UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(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, 1997
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;
Outstanding at November 10, 1997: 10,579,184 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, 1997 and
December 31, 1996 F-1
Consolidated Statements of Income - Three and nine
months ended September 30, 1997 and 1996 F-2
Consolidated Statements of Cash Flows - Nine months
ended September 30, 1997 and 1996 F-3
Notes to Consolidated Financial Statements F-4
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 19, 1997 /s/ Joichi Saito
Joichi Saito
Chairman of the Board and
Chief Executive Officer
Date: November 19, 1997 /s/ Neal Kanda
Neal 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) 1997 1996
ASSETS
Cash and due from banks $ 39,173 $ 55,534
Interest-bearing deposits in other banks 23,564 26,297
Investment securities:
Held to maturity, at cost (fair value of $145,015
at September 30, 1997 and $109,288 at December 31, 1996) 144,546 109,244
Available for sale, at fair value 141,944 131,214
Total investment securities 286,490 240,458
Loans 1,043,820 1,041,976
Less allowance for loan losses 19,103 19,436
Net loans 1,024,717 1,022,540
Premises and equipment 24,929 25,072
Accrued interest receivable 9,815 8,674
Investment in unconsolidated subsidiaries 7,155 6,902
Due from customers on acceptances 77 1,162
Other real estate owned 3,865 1,235
Other assets 22,405 15,291
Total assets $1,442,190 $1,403,165
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing deposits $ 151,899 $ 168,170
Interest-bearing deposits 989,003 955,444
Total deposits 1,140,902 1,123,614
Short-term borrowings 6,500 5,427
Long-term debt 128,197 115,840
Bank acceptances outstanding 77 1,162
Other liabilities 17,421 16,240
Total liabilities 1,293,097 1,262,283
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 10,571,688 shares at September
30, 1997, and 10,537,748 shares at December 31, 1996 6,607 6,586
Surplus 45,799 45,481
Retained earnings 96,698 89,405
Unrealized loss on investment securities,
net of taxes (11) (590)
Total stockholders' equity 149,093 140,882
Total liabilities and stockholders' equity $1,442,190 $1,403,165
Book value per share $14.10 $13.12
<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) 1997 1996 1997 1996
Interest income:
Interest and fees on loans $23,571 $22,059 $68,440 $65,844
Interest and dividends on
investment securities:
Taxable interest 3,831 3,426 10,681 11,148
Tax-exempt interest 246 32 399 112
Dividends 312 288 863 819
Interest on deposits in other banks 534 43 1,784 134
Interest on Federal funds sold 3 - 3 -
Total interest income 28,497 25,848 82,170 78,058
Interest expense:
Interest on deposits 9,572 8,709 27,596 26,484
Interest on short-term borrowings 80 113 215 437
Interest on long-term debt 1,784 1,522 5,276 4,166
Total interest expense 11,436 10,344 33,087 31,087
Net interest income 17,061 15,504 49,083 46,971
Provision for loan losses 1,250 450 2,750 1,350
Net interest income after
provision for loan losses 15,811 15,054 46,333 45,621
Other operating income:
Service charges on deposit accounts 792 715 2,224 2,088
Other service charges and fees 1,448 1,399 4,157 4,160
Trust income 121 97 310 223
Equity in earnings of
unconsolidated subsidiaries 107 207 368 423
Fees on foreign exchange 169 216 556 684
Investment securities losses - - - (6)
Other 144 88 370 394
Total other operating income 2,781 2,722 7,985 7,966
Other operating expense:
Salaries and employee benefits 6,415 6,182 19,178 19,170
Net occupancy 1,613 1,735 4,861 4,939
Equipment 666 645 1,993 2,002
Other 3,737 3,003 10,178 9,442
Total other operating expense 12,431 11,565 36,210 35,553
Income before income taxes 6,161 6,211 18,108 18,034
Income taxes 2,338 2,454 7,014 7,146
Net income $ 3,823 $ 3,757 $11,094 $10,888
Per common share:
Net income $ 0.36 $ 0.36 $ 1.05 $ 1.03
Cash dividends declared $ 0.12 $ 0.12 $ 0.36 $ 0.36
Weighted average shares outstanding
(in thousands) 10,554 10,535 10,547 10,528
<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) 1997 1996
Cash flows from operating activities:
Net income $11,094 $10,888
Adjustments to reconcile net income
to net cash provided by operating
activities:
Provision for loan losses 2,750 1,350
Provision for depreciation and
amortization 2,041 2,034
Net amortization and accretion of
investment securities 269 802
Net loss on investment securities - 6
Federal Home Loan Bank stock
dividends received (863) (819)
Net change in loans held for sale 3,800 (3,909)
Deferred income tax expense 1,065 788
Equity in earnings of unconsolidated
subsidiaries (368) (423)
(Increase) decrease in accrued interest
receivable, other real estate
owned and other assets (8,878) 3,376
Increase in accrued interest payable
and other liabilities 930 261
Net cash provided by operating
activities 11,840 14,354
Cash flows from investing activities:
Proceeds from maturities of and
calls on investment securities
held to maturity 30,993 37,828
Purchases of investment securities
held to maturity (66,505) (15,000)
Proceeds from sales, maturities and
calls on investment securities
available for sale 37,358 46,976
Purchases of investment securities
available for sale (46,321) (33,092)
Net decrease (increase) in interest-
bearing deposits in other banks 2,733 (2,145)
Net loan originations (11,936) (36,632)
Proceeds from disposal of premises
and equipment 3 16
Purchases of premises and equipment (1,901) (1,939)
Distributions from unconsolidated
subsidiaries 265 -
Investment in unconsolidated
Subsidiaries (150) -
Net cash used in investing
activities (55,461) (3,988)
Cash flows from financing activities:
Net increase (decrease) in deposits 17,288 (37,842)
Proceeds from long-term debt 34,000 50,000
Repayments of long-term debt (21,643) (25,588)
Net increase (decrease) in short-term
borrowings 1,073 (998)
Cash dividends paid (3,797) (3,787)
Proceeds from sale of common stock 339 159
Net cash provided by (used in)
financing activities 27,260 (18,056)
Net decrease in cash and cash
equivalents (16,361) (7,690)
Cash and cash equivalents:
At beginning of period 55,534 50,274
At end of period $39,173 $42,584
Supplemental disclosure of cash flow
information:
Cash paid during the period
for interest $32,497 $31,211
Cash paid during the period
for income taxes $ 7,700 $ 4,470
Supplemental disclosure of noncash
investing and financing activities:
Transfer of loans to other real estate $ 3,209 $ 350
See accompanying notes to consolidated financial statements.
F-3
CPB INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The financial information included herein is unaudited, except
for the consolidated balance sheet at December 31, 1996.
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, 1997 are not necessarily indicative of the results
to be expected for the full year.
2. Two-For-One Stock Split
On October 8, 1997, the "Board" declared a two-for-one split
of CPB Inc. common stock (the "Stock Split"). Each shareholder
receives one additional share of common stock for each share
owned as of October 20, 1997, the record date. Payment date is
November 14, 1997. Based on the 5,289,592 shares of CPB Inc.
common stock outstanding as of the record date, the Stock Split
would double the number of outstanding shares of 10,579,184 after
the payment date. Authorized shares will double to 50,000,000
shares.
The Company's 1997 Stock Option Plan, which was approved by
its shareholders in 1997, authorizes the granting of a maximum of
500,000 shares to participants. After adjustment for the Stock
Split, said shares total 1,000,000 of which 253,400 shares were
granted as of September 30, 1997, none of which were exercisable.
The Company's 1996 Stock Option Plan expired in 1996. Options
granted from the plan which were exercisable at September 30,
1997 totaled 262,086 shares after adjustment for the Stock Split.
The Company's share purchase agreement with The Sumitomo Bank,
Ltd. ("Sumitomo") provides Sumitomo the opportunity to purchase
an amount of securities which will allow it to maintain its
13.734% level of ownership of the Company's capital stock. As of
September 30, 1997, pursuant to this share purchase agreement,
the Company has issued warrants giving Sumitomo the right to
purchase 34,148 shares, after adjustment for the Stock Split.
Further explanation of the share purchase agreement is presented
in "Certain Transactions" on page 14 of the Company's Proxy
Statement for its Annual Meeting of Shareholders which was held
on April 22, 1997.
The financial statements presented in this Form 10-Q as of and
for the three and nine months ended September 30, 1997 and 1996,
reflect the effects of the Stock Split.
F-4
3. Accounting Pronouncements
In June 1996, the Financial Accounting Standards Board (the
"FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities." SFAS No.
125 provides accounting and reporting standards for transfers and
servicing of financial assets and extinguishments of liabilities
based on consistent application of a financial-components
approach that focuses on control, distinguishing transfers of
financial assets that are sales from transfers that are secured
borrowings. In December 1996, the FASB issued SFAS No. 127,
"Deferral of the Effective Date of Certain Provisions of FASB
Statement No. 125." SFAS No. 127 defers the effective date of
certain provisions of SFAS No. 125 to transactions occurring
after December 31, 1997. In January 1997, the Company
implemented those provisions of SFAS No. 125 which were not
subject to deferral by SFAS No. 127. However, servicing assets
were deemed immaterial, and accordingly, no disclosures will be
made, as permitted by SFAS No. 125. Further, the Company does
not expect the future application of SFAS No. 125 to the
transactions covered under SFAS No. 127 to have a material impact
on the Company's consolidated financial condition, results of
operations or liquidity.
In February 1997, the FASB issued SFAS No. 128, "Earnings Per
Share," and SFAS No. 129, "Disclosure of Information about
Capital Structure." SFAS No. 128 simplifies the calculation of
earnings per share and revises related disclosure requirements.
SFAS No. 129 consolidates existing guidance relating to an
entity's capital structure. SFAS No. 128 is effective for
interim periods and fiscal years ending after December 15, 1997.
Earlier application is not permitted. SFAS No. 129 is effective
for financial statements for periods ending after December 15,
1997. The adoption of these statements is not expected to be
material on the Company's financial condition, results of
operations or liquidity.
In June 1997, the FASB issued SFAS No. 130, "Reporting
Comprehensive Income," and SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." SFAS No. 130
requires that changes in comprehensive income be reported in a
financial statement. Comprehensive income is defined as all
changes in equity, including net income, except those resulting
from investments by and distributions to owners. SFAS No. 131
requires public companies to report selected quarterly
information about business segments, including information on
products and services, geographic areas and major customers,
based on a management approach to reporting. SFAS No. 130 and
131 are effective for fiscal years beginning after December 15,
1997, although SFAS No. 131 need not be applied to interim
periods in the initial year of implementation. Reclassification
of financial statements for prior periods will be required for
F-5
comparative purposes. As these statements relate solely to
disclosure requirements, their implementation will not have an
affect on the Company's financial condition or results of
operations or liquidity.
F-6