UNITED STATES SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES | |
| EXCHANGE ACT OF 1934 | ||
| For the quarterly period ended March 31, 2003 | ||
| OR | ||
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES | |
| EXCHANGE ACT OF 1934 | ||
| Commission File Number 0-12396 |
CB BANCSHARES, INC.
| Hawaii | 99-0197163 | |
| (State of Incorporation) | (IRS Employer Identification No.) |
201 Merchant Street Honolulu, Hawaii 96813
(Address of principal executive offices)
(808) 535-2500
(Registrant’s Telephone Number)
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 o |
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
| Yes x | No o |
The number of shares outstanding of each of the registrant’s classes of common stock as of April 30, 2003 was:
| Class | Outstanding | |
|
|
||
| Common Stock, $1.00 Par Value | 3,919,388 shares |
1
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS (Unaudited)
CB BANCSHARES, INC. AND SUBSIDIARIES
| March 31, | December 31, | March 31, | ||||||||||||
| (in thousands) | 2003 | 2002 | 2002 | |||||||||||
Assets |
||||||||||||||
Cash and due from banks |
$ | 34,410 | $ | 75,069 | $ | 25,585 | ||||||||
Interest-bearing deposits in other banks |
19,428 | 1,214 | 1,028 | |||||||||||
Federal funds sold |
— | 20,525 | — | |||||||||||
Investment and mortgage-backed securities: |
||||||||||||||
Held-to-maturity |
174,120 | 112,013 | 48,781 | |||||||||||
Available-for-sale |
202,610 | 228,335 | 212,481 | |||||||||||
FHLB Stock |
30,382 | 29,886 | 32,885 | |||||||||||
Loans held for sale |
111,002 | 98,568 | 33,556 | |||||||||||
Net loans |
1,012,925 | 1,035,272 | 1,122,082 | |||||||||||
Premises and equipment |
16,373 | 16,596 | 17,133 | |||||||||||
Other real estate owned |
771 | 2,193 | 3,898 | |||||||||||
Accrued interest receivable and other assets |
54,738 | 54,687 | 44,271 | |||||||||||
Total assets |
$ | 1,656,759 | $ | 1,674,358 | $ | 1,541,700 | ||||||||
Liabilities and stockholders’ equity |
||||||||||||||
Deposits: |
||||||||||||||
Noninterest-bearing |
$ | 172,076 | $ | 212,140 | $ | 151,061 | ||||||||
Interest-bearing |
974,018 | 951,087 | 957,779 | |||||||||||
Total deposits |
1,146,094 | 1,163,227 | 1,108,840 | |||||||||||
Short-term borrowings |
6,400 | 10,400 | 40,300 | |||||||||||
Accrued expenses and other liabilities |
27,617 | 27,595 | 19,483 | |||||||||||
Long-term debt |
319,402 | 319,407 | 234,420 | |||||||||||
Minority interest in consolidated subsidiary |
2,720 | 2,720 | 2,720 | |||||||||||
Total liabilities |
1,502,233 | 1,523,349 | 1,405,763 | |||||||||||
Stockholders’ equity: |
||||||||||||||
Preferred stock |
— | — | — | |||||||||||
Common stock |
3,917 | 3,898 | 3,489 | |||||||||||
Additional paid-in capital |
78,834 | 78,311 | 64,871 | |||||||||||
Retained earnings |
67,221 | 63,679 | 68,866 | |||||||||||
Unreleased shares to employee stock
ownership plan |
(1,448 | ) | (1,486 | ) | (1,799 | ) | ||||||||
Accumulated other comprehensive income,
net of tax |
6,002 | 6,607 | 510 | |||||||||||
Total stockholders’ equity |
154,526 | 151,009 | 135,937 | |||||||||||
Total liabilities and stockholders’ equity |
$ | 1,656,759 | $ | 1,674,358 | $ | 1,541,700 | ||||||||
See accompanying notes to the consolidated financial statements.
2
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
CB BANCSHARES, INC. AND SUBSIDIARIES
| Three months ended | ||||||||||
| March 31, | ||||||||||
| (in thousands, except per share data) | 2003 | 2002 | ||||||||
Interest income: |
||||||||||
Interest and fees on loans |
$ | 20,684 | $ | 23,865 | ||||||
Interest and dividends on investment and
mortgage-backed securities: |
||||||||||
Taxable interest income |
3,185 | 2,882 | ||||||||
Nontaxable interest income |
390 | 388 | ||||||||
Dividends |
496 | 480 | ||||||||
Other interest income |
178 | 19 | ||||||||
Total interest income |
24,933 | 27,634 | ||||||||
Interest expense: |
||||||||||
Deposits |
3,483 | 5,119 | ||||||||
FHLB advances and other short-term borrowings |
43 | 311 | ||||||||
Long-term debt |
3,105 | 2,765 | ||||||||
Total interest expense |
6,631 | 8,195 | ||||||||
Net interest income |
18,302 | 19,439 | ||||||||
Provision for credit losses |
4,330 | 4,868 | ||||||||
Net interest income after provision for credit losses |
13,972 | 14,571 | ||||||||
Noninterest income: |
||||||||||
Service charges on deposit accounts |
1,111 | 1,028 | ||||||||
Other service charges and fees |
1,693 | 1,556 | ||||||||
Net realized gains (losses) on sales of securities |
252 | (36 | ) | |||||||
Net gains on sales of loans |
882 | 511 | ||||||||
Other |
1,573 | 900 | ||||||||
Total noninterest income |
5,511 | 3,959 | ||||||||
Noninterest expense: |
||||||||||
Salaries and employee benefits |
7,174 | 6,569 | ||||||||
Net occupancy expense |
1,629 | 1,572 | ||||||||
Equipment expense |
609 | 795 | ||||||||
Other |
4,230 | 4,412 | ||||||||
Total noninterest expense |
13,642 | 13,348 | ||||||||
Income before income taxes |
5,841 | 5,182 | ||||||||
Income tax expense |
1,869 | 1,646 | ||||||||
Net income |
$ | 3,972 | $ | 3,536 | ||||||
Per share data: |
||||||||||
Basic |
$ | 1.03 | $ | 0.93 | ||||||
Diluted |
$ | 1.01 | $ | 0.91 | ||||||
See accompanying notes to the consolidated financial statements.
3
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
CB BANCSHARES, INC. AND SUBSIDIARIES
| Three months ended March 31, | |||||||||||
| (in thousands) | 2003 | 2002 | |||||||||
Cash flows from operating activities: |
|||||||||||
Net income |
$ | 3,972 | $ | 3,536 | |||||||
Adjustments to reconcile net income to net
cash provided by (used in) operating activities: |
|||||||||||
Provision for credit losses |
4,330 | 4,868 | |||||||||
Net gain on sale of loans, investment and
mortgage-backed securities |
(1,134 | ) | (475 | ) | |||||||
Depreciation and amortization |
1,090 | 933 | |||||||||
Increase in accrued interest receivable |
(306 | ) | (14 | ) | |||||||
Increase (decrease) in accrued interest payable |
189 | (72 | ) | ||||||||
Loans originated for sale |
(107,784 | ) | (46,721 | ) | |||||||
Sale of loans held for sale |
42,167 | 63,315 | |||||||||
Decrease (increase) in other assets |
255 | (38 | ) | ||||||||
Increase (decrease) in income taxes payable |
(232 | ) | 1,600 | ||||||||
Increase (decrease) in other liabilities |
464 | (2,360 | ) | ||||||||
Other |
(181 | ) | 856 | ||||||||
Net cash provided by (used in) operating activities |
(57,170 | ) | 25,428 | ||||||||
Cash flows from investing activities: |
|||||||||||
Net increase in deposits in other banks |
(18,214 | ) | (11 | ) | |||||||
Net decrease in federal funds sold |
20,525 | 10,655 | |||||||||
Purchase of held-to-maturity investment securities |
(94,549 | ) | (22,856 | ) | |||||||
Proceeds from maturities of held-to-maturity investment
securities |
32,194 | — | |||||||||
Purchase of available-for-sale securities |
(11 | ) | (42,100 | ) | |||||||
Proceeds from sales of available-for-sale securities |
59,902 | 22,964 | |||||||||
Proceeds from maturities of available-for-sale securities |
18,863 | 9,370 | |||||||||
Increase in FHLB Stock |
(496 | ) | (479 | ) | |||||||
Net decrease in loans |
17,746 | 45,300 | |||||||||
Capital expenditures |
(439 | ) | (274 | ) | |||||||
Proceeds from sales of foreclosed assets |
1,978 | 1,509 | |||||||||
Net cash provided by investing activities |
37,499 | 24,078 | |||||||||
Cash flows from financing activities: |
|||||||||||
Net decrease in deposits |
(17,133 | ) | (29,595 | ) | |||||||
Net decrease in short-term borrowings |
(4,000 | ) | (35,800 | ) | |||||||
Proceeds from long-term debt |
— | 20,000 | |||||||||
Principal payments on long-term debt |
(5 | ) | (4 | ) | |||||||
Cash dividends paid |
(430 | ) | (384 | ) | |||||||
Options exercised |
537 | 103 | |||||||||
Stock repurchase |
(12 | ) | (676 | ) | |||||||
Unreleased ESOP shares |
55 | 40 | |||||||||
Net cash used in financing activities |
(20,988 | ) | (46,316 | ) | |||||||
Increase (decrease) in cash and due from banks |
(40,659 | ) | 3,190 | ||||||||
Cash and due from banks at beginning of period |
75,069 | 22,395 | |||||||||
Cash and due from banks at end of period |
$ | 34,410 | $ | 25,585 | |||||||
Supplemental schedule of non-cash investing activities: |
|||||||||||
Interest paid on deposits and other borrowings |
$ | 6,441 | $ | 8,267 | |||||||
Income taxes paid |
— | — | |||||||||
Securitization
of mortgage loans into mortgage-backed securities classified as
available-for-sale |
$ | 54,065 | $ | — | |||||||
See accompanying notes to the consolidated financial statements.
4
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
AND COMPREHENSIVE INCOME (LOSS) (Unaudited)
CB BANCSHARES, INC. AND SUBSIDIARIES
| Unreleased | |||||||||||||||||||||||||||
| Shares to | Accumulated | ||||||||||||||||||||||||||
| Employee | Other | ||||||||||||||||||||||||||
| Stock | Compre- | ||||||||||||||||||||||||||
| Additional | Retained | Ownership | hensive | ||||||||||||||||||||||||
| (in thousands, except per share data) | Common Stock | Paid-In Capital | Earnings | Plan | Income | Total | |||||||||||||||||||||
Three months ended March 31, 2003: |
|||||||||||||||||||||||||||
Balance at January 1, 2003 |
$ | 3,898 | $ | 78,311 | $ | 63,679 | $ | (1,486 | ) | $ | 6,607 | $ | 151,009 | ||||||||||||||
Comprehensive income: |
|||||||||||||||||||||||||||
Net income |
— | — | 3,972 | — | — | 3,972 | |||||||||||||||||||||
Other comprehensive income, net of tax |
|||||||||||||||||||||||||||
Unrealized losses on securities,
net of reclassification adjustment |
— | — | — | — | (605 | ) | (605 | ) | |||||||||||||||||||
Total comprehensive income |
— | — | 3,972 | — | (605 | ) | 3,367 | ||||||||||||||||||||
Cash dividends ($0.11 per share) |
— | — | (430 | ) | |||||||||||||||||||||||