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The Honolulu Advertiser
Posted on: Saturday, May 1, 2010

CPB's parent firm shows $160.2M loss

By Rick Daysog
Advertiser Staff Writer

The parent of Central Pacific Bank reported a $160.2 million net loss for the first quarter after the company wrote off the remaining the goodwill on its books that had lost its value.

But John Dean, Central Pacific Financial Corp.'s Executive Chairman, believes that the company has gotten beyond its biggest difficulties.

"We still have some challenging quarters ahead of us," Dean said. "But the worst is behind us."

Shares of Central Pacific skidded 13.8 percent, or 35 cents, to close at $2.18 on the New York Stock Exchange yesterday.

Central Pacific Financial said its net loss of $160.2 million, or $5.36 per share, was the biggest for the first quarter and was its second largest loss behind third quarter 2009's $183.1 million.

It also compares with a net profit of $2.6 million, or 3 cents per share in the year-earlier period.

The quarterly loss includes a $102.7 million noncash, goodwill impairment charge. Minus the charge, the company reported an adjusted loss of $57.5 million, or $1.97 per share.

The goodwill impairment charge has no impact on Central Pacific's regulatory capital ratios, tangible equity or cash flows, the company said.

Goodwill, which is the value of a company above its book value, usually arises when one company buys another. Central Pacific accumulated more than $300 million in goodwill as a result of its 2005 merger with the parent of City Bank.

Founded in 1954, Central Pacific is the state's fourth largest financial institution with $4.4 billion in assets.

In recent years, the company has been hard-hit by troubled loans to California homebuilders hit hard by the subprime lending meltdown. The problem has led to huge quarterly losses at the Honolulu-based bank and played a role in it obtaining $135 million of Troubled Asset Relief Program funding.

Last year, the company entered into a consent agreement with the Federal Deposit Insurance Corp. to boost capital and improve its balance sheets.

Dean said yesterday that the bank has made progress on its recovery plan by reducing its credit risk exposure and by improving its liquidity position.

The company said it recently sold $439.4 million in investment securities and boosted its cash holdings to $865.4 million from $488.4 million at the end of the fourth quarter 2009.

The company said it also will lower costs by consolidating two of its branches and eliminating 90 positions.

"As we continue to work through our current challenges, we are encouraged by the progress we have made thus far," Dean said.