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Redesign helps
lift Bankoh
parent’s net
Pacific Century's earnings rose
By Russ Lynch
7.4% in the fourth quarter
Star-Bulletin
Pacific Century Financial Corp. had a profit of $37.6 million in the final quarter of 1999, up 7.4 percent from a $35 million net in the year-earlier quarter, as it gathered more income from fees for services and trimmed costs through its "New Era" corporate redesign.
The parent of Bank of Hawaii said its per-share income for the last quarter was 47 cents, up 9.3 percent from 43 cents in the year-earlier quarter.
The company said its fourth-quarter cash earnings were $42.3 million, up 9.1 percent from $38.8 million and equal to 52 cents a share compared to 48 cents in the 1998 quarter.
More and more companies are commenting on their cash earnings because they say the figure better reflects their performance than net earnings, by leaving out intangibles which aren't part of the day-to-day operations of the business.
Pacific Century announced its restructuring program in September, saying it would involve the elimination of more than 1,000 positions -- mostly through a hiring freeze, voluntary resignations and staff retraining and reassignments -- with less than 266 actual layoffs.
It also altered the ways it does business, seeking efficiencies and finding ways to provide more and better services and generate fees from them,
Lawrence M. Johnson, chairman and chief executive officer, said yesterday those moves showed positive results for the quarter just reported.
By the time all the initiatives are in place in the fourth quarter of this year, Pacific Century expects to be saving $43 million a year in costs and producing $21 million a year in new revenues, he said.
The company had prepared for financial troubles in Asia by increasing its reserve for possible loan losses and had to cut into that reserve because of troubles with Korean borrowers.
Johnson said Pacific Century entered the fourth quarter with $30.2 million due from a Korean company and its affiliates, who had stopped making loan payments.
Pacific Century charged off $19.5 million of the debt during the quarter and listed another $10.7 million as nonperforming loans.
It drew $16 million from its loan-loss reserve.
For all of 1999, Pacific Century had a profit of $133 million, or $1.64 a share, up from $107 million, or $1.32 a share, in 1998.
The company ended 1999 with assets of $14.4 billion, down from $15 billion a year earlier. Loans at year-end were $9.3 billion, down from $9.4 billion, and deposits of $9.4 billion were down from $9.6 billion.
The company said the declines in assets and loans came from voluntary reductions in its investment portfolio, due to changes in interest rates and a reduction of its exposure in Asia.
