Pacific Century Financial Corporation Reports Fourth Quarter 1999 Earnings
HONOLULU--(BUSINESS WIRE)--Jan. 19, 2000--Pacific Century Financial Corporation (NYSE: BOH) reported fourth quarter 1999 earnings of $37.6 million, up 7.4 percent over $35.0 million reported for the fourth quarter of 1998. Diluted earnings per share were $0.47, up 9.3 percent from $0.43 for the same period last year. Tangible or "cash" diluted earnings per share were $0.52 compared to $0.48 reported in 1998's fourth quarter. Return on average assets for the quarter was 1.04 percent and return on average equity was 12.29 percent.
For the full-year 1999, Pacific Century's earnings were $133.0 million, up 24.3 percent from $107.0 million reported in 1998. Both years reflect restructuring charges related to the company's New Era program and 1998 additionally reflects increased loan loss provisioning for the Asian crisis. Diluted earnings per share were $1.64 compared to $1.32 reported for 1998.
"We are pleased to report earnings that reflect positive results from initiatives and actions set in place over the last two years to improve our long-term performance," said Pacific Century Chairman & CEO Lawrence M. Johnson.
"The fourth quarter's performance revealed an improvement in fee income and a reduction in expenses -- a portion of which was directly attributable to the implementation of our New Era redesign program," noted Johnson.
Pacific Century began implementing initiatives resulting from its New Era Redesign in the fourth quarter of 1999. The program was announced in September 1999 to improve the delivery of financial services in Hawaii and the Pacific. When fully implemented by the fourth quarter of 2000, total annualized benefits from New Era Redesign are estimated at $43 million in cost savings and $21 million in revenue enhancements.
At year-end 1999, total assets were $14.4 billion compared to $15.0 billion at year-end 1998. Net loans ended 1999 at $9.3 billion versus $9.4 billion at December 31, 1998. Total deposits were $9.4 billion compared to $9.6 billion at year-end 1998. The decline in assets and loans reflects discretionary reductions in the investment portfolio due to changes in interest rates and a reduction in Asian exposures.
Pacific Century entered the fourth quarter with $33.7 million in exposure to a Korean conglomerate and its related companies of which $30.2 million was outstanding. During the quarter the borrower suspended debt service payments and began negotiations with its domestic and foreign bank creditors. At quarter-end those negotiations had not produced a definitive resolution of the matter with foreign lenders. In keeping with Pacific Century's credit policy, the company charged off $19.5 million of the assets and has $10.7 million on non-performing status. Partially as a result of this, net charge-offs for the quarter of $36.8 million exceeded the quarterly provision for loan losses of $20.9 million. The difference of approximately $16.0 million was drawn from the company's reserve for loan losses which had been previously strengthened in recognition of the financial volatility in Asia.
Non-performing assets exclusive of loans past due 90+ days ended the quarter at $149.9 million compared to $154.8 million at the end of the third quarter and $137.5 million at December 31, 1998.
Pacific Century successfully transitioned into the Year 2000 without significant incident. The company's actions to ensure Y2K readiness also included initiatives which were already planned to advance efficiency initiatives such as merging systems in the South Pacific, the U.S. Mainland, the Hawaii and West Pacific markets and outsourcing credit card processing. Total cumulative expenses related to Y2K readiness totaled approximately $36 million, versus the original estimate of $41 million.
Johnson also noted that Hawaii's economy continues to improve with more sectors, such as retail sales, home sales and construction participating in the recovery.
Hawaii's economy grew at an estimated 2.5 percent in 1999 according to state economists and real gross state product growth forecasts for 2000 are between 2.0 and 2.5 percent. Tourism measures through November 1999 reflect growth in both visitor arrivals (2.2 percent) and visitor days (2.8 percent). Other economic indicators such as personal income and unemployment continue to show improvement, with better prospects for improvement in construction.
"Overall, 1999 saw the culmination of significant events and initiatives that serve as the foundation for improved performance going forward," said Johnson. "Everyone in the company has demonstrated their commitment to bringing about the changes that will benefit all stakeholders."
Further highlights on Pacific Century's performance are included in the attached "Comments on Fourth Quarter 1999 Results."
Pacific Century Financial Corporation is a regional financial services holding company with locations throughout the Pacific region. Pacific Century and its subsidiaries provide varied financial service to businesses, governments and consumers in four principal markets: Hawaii, the West and South Pacific, Asia and selected markets on the U.S. Mainland. Pacific Century's principal subsidiary, Bank of Hawaii, is the largest commercial bank in the state of Hawaii.
Forward-Looking Statements
This press release and the attached comments contain forward-looking information. The Company cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. Forward-looking statements are subject to significant risk and uncertainties, many of which are beyond the Company's control. Although the Company believes that the assumptions underlying its forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate and actual results may differ from those contained in or implied by such forward-looking statements for a variety of reasons. Factors which might cause such a difference include, but are not limited to, expected cost savings from New Era Redesign cannot be fully realized or realized within the expected timeframe; income or revenues from New Era Redesign are lower than expected or operating or implementation costs are higher; competitor pressures in the banking and financial services industry increase significantly, particularly in connection with product delivery and pricing; business disruption related to implementation of New Era Redesign programs or methodologies; inability to achieve expected customer acceptance of revised pricing structures and strategies; general economic conditions in the geographic areas where the Company operates are weaker than expected or other unanticipated occurrences which could delay or adversely impact the implementation of all or a part of New Era Redesign. The Company does not undertake and specifically disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
Comments on Fourth Quarter 1999 Results
Pacific Century Financial Corporation reported fourth quarter earnings of $37.6 million, up 7.4% from the fourth quarter of 1998 and up 75.1% from 1999's third quarter. For comparative purposes 1999's third quarter included the impact of a $22.5 million pre-tax restructuring charge related to the company's "New Era" program. Diluted earnings per share for the quarter were $0.47, up 9.3% from $0.43 reported for the same period in 1998 and up 74.1% from 1999's third quarter. Tangible earnings for the quarter were $42.3 million relative to $38.8 million for the same period last year.
Results for the quarter reflect the impact of three major factors: provisioning to the loan loss reserve; non-interest income associated with the disposition of venture capital related assets; and positive contributions from the implementation phase of New Era which began in October 1999.
Pacific Century entered the fourth quarter with $33.7 million in exposure to a Korean conglomerate and its related companies of which $30.2 million was outstanding. During the quarter the borrower suspended debt service payments and began negotiations with its domestic and foreign bank creditors. At quarter-end those negotiations had not produced a definitive resolution of the matter with foreign lenders. In keeping with Pacific Century's credit policy, the company charged off $19.5 million of the assets and has $10.7 million on non-performing status. Partially as a result of this, net charge-offs for the quarter of $36.8 million exceeded the quarterly provision for loan losses of $20.9 million. The difference of approximately $16.0 million was drawn from the company's reserve for loan losses which had been previously strengthened in recognition of the financial volatility in Asia.
Additional Asia charge-offs were represented by $3.0 million to another Korean company and $1.6 million to Indonesian Banks. The latter charge-off was driven by interagency regulatory pronouncements, even though debt service on these loans was and continues to be current.
The ratio of loan loss reserve to loans ended the quarter at 2.05%, relative to 2.19% at December 31, 1998 and 2.22% at September 30, 1999.
Non-performing assets (NPAs), exclusive of loans past due 90+ days ended the quarter at $149.9 million or 1.54% of total loans. The same ratio compared with 1998's fourth quarter and 1999's third quarter was 1.40% and 1.59%, respectively. On a linked quarter basis NPAs, inclusive of loans past due 90+ days, ended the quarter at $168.4 million, $10.1 million higher than at yearend 1998 and $8.0 million lower than reported for 1999's third quarter.
Pacific Century's net interest income on a fully taxable equivalent basis totaled $143.2 million, down 0.3% from the comparable period in 1998 and down 0.4% from 1999's third quarter. Net interest margin for the quarter was 4.31%, up from 4.15% in 1998's fourth quarter and 4.28% in 1999's third quarter.
Non-interest income, exclusive of securities gains, totaled $64.1 million, up 18.2% from 1998's fourth quarter and down 10.2% from $71.3 million in 1999's third quarter which included a $14 million gain on the sale of a special purpose leasing company. During the quarter two venture capital related assets went public and contributed $4.3 million to other operating income and $5.6 million in securities gains.
New Era contributions to non-interest income are primarily reflected in Fees, Exchange & Other Service Charges which at $22.3 million was $2.2 million higher than reported in 1998's fourth quarter and $0.3 million higher than 1999's third quarter.
Non-interest expense totaled $131.2 million, relatively unchanged from 1998's fourth quarter and $1.9 million less than reported in 1999's third quarter, exclusive of the restructuring charge. Large non-recurring items that impacted non-interest expense include a $2.3 million reduction in accruals for deferred compensation and post retirement medical benefits, and approximately $2.3 million in increased one-time costs for various other operating expense items.
New Era cost savings are primarily reflected in compensation expense which adjusting for one-time items, would have ended the quarter at $60.9 million, down from $62.4 million in 1998's fourth quarter and down from $64.2 million in 1999's third quarter.
During the quarter, Pacific Century repurchased approximately 519,000 shares of common stock which included about 248,000 shares to offset shares issued under the company's dividend reinvestment and other benefit plans. The remainder of approximately 271,000 shares was repurchased under the company's October 1999 additional authorization to repurchase up to 300,000 shares each quarter. -0-
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Pacific Century Financial Corporation and subsidiaries
Highlights (Unaudited)
(in thousands of dollars
except per share amounts)
Percentage
Earnings Highlights and Performance Ratios 1999 1998 Change
Three Months Ended December 31
Net Income $37,599 $35,013 7.4%
Basic Earnings Per Share 0.47 0.44 6.8%
Diluted Earnings Per Share 0.47 0.43 9.3%
Cash Dividends 13,649 13,649
Return on Average Assets 1.04% 0.93%
Return on Average Equity 12.29% 11.72%
Average Spread on Earning Assets 4.31% 4.15%
Efficiency Ratio 63.32% 66.30%
Twelve Months Ended December 31
Net Income $132,957 $106,964 24.3%
Basic Earnings Per Share 1.66 1.33 24.8%
Diluted Earnings Per Share 1.64 1.32 24.2%
Cash Dividends 54,640 52,776
Return on Average Assets 0.91% 0.72%
Return on Average Equity 10.99% 9.21%
Average Spread on Earning Assets 4.28% 4.22%
Efficiency Ratio 67.01% 68.95%
Summary of Results Excluding the Effect of Intangibles (a)
Three Months Ended December 31
Net Income $42,317 $38,795 9.1%
Basic Earnings per Share $0.53 $0.48 10.4%
Diluted Earnings per Share $0.52 $0.48 8.3%
Return on Average Assets 1.19% 1.05%
Return on Average Equity 16.69% 15.89%
Efficiency Ratio 60.59% 64.15%
Twelve Months Ended December 31
Net Income $149,747 $121,704 23.0%
Basic Earnings per Share $1.86 $1.52 22.4%
Diluted Earnings per Share $1.85 $1.50 23.3%
Return on Average Assets 1.04% 0.83%
Return on Average Equity 15.02% 12.84%
Efficiency Ratio 64.66% 66.83%
(a) Intangibles include goodwill, core deposit and trust intangibles, and other intangibles.
Statement of Condition Dec. 31 Dec. 31 Percentage
Highlights and Performance Ratios 1999 1998 Change
Total Assets $14,440,315 $15,016,563 -3.8%
Net Loans 9,280,848 9,416,809 -1.4%
Total Deposits 9,394,218 9,576,342 -1.9%
Total Shareholders' Equity 1,212,330 1,185,594 2.3%
Book Value Per Common Share $15.15 $14.76
Loss Reserve / Loans Outstanding 2.05% 2.19%
Average Equity / Average Assets 8.30% 7.81%
Common Stock Price Range High Low
1998 ........................ $25.88 $14.75
1999 First Quarter........... $24.94 $19.94
Second Quarter.......... $23.25 $19.81
Third Quarter........... $22.31 $17.63
Fourth Quarter.......... $23.50 $17.38
Pacific Century Financial Corporation and subsidiaries
Consolidated Statements of Income (Unaudited)
3 Months 3 Months 12 Months 12 Months
Ended Ended Ended Ended
Dec 31 Dec 31 Dec 31 Dec 31
1999 1998 1999 1998
(in thousands of dollars
except per share amounts)
Interest Income
Interest on Loans $178,889 $180,355 $699,939 $737,276
Loan Fees 9,809 10,280 39,899 45,340
Income on Lease Financing 7,640 7,270 29,391 25,699
Interest and Dividends
on Investment Securities
Taxable 14,561 13,268 57,809 67,717
Non-taxable 274 273 1,094 1,096
Income on Investment
Securities Available
for Sale 41,841 43,857 168,349 170,963
Interest on Deposits 4,569 10,896 24,960 36,676
Interest on Security
Resale Agreements 6 41 244 82
Interest on Funds Sold 460 755 4,834 3,718
Total Interest Income 258,049 266,995 1,026,519 1,088,567
Interest Expense
Interest on Deposits 67,481 74,310 261,184 306,700
Interest on Security
Repurchase Agreements 21,554 27,097 92,175 121,445
Interest on Funds Purchased 10,191 8,032 41,677 26,720
Interest on Short-Term
Borrowings 3,631 4,035 12,414 14,376
Interest on Long-Term Debt 12,146 9,988 44,326 42,725
Total Interest Expense 115,003 123,462 451,776 511,966
Net Interest Income 143,046 143,533 574,743 576,601
Provision for Loan Losses 20,877 12,992 60,915 84,014
Net Interest Income After
Provision for Loan Losses 122,169 130,541 513,828 492,587
Non-Interest Income
Trust Income 16,047 14,318 60,700 55,879
Service Charges on
Deposit Accounts 8,559 9,512 34,267 35,459
Fees, Exchange, and
Other Service Charges 22,266 20,093 88,838 77,881
Other Operating Income 17,210 10,307 67,720 38,446
Investment Securities Gains 5,314 1,243 14,056 4,086
Total Non-Interest Income 69,396 55,473 265,581 211,751
Non-Interest Expense
Salaries 46,650 48,614 198,743 194,522
Pensions and Other
Employee Benefits 11,956 13,827 55,343 56,003
Net Occupancy Expense 12,255 11,805 47,893 46,799
Net Equipment Expense 12,482 13,180 48,674 49,009
Other Operating Expense 47,718 43,930 180,107 174,546
Restructuring Charge -- -- 22,478 19,400
Minority Interest 101 (241) 485 446
Total Non-Interest Expense 131,162 131,115 553,723 540,725
Income Before Income Taxes 60,403 54,899 225,686 163,613
Provision for Income Taxes 22,804 19,886 92,729 56,649
Net Income $37,599 $35,013 $132,957 $106,964
Basic Earnings Per Share $0.47 $0.44 $1.66 $1.33
Diluted Earnings Per Share $0.47 $0.43 $1.64 $1.32
Dividends Declared Per Share $0.17 $0.17 $0.68 $0.6575
Basic Weighted
Average Shares 80,199,539 80,307,913 80,298,725 80,228,424
Diluted Weighted
Average Shares 80,826,976 81,154,793 81,044,558 81,142,144
Pacific Century Financial Corporation and subsidiaries
Consolidated Statements of Condition (Unaudited)
December 31 December 31
(in thousands of dollars) 1999 1998
Assets
Interest-Bearing Deposits $ 278,473 $ 453,527
Investment Securities - Held to Maturity
(Market Value of $787,720 and $668,068,
respectively) 796,322 652,802
Investment Securities
- Available for Sale 2,542,232 3,018,403
Securities Purchased Under
Agreements to Resell -- --
Funds Sold 52,740 45,683
Loans 9,717,556 9,854,000
Unearned Income (242,503) (225,915)
Reserve for Loan Losses (194,205) (211,276)
Net Loans 9,280,848 9,416,809
Total Earning Assets 12,950,615 13,587,224
Cash and Non-Interest Bearing Deposits 639,895 564,243
Premises and Equipment 271,728 293,591
Customers' Acceptance Liability 7,236 8,227
Accrued Interest Receivable 78,974 85,485
Other Real Estate 4,576 5,648
Intangibles, including Goodwill 205,904 216,106
Other Assets 281,387 256,039
Total Assets $ 14,440,315 $ 15,016,563
Liabilities
Domestic Deposits
Demand - Non-Interest Bearing $1,676,425 $1,745,747
- Interest Bearing 2,076,358 2,385,285
Savings 700,720 740,378
Time 2,761,650 2,637,746
Foreign Deposits
Demand - Non-Interest Bearing 401,613 489,672
Time Due to Banks 597,675 685,137
Other Savings and Time 1,179,777 892,377
Total Deposits 9,394,218 9,576,342
Securities Sold Under
Agreements to Repurchase 1,490,655 2,008,399
Funds Purchased 839,962 942,062
Short-Term Borrowings 458,962 356,822
Bank's Acceptances Outstanding 7,236 8,227
Accrued Retirement Expense 40,360 39,811
Accrued Interest Payable 64,588 55,694
Accrued Taxes Payable 85,022 114,443
Minority Interest 4,435 7,394
Other Liabilities 114,890 136,159
Long-Term Debt 727,657 585,616
Total Liabilities 13,227,985 13,830,969
Shareholders' Equity
Common Stock ($.01 par value),
authorized 500,000,000 shares;
issued / outstanding;
December 1999 - 80,550,728 / 80,036,417;
December 1998 - 80,512,372 / 80,325,998 806 805
Capital Surplus 345,851 342,932
Accumulated Other Comprehensive Income (66,106) (22,476)
Retained Earnings 942,177 867,852
Treasury Stock, at Cost -
(December 1999 - 514,311 and
December 1998 - 186,374 Shares) (10,398) (3,519)
Total Shareholders' Equity 1,212,330 1,185,594
Total Liabilities and Shareholders'
Equity $14,440,315 $15,016,563
Pacific Century Financial Corporation and subsidiaries
Consolidated Statements of Shareholders' Equity (Unaudited)
Accumulated
Other
Common Capital Comprehensive
(in thousands of dollars) Total Stock Surplus Income
Balance at December 31, 1998 $1,185,594 $805 $342,932 ($22,476)
Comprehensive Income
Net Income 132,957 - - -
Other Comprehensive Income,
Net of Tax
Investment Securities, Net of
Reclassification Adjustment (44,803) - - (44,803)
Foreign Currency Translation
Adjustment 1,154 - - 1,154
Pension Liability Adjustments 19 - - 19
Total Comprehensive Income
Common Stock Issued
57,249 Profit Sharing Plan 1,096 - 4 -
501,929 Stock Option Plan 8,616 - 2,620 -
198,851 Dividend Reinvestment Plan 4,032 - 142 -
7,199 Directors' Restricted Shares
and Deferred Compensation
Plan 154 1 153 -
Treasury Stock Purchased (21,849) - - -
Cash Dividends Paid (54,640) - - -
Balance at December 31, 1999 $1,212,330 $ 806 $345,851 ($66,106)
Balance at December 31, 1997 $1,117,207 $159,369 $168,920 ($24,766)
Comprehensive Income
Net Income 106,964 - - -
Other Comprehensive Income,
Net of Tax
Investment Securities,
Net of Reclassification
Adjustment (2,732) - - (2,732)
Foreign Currency Translation
Adjustment 5,671 - - 5,671
Pension Liability Adjustments (649) - - (649)
Total Comprehensive Income
Common Stock Issued
125,889 Profit Sharing Plan 3,559 225 2,627 -
543,256 Stock Option Plan 10,084 530 8,408 -
153,574 Dividend Reinvestment
Plan 5,441 199 3,335 -
5,100 Directors' Restricted
Shares and Deferred
Compensation Plan 139 1 123 -
Treasury Stock Purchased (7,314) - - -
Change in par value of common
stock from $2.00 per share
to $.01 per share - (159,519) 159,519 -
Cash Dividends Paid (52,776) - - -
Balance at December 31, 1998 $1,185,594 $ 805 $342,932 ($22,476)
Pacific Century Financial Corporation and subsidiaries
Consolidated Statements of Shareholders' Equity (Unaudited)
Retained Treasury Comprehensive
(in thousands of dollars) Earnings Stock Income
Balance at December 31, 1998 $867,852 ($3,519)
Comprehensive Income
Net Income 132,957 - $132,957
Other Comprehensive Income,
Net of Tax
Investment Securities, Net of
Reclassification Adjustment - - (44,803)
Foreign Currency Translation Adjustment - - 1,154
Pension Liability Adjustments - - 19
Total Comprehensive Income $ 89,327
Common Stock Issued
57,249 Profit Sharing Plan (71) 1,163
501,929 Stock Option Plan (3,651) 9,647
198,851 Dividend Reinvestment Plan (270) 4,160
7,199 Directors' Restricted Shares
and Deferred Compensation Plan - -
Treasury Stock Purchased - (21,849)
Cash Dividends Paid (54,640) -
Balance at December 31, 1999 $942,177 ($10,398)
Balance at December 31, 1997 $813,684 $-
Comprehensive Income
Net Income 106,964 - $106,964
Other Comprehensive Income,
Net of Tax
Investment Securities, Net of
Reclassification Adjustment - - (2,732)
Foreign Currency Translation Adjustment - - 5,671
Pension Liability Adjustments - - (649)
Total Comprehensive Income $109,254
Common Stock Issued
125,889 Profit Sharing Plan - 707
543,256 Stock Option Plan (20) 1,166
153,574 Dividend Reinvestment Plan - 1,907
5,100 Directors' Restricted Shares and
Deferred Compensation Plan - 15
Treasury Stock Purchased - (7,314)
Change in par value of common stock from
$2.00 per share to $.01 per share - -
Cash Dividends Paid (52,776) -
Balance at December 31, 1998 $867,852 ($3,519)
Consolidated Average Balances and Interest Rates
Taxable Equivalent (Unaudited)
Pacific Century Financial Corporation and subsidiaries
(in millions of dollars)
Three Months Ended Three Months Ended
December 31, 1999 December 31, 1998
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
Earning Assets
Interest Bearing
Deposits $268.4 $4.6 6.75% $510.0 $10.9 8.48%
Investment
Securities Held
to Maturity
-Taxable 794.4 14.6 7.27 670.0 13.3 7.86
-Tax-Exempt 11.6 0.4 14.34 11.7 0.4 14.21
Investment
Securities
Available
for Sale 2,590.0 41.8 6.40 2,983.0 43.9 5.83
Funds Sold 33.2 0.5 6.53 67.9 0.8 4.65
Net Loans
-Domestic 7,803.0 161.4 8.20 7,727.2 156.4 8.03
-Foreign 1,688.6 25.1 5.91 1,762.9 31.2 7.03
Loan Fees 9.8 10.3
Total Earning
Assets 13,189.2 258.2 7.77 13,732.7 267.2 7.72
Cash and Due
From Banks 519.3 585.0
Other Assets 650.8 611.8
Total
Assets $14,359.3 $14,929.5
Interest Bearing
Liabilities
Domestic Deposits
- Demand $2,110.5 12.1 2.28 $2,074.1 13.3 2.54
- Savings 711.9 3.7 2.03 755.1 3.9 2.07
- Time 2,634.8 32.4 4.88 2,798.1 34.5 4.89
Total Domestic 5,457.2 48.2 3.50 5,627.3 51.7 3.65
Foreign Deposits
- Time Due
to Banks 625.6 8.7 5.50 630.2 10.2 6.41
- Other Time
and Savings 1,171.7 10.6 3.60 1,188.5 12.4 4.14
Total Foreign 1,797.3 19.3 4.26 1,818.7 22.6 4.92
Total Interest
Bearing
Deposits 7,254.5 67.5 3.69 7,446.0 74.3 3.96
Short-Term
Borrowings 2,707.6 35.4 5.18 3,031.9 39.2 5.12
Long-Term Debt 747.4 12.1 6.45 639.3 10.0 6.20
Total Interest
Bearing
Liabilities 10,709.5 115.0 4.26 11,117.2 123.5 4.41
Net Interest
Income 143.2 143.7
Interest Rate
Spread 3.51% 3.31%
Net Interest
Margin 4.31% 4.15%
Demand Deposits
- Domestic 1,662.8 1,648.3
- Foreign 457.5 511.8
Total Demand
Deposits 2,120.3 2,160.1
Other
Liabilities 315.3 466.7
Shareholders'
Equity 1,214.2 1,185.5
Total
Liabilities and
Shareholders'
Equity $14,359.3 $14,929.5
Provision for
Loan Losses 20.9 13.0
Net Overhead 61.7 75.6
Income Before
Income Taxes 60.6 55.1
Provision for
Income Taxes 22.8 19.9
Tax-Equivalent
Adjustment 0.2 0.2
Net Income $37.6 $35.0
Twelve Months Ended Twelve Months Ended
December 31, 1999 December 31, 1998
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
Earning Assets
Interest Bearing
Deposits $385.0 $24.9 6.48% $508.8 $36.7 7.21%
Investment
Securities Held
to Maturity
-Taxable 805.2 57.8 7.18 890.6 67.7 7.60
-Tax-Exempt 11.7 1.7 14.41 11.8 1.7 14.34
Investment
Securities
Available
for Sale 2,698.8 168.0 6.23 2,769.3 171.0 6.17
Funds Sold 102.0 5.4 5.31 69.7 3.8 5.45
Net Loans
-Domestic 7,742.3 623.0 8.05 7,669.7 643.8 8.39
-Foreign 1,702.2 106.4 6.25 1,752.6 119.2 6.80
Loan Fees 39.9 45.3
Total Earning
Assets 13,447.2 1,027.1 7.64 13,672.5 1,089.2 7.97
Cash and Due
From Banks 486.6 590.1
Other Assets 649.1 608.1
Total Assets $14,582.9 $14,870.7
Interest Bearing
Liabilities
Domestic Deposits
-Demand $2,137.1 48.5 2.27 $2,114.8 55.7 2.64
-Savings 723.9 14.7 2.03 783.9 18.5 2.35
-Time 2,559.4 123.3 4.82 2,780.7 145.4 5.23
Total Domestic 5,420.4 186.5 3.44 5,679.4 219.6 3.87
Foreign Deposits
- Time Due
to Banks 641.4 33.7 5.25 596.1 40.4 6.78
- Other Time
and Savings 1,165.7 41.0 3.52 1,176.1 46.7 3.97
Total Foreign 1,807.1 74.7 4.13 1,772.2 87.1 4.91
Total Interest
Bearing
Deposits 7,227.5 261.2 3.61 7,451.6 306.7 4.12
Short-Term
Borrowings 3,014.8 146.2 4.85 3,072.9 162.6 5.29
Long-Term Debt 685.9 44.3 6.46 676.5 42.7 6.32
Total Interest
Bearing
Liabilities 10,928.2 451.7 4.13 11,201.0 512.0 4.57
Net Interest
Income 575.4 577.2
Interest
Rate Spread 3.51% 3.40%
Net Interest
Margin 4.28% 4.22%
Demand Deposits
-Domestic 1,652.6 1,650.4
-Foreign 435.2 447.7
Total Demand
Deposits 2,087.8 2,098.1
Other
Liabilities 356.9 410.8
Shareholders'
Equity 1,210.0 1,160.8
Total Liabilities
and Shareholders'
Equity $14,582.9 $14,870.7
Provision for
Loan Losses 60.9 84.0
Net Overhead 288.2 329.0
Income Before
Income Taxes 226.3 164.2
Provision for
Income Taxes 92.7 56.6
Tax-Equivalent
Adjustment 0.6 0.6
Net Income $133.0 $107.0
Pacific Century Financial Corporation and subsidiaries
Consolidated Non-Performing Assets and
Accruing Loans Past Due 90 Days or More (Unaudited)
Dec 31 Sep 30 Jun 30 Mar 31
(in millions of dollars) 1999 1999 1999 1999
Non-Accrual Loans
Commercial and Industrial $23.7 $31.7 $37.5 $39.1
Real Estate
Construction 1.1 2.1 0.8 3.1
Commercial 19.0 20.8 17.2 18.7
Residential 29.7 33.1 35.2 37.6
Installment 0.5 0.7 0.8 0.5
Leases 3.9 4.8 4.4 4.5
Total Domestic 77.9 93.2 95.9 103.5
Foreign 67.4 55.7 47.5 53.6
Subtotal 145.3 148.9 143.4 157.1
Restructured Loans
Real Estate
Commercial - - - -
Subtotal - - - -
Foreclosed Real Estate
Domestic 4.3 5.6 5.8 6.1
Foreign 0.3 0.3 0.2 0.1
Subtotal 4.6 5.9 6.0 6.2
Total Non-Performing Assets 149.9 154.8 149.4 163.3
Accruing Loans Past Due
90 Days or More
Commercial and Industrial 5.9 6.2 3.9 4.3
Real Estate
Construction - 0.5 0.2 0.2
Commercial 1.9 2.4 0.2 0.4
Residential 4.0 2.8 3.7 3.5
Installment 4.5 4.5 5.2 6.9
Leases 1.2 0.2 - 0.1
Total Domestic 17.5 16.6 13.2 15.4
Foreign 1.0 5.0 8.2 6.3
Subtotal 18.5 21.6 21.4 21.7
Total $168.4 $176.4 $170.8 $185.0
Ratio of Non-Performing Assets
to Total Loans 1.54% 1.59% 1.55% 1.69%
Ratio of Non-Performing Assets
and Accruing Loans Past Due
90 Days or More to Total Loans 1.73% 1.81% 1.78% 1.92%
Pacific Century Financial Corporation and subsidiaries
Consolidated Non-Performing Assets and
Accruing Loans Past Due 90 Days or More (Unaudited)
Dec 31 Sep 30 Jun 30 Mar 31 Dec 31
(in millions of dollars) 1998 1998 1998 1998 1997
Non-Accrual Loans
Commercial and Industrial $ 28.2 $ 24.0 $ 23.7 $ 11.1 $ 10.7
Real Estate
Construction 2.9 4.4 2.2 6.4 1.0
Commercial 5.4 6.7 3.4 2.2 2.8
Residential 36.4 35.9 35.2 36.7 32.9
Installment 0.8 0.9 1.9 2.3 2.0
Leases 0.7 0.8 -- 0.3 --
Total Domestic 74.4 72.7 66.4 59.0 49.4
Foreign 57.5 67.9 59.7 27.7 39.9
Subtotal 131.9 140.6 126.1 86.7 89.3
Restructured Loans
Real Estate
Commercial -- -- 1.6 1.6 1.6
Subtotal -- -- 1.6 1.6 1.6
Foreclosed Real Estate
Domestic 5.5 10.8 11.6 6.1 6.2
Foreign 0.1 0.1 -- -- --
Subtotal 5.6 10.9 11.6 6.1 6.2
Total Non-Performing Assets 137.5 151.5 139.3 94.4 97.1
Accruing Loans Past Due
90 Days or More
Commercial and Industrial 0.4 7.3 2.4 2.2 2.0
Real Estate
Construction 0.4 0.6 4.2 -- --
Commercial -- 0.8 0.9 5.8 0.6
Residential 4.5 4.8 2.4 3.8 7.3
Installment 7.3 6.6 6.4 7.7 7.6
Leases 0.3 0.1 0.9 0.1 0.1
Total Domestic 12.9 20.2 17.2 19.6 17.6
Foreign 7.9 7.1 4.9 4.8 7.4
Subtotal 20.8 27.3 22.1 24.4 25.0
Total $ 158.3 $ 178.8 $ 161.4 $ 118.8 $ 122.1
Ratio of Non-Performing Assets
to Total Loans 1.40% 1.59% 1.47% 1.00% 1.02%
Ratio of Non-Performing
Assets and Accruing Loans
Past Due 90 Days or More
to Total Loan 1.61% 1.87% 1.71% 1.26% 1.29%
Pacific Century Financial Corporation and subsidiaries
Summary of Loan Loss Experience
Fourth Third Second
Quarter Quarter Quarter
(in millions of dollars) 1999 1999 1999
Average Amount of
Loans Outstanding $9,491.6 $9,421.7 $9,373.0
Balance of Reserve for
Loan Losses at Beginning
of Period $211.3 $209.6 $209.3
Loans Charged-Off
Commercial and Industrial 2.8 0.3 7.6
Real Estate
Construction 1.2 - 0.2
Commercial 2.2 0.1 0.2
Residential 2.2 2.0 1.6
Installment 6.0 6.2 6.9
Leases - 0.1 0.1
Total Domestic 14.4 8.7 16.6
Foreign 28.2 11.8 2.8
Total Charged-Off 42.6 20.5 19.4
Recoveries on Loans
Previously Charged-Off
Commercial and Industrial 1.1 3.4 1.5
Real Estate
Construction 0.1 - -
Commercial 0.6 0.8 0.1
Residential 0.4 - 0.2
Installment 2.0 2.0 2.0
Total Domestic 4.2 6.2 3.8
Foreign 1.6 0.8 2.9
Total Recoveries 5.8 7.0 6.7
Net Charge-Offs (36.8) (13.5) (12.7)
Provision Charged to
Operating Expenses 20.9 13.5 13.9
Other Net Additions
(Reductions)(a) (1.2) 1.7 (0.9)
Balance at End of Period $194.2 $211.3 $209.6
Ratio of Net Charge-Offs to
Average Loans Outstanding
(annualized) 1.55% 0.57% 0.54%
Ratio of Reserve to
Loans Outstanding 2.05% 2.22% 2.23%
(a) Includes balance transfers, reserves acquired, and foreign
currency translation adjustments.
Pacific Century Financial Corporation and subsidiaries
Summary of Loan Loss Experience
First 12 Months 12 Months
Quarter Ended Ended
(in millions of dollars) 1999 1999 1998
Average Amount of
Loans Outstanding $9,491.9 $9,444.5 $9,422.3
Balance of Reserve for
Loan Losses at Beginning
of Period $211.3 $211.3 $174.4
Loans Charged-Off
Commercial and Industrial 7.8 18.5 15.3
Real Estate
Construction - 1.4 -
Commercial 2.0 4.5 2.5
Residential 2.0 7.8 2.9
Installment 6.0 25.1 25.8
Leases - 0.2 0.7
Total Domestic 17.8 57.5 47.2
Foreign 3.0 45.8 34.8
Total Charged-Off 20.8 103.3 82.0
Recoveries on Loans
Previously Charged-Off
Commercial and Industrial 8.0 14.0 2.8
Real Estate
Construction - 0.1 0.1
Commercial 0.1 1.6 1.2
Residential - 0.6 0.2
Installment 1.6 7.6 6.4
Total Domestic 9.7 23.9 10.7
Foreign 0.3 5.6 5.6
Total Recoveries 10.0 29.5 16.3
Net Charge-Offs (10.8) (73.8) (65.7)
Provision Charged to
Operating Expenses 12.6 60.9 84.0
Other Net Additions
(Reductions)(a) (3.8) (4.2) 18.6
Balance at End of Period $209.3 $194.2 $211.3
Ratio of Net Charge-Offs to
Average Loans Outstanding
(annualized) 0.46% 0.78% 0.70%
Ratio of Reserve to
Loans Outstanding 2.22% 2.05% 2.19%
(a) Includes balance transfers, reserves acquired, and foreign
currency translation adjustments.
Pacific Century Financial Corporation and subsidiaries
Quarterly Summary of Selected Consolidated Financial Data
(in millions of dollars Dec. 31 Sep. 30 Jun. 30
except per share amounts) 1999 1999 1999
Balance Sheet Totals
Total Assets $ 14,440.3 $ 14,505.4 $ 14,551.5
Net Loans 9,280.8 9,321.5 9,181.7
Deposits 9,394.2 9,290.4 9,286.2
Long-Term Debt 727.7 794.8 654.8
Shareholders' Equity 1,212.3 1,208.5 1,214.2
Quarterly Operating Results
Net Interest Income $ 143.0 $ 143.5 $ 144.4
Provision for Loan Losses 20.9 13.5 13.9
Non-Interest Income 69.4 71.4 63.6
Non-Interest Expense 131.2 155.6 132.1
Net Income 37.6 21.5 38.5
Basic Earnings Per Share $0.47 $0.27 $0.48
Diluted Earnings Per Share $0.47 $0.27 $0.47
Return on Average Assets 1.04% 0.59% 1.05%
Return on Average Equity 12.29% 7.01% 12.72%
Efficiency Ratio 63.32% 72.44% 65.67%
Normalized Efficiency Ratio (1) - 61.98% -
Excluding the Effects of
Intangibles (2)
Net Income $42.3 $25.9 $42.3
Basic Earnings Per Share $0.53 $0.32 $0.53
Diluted Earnings Per Share $0.52 $0.32 $0.52
Return on Average Assets 1.19% 0.73% 1.18%
Return on Average Equity 16.69% 10.25% 17.01%
Efficiency Ratio 60.59% 70.04% 63.53%
Normalized Efficiency Ratio (1) - 59.57% -
(1) Excludes impact of $22.5 million restructuring charge in 1999's
Third Quarter. (2) Intangibles include goodwill, core deposit and trust intangibles,
and other intangibles.
Pacific Century Financial Corporation and subsidiaries
Quarterly Summary of Selected Consolidated Financial Data
(in millions of dollars Mar. 31 Dec. 31
except per share amounts) 1999 1998
Balance Sheet Totals
Total Assets $ 14,928.3 $ 15,016.6
Net Loans 9,208.1 9,416.8
Deposits 9,434.4 9,576.3
Long-Term Debt 675.6 585.6
Shareholders' Equity 1,207.6 1,185.6
Quarterly Operating Results
Net Interest Income $ 143.8 $ 143.5
Provision for Loan Losses 12.6 13.0
Non-Interest Income 61.2 55.5
Non-Interest Expense 134.8 131.1
Net Income 35.4 35.0
Basic Earnings Per Share $0.44 $0.44
Diluted Earnings Per Share $0.44 $0.43
Return on Average Assets 0.96% 0.93%
Return on Average Equity 12.00% 11.72%
Efficiency Ratio 66.37% 66.30%
Normalized Efficiency Ratio (1) - -
Excluding the Effects of
Intangibles (2)
Net Income $39.3 $38.8
Basic Earnings Per Share $0.49 $0.48
Diluted Earnings Per Share $0.48 $0.48
Return on Average Assets 1.08% 1.05%
Return on Average Equity 16.21% 15.89%
Efficiency Ratio 64.25% 64.15%
Normalized Efficiency Ratio (1) - -
(1) Excludes impact of $22.5 million restructuring charge in 1999's
Third Quarter. (2) Intangibles include goodwill, core deposit and trust intangibles,
and other intangibles.
*T
CONTACT: Pacific Century Financial Corporation
Media Inquiries:
Stafford Kiguchi, 808-537-8580
Investor/Analyst Inquiries:
Sharlene Bliss, 808/537-8037