Bankoh net hurt by Asia

Pacific Century reports a 3.8% drop in profits

By Rob Perez
Star-Bulletin

Hurt by its exposure in Asia, Pacific Century Financial Corp. reported lower-than-expected fourth-quarter profits, and analysts say the Asian economic crisis will continue to be a drag on company earnings.

The parent of the state's largest bank, Bank of Hawaii, yesterday said net income for the quarter ended Dec. 31 totaled $33.1 million, down 3.8 percent from a year earlier.

That amounted to 41 cents per share on a diluted basis, compared with 42 cents a year ago. Wall Street analysts surveyed by Zacks Investment Research had projected 44 cents.

Pacific Century's stock, traded on the New York Stock Exchange, closed today at $22.125, down $1 from yesterday.

Because of the Asia turbulence and expenses associated with adjusting its computer systems to deal with the Year 2000 problem, the company said "it would be imprudent to expect increased earnings in 1998." It also said it has suspended its stock buy-back program because of uncertainty on how the Asia situation will further affect the company.

Pacific Century's fourth-quarter results included a $10.4 million write-off for loans in Thailand as well as a $2.7 million expense related to demolition of a downtown building.

For the year, Pacific Century said earnings totaled $139.5 million, up 4.8 percent from $133.1 million in 1996. Diluted earnings amounted to $1.72 per share, up 6.2 percent from $1.62 a year earlier. The per-share data was adjusted to account for a 2-for-1 stock split last month.

Publicly traded firms are now required to report earnings two ways: on a diluted basis, which reflects options, warrants and other securities convertible into common stock; and on a basic basis, which doesn't. Investors tend to track the diluted numbers.

Pacific Century's basic earnings for 1997 equaled $1.75 a share, up 7.4 percent from $1.63 in 1996.

Joe Morford, a BT Alex. Brown analyst in San Francisco, said he expects the Asia crisis to continue affecting Pacific Century's financial picture for at least the next few quarters. "At this point, it's hard to quantify," he said.

As of Dec. 31, the company said assets totaled $15 billion, a 7 percent jump from a year earlier. Loans rose 9.2 percent to $9.1 billion, while deposits increased 10.8 percent to $9.6 billion.

But its nonperforming assets, excluding loans more than 90 days delinquent, rose nearly 17 percent to $97.1 million.

Lawrence Johnson, Pacific Century's chairman and chief executive, said the company has taken prudent steps to manage its Asia exposure.

"While the current turbulence in Asia requires our heightened focus and management, we believe this region holds long-term value and opportunity for the company," he said.