U N I T E D S T A T E S
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION
PERIOD FROM
____________ TO ____________
BANK OF HAWAII PROFIT SHARING PLAN
_____________________________________________________
Full title of the plan and the address of the plan,
if different from that of the issuer named below:
Pacific Century Financial Corporation
130 Merchant Street
Honolulu, Hawaii 96813
_____________________________________________________
Name of issuer of the securities held pursuant to the
plan and the address of its principal executive office
Required Information
Listed below are the financial statements and exhibits filed
as part of the annual report.
A) Financial Statements
1) Report of Independent Certified Public Accountants
2) Statements of Net Assets Available for Benefits
December 31, 1996 and 1995
3) Statements of Changes in Net Assets Available for
Benefits - Years Ended December 31, 1996 and 1995
4) Notes to Financial Statements
5) Schedule of Assets Held for Investment Purposes
December 31, 1996
6) Schedule of Reportable Transactions
December 31, 1996
B) Exhibits
Consent of Independent Certified Public Accountants
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the trustees (or other persons who administer the Plan)
have duly caused this annual report to be signed on its behalf by
the undersigned thereunto duly authorized.
BANK OF HAWAII PROFIT SHARING PLAN
Date: June 27, 1996 By: /s/ RICHARD J. DAHL
Richard J. Dahl
President and Director of
Pacific Century Financial
Corporation; and member of the
Pacific Century Financial
Corporation Benefit Plans
Committee
Financial Statements
and Supplemental Schedules
Bank of Hawaii Profit Sharing Plan
Years ended December 31, 1996 and 1995
with Report of Independent Auditors
Bank of Hawaii Profit Sharing Plan
Financial Statements
and Supplemental Schedules
Years ended December 31, 1996 and 1995
Contents
Report of Independent Auditors. . . . . . . . . . . . . . .1
Statements of Net Assets Available for Benefits . . . . . .2
Statements of Changes in Net Assets Available
for Benefits. . . . . . . . . . . . . . . . . . . . . . .3
Notes to Financial Statements . . . . . . . . . . . . . . .4
Supplemental Schedules
Schedule of Assets Held for Investment Purposes . . . . . 12
Schedule of Reportable Transactions . . . . . . . . . . . 13
Report of Independent Auditors
The Board of Directors
Bank of Hawaii and
The Profit Sharing Trust Committee
Bank of Hawaii Profit Sharing Plan
We have audited the accompanying statements of net assets
available for benefits of the Bank of Hawaii Profit Sharing
Plan (the Plan) as of December 31, 1996 and 1995 and the
related statements of changes in net assets available for
benefits for the years then ended. These financial statements
are the responsibility of the Plan's Trust Committee. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used
and significant estimates made by the Plan's Trust Committee,
as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the net assets
available for benefits of the Plan at December 31, 1996 and
1995, and the changes in net assets available for benefits for
the years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an
opinion on the financial statements taken as a whole. The
accompanying supplemental schedules of assets held for
investment purposes as of December 31, 1996, and reportable
transactions for the year then ended, are presented for
purposes of complying with the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974, and are not a required
part of the financial statements. The supplemental schedules
have been subjected to the auditing procedures applied in our
audit of the 1996 financial statements and, in our opinion,
are fairly stated in all material respects in relation to the
1996 financial statements taken as a whole.
/s/ ERNST & YOUNG LLP
Honolulu, Hawaii
May 16, 1997
Bank of Hawaii Profit Sharing Plan
Statements of Net Assets Available for Benefits
December 31
1996 1995
------------ ------------
Assets
Investments:
Investment securities, at fair value (Notes 2 and 3):
Wellington Fund $ 24,444,095 $ 24,552,465
Windsor Fund 30,270,200 26,608,335
Vanguard Fiduciary Trust Company Investment
Contract Trust 22,817,997 29,596,973
500 Portfolio of the Vanguard Index Trust 7,251,656 3,525,772
Short-Term Federal Portfolio of the Vanguard
Fixed Income Securities Fund 1,216,639 1,185,945
Pacific Capital Growth Fund 749,585 -
Pacific Capital Growth and Income Fund 316,090 -
Pacific Capital New Asia Growth Fund 863,745 -
Pacific Century Financial Corporation Stock 70,693,828 74,371,425
Loan Fund 3,030,869 16,625
------------ ------------
161,654,704 159,857,540
Receivables:
Employer contribution (Note 1) 4,952,825 5,194,107
Employee contributions (Note 1) 444,013 320,698
------------ ------------
5,396,838 5,514,805
------------ ------------
Net assets available for benefits $167,051,542 $165,372,345
============ ============
See accompanying notes to financial statements.
Bank of Hawaii Profit Sharing Plan
Statements of Changes in Net Assets Available for Benefits
Year ended December 31
1996 1995
------------- -------------
Net assets available for benefits at
beginning of year (Note 5) $165,372,345 $134,075,037
Contributions:
Employee 5,600,639 4,211,005
Employer 6,969,806 5,194,107
Other 48,151 15,230
------------- -------------
12,618,596 9,420,342
Investment income 8,740,970 8,564,938
Net realized and unrealized gain on investments 16,321,055 31,314,649
Income and net realized and unrealized gain on
investments 25,062,025 39,879,587
Distributions to plan participants (36,001,424) (18,002,621)
------------- -------------
Net assets available for benefits at end of year $167,051,542 $165,372,345
============= =============
See accompanying notes to financial statements.
1. Summary of Significant Accounting Policies
Description of the Plan
The following description of the Bank of Hawaii Profit Sharing
Plan (the "Plan") provides only general information.
Participants should refer to the Summary Plan Description for
a more complete description of the Plan's provisions.
The Plan is a defined contribution plan and covers eligible
staff members of Bank of Hawaii and certain subsidiaries of
Pacific Century Financial Corporation (formerly known as
Bancorp Hawaii, Inc.) and Bank of Hawaii, collectively (the
"Bank"), who have fulfilled the Plan's participation
requirements. Bank of Hawaii is a wholly-owned subsidiary of
Pacific Century Financial Corporation. The Plan is subject to
provisions of the Employee Retirement Income Security Act of
1974 ("ERISA").
Each year, the Bank contributes to the Plan an amount which is
based upon Pacific Century Financial Corporation's profits for
the year. The contribution varies depending on Pacific
Century Financial Corporation's adjusted net income and
adjusted return on equity. Participants are allowed to
contribute up to 7% of their eligible compensation to the
Plan. However, participants' contributions are limited to
certain maximum annual amounts, including those provided under
the Internal Revenue Code ($9,500 for 1996).
The Plan's trustee is the Vanguard Fiduciary Trust Company.
Participants' investment options include the Pacific Capital
Growth Stock Fund, Pacific Capital Growth and Income Fund,
Pacific Capital New Asia Growth Fund, the Pacific Century
Financial Corporation Stock, the Wellington Fund, the Windsor
Fund, the 500 Portfolio of the Vanguard Index Trust (the
"Vanguard 500 Portfolio"), Short-Term Federal Portfolio of the
Vanguard Fixed Income Securities Fund (the "Short-Term Federal
Portfolio") and the Vanguard Fiduciary Trust Company
Investment Contract Trust (the "Investment Contract Trust").
The Bank changed certain features of the Plan effective
January 1, 1996. Among those changes was a 401(k) enhancement
whereby the Bank will match participant contributions at $1.25
for each $1.00 contributed by participants up to 2% of the
participant's eligible compensation. Additional investment
options were also made available to participants effective
January 31, 1996 to include the Pacific Capital Growth Stock
Fund, the Pacific Capital Growth & Income Fund, and the
Pacific Capital New Asia Growth Fund.
Throughout the December 31, 1995 plan year, the Plan allowed
a participant to elect to receive up to 50% of his/her
employer contribution in cash after year end. Remaining
amounts were invested in any combination in the available
investment options. Additional plan changes effective January
1, 1996 call for mandatory distribution of 50% of employer
contributions with remaining amounts invested in any
combination of the investment options available as of that
date. Participants are fully vested in the Plan's assets
allocated to their account.
Under the Plan, a participant retiring may elect to defer
payment of benefits until a subsequent year. The benefits are
disbursed upon notice from the participant or designated
beneficiary. Under certain conditions, a participant may
receive part or all of the value of his or her account before
termination or retirement. Otherwise, distributions to
retirees are made during the quarter following retirement or
withdrawal.
In the event that the Bank's Board of Director discontinues
contributions, each member's interest in the Plan will become
fully vested and nonforfeitable.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities in the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Expenses
Fees paid to the Plan trustee and other administrative
expenses are paid by Bank of Hawaii.
Investments
Investments are stated at fair value. Values for the Pacific
Century Financial Corporation Stock and the mutual funds are
determined based on quoted market prices. Value for the
Investment Contract Trust is based on contract value, which
approximates fair value. Contract value represents
contributions made plus interest accrued at the contract rate,
less withdrawals. Net gains and losses from securities
transactions are computed using the average cost method.
Receivables
Contributions from both employer and employees are accrued
through December 31 in the Statements of Net Assets Available
for Benefits.
Reclassifications
Certain 1995 balances have been reclassified to conform with
the 1996 presentation.
2. Investments
During 1996 and 1995 the Plan's investments (including
investments bought, sold, as well as held during the year)
appreciated (depreciated) in fair value by $16,321,055 and
$31,314,649 as follows:
Year ended December 31
1996 1995
------------ ------------
Pacific Century Financial Corporation Stock $10,056,310 $22,289,947
Wellington Fund 1,582,517 5,067,677
Windsor Fund 3,613,741 3,233,711
Vanguard 500 Portfolio 960,005 664,067
Short-Term Federal Portfolio (15,984) 59,247
Pacific Capital Growth Fund 67,134 -
Pacific Capital Growth and Income Fund 16,686 -
Pacific Capital New Asia Growth Fund 40,646 -
------------ ------------
$16,321,055 $31,314,649
The investment contract trust is a collective trust investing
in investment contracts with selected insurance companies and
commercial banks. The investment contract trust allows for
benefit responsive withdrawals by the Plan at contract value,
subject to certain market value adjustments. The investment
contract trust's yields, net of expenses, for the years ended
December 31, 1996 and 1995 were 6.13% and 6.25%, respectively.
The stated contract rate on contracts ranged from 7.96% to
4.90% at December 31, 1996 and 1995 with average contractual
maturities at both dates being 2.4 and 2.5 years,
respectively.
The fair value of individual investments that represent 5% or
more of the Plan's net assets are as follows:
1996 1995
------------ ------------
Wellington mutual fund $24,444,095 $24,552,465
Windsor mutual fund 30,270,200 26,608,335
Vanguard Investment Contract Trust 22,817,997 29,596,973
Pacific Century Financial Corporation Stock 70,693,828 74,371,425
3. Transactions with Related Parties
The Plan's investment portfolio at December 31, 1996 and 1995
includes $70,693,828 and $74,371,425 in the Pacific Century
Financial Corporation Stock which invests in the $2 par common
stock of Pacific Century Financial Corporation Dividends
received during 1996 and 1995 from this fund from its
investment in common stock of Pacific Century Financial
Corporation totaled $2,100,083 and $2,298,976, respectively.
The Pacific Capital Growth Stock Fund, the Pacific Capital
Growth & Income Fund and the Pacific Capital New Asia Growth
Fund belong to a family of mutual funds whose investment
advisor is Hawaiian Trust Company, Ltd., a subsidiary of Bank
of Hawaii.
4. Income Tax Status
The Internal Revenue Service has issued a determination letter
dated February 21, 1997 that the Plan qualifies, in form,
under Section 401(a) and 401(k) of the Internal Revenue Code
of 1986, as amended (the "Code"), and the underlying trust is,
therefore, exempt from federal income taxes under Section
501(a) of the Code. The Plan is required to operate in
accordance with the Code to maintain its tax qualification.
The Plan's Administrator is not aware of any course of action
or series of events that have occurred that might adversely
affect the Plan's qualified status.
5. Changes in Net Assets Available for Benefits by Fund
During 1996, the change in net assets available for benefits
by fund is as follows:
Year ended December 31, 1996
- -----------------------------------------------------------------------------------------------------
Pacific Pacific Pacific Pacific
Capital Capital Capital Capital
Growth Growth & New Asia Financial
Stock Income Growth Wellington Windsor Corporation
Fund (1) Fund (1) Fund (1) Fund Fund Stock
- -----------------------------------------------------------------------------------------------------
Net assets available
for benefits at
beginning of year $ 75,867 $ 48,639 $ 80,114 $25,355,816 $27,623,769 $76,324,415
Interfund transfers 583,350 155,460 549,743 (206,069) (247,147) (7,072,077)
Contributions
Employee 108,491 66,196 157,667 743,180 1,081,577 1,874,012
Employer 150,495 100,617 227,735 951,187 1,298,018 2,266,105
Other 433 865 5,672 4,347 15,933 9,227
- -----------------------------------------------------------------------------------------------------
259,419 167,678 391,074 1,698,714 2,395,528 4,149,344
Investment income 3,553 16,469 9,162 1,932,241 2,924,993 2,100,083
Net realized and
unrealized gain
(loss) on
investments 67,134 16,686 40,646 1,582,517 3,613,741 10,056,310
- -----------------------------------------------------------------------------------------------------
Income and net gain
(loss) on
investments 70,687 33,155 49,808 3,514,758 6,538,734 12,156,393
Distributions to
Members (121,620) (9,243) (22,058) (5,182,843) (5,035,691) (13,107,942)
- -----------------------------------------------------------------------------------------------------
Net assets available
for benefits at end
of year $867,703 $395,689 $1,048,681 $25,180,376 $31,275,193 $72,450,133
=====================================================================================================
(1) Effective January 1, 1996, the Pacific Capital Funds became available as investment options.
Year ended December 31, 1996
- -----------------------------------------------------------------------------------------------------
Short-
Term Investment
Vanguard Federal Contract
500 Portfolio Portfolio Loan Fund Trust Total
- -----------------------------------------------------------------------------------------------------
Net assets available
for benefits at
beginning of year $4,002,523 $1,289,673 $ 16,393 $30,555,136 $165,372,345
Interfund transfers 2,014,549 357,294 3,007,875 857,022 -
Contributions
Employee 669,652 111,277 - 788,587 5,600,639
Employer 807,946 148,894 - 1,018,809 6,969,806
Other 10,883 493 - 298 48,151
- -----------------------------------------------------------------------------------------------------
1,488,481 260,664 - 1,807,694 12,618,596
Investment income 144,447 68,936 107,102 1,433,984 8,740,970
Net realized and
unrealized gain
(loss) on
investments 960,005 (15,984) - - 16,321,055
- -----------------------------------------------------------------------------------------------------
Income and net gain
(loss) on
investments 1,104,452 52,952 107,102 1,433,984 25,062,025
Distributions to
Members (724,234) (632,862) (100,501) (11,064,430) (36,001,424)
- -----------------------------------------------------------------------------------------------------
Net assets available
for benefits at end
of year $7,885,771 $1,327,721 $3,030,869 $23,589,406 $167,051,542
=====================================================================================================
During 1995, the change in net assets available for benefits
by fund is as follows:
Year ended December 31, 1995
- -----------------------------------------------------------------------------------------------------
Pacific Pacific Pacific Pacific
Capital Capital Capital Capital
Growth Growth & New Asia Financial
Stock Income Growth Wellington Windsor Corporation
Fund (1) Fund (1) Fund (1) Fund Fund Stock
- -----------------------------------------------------------------------------------------------------
Net assets available
for benefits at
beginning of year $ - $ - $ - $20,438,493 $21,991,206 $56,118,606
Employee transfers
to (from) funds - - - (318,244) (278,011) (1,914,233)
Contributions
Employee 317 92 848 630,309 817,866 1,558,147
Employer 75,550 48,547 79,266 758,414 951,749 1,833,500
Other - - - 3,038 2,893 7,225
- -----------------------------------------------------------------------------------------------------
75,867 48,639 80,114 1,391,761 1,772,508 3,398,872
Investment income - - - 1,239,932 3,025,335 2,319,401
Net realized and
unrealized gain
(loss) on
investments - - - 5,067,677 3,233,711 22,289,947
- -----------------------------------------------------------------------------------------------------
Income and net gain
(loss) on
investments - - - 6,307,609 6,259,046 24,609,348
Distributions to
Members - - - (2,463,803) (2,120,980) (5,888,178)
- -----------------------------------------------------------------------------------------------------
Net assets available
for benefits at end
of year $75,867 $48,639 $80,114 $25,355,816 $27,623,769 $76,324,415
=====================================================================================================
(1) Effective January 1, 1996, the Pacific Capital Funds became available as investment options.
Contributions received after January 1, 1996 for Plan year 1995 were eligible to invest in these Funds.
Year ended December 31, 1995
- -----------------------------------------------------------------------------------------------------
Short-
Term Investment
Vanguard Federal Contract
500 Portfolio Portfolio Loan Fund Trust Total
- -----------------------------------------------------------------------------------------------------
Net assets available
for benefits at
beginning of year $1,675,551 $1,053,046 $ 115 $32,798,020 $134,075,037
Employee transfers
to (from) funds 1,255,565 137,271 - 1,117,652 -
Contributions
Employee 274,327 88,908 - 840,191 4,211,005
Employer 449,534 97,355 - 900,192 5,194,107
Other 867 773 - 434 15,230
- -----------------------------------------------------------------------------------------------------
724,728 187,036 - 1,740,817 9,420,342
Investment income 71,883 64,623 17,211 1,826,553 8,564,938
Net realized and
unrealized gain
(loss) on
investments 664,067 59,247 - - 31,314,649
- -----------------------------------------------------------------------------------------------------
Income and net gain
(loss) on
investments 735,950 123,870 17,211 1,826,553 39,879,587
Distributions to
Members (389,271) (211,550) (933) (6,927,906) (18,002,621)
- -----------------------------------------------------------------------------------------------------
Net assets available
for benefits at end
of year $4,002,523 $1,289,673 $16,393 $30,555,136 $165,372,345
=====================================================================================================
Supplemental Schedules
Bank of Hawaii Profit Sharing Plan
Schedule of Assets Held for Investment Purposes
December 31, 1996
Identity of Issue Description Cost Current Value
- --------------------------------------------------------------------------------------------------
Mutual Funds:
Wellington Fund* 934,811.127 shares $ 19,206,214 $ 24,444,095
Windsor Fund* 1,824,605.182 shares 26,021,510 30,270,200
500 Portfolio of Vanguard
Index Trust* 104,853.322 shares 5,834,219 7,251,656
Short-Term Federal
Portfolio * 102,340.159 shares 1,220,856 1,216,639
Pacific Capital Growth
Fund 55,360.754 shares 686,885 749,585
Pacific Capital Growth and
Income Fund 23,766.187 shares 308,313 316,090
Pacific Capital New Asia
Growth Fund 69,538.890 shares 822,729 863,745
Collective Trust:
Investment Contract
Trust* 22,815,608.860 units 22,815,609 22,817,997
Common Stocks:
Pacific Century Financial
Corporation Stock* 3,143,372.684 shares 41,596,415 70,693,828
Participant Loans Interest rates ranging
from 7.14% to 8.49% 0 3,030,869
------------ ------------
$118,512,750 $161,654,704
============ ============
*Indicates party-in-interest to the Plan.
Bank of Hawaii Profit Sharing Plan
Schedule of Reportable Transactions
Year ended December 31, 1996
No. of Proceeds
Description No. of Sales/ Cost of from Sales/
of Assets Purchases Maturities Purchases Maturities Net Gain
- -----------------------------------------------------------------------------------------------------
Category (iii) -- series of transactions in excess of 5 percent of plan assets
Wellington Fund 131 212 $5,239,531 $ 6,949,691 $1,471,759
Windsor Fund 132 211 7,167,496 7,119,373 746,073
Pacific Century
Financial
Corporation
Stock* 107 213 7,392,464 21,120,210 8,509,790
Investment
Contract Trust 197 215 8,034,168 14,795,469 -
Note: There were no category (i), (ii), or (iv) reportable transactions in 1996.
*Indicates party-in-interest to the Plan.
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the
Registration Statement (Form S-8 No. 33-57267) pertaining to
the Bank of Hawaii Profit Sharing Plan, of our report dated
May 16, 1997, with respect to the financial statements and
schedules of the Bank of Hawaii Profit Sharing Plan included
in this Annual Report (Form 11-K) for the year ended
December 31, 1996.
/s/ ERNST & YOUNG LLP
Honolulu, Hawaii
June 27, 1997
