Investor Relations

Financial Release

<< Back
Pacific Century Financial Corporation 2001 Financial Results
HONOLULU, Jan 28, 2002 (BUSINESS WIRE) -- Pacific Century Financial Corporation (NYSE:BOH)

    --  2001 Net Income $117.8 Million, Up 4% From 2000
    --  Company Completes Divestiture Phase of Strategic Plan
    --  Regulators Remove Memorandum of Understanding
    --  $300 Million Additional Share Repurchase Program Announced
    --  Board of Directors Declares Dividend of $0.18 Per Share
Pacific Century Financial Corporation (NYSE:BOH) today reported diluted earnings per share for 2001 of $1.46, compared to $1.42 in 2000. Net income for the year was $117.8 million, up $4.1 million from $113.7 million reported in the previous year. The return on average assets in 2001 was 0.93 percent, up 14.8 percent compared to 0.81 percent in 2000. The return on average equity was 8.76 percent, down from 9.21 percent in 2000.

Pacific Century Financial Corporation also announced today that the Company has satisfied its obligations under the Memorandum of Understanding imposed by its regulators during the third quarter of 2000 and it has been removed. Additionally, the Company announced its authorization from its Board of Directors to repurchase an additional $300 million of its common stock.

"I am pleased that we were able to successfully complete the sale of our non-strategic assets," said Michael E. O'Neill, Chairman and CEO. "The divestiture and risk reduction program was the cornerstone of our strategic plan initiatives for the past year. Successfully accomplishing those objectives allows us to now focus exclusively on our key markets of Hawaii, the West Pacific and American Samoa. Also gratifying and significant was the lifting of the Memorandum of Understanding by our regulators."

Net income for the fourth quarter of 2001 was $26.3 million or $0.34 per diluted share, down from net income of $32.6 million, or $0.41 per diluted share for the same period last year. The Company's restructuring program had considerable impact on the quarterly operating results in 2001 and reduced the relevance of comparisons with prior periods.

Included in earnings for the fourth quarter of 2001 were several items relating to implementation of the Company's previously announced strategic plan that increased net income by $6.4 million, or $0.08 per diluted share. Significant items during the quarter included net gains of $32.2 million from the sale of the Company's Papua New Guinea, Fiji and Vanuatu branch franchise to Australia-based ANZ and the sale of its French Polynesia and New Caledonia operations to France-based Caisse Nationale des Caisses d'Epargne. These gains were offset by losses in venture investments of $3.4 million. Adjustments and other expenses related to restructuring and non-core activities of $18.5 million partially offset the gains and were primarily due to severance and professional services costs and asset write-downs. Adjusted for these items and their related tax impact, core diluted earnings per share for the fourth quarter were $0.26 and core net income was $19.9 million.

Financial Highlights

The net interest income for the fourth quarter of 2001 on a fully taxable equivalent basis was $106.2 million, down $25.9 million from $132.1 million in the same quarter last year. The decrease was primarily due to reduced business activity as a result of the divestitures, the wind down of the Asia business and the ongoing managed reduction of loans to improve the Company's credit profile.

The Company's net interest margin of 3.93 percent for the fourth quarter was down from 4.08 percent in the comparable quarter last year. The decrease was primarily due to loan reductions and asset sales, including the credit card portfolio, and lower returns earned on the increased liquidity of the Company.

The provision for loan and lease losses was $14.5 million for the fourth quarter 2001, down from $25.8 million in the same quarter last year. The provision equaled net charge-offs. Included in loan losses was approximately $10 million recognized in connection with loan sales.

Non-interest income was $80.2 million for the fourth quarter, including $28.7 million in non-core items. Adjusted for these items, core non-interest income decreased $19.1 million from the fourth quarter of 2000. This decrease was largely due to the intentional downsizing of certain businesses, sales of the Company's credit card portfolio, Pacific Century Bank branch franchise and South Pacific entities, and mortgage banking losses of $8.5 million recorded during fourth quarter 2001. The mortgage banking losses resulted from unhedged exposure to increases in interest rates.

Non-interest expense for the fourth quarter of 2001 was $141.5 million. Excluding a total of $18.5 million of restructuring and other related costs, core non-interest expense was essentially flat with non-interest expense of $122.9 million in the fourth quarter last year. In the fourth quarter of 2001, all categories of expense include adjustments and accruals to fully reflect expenses incurred as of year-end.

The 2001 core efficiency ratio of 69.9 percent excluding intangible amortization, was negatively impacted by the divesting businesses, where revenue declined more quickly than the related expenses and the fourth quarter loss in mortgage banking. The Company anticipates that the efficiency ratio will be approximately 62 percent in 2002.

The unusually low effective tax rate for the fourth quarter of 2001 reflects the impact of foreign tax and other credits recognized in the fourth quarter as well as adjustments in the effective tax rate for the year.

Net income from the continuing businesses was $20 million, or $0.26 per diluted share, down $9 million from the previous quarter. The decrease in revenue was due to the mortgage loss which more than offset increases in the other revenue categories. The provision for loan losses increased by approximately $10 million primarily due to net charge-offs taken in connection with the sale of loans. Non-interest expenses increased due to accruals for relocation and other costs of new employees, software licenses and maintenance, legal and professional fees, advertising and performance incentives in certain businesses. Excluding the effects of restructuring, net income for the divested businesses was negligible during the fourth quarter.

Asset Quality

Asset quality improved during the fourth quarter 2001. Non-performing assets, exclusive of loans past due 90+ days, decreased for the fifth consecutive quarter to $79.7 million. Compared to the previous quarter, non-performing assets declined $26.7 million or 25.1 percent and were down $103.3 million or 56.4 percent from last year. At December 31, 2001, the ratio of non-performing assets to total loans plus foreclosed assets was 1.41 percent compared to 1.56 percent at September 30, 2001 and 1.98 percent at December 31, 2000.

Non-accrual loans of $60.8 million at the end of the fourth quarter were down from $61.8 million in the third quarter and down $117.7 million or 65.9 percent from the same quarter last year. Non-accrual loans as a percentage of total loans were 1.08 percent, up from 0.91 percent in the previous quarter due to lower loan levels and down significantly from 1.93 percent in the same period last year.

Foreclosed assets were $17.2 million at the end of the fourth quarter, down $20.0 million or 53.8 percent from the prior quarter and up from $4.5 million in the fourth quarter last year. The significant improvement from the third quarter resulted from the sale of two commercial properties in Hawaii.

Net charge-offs for the fourth quarter of 2001 were $14.5 million or 0.87 percent of total average loans (annualized). Charge-offs of $25.9 million were offset by recoveries of $11.4 million. The allowance for loan and lease losses at December 31, 2001 was $159.0 million, down $23.5 million from the prior quarter and down significantly from $246.2 million at December 31, 2000. The decrease from the prior quarter is due to the release of $23.7 million reserves resulting from the sale of the South Pacific entities, of which $17.2 million is reflected in the gain on sale.

The allowance for loan and lease losses to non-accrual loans was 262 percent, down slightly from the previous quarter and up from 138 percent last year. The allowance for loan and lease losses to total loans was 2.81 percent at the end of the fourth quarter 2001, up from 2.70 percent at the end of the third quarter 2001 and 2.67 percent at the end of the same quarter last year.

The Company's total exposure to the air transportation industry at December 31, 2001 was $158 million, consisting of $136 million in equity interests in leveraged leases and $22 million in lending exposure of which $5 million was undrawn. The leases are comprised of $90 million in 14 aircraft leased to major United States and international passenger carriers, $31 million on 13 aircraft leased to regional carriers and $15 million on one aircraft leased to a major air cargo carrier.

At December 31, 2001 outstanding loans to national hotel and management companies totaled $65 million with undrawn commitments of $59 million. Exposure to hotel companies in Hawaii at December 31, 2001 included loans outstanding of $112 million and undrawn commitments of $19 million. In the West Pacific, loans outstanding to hotel owners totaled $59 million at December 31, 2001.

All of the Company's air transportation and hotel leases and loans remain current.

As a result of the Company's closure of its Asia businesses, it has no loans outstanding in Asia. Loans outstanding to Asian borrowers operating in Hawaii, Guam and the West Pacific were $103 million at the end of the year. The remaining Asia exposure represents placements of $167 million at December 31, 2001 in AA rated banks.

Syndicated loans outstanding decreased $103 million to $482 million during the fourth quarter. Syndicated exposure consisting of loans and undrawn commitments declined $124 million to $1.6 billion at December 31, 2001.

Other Financial Highlights

On November 27, 2001, the Company closed the sale of its operations in Papua New Guinea and Vanuatu to ANZ. The Company completed the sale of its approximately 95 percent share interest in its French Polynesia and New Caledonia operations to Caisse Nationale des Caisses d'Epargne on December 28, 2001. The sale of its Fiji operation to ANZ was completed on December 31, 2001.

Total assets were $10.6 billion at the end of December 31, 2001, down from $11.9 billion at September 30, 2001 and down from $14.0 billion at the end of December 31, 2000. The most significant reduction was in commercial loans, including foreign loans and commercial real estate loans resulting from the divestitures.

Deposits at the end of the year were $6.7 billion. Compared with the previous year, deposits declined primarily due to sales of the Pacific Century Bank branch franchise and South Pacific operations, as well as a managed decline in foreign deposits resulting from the Company's decision to exit certain foreign locations. During the fourth quarter, domestic deposits in the continuing businesses continued to reflect positive trends as demand and savings deposit balances increased replacing higher cost funds.

As part of its efforts to effectively manage capital, the Company announced a program during the third quarter of 2001 to repurchase $70 million common shares, which was completed in October 2001. An additional program to repurchase $200 million of common stock was announced on October 22, 2001. At December 31, 2001 the Company had repurchased for $195.7 million a total of 8.3 million shares under both programs at an average cost of $23.57. The Company is currently initiating an additional $300 million repurchase program. Remaining buyback authority is now $374.3 million in common stock under the existing repurchase programs.

The Company's capital and liquidity remains exceptionally strong. At December 31, 2001 Tier 1 leverage was 11.2 percent compared to 9.1 percent at December 31, 2000.

The Company's Board of Directors declared a quarterly cash dividend of $0.18 per share on the Company's outstanding shares. The dividend will be payable on March 14, 2002 to shareholders of record at the close of business on February 26, 2002.

Economic Outlook

The Hawaii economy continues to show improvement from the initial decline in tourism following the September 11 attacks. The economic recovery is currently on track for a gradual return to normal visitor levels by mid-2002. Hawaii's overall economic growth rate is anticipated to return to a normal 3 percent after inflation as tourism recovers. Hawaii's unemployment rate increased from 4.5 percent to 5.5 percent subsequent to September, where it has stabilized and is forecast to shift downward. Inflation is expected to remain substantially below national norms during 2002.

Earnings Outlook

The Company reaffirmed its earnings guidance for the full year 2002 at $120 million in net income for its continuing businesses. The Company also reaffirmed its previous guidance of $130 million in net income for the full year 2003. Earnings per share and return on equity projections are dependent upon the terms and timing of share repurchases.

"We successfully completed the strategic goals we established for 2001 and continue to be optimistic in our outlook about Hawaii," said Michael E. O'Neill. "Completion of these initiatives positions us well to take advantage of opportunities that arise as the economy recovers. We remain confident in our ability to meet our previously stated financial forecasts."

The Company will review its 2001 earnings today at 1:00 p.m. ET. The presentation will be accessible via teleconference and via the investor relations link of Pacific Century Financial Corporation's web site, www.boh.com. The conference call number is (800) 553-0349 in the U.S. or (612) 332-0718 for international callers. A replay will be available for one week beginning at 6:00 p.m. ET on Monday, January 28, 2002 by calling (800) 475-6701 (U.S.) or (320) 365-3844 (International) and entering the number 623444 when prompted. A replay of the presentation will be also available on the Company's web site.

This news release contains forward-looking statements concerning anticipated revenues and expenses in 2002 and 2003. We believe the assumptions underlying our forward-looking statements are reasonable. However, any of the assumptions could prove to be inaccurate and actual results may differ materially from those projected for a variety of reasons including, but not limited to: the Hawaii economy may not recover at the pace we anticipate; our refocused emphasis on our Hawaii market may not achieve the customer and revenue gains we anticipate; our credit markets may deteriorate and our credit quality may fall short of our goals; we may not achieve the expense reductions we expect; we may not be able to maintain our net interest margin; we may not be able to implement our proposed equity repurchases in the amount or at the times planned; customer acceptance of our business as restructured may be less than expected; there may be economic volatility in the markets we serve; and there may be changes in business and economic conditions, competition, fiscal and monetary policies or legislation. Except where specified, we do not undertake any obligation to update any forward-looking statements to reflect later events or circumstances.

Pacific Century Financial Corporation is a regional financial services company serving businesses, consumers and governments in Hawaii, American Samoa and the West Pacific. Pacific Century's principal subsidiary, Bank of Hawaii, was founded in 1897 and is the dominant commercial bank in the state of Hawaii.

 



Pacific Century Financial Corporation and subsidiaries
Highlights  (Unaudited)                                       Table 1
----------------------------------------------------------------------
(dollars in thousands except per share amounts)

                         Three Months Ended           Year Ended
                        Dec. 31,      Dec. 31,   Dec. 31,    Dec. 31,
                          2001         2000        2001        2000

Earnings Highlights and
 Performance Ratios
  Net Income           $ 26,320     $ 32,586    $117,795     $113,661
  Basic Earnings
   Per Share               0.35         0.41        1.49         1.43
  Diluted Earnings
   Per Share               0.34         0.41        1.46         1.42
  Cash Dividends         13,152       14,324      56,567       56,471
  Return on Average
   Assets                  0.90%        0.94%       0.93%        0.81%
  Return on Average
   Equity                  8.14%       10.24%       8.76%        9.21%
  Net Interest Margin      3.93%        4.08%       3.91%        4.08%
  Core Efficiency
   Ratio(a)               78.13%       60.68%      69.92%       61.28%

Cash Basis
 Financial Data
  Net Income           $ 28,767     $ 36,270    $131,137     $128,926
  Basic Earnings
   per Share               0.38         0.46        1.66         1.62
  Diluted Earnings
   per Share               0.37         0.45        1.63         1.62
  Return on Average
   Assets                  0.99%        1.06%       1.05%        0.93%
  Return on Average
   Equity                  9.50%       13.44%      11.00%       12.45%
  Core Efficiency
   Ratio(a)(b)            76.58%       58.86%      68.02%       59.38%


(a) Excludes the effect of restructuring activities and non-core
    transactions.

(b) Excludes the effect of intangibles which include goodwill, core
    deposit and trust intangibles.


----------------------------------------------------------------------
Statement of Condition Highlights    December 31,         December 31,
 and Performance Ratios                 2001                  2000
----------------------------------------------------------------------
Total Assets                       $ 10,628,109          $ 14,013,816
Net Loans                             5,493,539             8,988,311
Total Deposits                        6,673,908             9,080,581
Total Shareholders' Equity            1,247,012             1,301,356

Book Value Per Common Share        $      17.03          $      16.35
Allowance / Loans Outstanding              2.81%                 2.67%
Average Equity / Average Assets           10.60%                 8.78%
Employees (FTE)                           3,175                 4,166
Branches and offices                         97                   175

Market Price Per Share of
 Common Stock Quarter Ended
                           Closing $     25.89          $       17.69
                           High    $     26.40          $       18.75
                           Low     $     19.32          $       11.06
----------------------------------------------------------------------




Pacific Century Financial Corporation and subsidiaries
Consolidated Statements of Income (Unaudited)                 Table 2
----------------------------------------------------------------------
(dollars in thousands except per share amounts)

                          Three Months Ended         Year Ended
                             December 31             December 31
                          2001          2000       2001        2000
----------------------------------------------------------------------
Interest Income
 Interest and Fees
  on Loan and Leases   $ 123,716     $ 202,481  $ 619,447   $ 795,028
 Income on Investment
  Securities -
  Held to Maturity         6,422        11,110     33,521      48,013
 Income on Investment
  Securities -
  Available for Sale      29,317        41,462    137,320     166,266
 Deposits                  7,858         4,018     27,596      15,685
 Funds Sold and
  Security Resale
  Agreements                 803         1,366      5,034       2,689
 Other                     1,396         1,221      5,344       4,742
----------------------------------------------------------------------
    Total Interest
     Income              169,512       261,658    828,262   1,032,423
Interest Expense
 Deposits                 35,158        73,607    217,305     286,046
 Security Repurchase
  Agreements              14,716        28,621     77,764     104,536
 Funds Purchased             365         7,315     10,099      32,636
 Short-Term Borrowings     1,549         3,174      9,562      19,002
 Long-Term Debt           11,624        16,925     53,854      59,053
----------------------------------------------------------------------
    Total Interest
     Expense              63,412       129,642    368,584     501,273
----------------------------------------------------------------------
Net Interest Income      106,100       132,016    459,678     531,150
Provision for Loan
 and Lease Losses         14,541        25,777     74,339     142,853
----------------------------------------------------------------------
Net Interest Income
 After Provision for
 Loan and Lease Losses    91,559       106,239    385,339     388,297
Non-Interest Income
 Trust and Asset
  Management              14,883        16,999     59,924      66,077
 Mortgage Banking            (58)        2,885     20,133      10,996
 Service Charges on
  Deposit Accounts         9,045        10,251     38,467      40,062
 Fees, Exchange, and
  Other Service Charges   17,223        24,636     78,787      99,519
 Gain on Sale of Banking
  Operations and Venture
  Investments Loss        28,746            --    173,426          --
 Gain on Settlement
  of Pension Obligation       --            --         --      11,900
 Investment Securities
  Gains (Losses)              68          (581)    32,982      (1,101)
 Other Operating Income   10,255        16,292     48,900      57,459
----------------------------------------------------------------------
    Total Non-Interest
     Income               80,162        70,482    452,619     284,912
Non-Interest Expense
 Salaries                 46,601        45,106    191,473     184,413
 Pensions and Other
  Employee Benefits       13,247        10,238     52,235      48,042
 Net Occupancy Expense    10,897        11,917     46,344      48,798
 Net Equipment Expense    14,445        13,129     53,395      50,620
 Goodwill and Other
  Intangibles
  Amortization             2,447         3,684     13,342      15,265
 Restructuring and
  Other Related Costs     18,464            --    104,794          --
 Minority Interest           144           101        383         387
 Other Operating Expense  35,294        38,701    136,033     145,279
----------------------------------------------------------------------
    Total Non-Interest
     Expense             141,539       122,876    597,999     492,804
----------------------------------------------------------------------
Income Before
 Income Taxes             30,182        53,845    239,959     180,405
Provision for
 Income Taxes              3,862        21,259    122,164      66,744
----------------------------------------------------------------------
Net Income              $ 26,320      $ 32,586   $117,795    $113,661
======================================================================
Basic Earnings
 Per Share              $   0.35      $   0.41   $   1.49    $   1.43
Diluted Earnings
 Per Share              $   0.34      $   0.41   $   1.46    $   1.42
Dividends Declared
 Per Share              $   0.18      $   0.18   $   0.72    $   0.71
Basic Weighted
 Average Shares       75,165,102    79,534,105  78,977,011  79,551,296
Diluted Weighted
 Average Shares       76,835,941    79,747,220  80,577,763  79,813,443
======================================================================




Pacific Century Financial Corporation and subsidiaries
Consolidated Statements of Condition (Unaudited)              Table 3
----------------------------------------------------------------------
(dollars in thousands)
                                   December 31           December 31
                                       2001                  2000
----------------------------------------------------------------------
Assets
Interest-Bearing Deposits          $ 1,101,974           $ 189,301
Investment Securities
 - Held to Maturity
 (Market Value of $407,838 and
  $589,079, respectively)             396,216              583,587
Investment Securities
 - Available for Sale               2,001,420            2,509,359
Securities Purchased
 Under Agreements to Resell                --                3,969
Funds Sold                            115,000              134,644
Loans Held for Sale                   456,709              179,229
Loans                               5,652,518            9,234,558
 Allowance for Loan
  and Lease Losses                   (158,979)            (246,247)
----------------------------------------------------------------------
    Net Loans                       5,493,539            8,988,311
----------------------------------------------------------------------
   Total Earning Assets             9,564,858           12,588,400
Cash and Non-Interest
 Bearing Deposits                     405,981              523,968
Premises and Equipment                196,171              254,621
Customers' Acceptance Liability           593               14,690
Accrued Interest Receivable            42,687               68,585
Foreclosed Assets                      17,174                4,526
Mortgage Service Rights                27,291               16,195
Goodwill and Other Intangibles         36,216              176,070
Other Assets                          337,138              366,761
----------------------------------------------------------------------
    Total Assets                  $10,628,109          $14,013,816
======================================================================

Liabilities
Domestic Deposits
 Demand - Non-Interest Bearing    $ 1,548,322          $ 1,707,724
        - Interest Bearing          1,926,018            2,008,730
 Savings                              968,137              665,239
 Time                               1,927,778            2,836,083
Foreign Deposits
 Demand - Non-Interest Bearing              2              385,366
 Time Due to Banks                    230,247              535,126
 Other Savings and Time                73,404              942,313
----------------------------------------------------------------------
    Total Deposits                  6,673,908            9,080,581
Securities Sold Under
 Agreements to Repurchase           1,643,444            1,655,173
Funds Purchased                        55,800              413,241
Short-Term Borrowings                 134,222              211,481
Banker's Acceptances Outstanding          593               14,690
Retirement Expense Payable             36,175               37,931
Accrued Interest Payable               29,762               72,460
Taxes Payable                         138,366              130,760
Minority Interest                          --                4,536
Other Liabilities                      98,422               94,450
Long-Term Debt                        570,405              997,157
----------------------------------------------------------------------
    Total Liabilities               9,381,097           12,712,460
Shareholders' Equity
Common Stock ($.01 par value),
 authorized 500,000,000 shares;
 issued / outstanding:
 Dec. 2001 - 81,377,241 /
  73,218,326;
 Dec. 2000 - 80,558,811 /
  79,612,178                              806                  806
Capital Surplus                       367,672              346,045
Accumulated Other
 Comprehensive Income                  22,761              (25,079)
Retained Earnings                   1,055,424              996,791
Deferred Stock Grants                  (7,637)                  --
Treasury Stock, at Cost
 (Shares:  December 2001
 - 8,136,134:
 December 2000
 - 946,633)                          (192,014)             (17,207)
----------------------------------------------------------------------
    Total Shareholders' Equity      1,247,012            1,301,356
----------------------------------------------------------------------
    Total Liabilities and
     Shareholders' Equity         $10,628,109          $14,013,816
======================================================================




Pacific Century Financial Corporation and subsidiaries
Consolidated Statements of Shareholders' Equity (Unaudited)   Table 4
----------------------------------------------------------------------
(dollars in thousands)
                                                           Accumulated
                                                              Other
                                                             Compre-
                                        Common    Capital    hensive
                             Total      Stock     Surplus    Income
----------------------------------------------------------------------
Balance at
 December 31, 2000      $ 1,301,356     $ 806   $346,045    $ (25,079)
Comprehensive Income
 Net Income                 117,795        --         --           --
 Other Comprehensive
  Income, Net of Tax
   Investment Securities     20,733        --         --       20,733
   Foreign Currency
    Translation
    Adjustment               27,266        --         --       27,266
   Pension Liability
    Adjustments                (159)       --         --         (159)

    Total Comprehensive
     Income


Common Stock Issued
 59,586 Profit
  Sharing Plan                1,402        --        261           --
 916,817 Stock Option
  Plan                       21,314        --      1,054           --
 120,397 Dividend
  Reinvestment Plan           2,819        --        495           --
 5,487 Directors'
  Restricted Shares
  and Deferred
  Compensation Plan             336        --        121           --
 727,800 Employees'
  Restricted Shares           5,105        --     18,397           --
 65,146 Hawaii
  Insurance Network           1,299        --      1,299           --
Treasury Stock Purchased
 (8,300,900 shares)        (195,687)
Cash Dividends Paid         (56,567)       --         --           --
----------------------------------------------------------------------
Balance at
 December 31, 2001      $ 1,247,012     $ 806   $367,672     $ 22,761
======================================================================

                                      Deferred               Compre-
                           Retained    Stock     Treasury    hensive
                           Earnings    Grants     Stock       Income
Balance at
 December 31, 2000         $ 996,791  $    --    $(17,207)
Comprehensive Income
 Net Income                  117,795                   --    $117,795
 Other Comprehensive
  Income, Net of Tax
   Investment Securities          --       --          --      20,733
   Foreign Currency
    Translation
    Adjustment                    --       --          --      27,266
   Pension Liability
    Adjustments                   --       --          --        (159)
                                                             ---------
    Total Comprehensive
     Income                                                  $165,635
                                                             =========

Common Stock Issued
 59,586 Profit
  Sharing Plan                    --       --       1,141
 916,817 Stock Option
  Plan                        (2,591)   5,655      17,196
 120,397 Dividend
  Reinvestment Plan               (4)      --       2,328
 5,487 Directors'
  Restricted Shares
  and Deferred
  Compensation Plan               --       --         215
 727,800 Employees'
  Restricted Shares               --  (13,292)         --
 65,146 Hawaii
  Insurance Network               --       --          --
Treasury Stock Purchased
 (8,300,900 shares)                              (195,687)
Cash Dividends Paid          (56,567)      --          --
----------------------------------------------------------------------
Balance at
 December 31, 2001        $1,055,424  $(7,637)  $(192,014)
======================================================================

                                                          Accumulated
                                                             Other
                                                            Compre-
                                        Common  Capital     hensive
                            Total       Stock   Surplus     Income
----------------------------------------------------------------------
Balance at
 December 31, 1999      $ 1,212,330     $ 806   $345,851    $ (66,106)
Comprehensive Income
 Net Income                 113,661        --         --           --
 Other Comprehensive
  Income, Net of Tax
   Investment Securities,
    Net of
    Reclassification
    Adjustment               45,300        --         --       45,300
   Foreign Currency
    Translation
    Adjustment               (4,273)       --         --       (4,273)

 Total Comprehensive
  Income


Common Stock Issued
 86,670 Profit
  Sharing Plan                1,470        --         18           --
 228,438 Stock
  Option Plan                 2,948        --          3           --
 193,689 Dividend
  Reinvestment Plan           3,261        --         51           --
 6,901 Directors'
  Restricted Shares and
  Deferred Compensation
  Plan                          122        --        122           --
Treasury Stock Purchased
 (934,800 shares)           (16,992)       --         --           --
Cash Dividends Paid         (56,471)       --         --           --
----------------------------------------------------------------------
Balance at
 December 31, 2000      $ 1,301,356     $ 806   $346,045    $ (25,079)
======================================================================


                                      Deferred               Compre-
                           Retained    Stock     Treasury    hensive
                           Earnings    Grants     Stock       Income
----------------------------------------------------------------------
Balance at
 December 31, 1999         $ 942,177  $   --     $(10,398)
Comprehensive Income
 Net Income                  113,661                   --   $113,661
 Other Comprehensive
  Income, Net of Tax
   Investment Securities,
    Net of
    Reclassification
    Adjustment                   --                    --     45,300
   Foreign Currency
    Translation
    Adjustment                   --                    --     (4,273)
                                                            ----------
 Total Comprehensive
  Income                                                    $154,688
                                                            ==========

Common Stock Issued
 86,670 Profit
  Sharing Plan                 (230)                1,682
 228,438 Stock
  Option Plan                (1,763)                4,708
 193,689 Dividend
  Reinvestment Plan            (583)                3,793
 6,901 Directors'
  Restricted Shares and
  Deferred Compensation
  Plan                           --                    --
Treasury Stock Purchased
 (934,800 shares)                --               (16,992)
Cash Dividends Paid         (56,471)                   --
----------------------------------------------------------------------
Balance at
 December 31, 2000        $ 996,791   $    --    $(17,207)
======================================================================



Pacific Century Financial Corporation and subsidiaries
Consolidated Average Balances and
 Interest Rates Taxable Equivalent (Unaudited)                Table 5
----------------------------------------------------------------------
(dollars in millions)

                     Three Months Ended          Three Months Ended
                      December 31, 2001         December 31, 2000(A)
                  Average  Income/  Yield/    Average  Income/  Yield/
                  Balance  Expense   Rate     Balance  Expense  Rate
----------------------------------------------------------------------
Earning Assets
 Interest
  Bearing
  Deposits      $ 1,236.2  $ 7.9    2.52%   $   215.7  $ 4.0    7.41%
 Funds Sold         150.5    0.8    2.09         66.8    1.4    8.14
 Investment
  Portfolio
  - Held-To-
    Maturity        431.5    6.5    5.99        616.0   11.2    7.25
  - Available
    for Sale      2,037.5   29.3    5.75      2,478.4   41.5    6.66
 Loans Held
  For Sale          304.9    5.1    6.63        153.1    3.0    7.80
 Net Loans
  - Domestic      5,752.6  104.0    7.20      7,955.3  177.0    8.85
  - Foreign         777.0   14.6    7.48      1,319.9   22.5    6.78
                ------------------------    ------------------------
 Total Loans      6,529.6  118.6    7.23      9,275.2  199.5    8.56
 Other               86.3    1.4    6.42         74.8    1.2    6.50
                ------------------------    ------------------------
  Total Earning
   Assets        10,776.5  169.6    6.27     12,880.0  261.8    8.09
Cash and Due
 From Banks         354.9                       404.5
Other Assets        480.7                       503.3
                ---------                   ---------
  Total Assets  $11,612.1                   $13,787.8
                =========                   =========

Interest Bearing
 Liabilities
  Domestic
   Deposits
   - Demand     $ 1,774.7    5.1    1.15    $ 1,991.6   12.1    2.41
   - Savings        958.3    4.6    1.89        667.5    3.4    2.03
   - Time         2,048.2   19.7    3.81      2,815.6   42.3    5.98
                ------------------------    ------------------------
   Total
    Domestic
    Deposits      4,781.2   29.4    2.44      5,474.6   57.8    4.20
  Foreign
   Deposits
   - Time Due
     to Banks       365.5    2.1    2.26        557.9    8.7    6.23
   - Other Time
     and Savings    445.9    3.7    3.31        768.9    7.1    3.65
                ------------------------    ------------------------
   Total Foreign
    Deposits        811.4    5.8    2.84      1,326.8   15.8    4.73
                ------------------------    ------------------------
    Total
     Interest
     Bearing
     Deposits     5,592.6   35.2    2.49      6,801.5   73.6    4.31
  Short-Term
   Borrowings     1,942.4   16.6    3.40      2,437.1   39.2    6.38
  Long-Term Debt    678.9   11.6    6.79      1,001.6   16.9    6.72
                ------------------------    ------------------------
   Total
    Interest
    Bearing
    Liabilities   8,214.0   63.4    3.06     10,240.2  129.6    5.04
                ------------------------    ------------------------
   Net Interest
    Income                 106.2                       132.1
   Interest Rate
    Spread                          3.20%                       3.05%
   Net Interest
    Margin                          3.93%                       4.08%
Demand Deposits
 - Domestic       1,397.8                     1,610.8
 - Foreign          328.0                       354.7
                ---------                   ---------
    Total Demand
     Deposits     1,725.7                     1,965.5
Other
 Liabilities        390.3                       315.6
Shareholders'
 Equity           1,282.1                     1,266.5
                ---------                   ---------
  Total
   Liabilities
   and
   Shareholders'
   Equity       $11,612.1                   $13,787.8
                =========                   =========

Provision for
 Loan Losses                14.5                        25.8
Net Overhead                61.4                        52.3
                          --------                    --------
Income Before
 Income Taxes               30.3                        54.0
Provision for
 Income Taxes                3.9                        21.3
Tax-Equivalent
 Adjustment                  0.1                         0.1
                          --------                    ---------
Net Income                $ 26.3                      $ 32.6
                          ========                    =========




                      Year Ended                 Year Ended
                  December 31, 2001           December 31, 2000 (A)
                  Average  Income/  Yield/    Average  Income/  Yield/
                  Balance  Expense  Rate      Balance  Expense  Rate
Earning Assets
 Interest
  Bearing
  Deposits      $   733.4  $ 27.6   3.76%   $   216.2  $ 15.7   7.25%
 Funds Sold         136.7     5.1   3.63         43.2     2.7   6.22
 Investment
  Portfolio
  - Held-To-
    Maturity        525.6    33.7   6.42        658.9    48.8   7.41
  - Available
    for Sale      2,242.3   137.3   6.12      2,502.5   166.3   6.64
 Loans Held
  For Sale          312.7    21.4   6.85        128.4     9.8   7.63
 Net Loans
  - Domestic      6,693.2   525.5   7.85      7,948.0   687.5   8.65
  - Foreign       1,026.4    72.5   7.07      1,467.9    97.7   6.65
                ------------------------    ------------------------
 Total Loans      7,719.6   598.0   7.75      9,415.9   785.2   8.34
 Other               79.6     5.4   6.72         73.0     4.7   6.50
                ------------------------    ------------------------
  Total Earning
   Assets        11,749.9   828.5   7.05     13,038.1 1,033.2   7.92
Cash and Due
 From Banks         376.6                       443.1
Other Assets        554.5                       574.1
                ---------                   ---------
  Total Assets  $12,681.0                   $14,055.3
                =========                   =========

Interest Bearing
 Liabilities
  Domestic
   Deposits
   - Demand     $ 1,894.5    34.4   1.82    $ 2,061.9    48.7   2.36
   - Savings        780.3    16.2   2.08        684.8    13.9   2.03
   - Time         2,506.7   129.6   5.17      2,781.1   154.1   5.54
                ------------------------    ------------------------
   Total
    Domestic
    Deposits      5,181.5   180.2   3.48      5,527.8   216.7   3.92
  Foreign
   Deposits
   - Time Due
     to Banks       351.2    14.5   4.13        505.4    30.5   6.03
   - Other Time
     and Savings    648.2    22.6   3.49        960.5    38.9   4.05
                ------------------------    ------------------------
   Total Foreign
    Deposits        999.4    37.1   3.71      1,465.9    69.4   4.73

    Total
     Interest
     Bearing
     Deposits     6,180.9   217.3   3.52      6,993.7   286.1   4.09
  Short-Term
   Borrowings     2,105.6    97.4   4.63      2,597.4   156.1   6.01
  Long-Term Debt    800.5    53.9   6.73        886.8    59.0   6.66
                ------------------------    ------------------------
   Total
    Interest
    Bearing
    Liabilities   9,087.0   368.6   4.06     10,477.9   501.2   4.78

   Net Interest
    Income                  459.9                       532.0
   Interest Rate
    Spread                          2.99%                       3.14%
   Net Interest
    Margin                          3.91%                       4.08%
Demand Deposits
 - Domestic       1,527.1                     1,640.0
 - Foreign          346.0                       371.4
                ---------                   ---------
    Total Demand
     Deposits     1,873.1                     2,011.4
Other
 Liabilities        376.8                       331.4
Shareholders'
 Equity           1,344.1                     1,234.6
                ---------                   ---------
  Total
   Liabilities
   and
   Shareholders'
   Equity       $12,681.0                   $14,055.3
                =========                   =========

Provision for
 Loan Losses                 74.3                       142.9
Net Overhead                145.5                       207.9
                          --------                    --------
Income Before
 Income Taxes               240.2                       181.2
Provision for
 Income Taxes               122.2                        66.7
Tax-Equivalent
 Adjustment                   0.2                         0.8
                          --------                    --------
Net Income                $ 117.8                     $ 113.7
                          ========                    ========

(A) Adjusted to reflect the reclassification of interchange fees,
    mortgage banking income, and other interest income.




Pacific Century Financial Corporation and subsidiaries
Loan and Lease Portfolio Balances                            Table 6
----------------------------------------------------------------------
(dollars in millions)

                           December 31    September 30    December 31
                              2001           2001            2000
----------------------------------------------------------------------
Domestic Loans
 Commercial and
  Industrial               $ 1,177.5      $ 1,436.7       $ 2,433.6
 Real Estate
  Construction
   - Commercial                141.9          144.4           282.4
   - Residential                27.7           31.3            25.0
  Mortgage
   - Commercial                640.7          667.9         1,125.5
   - Residential             2,427.2        2,442.0         2,558.8
 Installment                   729.7          735.3         1,001.9
 Lease Financing               493.4          503.0           539.8
----------------------------------------------------------------------
    Total Domestic           5,638.1        5,960.6         7,967.0
----------------------------------------------------------------------
Foreign Loans                   14.4          806.1         1,267.6
----------------------------------------------------------------------
    Total Loan and Leases  $ 5,652.5      $ 6,766.7       $ 9,234.6
======================================================================




Pacific Century Financial Corporation and subsidiaries
Consolidated Non-Performing Assets and
 Accruing Loans Past Due 90 Days or More (Unaudited)          Table 7
----------------------------------------------------------------------
(dollars in millions)

                 Dec. 31    Sept. 30    June 30    March 31    Dec. 31
                  2001        2001       2001       2001        2000
----------------------------------------------------------------------
Non-Accrual Loans
 Commercial &
  Industrial     $ 18.9     $ 10.5      $ 11.8     $ 23.8      $ 55.4
 Real Estate
  Construction      9.3        0.7         5.8        6.3         6.4
  Commercial       16.3       12.8        14.4       29.7        60.1
  Residential      15.4       19.5        16.2       18.5        22.7
 Installment        0.1        0.1         0.2        0.1          --
 Leases             0.8        1.0         0.4        0.2         0.4
                 -----------------------------------------------------
    Total
     Domestic      60.8       44.6        48.8       78.6       145.0
 Foreign             --       17.2        18.5       16.9        33.5
                 -----------------------------------------------------
    Subtotal       60.8       61.8        67.3       95.5       178.5

 Loans Held
  For Sale          1.7        7.4        11.5       12.8          --

Foreclosed Assets
 Domestic          17.2       36.9        39.8       10.9         4.2
 Foreign             --        0.3         0.3        0.3         0.3
                 -----------------------------------------------------
    Subtotal       17.2       37.2        40.1       11.2         4.5
                 -----------------------------------------------------
    Total Non-
     Performing
     Assets      $ 79.7    $ 106.4     $ 118.9    $ 119.5     $ 183.0
                 =====================================================

Accruing Loans
 Past Due 90
 Days or More
  Commercial &
   Industrial    $  0.1    $   0.1     $   0.2    $   3.9     $   5.0
  Real Estate
  - Construction
    & Commercial     --         --          --        0.9         1.3
  - Residential     3.8        3.4         3.7        3.3         3.3
  Installment       0.9        1.0         1.8        2.7         5.6
  Leases            0.1         --         0.1        0.1         0.4
                 -----------------------------------------------------
    Total
     Domestic       4.9        4.5         5.8       10.9        15.6
  Foreign            --        0.8         0.4        0.2         3.2
                 -----------------------------------------------------
    Total
     Accruing &
     Past Due    $  4.9    $   5.3     $   6.2    $  11.1     $  18.8
                 =====================================================
    Total Loans  $5,652.5  $6,766.6    $7,618.4   $8,425.0    $9,234.6

----------------------------------------------------------------------
Ratio of
 Non-Accrual
 Loans to
 Total Loans         1.08%     0.91%       0.88%      1.13%      1.93%
----------------------------------------------------------------------
Ratio of Non-
 Performing
 Assets to
 Total Loans,
 Foreclosed Real
 Estate and Non-
 Performing Loans
 Held for Sale       1.41%     1.56%       1.55%      1.41%      1.98%
----------------------------------------------------------------------
Ratio of Non-
 Performing
 Assets and
 Accruing Loans
 Past Due 90 Days
 or More to
 Total Loans         1.50%     1.65%       1.64%      1.55%      2.19%
----------------------------------------------------------------------
Quarter to Quarter
 Changes in Non-
 Performing
 Assets
  Beginning
   Balance        $ 106.4   $ 118.9     $ 119.5    $ 183.0    $ 219.6

  Additions          43.8      23.2        23.8       43.1       50.7

  Reductions
   Payments         (40.9)    (25.8)      (14.4)     (63.7)     (68.4)
   Return to
    Accrual          (3.6)     (0.9)       (2.5)      (3.0)      (4.4)
   Sales of
    Foreclosed
    Assets          (21.9)     (2.2)       (1.6)      (3.0)      (2.7)
   Charge-offs       (4.1)     (6.8)       (5.9)     (36.9)     (11.8)
                  ----------------------------------------------------
  Total
   Reductions       (70.5)    (35.7)      (24.4)    (106.6)     (87.3)

    Ending
     Balance      $  79.7   $ 106.4     $ 118.9    $ 119.5    $ 183.0
                  ====================================================




Pacific Century Financial Corporation and subsidiaries
Consolidated Allowance
 for Loan and Lease Losses  (Unaudited)                       Table 8
----------------------------------------------------------------------
(dollars in millions)
                            Three Months Ended        Year Ended
                               December 31            December 31
                            2001          2000     2001         2000
----------------------------------------------------------------------
Balance of Allowance
 for Loan and Lease Losses
 at Beginning of Period   $ 182.5       $ 245.0  $ 246.2      $ 194.2
Loans Charged-Off
 Commercial and
  Industrial                  9.7           4.4     97.5         22.1
 Real Estate
  Construction                0.1           0.1      0.1          0.6
  Commercial                  3.1           0.9     19.2         15.2
  Residential                 3.4           1.3      8.9          6.5
 Installment                  5.5           5.6     20.5         20.1
 Leases                       0.1           0.1      0.8          0.5
----------------------------------------------------------------------
    Total Domestic           21.9          12.4    147.0         65.0
 Foreign                      4.0          19.2     22.0         45.8
----------------------------------------------------------------------
Total Charged-Off            25.9          31.6    169.0        110.8
Recoveries on Loans
 Previously Charged-Off
  Commercial and
   Industrial                 3.0           0.4     11.1          5.5
  Real Estate
   Construction                --            --       --           --
   Commercial                 0.8           0.3      3.2          0.6
   Residential                0.3           0.1      1.0          1.1
  Installment                 2.3           1.6      8.0          6.9
  Leases                       --            --      0.2           --
----------------------------------------------------------------------
    Total Domestic            6.4           2.4     23.5         14.1
 Foreign                      5.0           3.6     24.1          7.3
----------------------------------------------------------------------
Total Recoveries             11.4           6.0     47.6         21.4
----------------------------------------------------------------------
Net Charge-Offs             (14.5)        (25.6)  (121.4)       (89.4)
Provision for Loan
 and Lease Losses            14.5          25.8     74.3        142.9
Allowance Related
 to Dispositions            (23.7)           --    (40.2)          --
Foreign Currency
 Translation                  0.2           1.0      0.1         (1.5)
----------------------------------------------------------------------
Balance at End of Period  $ 159.0       $ 246.2  $ 159.0      $ 246.2
======================================================================
Average Loans
 Outstanding            $ 6,529.6     $ 9,275.2  $ 7,719.6  $ 9,415.9
======================================================================
Ratio of Net
 Charge-Offs to
 Average Loans
 Outstanding
 (annualized)                0.87%         1.10%    1.57%        0.95%
----------------------------------------------------------------------
Ratio of Allowance
 to Loans Outstanding        2.81%         2.67%    2.81%        2.67%
----------------------------------------------------------------------




Pacific Century Financial Corporation and subsidiaries
Analysis of Earnings (Unaudited)                              Table 9
----------------------------------------------------------------------
(dollars in millions, except per share amounts)

                                Allocated
                 --------------------------------------
                 Restructuring
                   and Non-
                    Core        Divesting    Continuing     Reported
                   Impact       Businesses   Businesses     Amounts
----------------------------------------------------------------------
Three Months
 Ended
 Dec. 31, 2001
Net Revenue       $  29         $  20         $ 137          $ 186
Non-Interest
 Expense             19            21           102            142
                  ----------------------------------------------------
                     10            (1)           35             44
Provision for
 Loan Losses         --            (1)           15             14
                  ----------------------------------------------------
Income Before
 Income Taxes        10            --            20             30
Provision for
 Income Taxes         4            --            --              4
                  ----------------------------------------------------
   Net Income     $   6         $  --         $  20          $  26
                  ====================================================
   Diluted
    Earnings
    Per Share     $ 0.08        $  --         $ 0.26         $ 0.34
                  ====================================================

Year Ended
 Dec. 31, 2001
Net Revenue       $ 207         $ 133         $ 572          $ 912
Non-Interest
 Expense            105           118           375            598
                  ----------------------------------------------------
                    102            15           197            314
Provision for
 Loan Losses         37            --            37             74
                  ----------------------------------------------------
Income Before
 Income Taxes        65            15           160            240
Provision for
 Income Taxes        60             5            57            122
                  ----------------------------------------------------
    Net Income    $   5         $  10         $ 103          $ 118
                  ====================================================
    Diluted
     Earnings
     Per Share    $ 0.06        $ 0.12        $ 1.28         $ 1.46
                  ====================================================


Business Outlook
Year Ending 2002
----------------------------------------------------------------------
(dollars in millions)
                                        Current             Previous
                                        Outlook             Outlook
----------------------------------------------------------------------

Net Interest Income                      $ 376
Non-Interest Income                        215
                                        -------
    Net Revenue                            591               $ 597
Non-Interest Expense                       364                 369
Provision For Loan and Lease Losses         39                  36
                                        -------             -------
    Income Before Income Taxes             188                 192
Provision For Income Taxes                  68                  73
                                        -------             -------
    Net Income                           $ 120               $ 119
                                        =======             =======

    This information is based on estimates of future performance
within a range of 2%.
    Readers are reminded to refer to the guidance regarding forward
looking information.




Pacific Century Financial Corporation and subsidiaries
Quarterly Summary of Selected Consolidated
 Financial Data (Unaudited)                                  Table 10
----------------------------------------------------------------------
(dollars in millions except per share amounts)

               Dec. 31    Sept. 30    June 30    March 31    Dec. 31
                2001        2001       2001       2001        2000
----------------------------------------------------------------------

Balance Sheet
 Totals
Total Assets $ 10,628.1  $ 11,944.2 $ 12,755.5 $ 13,710.7  $ 14,013.8
Net Loans       5,493.5     6,584.1    7,418.6    8,225.2     8,988.3
Deposits        6,673.9     7,399.7    8,108.5    8,815.5     9,080.6
Long-Term
 Debt             570.4       678.4      830.9      882.7       997.2
Shareholders'
 Equity         1,247.0     1,371.1    1,395.7    1,371.9     1,301.4

Quarterly
 Operating
 Results
Net Interest
 Income      $    106.1  $    111.8 $    116.8 $    125.0  $    132.0
Provision
 for Loan
 and Lease
 Losses            14.5         0.9        6.4       52.5        25.8
Non-Interest
 Income            80.2       113.7       98.2      160.5        70.5
Non-Interest
 Expense          141.5       123.1      161.6      171.8       122.9
Net Income         26.3        31.1       26.7       33.7        32.6

Basic
 Earnings
 Per Share   $     0.35  $     0.39 $     0.33 $     0.42  $     0.41
Diluted
 Earnings
 Per Share   $     0.34  $     0.37 $     0.32 $     0.42  $     0.41

Return on
 Average
 Assets            0.90%      1.00%       0.83%      0.99%       0.94%
Return on
 Average
 Equity            8.14%      8.88%       7.69%     10.42%      10.24%
Core
 Efficiency
 Ratio            78.13%     69.07%      68.50%     65.33%      60.68%

Cash Basis
 Financial
 Data(1)(2)
  Net Income $     28.8  $    34.4 $      30.4 $     37.6  $     36.3
  Basic
   Earnings
   Per Share $     0.38  $    0.43 $      0.38 $     0.47  $     0.46
  Diluted
   Earnings
   Per Share $     0.37  $    0.41 $      0.37 $     0.46  $     0.45
  Return on
   Average
   Assets          0.99%      1.12%       0.95%      1.12%       1.06%
  Return on
   Average
   Equity          9.50%     11.17%       9.96%     13.61%      13.44%
  Core
   Efficiency
   Ratio          76.58%     67.15%      66.47%     63.32%      58.86%


(1) Excludes the effect of restructuring activities and non-core
    transactions.
(2) Excludes the effect of intangibles which include goodwill, core
    deposit and trust intangibles.

CONTACT:          Pacific Century Financial Corp.
                  Stafford Kiguchi, 808/537-8580 (Media)
                  or 877/849-5423 (pager)
                  skiguchi@boh.com
                  Cindy Wyrick, 808/537-8430 (Investors/Analysts)
                  cwyrick@boh.com