 | |
| | | | | | | | | |
Total other operating income | | 3,339 | | 2,802 | | 10,490 | | 10,004 | |
| | | | | | | | | |
Other operating expense: | | | | | | | | | |
Salaries and employee benefits | | 6,755 | | 6,221 | | 20,216 | | 18,518 | |
Net occupancy | | 1,007 | | 1,594 | | 3,958 | | 4,765 | |
Equipment | | 606 | | 674 | | 1,977 | | 2,051 | |
Other | | 3,446 | | 3,197 | | 11,699 | | 11,847 | |
| | | | | | | | | |
Total other operating expense | | 11,814 | | 11,686 | | 37,850 | | 37,181 | |
| | | | | | | | | |
Income before income taxes | | 10,155 | | 7,663 | | 27,436 | | 22,146 | |
Income taxes | | 1,433 | | 2,720 | | 7,612 | | 7,827 | |
| | | | | | | | | |
Net income | | $ | 8,722 | | $ | 4,943 | | $ | 19,824 | | $ | 14,319 | |
| | | | | | | | | |
Per share data: | | | | | | | | | |
Basic earnings per share | | $ | 1.06 | | $ | 0.56 | | $ | 2.39 | | $ | 1.59 | |
Diluted earnings per share | | 1.04 | | 0.55 | | 2.35 | | 1.56 | |
Cash dividends declared | | 0.17 | | 0.15 | | 0.49 | | 0.45 | |
| | | | | | | | | |
Basic weighted average shares outstanding | | 8,225 | | 8,777 | | 8,295 | | 9,019 | |
Diluted weighted average shares outstanding | | 8,383 | | 8,927 | | 8,450 | | 9,166 | |
See accompanying notes to consolidated financial statements.
CPB INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME
(Unaudited)
| | | | | | | | Accumulated | | | |
| | | | | | | | other | | | |
(Dollars in thousands, except per share data) | | Common | | | | Retained | | comprehensive | | | |
| | stock | | Surplus | | earnings | | income(loss) | | Total | |
Nine months ended September 30, 2001: | | | | | | | | | | | |
Balance at December 31, 2000 | | $ | 6,172 | | $ | 45,848 | | $ | 88,232 | | $ | 3,060 | | $ | 143,312 | |
Net income | | - | | - | | 19,824 | | - | | 19,824 | |
Net change in unrealized gain(loss) on investment securities, net of taxes of $2,172 | | - | | - | | - | | 3,265 | | 3,265 | |
| | | | | | | | | | | |
Comprehensive income | | | | | | | | | | 23,089 | |
| | | | | | | | | | | |
Cash dividends declared ($0.49 per share) | | - | | - | | (3,997 | ) | - | | (3,997 | ) |
30,070 shares of common stock issued | | 463 | | - | | - | | - | | 463 | |
466,750 shares of common stock repurchased | | (354 | ) | - | | (13,028 | ) | - | | (13,382 | ) |
| | | | | | | | | | | |
Balance at September 30, 2001 | | $ | 6,281 | | $ | 45,848 | | $ | 91,031 | | $ | 6,325 | | $ | 149,485 | |
| | | | | | | | | | | |
Disclosure of reclassification amount: | | | | | | | | | | | |
Unrealized holding gain(loss) on investment securities during period, net of taxes of $1,037 | | - | | - | | - | | 3,030 | | 3,030 | |
Less: reclassification adjustment for gains (losses) included in net income, net of taxes of ($157) | | - | | - | | - | | (235 | ) | (235 | ) |
| | | | | | | | | | | |
Net change in unrealized gain(loss) on investment securities | | - | | - | | - | | $ | 3,265 | | $ | 3,265 | |
| | | | | | | | | | | |
Nine months ended September 30, 2000: | | | | | | | | | | | |
Balance at December 31, 1999 | | $ | 6,540 | | $ | 45,848 | | $ | 94,436 | | $ | (2,745 | ) | $ | 144,079 | |
Net income | | - | | - | | 14,319 | | - | | 14,319 | |
Net change in unrealized gain(loss) on investment securities, net of taxes of $1,137 | | - | | - | | - | | 1,706 | | 1,706 | |
| | | | | | | | | | | |
Comprehensive income | | | | | | | | | | 16,025 | |
| | | | | | | | | | | |
Cash dividends declared ($0.45 per share) | | - | | - | | (4,015 | ) | - | | (4,015 | ) |
5,690 shares of common stock issued | | 88 | | - | | - | | - | | 88 | |
531,227 shares of common stock repurchased | | (377 | ) | - | | (12,490 | ) | - | | (12,867 | ) |
| | | | | | | | | | | |
Balance at September 30, 2000 | | $ | 6,251 | | $ | 45,848 | | $ | 92,250 | | $ | (1,039 | ) | $ | 143,310 | |
| | | | | | | | | | | |
Disclosure of reclassification amount: | | | | | | | | | | | |
Unrealized holding gain(loss) on investment securities during period, net of taxes of
$1,355 | | - | | - | | - | | 2,035 | | 2,035 | |
Less: reclassification adjustment for gains included in net income, net of taxes of $218 | | - | | - | | - | | 329 | | 329 | |
| | | | | | | | | | | |
Net change in unrealized gain (loss) on investment securities | | - | | - | | - | | $ | 1,706 | | $ | 1,706 | |
See accompanying notes to consolidated financial statements.
CPB INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| | Nine Months Ended | |
| | September 30, | |
(Dollars in thousands) | | 2001 | | 2000 | |
Cash flows from operating activities: | | | | | |
Net income | | $ | 19,824 | | $ | 14,319 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | |
| | | | | |
Provision for loan losses | | 2,700 | | 3,500 | |
Provision for depreciation and amortization | | 2,439 | | 2,043 | |
Net amortization and accretion of investment securities | | (261 | ) | (2 | ) |
Net (gain) loss on investment securities | | (893 | ) | 683 | |
Federal Home Loan Bank stock dividends received | | (1,038 | ) | (925 | ) |
Origination of loans held for sale | | (75,091 | ) | (4,970 | ) |
Net (gain) loss on sale of loans | | (839 | ) | 46 | |
Proceeds from sales of loans held for sale | | 75,472 | | 7,363 | |
Deferred income tax expense | | (3,008 | ) | (3,043 | ) |
Equity in earnings of unconsolidated subsidiaries | | (217 | ) | (457 | ) |
Net (increase) decrease in other assets | | (1,289 | ) | 3,934 | |
Net increase in other liabilities | | 11,926 | | 4,686 | |
| | | | | |
Net cash provided by operating activities | | 29,725 | | 27,177 | |
| | | | | |
Cash flows from investing activities: | | | | | |
Proceeds from maturities of and calls on investment securities held to maturity | | 9,032 | | 8,718 | |
Proceeds from sales of investment securities available for sale | | 40,942 | | 30,592 | |
Proceeds from maturities of and calls on investment securities available for sale | | 31,739 | | 19,774 | |
Purchases of investment securities available for sale | | (63,674 | ) | (106,335 | ) |
Net (increase) decrease in interest- bearing deposits in other banks | | (30,362 | ) | 5,636 | |
Net decrease in Federal funds sold | | 15,000 | | - | |
Net loan repayments (originations) | | 10,555 | | (118,497 | ) |
Purchases of premises and equipment | | (644 | ) | (1,036 | ) |
Distributions from unconsolidated subsidiaries | | 125 | | 375 | |
Investments in unconsolidated subsidiaries | | (81 | ) | (27 | ) |
Acquisition of remaining interest in CKSS Associates | | (31,043 | ) | - | |
| | | | | |
Net cash used in investing activities | | (18,411 | ) | (160,800 | ) |
| | | | | |
Cash flows from financing activities: | | | | | |
Net increase in deposits | | 57,871 | | 50,195 | |
Proceeds from long-term debt | | 8,670 | | 65,000 | |
Repayments of long-term debt | | (28,228 | ) | (21,692 | ) |
Net decrease (increase) in short-term borrowings | | (53,057 | ) | 13,730 | |
Cash dividends paid | | (3,986 | ) | (4,001 | ) |
Proceeds from sale of common stock | | 463 | | 88 | |
Proceeds from sale of preferred stock | | 10,000 | | - | |
Repurchases of common stock | | (13,382 | ) | (12,867 | ) |
| | | | | |
Net cash (used in) provided by financing activities | | (21,649 | ) | 90,453 | |
| | | | | |
Net decrease in cash and cash equivalents | | (10,335 | ) | (43,170 | ) |
| | | | | |
| | | | | |
Cash and cash equivalents: | | | | | |
At beginning of period | | 52,207 | | 83,425 | |
At end of period | | $ | 41,872 | | $ | 40,255 | |
| | | | | |
Supplemental disclosure of cash flow information: | | | | | |
Cash paid during the period for interest | | $ | 42,883 | | $ | 36,718 | |
Cash paid during the period for income taxes | | $ | - | | $ | 5,798 | |
| | | | | |
Supplemental disclosure of noncash investing and financing activities: | | | | | |
Transfer of loans to other real estate | | $ | 2,458 | | $ | 2,672 | |
| | | | | | | | | | | |
See accompanying notes to consolidated financial statements.
CPB INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2001 and 2000
1. Basis of Presentation
The financial information included herein is unaudited, except for the consolidated balance sheet at December 31, 2000. However, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods.
The results of operations for the three and nine months ended September 30, 2001 are not necessarily indicative of the results to be expected for the full year.
2. Comprehensive Income
Components of other comprehensive income (loss) for the three and nine months ended September 30, 2001 and 2000 were comprised solely of unrealized holding gains (losses) on available-for-sale investment securities. Accumulated other comprehensive income (loss), net of taxes, is presented below as of the dates indicated:
| | Three months ended | | Nine months ended | |
| | September 30, | | September 30, | |
(Dollars in thousands) | | 2001 | | 2000 | | 2001 | | 2000 | |
Balance at beginning of period | | $ | 4,665 | | $ | (2,754 | ) | $ | 3,060 | | $ | (2,745 | ) |
Current-period change | | 1,660 | | 1,715 | | 3,265 | | 1,706 | |
Balance at end of period | | $ | 6,325 | | $ | (1,039 | ) | $ | 6,325 | | $ | (1,039 | ) |
3. Segment Information
The Company has three reportable segments: retail branches, commercial finance and treasury. The segments reported are consistent with internal functional reporting lines. They are managed separately because each unit has different target markets, technological requirements, marketing strategies and specialized skills. The retail branch segment includes all retail branch offices. Products and services offered include a full range of deposit and loan products, safe deposit boxes and various other bank services. The commercial finance segment focuses on lending to corporate customers, residential mortgage lending, construction and real estate development lending and international banking services. The treasury segment is responsible for managing the Company's investment securities portfolio and wholesale funding activities. Other activities include trust, mortgage servicing, and indirect lending activities.
The accounting policies of the segments are consistent with the Company's accounting policies that are described in note 1 to the consolidated financial statements in the 2000 Annual Report to Stockholders. The majority of the Company's net income is derived from net interest income. Accordingly, Management focuses primarily on net interest income (expense), rather than gross interest income and expense amounts, in evaluating segment profitability. Intersegment net interest income (expense) is allocated to each segment based on the amount of net investable funds provided (used) by that segment at a rate equal to the Bank's average rate on interest-sensitive assets and liabilities. All administrative and overhead expenses are allocated to the segments at cost. Cash, investment securities, loans and their related balances are allocated to the segment responsible for acquisition and maintenance of those assets. Segment assets also include all premises and equipment used directly in segment operations.
Segment profits and assets are provided in the following table for the periods indicated.
| | Retail | | Commercial | | | | All | | | |
(Dollars in thousands) | | Branch | | Finance | | Treasury | | Others | | Total | |
Three months ended September 30, 2001: | | | | | | | | | | | |
Net interest income (expense) | | $ | (3,244 | ) | $ | 18,153 | | $ | 2,286 | | $ | 2,485 | | $ | 19,680 | |
Intersegment net interest income (expense) | | 9,566 | | (8,393 | ) | 252 | | (1,425 | ) | - | |
Provision for loan losses | | 399 | | 23 | | - | | 628 | | 1,050 | |
Other operating income | | 973 | | 223 | | 291 | | 1,852 | | 3,339 | |
Other operating expense | | 3,446 | | 755 | | 285 | | 7,328 | | 11,814 | |
Administrative and overhead expense allocation | | 3,696 | | 1,542 | | 126 | | (5,364 | ) | - | |
Income tax expense | | 10 | | 740 | | 470 | | 213 | | 1,433 | |
Net income | | $ | (256 | ) | $ | 6,923 | | $ | 1,948 | | $ | 107 | | $ | 8,722 | |
| | | | | | | | | | | |
Three months ended September 30, 2000: | | | | | | | | | | | |
Net interest income (expense) | | $ | (3,151 | ) | $ | 16,240 | | $ | 1,203 | | $ | 3,755 | | $ | 18,047 | |
Intersegment net interest income (expense) | | 9,648 | | (7,698 | ) | 676 | | (2,626 | ) | - | |
Provision for loan losses | | 121 | | 1,207 | | - | | 172 | | 1,500 | |
Other operating income (expense) | | 926 | | 148 | | (1 | ) | 1,729 | | 2,802 | |
Other operating expense | | 3,649 | | 544 | | 119 | | 7,374 | | 11,686 | |
Administrative and overhead expense allocation | | 3,333 | | 1,187 | | 79 | | (4,599 | ) | - | |
Income tax expense (benefit) | | 113 | | 2,031 | | 593 | | (17 | ) | 2,720 | |
Net income (loss) | | $ | 207 | | $ | 3,721 | | $ | 1,087 | | $ | (72 | ) | $ | 4,943 | |
| | | | | | | | | | | |
Nine months ended September 30, 2001: | | | | | | | | | | | |
Net interest income (expense) | | $ | (11,858 | ) | $ | 53,916 | | $ | 5,767 | | $ | 9,671 | | $ | 57,496 | |
Intersegment net interest income (expense) | | 29,335 | | (25,224 | ) | 1,125 | | (5,236 | ) | - | |
Provision for loan losses | | 790 | | 248 | | - | | 1,662 | | 2,700 | |
Other operating income | | 4,069 | | 755 | | 1,005 | | 4,661 | | 10,490 | |
Other operating expense | | 10,507 | | 2,379 | | 1,120 | | 23,844 | | 37,850 | |
Administrative and overhead expense allocation | | 11,863 | | 4,918 | | 378 | | (17,159 | ) | - | |
Income tax expense (benefit) | | (474 | ) | 5,828 | | 1,900 | | 358 | | 7,612 | |
Net income (loss) | | $ | (1,140 | ) | $ | 16,074 | | $ | 4,499 | | $ | 391 | | $ | 19,824 | |
| | | | | | | | | | | |
Nine months ended September 30, 2000: | | | | | | | | | | | |
Net interest income (expense) | | $ | (5,918 | ) | $ | 42,944 | | $ | 4,249 | | $ | 11,548 | | $ | 52,823 | |
Intersegment net interest income (expense) | | 26,038 | | (19,967 | ) | 1,531 | | (7,602 | ) | - | |
Provision for loan losses | | 786 | | 1,665 | | - | | 1,049 | | 3,500 | |
Other operating income (expense) | | 2,523 | | 760 | | (638 | ) | 7,359 | | 10,004 | |
Other operating expense | | 11,147 | | 2,143 | | 317 | | 23,574 | | 37,181 | |
Administrative and overhead expense allocation | | 11,496 | | 2,928 | | 251 | | (14,675 | ) | - | |
Income tax expense (benefit) | | (307 | ) | 5,948 | | 1,608 | | 578 | | 7,827 | |
Net income (loss) | | $ | (479 | ) | $ | 11,053 | | $ | 2,966 | | $ | 779 | | $ | 14,319 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
At September 30, 2001: | | | | | | | | | | | |
Investment securities | | $ | - | | $ | - | | $ | 374,210 | | $ | - | | $ | 374,210 | |
Loans | | 155,530 | | 1,010,910 | | - | | 112,239 | | 1,278,679 | |
Other | | 17,878 | | 21,100 | | 70,560 | | 67,621 | | 177,159 | |
Total assets | | $ | 173,408 | | $ | 1,032,010 | | $ | 444,770 | | $ | 179,860 | | $ | 1,830,048 | |
| | | | | | | | | | | |
At December 31, 2000: | | | | | | | | | | | |
Investment securities | | $ | - | | $ | - | | $ | 384,619 | | $ | - | | $ | 384,619 | |
Loans | | 169,839 | | 944,436 | | - | | 176,915 | | 1,291,190 | |
Other | | 19,906 | | 21,841 | | 73,432 | | 25,930 | | 141,109 | |
Total assets | | $ | 189,745 | | $ | 966,277 | | $ | 458,051 | | $ | 202,845 | | $ | 1,816,918 | |
4. Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities," which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133, an Amendment of SFAS Statement No. 133," which deferred the effective date of SFAS No. 133. SFAS No. 133, as amended, is now effective for all fiscal quarters of fiscal years beginning after June 15, 2000. Earlier application is permitted only as of the beginning of a fiscal quarter. The application of SFAS No. 133, as amended, effective from January 1, 2001, did not have a material impact on the Company's consolidated financial statements.
In September 2000, the FASB issued SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS No. 140 supersedes and replaces SFAS No. 125 of the same name and provides accounting and reporting guidance for transfers and servicing of financial assets and extinguishments of liabilities. The provisions of SFAS No. 140 are to be applied prospectively to transactions occurring after March 31, 2001. The application of SFAS No. 140 is not expected to have a material impact on the Company’s consolidated financial statements.
In June 2001, the FASB issued SFAS No. 141, “Business Combinations.” SFAS No. 141 supersedes Accounting Principles Board (APB) Opinion No. 16, “Business Combinations,” and SFAS No. 38, “Accounting for Preacquisition Contingencies of Purchased Enterprises,” and provides accounting and reporting guidance on business combinations initiated after June 30, 2001. The application of SFAS No. 141 is not expected to have a material impact on the Company’s consolidated financial statements.
In June 2001, the FASB issued SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142 supersedes APB Opinion No. 17, “Intangible Assets,” and provides accounting and reporting guidance on intangible assets acquired individually or with a group of other assets (but not those acquired in a business combination). The provisions of SFAS No. 142 are to be applied starting with fiscal years beginning after December 15, 2001. The application of SFAS No. 142 is not expected to have a material impact on the Company’s consolidated financial statements.
In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations.” SFAS No. 143 provides accounting and reporting guidance on obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The provisions of SFAS No. 143 are effective for fiscal years beginning after June 15, 2002. The application of SFAS No. 143 is not expected to have a material impact on the Company’s consolidated financial statements.
In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” and the accounting and reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions,” for the disposal of a segment of a business (as previously defined in that opinion). It also amends Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to eliminate the exception to consolidation for a subsidiary for which control is likely to be temporary. The provisions of SFAS No. 144 are effective for fiscal years beginning after December 15, 2001, and interim periods within those fiscal years. The application of SFAS No. 144 is not expected to have a material impact on the Company’s consolidated financial statements.
