Hawaiian bank announced plans to sell at least $100 million in stock, becoming the latest company to raise capital amid increased risk tolerance by investors. The planned sale comes as the stock is near its 52-week low. Many companies which have sold stock in recent months used a sharp price rebound in their equity as an opportunity to raise capital in a less-dilutive way than would have been the case near the March lows for the market. Meanwhile, the company projected a second-quarter loss of $1.22 to $1.35 a share. The mean estimate of analysts surveyed by Thomson Reuters was 13 cents. The company blamed surging credit costs for the red ink - $77 million to $83 million versus the first quarter's $29.6 million. As a result, loan- and lease-loss allowances should rise to 4.4% to 4.6% of total loans and leases from 3.2% at the end of the first quarter. Net charge-offs are seen rising to $28 million to $33 million from $24.3 million. The woes stem from the still-weakening commercial real-estate markets in Hawaii and California, said Chairman and Chief Executive Ronald Migita.
As for the stock sale, he said, "Although we are 'well-capitalized' for regulatory purposes, the proposed public offering is a prudent measure based on our expectation that the tough economic climate in Hawaii and California will continue in the coming quarters." Central Pacific shares closed Monday at $3.53 and were inactive premarket. The stock is down 65% this year. At $100 million, such a stock sale would double Central Pacific shares outstanding. Central Pacific Financial Corp. (CPF) sees a second-quarter loss much worse than analysts'
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