U N I T E D S T A T E S
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported) February 25, 1999
PACIFIC CENTURY FINANCIAL CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-6887 99-0148992
- ------------------------ ------------- -------------------
(State of incorporation) (Commission (IRS Employer
File Number) Identification No.)
130 Merchant Street, Honolulu, Hawaii 96813
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number,
including area code) (808) 643-3888
Item 7. Financial Statements and Exhibits
(a) Financial Statements (Unaudited) -- Included with
Press Release
(b) Pro Forma Financial Information -- None
(c) Exhibit
99.1 Press Release
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
Date: February 25, 1999 PACIFIC CENTURY FINANCIAL
CORPORATION
/s/ Richard J. Dahl
(Signature)
Richard J. Dahl
President and Chief
Operating Officer
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PACIFIC CENTURY FINANCIAL CORPORATION
EXHIBIT TO CURRENT REPORT ON
FORM 8-K DATED February 25, 1999
Commission File Number 1-6887
Improved Fourth Quarter 1998 Earnings
At Pacific Century Financial Corporation
FOR IMMEDIATE RELEASE
Honolulu - (January 20, 1999) Pacific Century Financial
Corporation, the parent company of Bank of Hawaii and Pacific
Century Bank, N.A. reported a 5.6 percent increase in fourth
quarter earnings over the fourth quarter of 1997. Net income was
$35.0 million compared to $33.1 million reported for the same
quarter in 1997. Diluted earnings per share were $0.43, up 4.9
percent from $0.41 for fourth quarter 1997. Return on average
assets for the quarter was 0.93 percent and return on average
equity was 11.72 percent.
"The fourth quarter's improved performance evidences our
prudent and expeditious management of the Asian Rim crisis which
first impacted our results in the fourth quarter of 1997," said
Lawrence M. Johnson, chairman and chief executive officer.
"By staying focused on our core businesses of working
capital lending, trade finance and correspondent banking in Asia,
we have been able to manage through this situation with better
than expected results."
Net income for 1998 stood at $107.0 million compared to
$139.5 million in 1997, a 23.3 percent decrease directly linked
to the company's second quarter 1998 results, which included a
restructuring charge and increased provisioning to the reserve
for loan losses. Diluted earnings per share were $1.32, compared
with $1.72 for 1997.
Total assets at year-end were $15.0 billion, similar to
year-end 1997. Net loans ended 1998 at $9.4 billion, up 3.3
percent from $9.1 billion at December 31, 1997. Total deposits
were $9.6 billion at both year-end 1998 and year-end 1997.
"There are several bright spots that give us confidence in
the potential of Pacific Century," said Johnson. "Despite a year
marked by change and challenge, Bank of Hawaii had a banner year
in residential lending, closing in excess of $1.0 billion dollars
in residential loans for 1998, the highest dollar amount ever for
any mortgage lender in the State of Hawaii."
Johnson also noted, "In the South Pacific market, we are
making excellent progress in gaining synergies as we merge the
operations of Banque Paribas, acquired in the second quarter in
Tahiti and New Caledonia. On the U.S. mainland, the merger of
Pacific Century Bank and California United Bank in the third
quarter allowed us to gain efficiencies by consolidating our back
office functions."
Last February, Pacific Century announced the two-year New
Era restructuring and redesign program which identified several
key initiatives for change and laid out an aggressive agenda for
accomplishing those objectives. Johnson noted that the company is
on track and ahead of schedule on all fronts of these
initiatives. Among the key events were the merger of First
Federal Savings & Loan Association with Bank of Hawaii, and the
outsourcing of Bank of Hawaii's credit card processing.
"These results are a validation of the course we have set
and the actions we are taking to transform our company and to
achieve our performance goals," said Johnson.
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 services 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 subsidiary, Bank of Hawaii, is the state's largest
commercial bank.
This press release may contain forward-looking information.
Although the company believes that its expectations are based on
reasonable assumptions, it can give no assurances that such
assumptions will prove true. Forward-looking statements by the
company involve significant risk and uncertainties, and actual
results could differ materially from those stated or implied by
such forward-looking statements. Factors that might cause such
differences to occur include economic conditions in markets the
company serves and those that impact the Hawaii, U.S. Mainland
(especially California) and Asian economies, changes in the
currencies of Pacific Basin and Pacific Rim countries relative to
the U.S. dollar, changes in interest rates, changes in state or
federal income tax laws, changes in applicable federal, state and
foreign regulatory and monetary policy, and the nature and level
of competition from others.
# # #
Highlights (Unaudited) Pacific Century Financial Corporation and subsidiaries
- ------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars except per share amounts)
Percentage
Earnings Highlights and Performance Ratios 1998 1997 Change
- ------------------------------------------------------------------------------------------------------------------------
Three Months Ended December 31
Net Income $35,013 $33,148 5.6%
Basic Earnings Per Share 0.44 0.41 7.3%
Diluted Earnings Per Share 0.43 0.41 4.9%
Cash Dividends 13,649 12,944
Return on Average Assets 0.93% 0.90%
Return on Average Equity 11.72% 11.53%
Average Spread on Earning Assets 4.15% 4.09%
Twelve Months Ended December 31
Net Income $106,964 $139,488 -23.3%
Basic Earnings Per Share 1.33 1.75 -24.0%
Diluted Earnings Per Share 1.32 1.72 -23.3%
Cash Dividends 52,776 49,725
Return on Average Assets 0.72% 0.98%
Return on Average Equity 9.21% 12.57%
Average Spread on Earning Assets 4.22% 3.98%
Summary of Results Excluding the Effect of Intangibles (a)
- ------------------------------------------------------------------------------------------------------------------------
Tangible Net Income $38,795 $36,434 6.5%
Tangible Basic Earnings per Share $0.48 $0.46 4.3%
Tangible Diluted Earnings per Share $0.48 $0.45 6.7%
Tangible Return on Average Assets 1.05% 1.01%
Tangible Return on Average Equity 15.89% 15.50%
Twelve Months Ended December 31
Tangible Net Income $121,704 $150,666 -19.2%
Tangible Basic Earnings per Share $1.52 $1.89 -19.6%
Tangible Diluted Earnings per Share $1.50 $1.86 -19.4%
Tangible Return on Average Assets 0.83% 1.07%
Tangible Return on Average Equity 12.84% 15.78%
(a) Intangibles include goodwill, core deposit and trust intangibles, and other intangibles.
December 31 December 31 Percentage
Statement of Condition Highlights and Performance Ratios 1998 1997 Change
- ------------------------------------------------------------------------------------------------------------------------
Total Assets $15,016,563 $14,995,464 0.1%
Total Deposits 9,576,342 9,607,695 -0.3%
Net Loans 9,416,809 9,114,325 3.3%
Total Shareholders' Equity 1,185,594 1,117,207 6.1%
- ------------------------------------------------------------------------------------------------------------------------
Book Value Per Common Share $14.76 $14.02
Loss Reserve / Loans Outstanding 2.19% 1.88%
Average Equity / Average Assets 7.81% 7.79%
Common Stock Price Range High Low
1997 .............................. $28.06 $20.31
1998- First Quarter................. $25.13 $20.31
Second Quarter................ $25.88 $23.56
Third Quarter................. $24.06 $14.75
Fourth Quarter................ $24.38 $15.50
Corporate Offices: Inquiries:
Financial Plaza of the Pacific David A. Houle
130 Merchant Street Executive Vice President, Treasurer
Honolulu, Hawaii 96813 and Chief Financial Officer
(808) 537-8288
/TABLE
Pacific Century Financial Corporation and subsidiaries
Quarterly Summary of Selected Consolidated Financial Data
- ------------------------------------------------------------------------------------------------------------------------
1998 1997
(in millions of dollars except --------------------------------------- ----------------------------------------
per share amounts) Dec. 31 Sept. 30 Jun. 30 Mar. 31 Dec. 31 Sept. 30 Jun. 30 Mar. 31
- ------------------------------------------------------------------------------------------------------------------------
Balance Sheet Totals
Net Loans $9,416.8 $9,132.7 $9,045.7 $9,025.3 $9,114.3 $9,145.0 $8,653.0 $8,400.9
Total Assets 15,016.6 14,638.5 14,731.1 14,757.8 14,995.5 14,814.2 14,168.7 13,986.8
Deposits 9,576.3 9,422.9 9,506.0 9,435.4 9,607.7 9,443.3 8,916.2 9,101.1
Long-Term Debt 585.6 624.6 665.1 684.8 705.8 766.5 701.6 698.4
Shareholders' Equity 1,185.6 1,167.0 1,140.5 1,143.3 1,117.2 1,141.2 1,082.2 1,061.4
Quarterly Operating Results
Total Interest Income $269.2 $275.5 $282.1 $273.1 $272.5 $271.5 $255.5 $250.2
Net Interest Income 143.5 144.5 146.9 141.7 137.8 135.6 125.0 125.0
Provision for Loan Losses 13.0 10.7 42.0 18.3 9.8 8.2 7.3 5.1
Non-Interest Income 55.5 53.6 49.8 52.9 53.7 46.1 46.3 41.7
Non-Interest Expense 131.1 136.2 151.7 121.7 128.8 119.0 109.0 106.1
Net Income 35.0 34.8 3.1 34.0 33.1 35.3 35.6 35.5
Basic Earnings Per Share $0.44 $0.43 $0.04 $0.43 $0.41 $0.44 $0.45 $0.45
Diluted Earnings Per Share $0.43 $0.43 $0.04 $0.42 $0.41 $0.43 $0.44 $0.44
Return on Average Assets 0.93% 0.93% 0.08% 0.95% 0.90% 0.95% 1.03% 1.04%
Return on Average Equity 11.72% 11.87% 1.08% 12.11% 11.52% 12.16% 13.34% 13.40%
Excluding the Effects of Intangibles (1)
Tangible Net Income $38.8 $39.0 $7.4 $36.4 $36.4 $38.7 $38.5 $37.1
Tangible Basic Earnings Per Share $0.48 $0.48 $0.09 $0.46 $0.46 $0.48 $0.49 $0.47
Tangible Diluted Earnings Per Share $0.48 $0.48 $0.09 $0.45 $0.45 $0.47 $0.48 $0.46
Tangible Return on Average Assets 1.05% 1.05% 0.20% 1.03% 1.01% 1.05% 1.13% 1.10%
Tangible Return on Average Equity 15.89% 14.78% 3.25% 15.87% 15.50% 15.36% 16.58% 15.74%
(1) Intangibles include goodwill, core deposit and trust intangibles, and other intangibles.
/TABLE
Consolidated Statements of Condition (Unaudited) Pacific Century Financial Corporation and subsidiaries
- ------------------------------------------------------------------------------------------------------------------
December 31 December 31
(in thousands of dollars) 1998 1997
- ------------------------------------------------------------------------------------------------------------------
Assets
Interest-Bearing Deposits $453,527 $335,847
Investment Securities - Held to Maturity
(Market Value of $668,068 and $1,223,235 respectively) 652,802 1,220,215
Investment Securities - Available for Sale 3,018,403 2,586,698
Funds Sold 45,683 80,457
Loans 9,854,000 9,498,408
Unearned Income (225,915) (209,721)
Reserve for Loan Losses (211,276) (174,362)
- ------------------------------------------------------------------------------------------------------------------
Net Loans 9,416,809 9,114,325
- ------------------------------------------------------------------------------------------------------------------
Total Earning Assets 13,587,224 13,337,542
Cash and Non-Interest Bearing Deposits 564,243 795,332
Premises and Equipment 293,591 288,358
Customers' Acceptance Liability 8,227 21,575
Accrued Interest Receivable 85,485 93,831
Other Real Estate 5,648 6,151
Intangibles, including Goodwill 216,106 203,366
Other Assets 256,039 249,309
- ------------------------------------------------------------------------------------------------------------------
Total Assets $15,016,563 $14,995,464
==================================================================================================================
Liabilities
Domestic Deposits
Demand - Non-Interest Bearing 1,745,747 $1,714,886
- Interest Bearing 2,385,285 2,112,425
Savings 740,378 823,216
Time 2,637,746 2,929,782
Foreign Deposits
Demand - Non-Interest Bearing 489,672 351,178
Time Due to Banks 685,137 707,684
Other Savings and Time 892,377 968,524
- ------------------------------------------------------------------------------------------------------------------
Total Deposits 9,576,342 9,607,695
Securities Sold Under Agreements to Repurchase 2,008,399 2,279,124
Funds Purchased 942,062 710,472
Short-Term Borrowings 356,822 226,127
Bank's Acceptances Outstanding 8,227 21,575
Accrued Retirement Expense 39,811 37,737
Accrued Interest Payable 55,694 57,512
Accrued Taxes Payable 114,443 152,092
Minority Interest 7,394 5,758
Other Liabilities 136,159 74,376
Long-Term Debt 585,616 705,789
- ------------------------------------------------------------------------------------------------------------------
Total Liabilities 13,830,969 13,878,257
Shareholders' Equity
Common Stock ($.01 par value at December 31, 1998 and $2.00 par value
at December 31, 1997), authorized 500,000,000 shares;
issued / outstanding, December 1998 -80,512,372 / 80,325,998;
December 1997 - 79,684,553 / 79,684,553; 805 159,369
Capital Surplus 342,932 168,920
Accumulated Other Comprehensive Income (22,476) (24,766)
Retained Earnings 867,852 813,684
Treasury Stock, at Cost - 186,374 December 1998 (3,519) --
- ------------------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 1,185,594 1,117,207
- ------------------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $15,016,563 $14,995,464
==================================================================================================================
/TABLE
Consolidated Statements of Income (Unaudited) Pacific Century Financial Corporation and subsidiaries
- ------------------------------------------------------------------------------------------------------------------
3 Months 3 Months 12 Months 12 Months
Ended Ended Ended Ended
December 31 December 31 December 31 December 31
(in thousands of dollars except per share amounts) 1998 1997 1998 1997
- ------------------------------------------------------------------------------------------------------------------
Interest Income
Interest on Loans $182,569 $188,713 $748,495 $714,572
Loan Fees 10,280 9,651 45,340 34,334
Income on Lease Financing 7,270 6,188 25,699 22,063
Interest and Dividends on Investment Securities
Taxable 13,268 19,841 67,717 81,845
Non-taxable 273 312 1,096 1,186
Income on Investment Securities Available for Sale 43,857 40,309 170,963 158,851
Interest on Deposits 10,896 6,536 36,676 33,058
Interest on Security Resale Agreements 41 -- 82 86
Interest on Funds Sold 755 1,012 3,718 3,727
- ------------------------------------------------------------------------------------------------------------------
Total Interest Income 269,209 272,562 1,099,786 1,049,722
Interest Expense
Interest on Deposits 76,524 82,685 317,919 323,114
Interest on Security Repurchase Agreements 27,097 30,309 121,445 115,461
Interest on Funds Purchased 8,032 6,217 26,720 23,805
Interest on Short-Term Borrowings 4,035 3,715 14,376 17,554
Interest on Long-Term Debt 9,988 11,785 42,725 46,344
- ------------------------------------------------------------------------------------------------------------------
Total Interest Expense 125,676 134,711 523,185 526,278
- ------------------------------------------------------------------------------------------------------------------
Net Interest Income 143,533 137,851 576,601 523,444
Provision for Loan Losses 12,992 9,802 84,014 30,338
- ------------------------------------------------------------------------------------------------------------------
Net Interest Income After Provision for Loan Losses 130,541 128,049 492,587 493,106
Non-Interest Income
Trust Income 14,318 12,966 55,879 52,237
Service Charges on Deposit Accounts 9,512 8,366 35,459 29,354
Fees, Exchange, and Other Service Charges 20,093 17,780 77,881 67,081
Other Operating Income 10,307 13,799 38,446 36,043
Investment Securities Gains 1,243 770 4,086 3,074
- ------------------------------------------------------------------------------------------------------------------
Total Non-Interest Income 55,473 53,681 211,751 187,789
Non-Interest Expense
Salaries 48,614 46,473 194,522 173,159
Pensions and Other Employee Benefits 13,827 13,503 56,003 53,535
Net Occupancy Expense 11,805 14,105 46,799 46,725
Net Equipment Expense 13,180 9,994 49,009 38,524
Other Operating Expense 43,930 44,335 174,546 149,464
Restructuring Charge -- -- 19,400 --
Minority Interest (241) 489 446 1,488
- ------------------------------------------------------------------------------------------------------------------
Total Non-Interest Expense 131,115 128,899 540,725 462,895
- ------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes 54,899 52,831 163,613 218,000
Provision for Income Taxes 19,886 19,683 56,649 78,512
- ------------------------------------------------------------------------------------------------------------------
Net Income $35,013 $33,148 $106,964 $139,488
==================================================================================================================
Basic Earnings Per Share $0.44 $0.41 $1.33 $1.75
Diluted Earnings Per Share $0.43 $0.41 $1.32 $1.72
Dividends Declared Per Share $0.17 $0.1625 $0.6575 $0.625
Basic Weighted Average Shares 80,307,913 79,982,082 80,228,424 79,794,011
Diluted Weighted Average Shares 81,154,793 81,246,771 81,142,144 80,946,170
==================================================================================================================
Pacific Century Financial Corporation and subsidiaries
Consolidated Statements of Shareholders' Equity (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
Accumulated
Other
Common Capital Comprehensive Retained Treasury Comprehensive
(in thousands of dollars except per share amounts) Total Stock Surplus Income Earnings Stock Income
- -----------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997 $1,117,207 $159,369 $168,920 ($24,766)$813,684 $-
Comprehensive Income
Net Income 106,964 - - - 106,964 - $106,964
Other Comprehensive Income, Net of Tax
Investment Securities, Net of
Reclassification Adjustment (3,747) - - (2,732) - - (2,732)
Foreign Currency Translation Adjustment 6,686 - - 5,671 - - 5,671
Pension Liability Adjustments (649) - - (649) - - (649)
-------------
Total Comprehensive Income $109,254
=============
Common Stock Issued
125,889 Profit Sharing Plan 3,559 225 2,627 - - 707
543,256 Stock Option Plan 10,084 530 8,408 - (20) 1,166
153,574 Dividend Reinvestment Plan 5,441 199 3,335 - - 1,907
5,100 Directors' Restricted Shares and
Deferred Compensation Plan 139 1 123 - - 15
Treasury Stock Purchased (7,314) - - - - (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) - - - (52,776) -
- ----------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1998 $1,185,594 $805 $342,932 ($22,476)$867,852 ($3,519)
======================================================================================================================
Balance at December 31, 1996 $1,066,122 $79,918 $186,391 ($3,722)$803,535 $-
Comprehensive Income
Net Income 139,488 - - - 139,488 - $139,488
Other Comprehensive Income, Net of Tax
Investment Securities, Net of
Reclassification Adjustment 3,233 - - 3,233 - - 3,233
Foreign Currency Translation Adjustment (24,277) - - (24,277) - - (24,277)
-------------
Total Comprehensive Income $118,444
=============
Common Stock Issued
88,517 Profit Sharing Plan 4,116 177 3,939 - - -
231,264 Stock Option Plan 5,356 463 4,893 - - -
164,671 Dividend Reinvestment Plan 6,754 329 6,425 - - -
3,407 Directors' Restricted Shares and
Deferred Compensation Plan 150 7 143 - - -
2,317,873 Shares Issued to Acquire CU Bancorp 108,469 4,636 103,833 - - -
Stock Repurchased (142,479) (5,775) (136,704) - - -
Two-for-One Stock Split in the form of a
100% Stock Dividend - 79,614 - - (79,614) -
Cash Dividends Paid (49,725) - - - (49,725) -
- ----------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1997 $1,117,207 $159,369 $168,920 ($24,766)$813,684 $-
======================================================================================================================
/TABLE
Pacific Century Financial Corporation and subsidiaries
Consolidated Average Balances and Interest Rates Taxable Equivalent
- ----------------------------------------------------------------------------------------------------------
Three Months Ended Three Months Ended
December 31, 1998 December 31, 1997
Average Income/Yield/ Average Income/Yield/
(in millions of dollars) Balance Expense Rate Balance Expense Rate
- ----------------------------------------------------------------------------------------------------------
Earning Assets
Interest Bearing Deposits $510.0 $10.9 8.48% $366.8 $6.5 7.07%
Investment Securities Held to Maturity
-Taxable 670.0 13.3 7.86 1,183.5 19.8 6.65
-Tax-Exempt 11.7 0.4 14.21 12.4 0.5 15.31
Investment Securities Available for Sale 2,983.0 43.9 5.83 2,494.6 40.3 6.41
Funds Sold 67.9 0.8 4.65 71.7 1.0 5.60
Net Loans
-Domestic 7,727.2 156.4 8.03 7,676.0 161.9 8.37
-Foreign 1,762.9 33.4 7.53 1,578.8 33.1 8.31
Loan Fees 10.3 9.7
------------------------ ------------------------
Total Earning Assets 13,732.7 269.4 7.78 13,383.8 272.8 8.09
Cash and Due From Banks 585.0 564.0
Other Assets 611.8 602.3
---------- ----------
Total Assets $14,929.5 $14,550.1
========== ==========
Interest Bearing Liabilities
Domestic Deposits - Demand $2,074.1 13.3 2.54 $2,104.3 14.0 2.63
- Savings 755.1 3.9 2.07 844.6 5.2 2.46
- Time 2,798.1 34.5 4.89 2,917.1 40.5 5.51
------------------------ ------------------------
Total Domestic 5,627.3 51.7 3.65 5,866.0 59.7 4.04
Foreign Deposits
- Time Due to Banks 630.2 10.2 6.41 546.4 8.8 6.39
- Other Time and Savings 1,188.5 14.6 4.88 1,198.5 14.2 4.69
------------------------ ------------------------
Total Foreign 1,818.7 24.8 5.41 1,744.9 23.0 5.22
------------------------ ------------------------
Total Deposits 7,446.0 76.5 4.08 7,610.9 82.7 4.31
Short-Term Borrowings 3,031.9 39.2 5.12 2,933.1 40.2 5.44
Long-Term Debt 639.3 10.0 6.20 727.8 11.8 6.42
------------------------ ------------------------
Total Interest Bearing Liabilities 11,117.2 125.7 4.48 11,271.8 134.7 4.74
------------------------ ------------------------
Net Interest Income 143.7 3.30 138.1 3.35
Average Spread on Earning Assets 4.15% 4.09%
Demand Deposits - Domestic 1,648.3 1,674.4
- Foreign 511.8 267.9
---------- ----------
Total Demand Deposits 2,160.1 1,942.3
Other Liabilities 466.7 194.9
Shareholders' Equity 1,185.5 1,141.1
---------- ----------
Total Liabilities and Shareholders' Equity $14,929.5 $14,550.1
========== ==========
Provision for Possible Loan Losses 13.0 9.8
Net Overhead 75.6 75.3
------- -------
Income Before Income Taxes 55.1 53.0
Provision for Income Taxes 19.9 19.7
Tax-Equivalent Adjustment 0.2 0.2
------- -------
Net Income $35.0 $33.1
======= =======
/TABLE
Pacific Century Financial Corporation and subsidiaries
Consolidated Average Balances and Interest Rates Taxable Equivalent
- ----------------------------------------------------------------------------------------------------------
Twelve Months Ended Twelve Months Ended
December 31, 1998 December 31, 1997
Average Income/Yield/ Average Income/Yield/
(in millions of dollars) Balance Expense Rate Balance Expense Rate
- ----------------------------------------------------------------------------------------------------------
Earning Assets
Interest Bearing Deposits $508.8 $36.7 7.21% $486.3 $33.1 6.80%
Investment Securities Held to Maturity
-Taxable 890.6 67.7 7.60 1,220.4 81.8 6.71
-Tax-Exempt 11.8 1.7 14.34 12.5 1.8 14.55
Investment Securities Available for Sale 2,769.3 171.0 6.17 2,452.0 158.8 6.48
Funds Sold 69.7 3.8 5.45 76.4 3.8 4.99
Net Loans
-Domestic 7,669.7 643.8 8.39 7,389.4 607.7 8.22
-Foreign 1,752.6 130.4 7.44 1,540.3 129.2 8.39
Loan Fees 45.3 34.4
------------------------ ------------------------
Total Earning Assets 13,672.5 1,100.4 8.05 13,177.3 1,050.6 7.97
Cash and Due From Banks 590.1 545.1
Other Assets 608.1 519.9
---------- ----------
Total Assets $14,870.7 $14,242.3
========== ==========
Interest Bearing Liabilities
Domestic Deposits - Demand $2,114.8 55.7 2.64 $1,945.3 52.9 2.72
- Savings 783.9 18.5 2.35 865.5 21.4 2.48
- Time 2,780.7 145.4 5.23 2,858.7 157.0 5.49
------------------------ ------------------------
Total Domestic 5,679.4 219.6 3.87 5,669.5 231.3 4.08
Foreign Deposits
- Time Due to Banks 596.1 40.4 6.78 718.7 43.6 6.06
- Other Time and Savings 1,176.1 57.9 4.92 1,079.0 48.2 4.47
------------------------ ------------------------
Total Foreign 1,772.2 98.3 5.55 1,797.7 91.8 5.10
------------------------ ------------------------
Total Deposits 7,451.6 317.9 4.27 7,467.2 323.1 4.33
Short-Term Borrowings 3,072.9 162.6 5.29 2,868.7 156.8 5.47
Long-Term Debt 676.5 42.7 6.32 725.5 46.4 6.39
------------------------ ------------------------
Total Interest Bearing Liabilities 11,201.0 523.2 4.67 11,061.4 526.3 4.76
------------------------ ------------------------
Net Interest Income 577.2 3.38 524.3 3.21
Average Spread on Earning Assets 4.22% 3.98%
Demand Deposits - Domestic 1,650.4 1,516.8
- Foreign 447.7 264.0
---------- ----------
Total Demand Deposits 2,098.1 1,780.8
Other Liabilities 410.8 290.8
Shareholders' Equity 1,160.8 1,109.3
---------- ----------
Total Liabilities and Shareholders' Equity $14,870.7 $14,242.3
========== ==========
Provision for Possible Loan Losses 84.0 30.3
Net Overhead 329.0 275.1
------- -------
Income Before Income Taxes 164.2 218.9
Provision for Income Taxes 56.6 78.5
Tax-Equivalent Adjustment 0.6 0.9
------- -------
Net Income $107.0 $139.5
======= =======
/TABLE
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 Sep 30 June 30 Mar 31 Dec 31
(in millions of dollars) 1998 1998 1998 1998 1997 1997 1997 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------
Non-Accrual Loans
Commercial $28.2 $24.0 $23.7 $11.1 $10.7 $12.9 $16.6 $20.9 $20.9
Real Estate
Construction 2.9 4.4 2.2 6.4 1.0 0.9 0.7 0.6 0.3
Commercial 5.4 6.7 3.4 2.2 2.8 3.8 3.5 3.6 4.1
Residential 36.4 35.9 35.2 36.7 32.9 35.8 35.7 29.4 23.6
Installment 0.8 0.9 1.9 2.3 2.0 1.9 1.7 1.6 1.3
Leases 0.7 0.8 -- 0.3 -- 0.2 0.3 0.1 --
Foreign 57.5 67.9 59.7 27.7 39.9 26.1 23.5 20.1 22.3
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Subtotal 131.9 140.6 126.1 86.7 89.3 81.6 82.0 76.3 72.5
Restructured Loans
Real Estate
Commercial -- -- 1.6 1.6 1.6 2.1 -- -- --
--------------------------------------------------------------------------------------
Subtotal -- -- 1.6 1.6 1.6 2.1 -- -- --
Foreclosed Real Estate
Domestic 5.5 10.8 11.6 6.1 6.2 11.0 11.6 11.3 10.7
Foreign 0.1 0.1 -- -- -- -- -- -- --
--------------------------------------------------------------------------------------
Subtotal 5.6 10.9 11.6 6.1 6.2 11.0 11.6 11.3 10.7
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Total Non-Performing Assets 137.5 151.5 139.3 94.4 97.1 94.7 93.6 87.6 83.2
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Accruing Loans Past Due 90 Days or More
Commercial 0.4 7.3 2.4 2.2 2.0 2.2 0.7 1.5 2.0
Real Estate
Construction 0.4 0.6 4.2 -- -- 0.4 0.1 -- 0.4
Commercial -- 0.8 0.9 5.8 0.6 3.0 0.3 2.8 6.8
Residential 4.5 4.8 2.4 3.8 7.3 3.0 2.6 6.8 6.8
Installment 7.3 6.6 6.4 7.7 7.6 6.9 8.2 10.2 9.0
Leases 0.3 0.1 0.9 0.1 0.1 0.2 0.2 0.1 0.2
Foreign 7.9 7.1 4.9 4.8 7.4 10.1 10.5 8.5 9.5
--------------------------------------------------------------------------------------
Subtotal 20.8 27.3 22.1 24.4 25.0 25.8 22.6 29.9 34.7
--------------------------------------------------------------------------------------
Total $158.3 $178.8 $161.4 $118.8 $122.1 $120.5 $116.2 $117.5 $117.9
======================================================================================
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of Non-Performing Assets
to Total Loans 1.40% 1.59% 1.47% 1.00% 1.02% 0.99% 1.04% 1.00% 0.96%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of Non-Performing Assets
and Accruing Loans Past Due
90 Days or More to Total Loans 1.61% 1.87% 1.71% 1.26% 1.29% 1.26% 1.29% 1.34% 1.36%
- ---------------------------------------------------------------------------------------------------------------------------
/TABLE
Summary of Loan Loss Experience Pacific Century Financial Corporation and subsidiaries
- -----------------------------------------------------------------------------------------------------------------
Fourth Third Second First 12 Months 12 Months
Quarter Quarter Quarter Quarter Ended Ended
(in millions of dollars) 1998 1998 1998 1998 1998 1997
- -----------------------------------------------------------------------------------------------------------------
Average Amount of Loans Outstanding $9,490.1 $9,499.6 $9,619.7 $9,234.0 $9,422.3 $8,929.7
Balance of Reserve for Loan Losses
at Beginning of Period $209.7 $204.0 $175.2 $174.4 $174.4 $167.8
Loans Charged-Off
Commercial and Industrial 1.5 4.3 7.2 2.3 15.3 12.7
Real Estate - Mortgage
Commercial 2.0 0.3 0.2 -- 2.5 1.3
Residential 1.3 0.8 0.2 0.6 2.9 1.9
Installment 5.7 6.9 6.0 7.2 25.8 28.1
Foreign 8.0 0.6 16.0 10.2 34.8 10.6
Leases 0.5 -- 0.1 0.1 0.7 0.5
- -----------------------------------------------------------------------------------------------------------------
Total Charged-Off 19.0 12.9 29.7 20.4 82.0 55.1
Recoveries on Loans Previously Charged-Off
Commercial and Industrial 0.6 0.6 1.0 0.6 2.8 16.4
Construction 0.1 -- -- -- 0.1 --
Real Estate - Mortgage
Commercial -- 0.2 1.0 -- 1.2 0.6
Residential -- -- 0.1 0.1 0.2 1.0
Installment 1.6 1.8 1.5 1.5 6.4 6.3
Foreign 5.1 0.1 0.1 0.3 5.6 0.6
- -----------------------------------------------------------------------------------------------------------------
Total Recoveries 7.4 2.7 3.7 2.5 16.3 24.9
- -----------------------------------------------------------------------------------------------------------------
Net Charge-Offs (11.6) (10.2) (26.0) (17.9) (65.7) (30.2)
Provision Charged to Operating Expenses 13.0 10.7 42.0 18.3 84.0 30.3
Other Net Additions * 0.2 5.2 12.8 0.4 18.6 6.5
- -----------------------------------------------------------------------------------------------------------------
Balance at End of Period $211.3 $209.7 $204.0 $175.2 $211.3 $174.4
=================================================================================================================
Ratio of Net Charge-Offs to
Average Loans Outstanding (annualized) 0.49% 0.43% 1.08% 0.78% 0.70% 0.34%
- -----------------------------------------------------------------------------------------------------------------
Ratio of Reserve to Loans Outstanding 2.19% 2.24% 2.21% 1.90% 2.19% 1.88%
- -----------------------------------------------------------------------------------------------------------------
* Includes balance transfers, reserves acquired, and foreign currency translation adjustments.