UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] 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 (I.R.S. Employer
incorporation or organization) 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 [ X ] No [ ]
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, $1.25 Stated Value;
Outstanding at September 30, 1996: 5,267,734 shares
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The financial statements listed below are filed as a part hereof.
Page
Consolidated Balance Sheets - September 30, 1996 and
December 31, 1995 F-1
Consolidated Statements of Income - Three and nine
months ended September 30, 1996 and 1995 F-2
Consolidated Statements of Cash Flows - Nine months
ended September 30, 1996 and 1995 F-3
Notes to Consolidated Financial Statements F-4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview
CPB Inc. (the "Company") posted third quarter 1996 net income of
$3.757 million, increasing by 1.2% over the $3.711 million earned
in the third quarter of 1995. Net income for the first nine months
of 1996 was $10.888 million, increasing by 2.0% over the $10.676
million earned in the same period in 1995. A reduction in the
provision for loan losses offset a decrease in net interest income
for the third quarter of 1996 compared with the third quarter of
1995. A reduction in the Federal Deposit Insurance Corporation
(the "FDIC") deposit assessment contributed to the increased
earnings for the first nine months of 1996 compared with the same
period in 1995. As of September 30, 1996, total assets of $1,362.7
million decreased by $9.2 million or 0.7%, and total deposits of
$1,100.5 million decreased by $37.8 million or 3.3% compared with
year-end 1995. During the same period, net loans of $1,009.0
million increased by $38.8 million or 4.0%. With the decline in
deposits, loan growth was funded primarily through investment
maturities and other borrowings.
The following table presents return on average assets, return on
average stockholders' equity and earnings per share for the periods
indicated.
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
Annualized return on
average assets 1.11% 1.07% 1.07% 1.03%
Annualized return on average
stockholders' equity 10.92% 11.47% 10.69% 11.25%
1
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
Earnings per share $0.71 $0.71 $2.07 $2.04
Hawaii's economy has shown signs of recovery in certain sectors
during the first nine months of 1996, but there is little evidence
to support a strong and lasting recovery. The visitor industry
continues to sustain the economy, with the visitor count during the
first nine months of 1996 increasing by approximately 5% over 1995
levels. Conversely, the local labor market has demonstrated signs
of persistent weakness. In September 1996, the state unemployment
rate was 5.6%, a slight improvement from the 6.1% recorded in
September 1995 but still exceeding the national unemployment rate
of 5.0%. Bankruptcies and foreclosures have also increased over
1995 levels, by 50% and 44%, respectively. Likewise, both the
commercial and residential real estate markets continue to
experience declines in both volume and average sales prices during
the past year. In summary, economic results indicate that weakness
in labor and real estate market conditions have had, and will
likely continue to have, an adverse effect on the Hawaii economy
and the Company's loan portfolio. Consequently, the results of
operations of the Company for the remainder of 1996 and in 1997
will depend on the speed, strength and duration of economic
recovery in the State of Hawaii.
This Management's Discussion and Analysis contains forward
looking statements regarding net interest income, net interest
margin, the levels of nonperforming loans, loan losses and the
allowance for loan losses, and partnership income that involve
certain risks and uncertainties. Important factors that could
cause the results to differ from those discussed in this report
include, but are not limited to, 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 the 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, 1995.
Results of Operations
Net Interest Income
A comparison of net interest income for the three and nine months
ended September 30, 1996 and 1995 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."
2
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
(Dollars in thousands)
Interest income $25,911 $27,547 $78,225 $81,069
Interest expense 10,344 11,592 31,087 33,550
Net interest income $15,567 $15,955 $47,138 $47,519
Net interest margin 4.86% 4.87% 4.91% 4.87%
Interest income decreased by $1.6 million or 5.9% and $2.8
million or 3.5% in the third quarter and first nine months of 1996,
respectively, as compared to the same periods in 1995 due to the
decline in earning assets and the lower level of interest rates in
1996. Average interest earning assets of $1,281.1 million and
$1,280.2 million for the third quarter and first nine months of
1996, respectively, decreased by $29.2 million or 2.2% and $21.5
million or 1.7%, respectively, from the same periods in 1995. The
yield on interest earning assets for the three and nine months
ended September 30, 1996 as compared to the same periods in 1995
decreased to 8.09% from 8.41% and to 8.15% from 8.30%,
respectively.
Interest and fees on loans decreased by $1.2 million or 5.1% and
$2.8 million or 4.0% in the third quarter and first nine months of
1996, respectively, as compared to the same periods in 1995 due
primarily to declines in average loan yields during the those
periods. In addition, fees on loans, which are included in
interest income, decreased by $391,000 or 51.7% and $57,000 or 3.3%
during those periods. Interest on investment securities for the
three and nine months ended September 30, 1996, increased by
$137,000 or 3.8% and $1,550,000 or 14.7%, respectively, compared to
the same periods in 1995 due to higher average yields. An increase
in average balances of $24.8 million also contributed to the
increase in interest on investment securities for the first nine
months of 1996 compared to the comparable period in 1995. Interest
on deposits in other banks and interest on Federal funds sold and
securities purchased under agreements to resell decreased from
prior year levels due primarily to two large short-term deposits
received from customers in 1995 which were temporarily deposited in
interest-bearing accounts in other banks or held as Federal funds.
Interest expense for the three and nine months ended September
30, 1996 decreased by $1.2 million or 10.8% and $2.5 million or
7.3%, respectively, as compared to the same periods in 1995,
resulting from declines in average interest-bearing liabilities and
the lower level of short-term interest rates during those periods.
Average interest-bearing liabilities of $1,046.6 million and
$1,051.5 million for the third quarter and first nine of 1996
decreased by $46.7 million or 4.3% and $35.8 million or 3.3%
compared with the comparable periods in 1995 due to the two
3
large arrangements entered into in 1995. The rate on interest-
bearing liabilities for the third quarter and first nine months of
1996 as compared to the same periods in 1995 decreased to 3.95%
from 4.24% and to 3.94% from 4.11%, respectively.
As a result, net interest income for the third quarter of 1996
decreased by $388,000 or 2.4% from the third quarter of 1995, and
net interest margin declined to 4.86% from 4.87% during the same
period. Net interest income for the first nine months of 1996
decreased by $381,000 or 0.8%, while net interest margin increased
to 4.91% from 4.87%. Due to the expectation of strong competition
for both loans and deposits, no assurances can be given that the
Company will be able to maintain net interest margin at its current
level for the remainder of 1996.
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 the
borrowers' ability to repay their 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. Amounts deemed
uncollectible are written-off through a charge against the
allowance 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 inherent risks in the loan portfolio,
current and projected economic conditions, and past loan loss
experience. The allowance is increased by provisions charged to
operating expense and reduced by charge-offs, net of recoveries.
Provision for loan losses, loan charge-offs, recoveries, net loan
charge-offs (recoveries) and the annualized ratio of net loan
charge-offs to average loans are set forth below for the periods
indicated.
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
(Dollars in thousands)
Provision for loan losses $ 450 $825 $1,350 $2,475
4
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
(Dollars in thousands)
Loan charge-offs $1,702 $266 $2,332 $ 561
Recoveries 137 45 293 261
Net loan charge-offs
(recoveries) $1,565 $221 $2,039 $ 300
Annualized ratio of net
loan charge-offs to
average loans 0.61% 0.09% 0.27% 0.04%
The provision for loan losses of $450,000 and $1,350,000 for the
third quarter and first nine months of 1996, respectively,
decreased by 45.5% compared to the same periods in 1995. Net loan
charge-offs of $1,565,000 and $2,039,000, when expressed as an
annualized percentage of average total loans, was 0.61% and 0.27%,
respectively. Charge-offs during the third quarter of 1996
included a $1,250,000 partial charge-off of a commercial real
estate loan. Approximately 57% of all other loans charged off
during the first nine months of 1996 were consumer loans. The
allowance for loan losses expressed as a percentage of total loans
was 1.89% and 2.04% at September 30, 1996 and December 31, 1995,
respectively.
Management believes that the allowance for loan losses at
September 30, 1996 was adequate to cover the credit risks inherent
in the loan portfolio. However, continuation of current economic
conditions in the State of Hawaii may 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, accruing
loans which were delinquent for 90 days or more and restructured
loans still accruing interest at the dates indicated.
September 30, December 31, September 30,
1996 1995 1995
(Dollars in thousands)
Nonaccrual loans $11,289 $3,583 $ 4,820
Other real estate 1,140 2,231 3,181
Total nonperforming
assets 12,429 5,814 8,001
Loans delinquent for 90
days or more 16,630 9,189 6,447
5
September 30, December 31, September 30,
1996 1995 1995
(Dollars in thousands)
Restructured loans still
accruing interest - 5,974 6,809
Total nonperforming
assets, loans delin-
quent for 90 days or
more and restructured
loans still accruing
interest $29,059 $20,977 $21,257
Total nonperforming assets
as a percentage of total
loans and other real
estate 1.21% 0.59% 0.80%
Total nonperforming assets
and loans delinquent for
90 days or more as a
percentage of total loans
and other real estate 2.82% 1.51% 1.45%
Total nonperforming assets,
loans delinquent for 90
days or more and
restructured loans still
accruing interest as a
percentage of total loans
and other real estate 2.82% 2.11% 2.13%
Nonperforming assets, loans delinquent for 90 days or more and
restructured loans still accruing interest totalled $29.1 million
at September 30, 1996, increasing by $8.1 million or 38.5% from
year-end 1995. Nonaccrual loans, loans delinquent for 90 days or
more and restructured loans still accruing interest were comprised
primarily of loans secured by commercial or residential real
property in the State of Hawaii. Nonaccrual loans of $11.3 million
were comprised of several large commercial real estate loans,
including a $6.0 million loan which was transferred to nonaccrual
status from its previous classification as restructured but still
accruing interest, and several residential real estate loans.
Other real estate of $1.1 million at September 30, 1996 consisted
of several residential properties. Loans delinquent for 90 days or
more and still accruing interest totaled $16.6 million at September
30, 1996, increasing by $7.4 million or 81.0% from year-end 1995.
Increases in delinquencies occurred primarily in the commercial and
commercial real estate portfolios, with $9.8 million in
delinquencies attributable to multiple loans to two borrowers.
These loans are secured by commercial and residential real estate
located in the State of Hawaii, with the exception of a $1.2
million loan which is
6
unsecured. The Company has been actively working with borrowers to
enhance cash flows and secure additional collateral. Continued
stagnation of local economic conditions may further delay
resolution of existing loan problems and may result in increases in
nonperforming assets, delinquencies, net loan charge-offs and the
provision for loan losses.
Other Operating Income
Total other operating income in the third quarter of 1996 of
$2,722,000 increased by $58,000 or 2.2% from the third quarter of
1995 due to increases in service charges on deposits.
Total other operating income for the first nine months of 1996 of
$8,022,000 decreased by $59,000 or 0.7% from the first nine months
of 1995. Partnership income declined by $501,000 or 54.2% due to
operating losses sustained from leasing activities at the Kaimuki
Plaza and the effects on vacancies and lease rates of an oversupply
of office space in the Honolulu area. Due to concessions granted
in connection with the leasing of the Kaimuki Plaza, partnership
income is expected to remain at this lower level throughout the
remainder of 1996 and improve slowly over the next several years.
Other income in 1996 also includes a one-time credit of $191,000 in
interest income on income tax refunds received.
Other Operating Expense
Total other operating expense of $11,565,000 for the third
quarter of 1996 decreased by $39,000 or 0.3% from the same period
in 1995. Salaries and employee benefits of $6,182,000 decreased by
$209,000 or 3.3% due to $234,000 accrued in the third quarter of
1995 for executive retirement benefits. Net occupancy expense of
$1,735,000 increased by $192,000 or 12.4% due primarily to the
openings of five new in-store branches during the fourth quarter of
1995 and first nine months of 1996.
Total other operating expense of $35,609,000 for the first nine
months of 1996 increased by $308,000 or 0.9% over the same period
in 1995. Salaries and employee benefits of $19,170,000 increased
by $304,000 or 1.6% due to the recent branch expansions. Other
expenses of $9,498,000 decreased by $715,000 or 7.0% due primarily
to a $1,135,000 reduction in the FDIC deposit assessment, which was
partially offset by increases in computer software and charge card
related expenses.
Income Taxes
The effective tax rates for the third quarter and first nine
months of 1996 were 39.51% and 39.63%, respectively, compared with
the previous year's rates of 39.59% and 39.61%, respectively.
7
Financial Condition
Total assets at September 30, 1996 of $1,362.7 million decreased
by $9.2 million or 0.7% from December 31, 1995. Investment
securities of $244.4 million decreased by $39.2 million or 13.8%,
while net loans of $1,009.0 million increased by $38.8 million or
4.0%. Other borrowed funds of $106.5 million, consisting primarily
of Federal Home Loan Bank advances, increased by $24.4 million or
29.7% in response to a decline in deposits during the first nine
months of 1996.
Total deposits at September 30, 1996 of $1,100.5 million
decreased by $37.8 million or 3.3% from year-end 1995.
Noninterest-bearing deposits of $157.4 million decreased by $13.1
million or 7.7%, and interest-bearing deposits of $943.1 million
decreased by $24.7 million or 2.6%. Core deposits (noninterest-
bearing demand, interest-bearing demand and savings deposits, and
time deposits under $100,000) at September 30, 1996 of $837.5
million decreased by $40.6 million or 4.6% during the first nine
months of 1996, while time deposits of $100,000 or more of $263.0
million increased by $2.7 million or 1.1% compared to year-end 1995
levels. The decline in core deposits resulted from decreases in
business checking accounts of $5.3 million and personal interest-
bearing checking and savings accounts of $7.3 million and $15.0
million, respectively. Local competition for deposits remains
strong and will continue to challenge the bank's ability to gather
retail funds.
Capital Resources
Stockholders' equity of $138.2 million at September 30, 1996
increased by $5.7 million or 4.3% from December 31, 1995, as a
result of an increase in retained earnings, notwithstanding the
impact of a $1.5 million increase in the unrealized loss, net of
taxes, on investment securities available for sale. The increase
in the unrealized loss, net of taxes, on investment securities
available for sale was due primarily to changes is interest rates
which affect the valuation of investment securities. When
expressed as a percentage of total assets, stockholders' equity was
10.14% and 9.66% at September 30, 1996 and December 31, 1995,
respectively. On September 16, 1996, the Board of Directors
declared a third quarter cash dividend of $0.24 per share, bringing
total dividends declared to $0.72 per share for the first three
quarters of 1996, an increase of 5.9% over dividends declared
during the same period in 1995. Dividends declared in the first
nine months of 1996 totaled $3,792,000 compared with $3,564,000 in
the first nine months of 1995, an increase of 6.4%. The Company's
objective with respect to capital resources is to maintain a level
of capital that will support sustained asset growth and anticipated
credit risks and to ensure that regulatory guidelines and industry
standards are met.
8
Regulations on capital adequacy guidelines adopted by the Federal
Reserve Board (the "FRB") and the FDIC are as follows. An
institution is required to maintain a minimum ratio of qualifying
total capital to risk-weighted assets of 8%, of which at least 4%
must consist of Tier I capital, essentially common stockholders'
equity (before unrealized loss on investment securities) less
intangible assets. The FRB and the FDIC have also adopted a
minimum leverage ratio of Tier I capital to total assets of 3%.
The leverage ratio requirement establishes the minimum level for
banks that have a uniform composite ("CAMEL") rating of 1, and all
other institutions and institutions experiencing or anticipating
significant growth are expected to maintain capital levels at least
100 to 200 basis points above the minimum level. Furthermore,
higher leverage and risk-based capital ratios are required to be
considered well capitalized or adequately capitalized under the
prompt corrective action provisions of the FDIC Improvement Act of
1991.
The following table sets forth capital requirements applicable to
the Company and the Company's capital ratios as of the dates
indicated.
Required Actual Excess
At September 30, 1996:
Tier I risk-based
capital ratio 4.00% 11.90% 7.90%
Total risk-based
capital ratio 8.00% 13.15% 5.15%
Leverage capital ratio 4.00% 10.28% 6.28%
At December 31, 1995:
Tier I risk-based
capital ratio 4.00% 12.35% 8.35%
Total risk-based
capital ratio 8.00% 13.61% 5.61%
Leverage capital ratio 4.00% 9.61% 5.61%
In addition, FDIC-insured institutions such as the Bank must
maintain leverage, Tier I 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.
9
The following table sets forth the Bank's capital ratios as of
the dates indicated.
Required Actual Excess
At September 30, 1996:
Tier I risk-based
capital ratio 6.00% 11.08% 5.08%
Total risk-based
capital ratio 10.00% 12.33% 2.33%
Leverage capital ratio 5.00% 9.59% 4.59%
At December 31, 1995:
Tier I risk-based
capital ratio 6.00% 11.05% 5.05%
Total risk-based
capital ratio 10.00% 12.31% 2.31%
Leverage capital ratio 5.00% 8.99% 3.99%
Liquidity and Effects of Inflation
A discussion of liquidity and effects of inflation is included in
the 1995 Annual Report to Shareholders. No significant changes in
the Company's liquidity position or policies have occurred during
the nine months ended September 30, 1996.
10
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 12, 1996 /s/ Joichi Saito
Joichi Saito
Chairman of the Board and
Chief Executive Officer
Date: November 12, 1996 /s/ Neal Kanda
Neal Kanda
Vice President and Treasurer
(Principal Financial and
Accounting Officer)
11
CPB INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
(Dollars in thousands, except per share data) 1996 1995
ASSETS
Cash and due from banks $ 42,584 $ 50,274
Interest-bearing deposits in other banks 9,285 7,140
Investment securities:
Held to maturity, at cost (fair value of $112,516
and $137,347 at September 30, 1996 and December 31,
1995, respectively) 113,043 136,693
Available for sale, at fair value 131,354 146,934
Total investment securities 244,397 283,627
Loans 1,028,509 990,356
Less allowance for loan losses 19,467 20,156
Net loans 1,009,042 970,200
Premises and equipment 25,341 25,452
Accrued interest receivable 9,344 9,454
Investment in partnership 6,645 6,221
Due from customers on acceptances 788 1,443
Other assets 15,319 18,098
Total assets $1,362,745 $1,371,909
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing deposits $ 157,382 $ 170,494
Interest-bearing deposits 943,095 967,825
Total deposits 1,100,477 1,138,319
Federal funds purchased and securities sold under
agreements to repurchase 1,500 2,500
Other borrowed funds 106,518 82,104
Bank acceptances outstanding 788 1,443
Other liabilities 15,218 15,036
Total liabilities 1,224,501 1,239,402
Stockholders' equity:
Preferred stock, no par value, authorized 1,000,000
shares, none issued - -
Common stock, no par value, stated value $1.25 per
share; authorized 25,000,000 shares; issued and
outstanding 5,267,734 and 5,251,762 shares at
September 30, 1996 and December 31, 1995, respectively 6,585 6,565
Surplus 45,476 45,337
Retained earnings 87,467 80,370
Unrealized gain (loss) on investment securities,
net of taxes (1,284) 235
Total stockholders' equity 138,244 132,507
Total liabilities and stockholders' equity $1,362,745 $1,371,909
Book value per share $26.24 $25.23
<FN>
See accompanying notes to consolidated financial statements.
</FN>
F-1
CPB INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
(Dollars in thousands, September 30, September 30,
except per share data) 1996 1995 1996 1995
Interest income:
Interest and fees on loans $22,059 $23,251 $65,844 $68,601
Interest and dividends on
investment securities:
Taxable interest 3,426 3,343 11,148 9,817
Tax-exempt interest 32 30 112 98
Dividends 288 236 819 614
Interest on deposits in other banks 43 640 134 1,456
Interest on Federal funds sold and
securities purchased under
agreements to resell - - 1 336
Total interest income 25,848 27,500 78,058 80,922
Interest expense:
Interest on deposits 8,709 9,589 26,484 27,260
Interest on Federal funds purchased,
securities sold under agreements
to repurchase and other borrowed
funds 1,635 2,003 4,603 6,290
Total interest expense 10,344 11,592 31,087 33,550
Net interest income 15,504 15,908 46,971 47,372
Provision for loan losses 450 825 1,350 2,475
Net interest income after
provision for loan losses 15,054 15,083 45,621 44,897
Other operating income:
Service charges on deposit accounts 715 658 2,088 1,972
Other service charges and fees 1,399 1,373 4,160 3,961
Partnership income 207 253 423 924
Fees on foreign exchange 216 244 684 808
Investment securities gains (losses) - - (6) 25
Other 185 136 673 391
Total other operating income 2,722 2,664 8,022 8,081
Other operating expense:
Salaries and employee benefits 6,182 6,391 19,170 18,866
Net occupancy 1,735 1,543 4,939 4,321
Equipment 645 591 2,002 1,901
Other 3,003 3,079 9,498 10,213
Total other operating expense 11,565 11,604 35,609 35,301
Income before income taxes 6,211 6,143 18,034 17,677
Income taxes 2,454 2,432 7,146 7,001
Net income $ 3,757 $ 3,711 $10,888 $10,676
Per common share:
Net income $ 0.71 $ 0.71 $ 2.07 $ 2.04
Cash dividends declared $ 0.24 $ 0.24 $ 0.72 $ 0.68
Weighted average shares outstanding
(in thousands) 5,268 5,243 5,264 5,239
<FN>
See accompanying notes to consolidated financial statements.
</FN>
F-2
CPB INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
(Dollars in thousands) 1996 1995
Cash flows from operating activities:
Net income $10,888 $10,676
Adjustments to reconcile net income
to net cash provided by operating
activities:
Provision for loan losses 1,350 2,475
Provision for depreciation and
amortization 2,034 1,922
Net amortization and accretion of
investment securities 802 1,405
Net loss (gain) on investment securities 6 (25)
Federal Home Loan Bank stock
dividends received (819) (614)
Net change in loans held for sale (3,909) (915)
Deferred income tax expense (benefit) 788 (1,696)
Partnership income (423) (924)
Decrease in accrued interest
receivable and other assets 3,376 3,412
Increase in accrued interest payable
and other liabilities 261 2,191
Net cash provided by operating
activities 14,354 17,907
Cash flows from investing activities:
Proceeds from maturities of and
calls on investment securities
held to maturity 37,828 33,433
Purchases of investment securities
held to maturity (15,000) (35,667)
Proceeds from sales, maturities and
calls on investment securities
available for sale 46,976 9,112
Purchases of investment securities
available for sale (33,092) (21,384)
Net decrease in interest-bearing
deposits in other banks (2,145) (20,912)
Net loan originations (36,632) (3,228)
Proceeds from disposal of premises
and equipment 16 217
Purchases of premises and equipment (1,939) (2,442)
Distributions from partnership - 320
Net cash used in investing
activities (3,988) (40,551)
Cash flows from financing activities:
Net increase (decrease) in deposits (37,842) 41,050
Proceeds from Federal Home Loan
Bank intermediate-term advances 50,000 26,000
Repayments of Federal Home Loan
Bank intermediate-term advances (25,588) (7,885)
Net increase (decrease) in other
short-term borrowings (998) (50,402)
Cash dividends paid (3,787) (3,457)
Proceeds from sale of common stock 159 71
Net cash provided by (used in)
financing activities (18,056) 5,377
Net decrease in cash and cash
equivalents (7,690) (17,267)
Cash and cash equivalents:
At beginning of period 50,274 61,604
At end of period $42,584 $44,337
Supplemental disclosure of cash flow
information:
Cash paid during the period
for interest $31,211 $34,864
Cash paid during the period
for income taxes $ 4,470 $ 8,800
Supplemental disclosure of noncash
investing and financing activities:
Transfer of loans to other real estate $ 350 $ 1,289
<FN>
See accompanying notes to consolidated financial statements.
</FN>
F-3
CPB INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The financial information included herein is unaudited, except
for the consolidated balance sheet at December 31, 1995. 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, 1996 are not necessarily indicative of the results to
be expected for the full year.
F-4