FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Current Report Pursuant to Section 13
of the Securities Exchange Act of 1934
Date of Report (Date Earliest Event reported) - April 12, 2004
CB BANCSHARES, INC.
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(Exact name of registrant as specified in its charter)
Hawaii 99-0197163
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(State of Incorporation) (IRS Employer Identification No.)
201 Merchant Street, Honolulu, Hawaii 96813
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(Address of principal executive offices)
(808) 535-2500
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(Registrant's Telephone Number)
Item 12. Disclosure of Operations and Financial Condition
On April 12, 2004, CB Bancshares, Inc. issued a press release
announcing the Company's results of operations for the first quarter
ended March 31, 2004 (attached as Exhibit A).
The earnings release includes non-GAAP financial measures, which
excludes the effect of expenses associated with the unsolicited
hostile takeover proposal announced by Central Pacific Financial
Corp. on April 17, 2003 and gain from the early pay-off of an
asset-backed security. The earnings release also presents the
calculation of the efficiency ratio, which excludes the unsolicited
hostile takeover proposal expenses, gain from the early pay-off of an
asset-backed security and amortization of intangibles.
Management uses these non-GAAP financial measures because they
provide meaningful information regarding the Company's operating
performance and facilitate management's comparisons to the Company's
historical operating results. The Company believes that these
non-GAAP financial measures can also be useful to investors in
facilitating comparisons to the Company's historical operating
results.
These non-GAAP financial measures are not prepared in accordance with
generally accepted accounting principles and may be different from
non-GAAP financial measures used by other companies. Non-GAAP
financial measures should not be considered as a substitute for, or
superior to, measures of financial performance prepared in accordance
with GAAP.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned
hereunto duly authorized.
Date: April 12, 2004 CB Bancshares, Inc.
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By: /s/ Dean K. Hirata
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Dean K. Hirata
Senior Vice President and
Chief Financial Officer
(principal financial officer)
EXHIBIT A
FOR IMMEDIATE RELEASE
Contact: Dean K. Hirata Wayne T. Miyao
Senior Vice President and Senior Vice President
Chief Financial Officer City Bank
CB Bancshares, Inc. Phone (808) 535-2590
Phone (808) 535-2583
CB BANKSHARES, INC. REPORTS A 146.8% INCREASE
IN FIRST QUARTER ESULTS
HONOLULU, HAWAII, April 12, 2004 - CB Bancshares, Inc. (NASDAQ: CBBI), parent
company of City Bank, reported consolidated net income of $9.8 million for the
quarter ended March 31, 2004, an increase of 146.8% over the same quarter last
year. Diluted earnings per share of $2.21 for the first quarter of 2004
increased 140.2% over the same quarter last year.
Ronald K. Migita, President and Chief Executive Officer of CB Bancshares, Inc.
said, "We are extremely pleased to report our record financial results for the
first quarter ending March 31, 2004. We have produced four consecutive
quarters of outstanding financial performance. Our core businesses are strong,
net interest margin has increased, and loan volume continues to grow, while
our credit quality continues to improve. We believe that our Company is well
positioned to deliver sustainable growth and to enhance value for our
shareholders."
At March 31, 2004, the Company had $1.9 billion in assets, up 13.1% as
compared to March 31, 2003. The Company also had $1.3 billion in deposits, up
14.2% and $1.3 billion in loans, up 16.6%.
Net interest income was $21.3 million for the first quarter of 2004, an
increase of $3.0 million, or 16.1%, over the same period in 2003. The increase
in net interest income was due to an 11 basis point increase in the net
interest margin (to 4.87%) and a $197.2 million increase in the average
balance of interest-earning assets and a $154.5 million rise in the average
balance of interest-bearing liabilities.
Noninterest income was $7.4 million for the first quarter of 2004, an increase
of $1.9 million, or 35.1%, over the same quarter last year. The increase was
primarily due to a gain of $2.6 million that resulted from the early pay-off
of an asset-backed security.
Noninterest expense totaled $14.5 million for the first quarter of 2004, an
increase of $900,000, or 6.6%, over the first quarter of 2003. The increase
was primarily due to an increase of $800,000 in salaries and employee benefits
resulting from higher incentive-based compensation and an increase in
personnel to staff mainland loan offices and $348,000 of expenses related to
the unsolicited hostile takeover proposal.
The efficiency ratio (excluding the unsolicited hostile takeover proposal
expenses, gain on early pay-off of asset-backed securities and amortization of
intangibles) improved from 56.98% for the first quarter of 2003 to 53.18% for
the first quarter of 2004. Inclusive of these items, the efficiency ratio was
57.29% and 50.67% for the first quarter of 2003 and 2004, respectively.
Nonperforming loans and nonperforming assets were $4.6 million at March 31,
2004, which represented decreases of $7.0 million, or 60.3%, and $7.8 million,
or 62.8%, respectively, as compared to March 31, 2003. The decrease in
nonperforming assets was primarily due to a $5.1 million decrease in
nonperforming real estate loans and an $800,000 reduction in other real estate
owned.
The provision for credit losses was $500,000 in the first quarter of 2004, a
decrease of $3.8 million, or 88.5%, compared to the same period in 2003. The
Company's lower provision in 2004 reflects the significant improvement in
asset quality. The allowance for credit losses to total nonperforming loans
increased to 620.4% at March 31, 2004 from 267.7% at March 31, 2003.
At March 31, 2004, total stockholders' equity was $178.0 million, an increase
of $23.4 million, or 15.2%, over March 31, 2003. Return on equity for the
quarter ended March 31, 2003 was 22.71% (19.95% excluding the after-tax
unsolicited hostile takeover proposal expenses and gain on early pay-off of
asset-backed securities). In March 2004, a cash dividend of $0.36 per share
was paid to shareholders, an increase of $0.26, or 260%, over the $0.10 per
common share paid last year.
CB Bancshares, Inc. is a bank holding company, which provides a full range of
banking products and services for small-and-medium-sized businesses and retail
customers through its principal subsidiary, City Bank. City Bank maintains 22
branches on the islands of Oahu, Hawaii, Maui and Kauai.
This communication may be deemed to include forward-looking statements, such
as statements that relate to CB Bancshares' financial results. Forward-
looking statements are typically identified by words or phrases such as
"believe," "expect," "anticipate," "intent," "estimate," "may increase," "may
fluctuate," and similar expressions or future or conditional verbs such as
"will," "should," "would," and "could." Forward-looking statements are CB
Bancshares' current estimates or expectations of future events or future
results. For such statements, CB Bancshares claims the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. Actual results could differ materially from
those indicated by these statements because the realization of those results
is subject to many risks and uncertainties. CB Bancshares' 2003 Annual Report
on Form 10-K and other periodic reports to the Securities and Exchange
Commission contain additional information about factors that could affect
actual results. All forward-looking statements included in this communication
are based on information available at the time of the release, and CB
Bancshares assumes no obligation to update any forward-looking statement.
CONSOLIDATED FINANCIAL HIGHLIGHTS
CB Bancshares, Inc. and Subsidiaries
At or for the Quarter Ended
March 31, 2004 and 2003
Change
2004 2003 Amount Percent
(dollars in thousands, except number of
shares and per share data)
QUARTER ENDED MARCH 31:
Net income $9,802 $3,972 $5,830 146.8 %
Net income - adjusted (1) 8,608 3,972 4,636 116.7
Per share data:
Diluted:
Net income 2.21 0.92 1.29 140.2
Net income - adjusted (1) 1.94 0.92 1.02 110.9
Cash dividends 0.36 0.10 0.26 260.0
Average shares outstanding(2) 4,439,467 4,333,696 105,771 2.4
AT MARCH 31:
Balance sheet:
Total assets $1,873,523 $1,656,759 $216,764 13.1 %
Loans 1,349,512 1,157,014 192,498 16.6
Loans, net 1,299,474 1,015,423 284,051 28.0
Deposits 1,308,578 1,146,094 162,484 14.2
Stockholders' equity 177,953 154,526 23,427 15.2
Asset quality:
Nonperforming loans 4,624 11,659 (7,035) (60.3)
Nonperforming assets (3) 4,624 12,430 (7,806) (62.8)
Allowance for credit
losses 28,686 31,210 (2,524) (8.1)
Per share data:
Book value 41.22 36.23 4.99 13.8
Market value 69.91 44.35 25.56 57.6
Balance sheet averages:
Total assets $1,865,743 $1,657,589 $208,154 12.6 %
Loans 1,332,010 1,152,321 179,689 15.6
Earning assets 1,773,298 1,576,069 197,229 12.5
Deposits 1,251,916 1,148,644 103,272 9.0
Stockholders' equity 173,582 152,768 20,814 13.6
SELECTED FINANCIAL RATIOS:
Return on average:
Total assets 2.11 % 0.97 %
Total assets - adjusted (1) 1.86 0.97
Stockholders' equity 22.71 10.54
Stockholders' equity -
adjusted (1) 19.95 10.54
Net interest margin 4.87 4.76
Efficiency ratio 50.67 57.29
Efficiency ratio - adjusted (4) 53.18 56.98
Nonperforming loans to
total loans (at March 31) 0.34 1.01
Nonperforming assets to
total assets (at March 31)(3) 0.25 0.75
Allowance for credit losses
to total loans (at March 31) 2.13 2.70
Allowance for credit losses
to nonperforming loans
(at March 31) 620.37 267.69
Notes:
(1) Excludes after-tax unsolicited hostile takeover proposal expenses and
gain on early pay-off of asset-backed security in 2004 (see
supplemental financial information).
(2) Average outstanding shares retroactively adjusted for the 390,345
common shares issued in connection with the 10% stock dividend
distributed to shareholders of record on June 16, 2003.
(3) Nonperforming assets consist of nonperforming loans and other real
estate owned.
(4) Defined as noninterest expense excluding unsolicited hostile takeover
proposal expenses and amortization of intangibles as a percentage of
total operating revenue excluding gain on early pay-off of
asset-backed security (see supplemental financial information).
Supplemental Financial Information
CB Bancshares, Inc. and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
At or for the Quarter Ended
March 31, 2004 and 2003
2004 2003
(dollars in thousands, except
per share data)
Net income:
Net income $9,802 $3,972
Unsolicited proposal expenses (1) 235 --
Gain on early pay-off of asset-backed
security (2) (1,429) --
Net income, excluding unsolicited
proposal expenses and gain on early
pay-off of asset-backed security $8,608 $3,972
Earnings per share:
Net income $2.21 $0.92
Unsolicited proposal expenses (1) 0.05 --
Gain on early pay-off of asset-backed
security (2) (0.32) --
Net income, excluding unsolicited
proposal expenses and gain on early
pay-off of asset-backed security $1.94 $0.92
Return on average assets:
Net income 2.11 % 0.97 %
Unsolicited proposal expenses (1) 0.06 --
Gain on early pay-off of asset-backed
security (2) (0.31) --
Net income, excluding unsolicited
proposal expenses and gain on early
pay-off of asset-backed security 1.86 % 0.97 %
Return on average stockholders' equity:
Net income 22.71 % 10.54 %
Unsolicited proposal expenses (1) 0.55 --
Gain on early pay-off of asset-backed
security (2) (3.31) --
Net income, excluding unsolicited
proposal expenses and gain on early
pay-off of asset-backed security 19.95 % 10.54 %
Efficiency ratio:
Net interest income $21,257 $18,302
Noninterest income 7,445 5,511
Total operating revenue (a) $28,702 $23,813
Less gain on early pay-off of
asset-backed security (2,012) --
Total operating revenue, adjusted (b) $26,690 $23,813
Noninterest expense (c) $14,542 $13,642
Unsolicited proposal expenses (348) --
Amortization of intangibles 1 (74)
Noninterest expense, adjusted (d) $14,195 $13,568
GAAP efficiency ratio (c / a) 50.67 % 57.29 %
Efficiency ratio, excluding gain on
early pay-off of asset-backed
security, unsolicited proposal
expenses, and amortization of
intangibles (d / b) 53.18 % 56.98 %
Notes:
(1) Represents after-tax expenses associated with the defense of the
unsolicited hostile takeover proposal by Central Pacific Financial
Corp. announced on April 16, 2003.
(2) Represents after-tax gain on early pay-off of asset-backed security.
CONSOLIDATED BALANCE SHEETS
CB Bancshares, Inc. and Subsidiaries
(Unaudited)
March 31, March 31,
(in thousands) 2004 2003
ASSETS
Cash and due from banks $56,577 $34,410
Interest-bearing deposits in other
banks 1,109 19,428
Federal funds sold 2,300 --
Investment securities:
Held to maturity 105,441 174,120
Available-for-sale 281,756 202,610
Restricted 31,889 30,382
Loans held for sale 21,352 110,381
Loans, net 1,299,474 1,015,423
Premises and equipment 16,712 16,373
Other assets 56,913 53,632
Total assets $1,873,523 $1,656,759
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $205,336 $172,076
Interest bearing 1,103,242 974,018
Total deposits 1,308,578 1,146,094
Short-term borrowings 115,400 6,400
Other liabilities 24,487 27,617
Long-term debt 244,385 319,402
Minority interest in consolidated
subsidiary 2,720 2,720
Total liabilities 1,695,570 1,502,233
Stockholders' equity:
Preferred stock -- --
Common stock 4,353 3,917
Additional paid-in capital 103,466 78,834
Retained earnings 64,778 67,221
Unreleased shares to employee
stock ownership plan (1,284) (1,448)
Accumulated other comprehensive
income, net of tax 6,640 6,002
Total stockholders' equity 177,953 154,526
Total liabilities and stockholders'
equity $1,873,523 $1,656,759
CONSOLIDATED STATEMENTS OF INCOME
CB Bancshares, Inc. and Subsidiaries
(Unaudited)
Three months ended March 31,
(in thousands) 2004 2003
Interest income:
Interest and fees on loans $22,313 $20,684
Interest and dividends on
investment securities:
Taxable interest income 3,784 3,185
Nontaxable interest income 386 390
Dividends 314 496
Other interest income 6 178
Total interest income 26,803 24,933
Interest expense:
Deposits 2,711 3,483
Short-term borrowings 542 43
Long-term debt 2,293 3,105
Total interest expense 5,546 6,631
Net interest income 21,257 18,302
Provision for credit losses 500 4,330
Net interest income after
provision for credit losses 20,757 13,972
Noninterest income:
Service charges on deposit accounts 1,092 1,111
Other service charges and fees 1,634 1,693
Net realized gains on sales of
securities 2,353 252
Net realized gains on sales of
loans 1,066 882
Item processing fee income 479 425
Other 821 1,148
Total noninterest income 7,445 5,511
Noninterest expense:
Salaries and employee benefits 7,975 7,174
Net occupancy expense 1,723 1,629
Equipment expense 573 609
Unsolicited hostile takeover
proposal expenses 348 --
Other 3,923 4,230
Total noninterest expense 14,542 13,642
Income before income taxes 13,660 5,841
Income tax expense 3,858 1,869
NET INCOME $9,802 $3,972