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