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Sunset, Spring-Summer, 1995 by Lauren Bonar Swezey

HONOLULU, May 15 /PRNewswire/ -- CB Bancshares, Inc. (Nasdaq: CBBI) reported net income of $2.3 million or $0.66 per fully- diluted share for the three months ended March 31, 1995 as compared to $2.3 million or $0.84 per fully-diluted share for the first quarter 1994. The principal factors behind these disappointing operating results was continued erosion in the Company's net interest margin due to increasing local competition for deposits, higher borrowing costs, and slowness in the Company's realization of previously announced merger synergies.

In announcing the results, James M. Morita, Chairman, President and Chief Executive Officer of CB Bancshares, said, "Results of the first quarter are quite disappointing as the Company was impacted by narrower margins and continued slowness in the realization of previously announced merger synergies. Although the Company is in the process of completing the merger of its mortgage banking operations, much more progress needs to be accomplished in order to return the Company to its historical excellent performance levels. The Company is intensifying its efforts in consolidating departments and reducing overhead expenses. These efforts will result in the restructuring of the Company, which is hoped to be accomplished through a combination of early retirement programs and attrition. The Company is currently evaluating its options for implementation during the remainder of 1995."

Mr. Morita added, "To assist the Company in the realization of these benefits and to return its operating performance to its historical levels, the Company is currently in discussion with an individual with a strong lending and operating background to become President and Chief Operating Officer of CB Bancshares. This individual will report to me and will be responsible for the realization of all merger synergies and improving the overall efficiency of the Company. I hope to make an announcement over the next two weeks. I want to thank our stockholders for their continued support as I am fully determined to return CB Bancshares performance to historical levels."

The return on average assets for the first quarter of 1995 was 0.65%, as compared to 0.76% for the fourth quarter 1994 and 1.13% for the first quarter of 1994. The return on average equity for the comparable periods was 8.47%, 9.81% and 11.46%, respectively.

Net interest income was $13.9 million for the three months ended March 31, 1995, an increase of $3.9 million or 39.5% from the first quarter 1994. However, net interest income was down $1.9 million or 12.7% from the fourth quarter 1994. Contributing to this erosion was a shift from demand deposits into higher cost interest-bearing deposits and higher borrowing costs. Demand deposits decline 8.3% from $135.4 million at December 31, 1994 to $124.1 million at March 31, 1995. Interest bearing deposits over the same period increased 5.1% from $788.1 million to $828.3 million. This $29.0 million increase in deposits was needed to fund loan growth of $29.2 million which occurred primarily at International Savings. Although earning assets increased 2.1% from year-end 1994 to $1.41 billion at March 31, 1995, the shift into higher rate deposits and the increase in mortgage-related loans contributed in net interest margin contraction from 4.84% during the fourth quarter 1994 to 4.15% for the first quarter 1995. The comparable number for the first quarter 1994 was 5.82%.

Non-interest income associated with higher service charges and fees related to mortgage banking activities and extension of existing product lines for the first quarter 1995 increased 34.5% to $2.2 million from $1.6 million for the fourth quarter 1994 and $1.9 million for the first quarter 1994. Non-interest expense for the first quarter 1995 increased 0.9% to $12.3 million from $12.2 million for the fourth quarter 1994 and $7.8 million for the first quarter 1994. The first quarter 1994 was the last quarter before CB Bancshares acquired International Holding Capital Corp. The Company will be completing the integration of its mortgage banking operations during the second quarter and is increasing its efforts to realize the full merger synergies. Further department consolidation and a review of all overhead expenses will continue during the remainder of 1995.

Reflecting continued strong coverage of the Company's non-performing assets, which include all loans 90 days or more past due, the first quarter 1995 provision for loan losses was $120,000 as compared to $409,000 during the first quarter 1994 and $839,000 during the fourth quarter 1994. The allowance for loan losses amounted to $14.4 million or 1.31% of total loans at March 31, 1995 as compared to $14.3 million or 1.33% of total loans at December 31, 1994 and $10.0 million or 1.81% of total loans at March 31, 1994. Total non-performing assets were $18.7 million at March 31, 1995 as compared to $15.2 million at December 31, 1994 and $5.8 million at March 31, 1994. The increase in non- performing assets since year-end 1994 was principally associated with one loan each at City Bank and International Savings. Resolutions since quarter end has returned total non performing assets closer to year-end 1994 levels. However, as a percentage of total loans and foreclosed real estate, the ratio increased to 1.69% at March 31, 1995 from 1.42% at December 31, 1994 and 1.05% at March 31, 1994. Loan loss reserve coverage of non-performing loans remained strong at 85.7% at March 31, 1995 as compared to 107.6% at December 31, 1994 and 168.1 % at March 31, 1994.