Reported by Star-Bulletin staff & wire
Wednesday, August 25, 1999
Major banks in Hawaii and throughout the nation today raised their prime lending rates a quarter percentage point following the lead of the Federal Reserve.
Hawaii banks raise
cost of securing loans
Hawaii's three largest banks -- First Hawaiian Bank, Bank of Hawaii and American Savings Bank -- all bumped up their prime lending rates to 8.25 percent.
Other local banks were expected to do the same. Nationwide, Bank of America, Chase Manhattan and Wells Fargo were among major banks that announced a similar move.
The prime rate is the benchmark for consumer loans to small businesses and individuals.
Banks routinely raise their prime rates in response to Fed moves. Yesterday, the central bank raised two key lending rates a quarter point.
Two reports detail strong U.S. economyWASHINGTON -- Orders for big-ticket manufactured goods vaulted ahead in July, and sales of existing homes, though pinched by rising mortgage rates, still managed to post the third best month ever.
The two reports, released today, reflected a still-booming economy, powered by strong consumer spending and low unemployment, economists said.
The Commerce Department reported that orders for durable goods -- items expected to last at least three years -- rose 3.3 percent last month to a seasonally adjusted $204 billion. That bigger-than-expected increase was the best showing since December 1998 when orders went up by 3.4 percent.
Meanwhile, the National Association of Realtors reported that sales of existing single-family homes declined 3.9 percent in July to a seasonally adjusted annual rate of 5.41 million units following a record high the month before. Even with the decrease, July was the third highest sales level ever, the association said.
Bank One shares fall on warningCHICAGO -- Bank One Corp. shares fell nearly 25 percent today after it said 1999 earnings would be as much as 8 percent below analysts' forecasts because of slower-than-expected growth at its First USA Inc. credit-card unit.
Bank One, the fifth-largest U.S. bank and No. 2 credit-card issuer, said yesterday after the close of trading that it expects operating earnings per share to be between $3.60 and $3.65 this year. Analysts surveyed by First Call Corp. predicted $3.92. It earned $3.25 a share in 1998, Bloomerg News reported.
"The latest earnings disappointment comes as the biggest surprise yet within Bank One's consumer operations . . . an area that many of us have come to regard as the hallmark of Bank One," Thomas H. Hanley, an analyst at Warburg Dillon Read, wrote in a research note. Hanley cut his recommendation on the stock from "hold" to "buy." Bank One shares closed down $13.75 to $41.87 in NYSE trading.
In other news . . .LOS ANGELES -- The Walt Disney Co. has bought a majority interest in toysmart.com, an online educational toy seller, the companies said today. Disney's Buena Vista internet group will have an estimated 60 percent stake in Waltham, Mass.-based toysmart.com. Terms of the deal were not disclosed.