Pacific Century
finds buyer for
Calif. banks

Bank of Hawaii's parent also says
it will trim 40 Hawaii positions as
part of its restructuring

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By Rick Daysog
Star-Bulletin

Bank of Hawaii's parent company is selling its 20-branch Southern California subsidiary to U.S. Bancorp.

Pacific Century Financial Corp. -- which announced in April that it was exiting the mainland and Asia-Pacific markets to refocus on Hawaii -- yesterday said it signed a definitive agreement to sell its branch network in the Los Angeles-Orange County area to the Minneapolis-based financial institution.

In the cash deal, U.S. Bancorp will also get the retail accounts, small business loans and commercial accounts handled by Pacific Century's California unit.

The price was not disclosed but Pacific Century said the deal -- which is scheduled to close by the end of the third quarter pending regulatory approval -- will free up about $250 million in capital.

Shares of Pacific Century closed up 31 cents to $25.52 today on the New York Stock Exchange. Yesterday's announce- ment came after the close of trading.

In addition to the Southern California branches, called Pacific Century Bank, the deal includes roughly $640 million in deposits, $570 million in loans and 300 employees.

"We are extremely pleased to have U.S. Bancorp as the acquiring institution," said Michael O'Neill, Pacific Century's chairman and chief executive officer.

"We wish U.S. Bancorp the best and are confident our PCB employees will help make them stronger competitors in the California market."

A Bank of Hawaii spokesman referred questions regarding the deal's impact on employees to the buyer. U.S Bancorp officials could not be reached for immediate comment.

U.S. Bancorp said in a statement the branches will be acquired through its U.S. Bank subsidiary, in a move that will expand the company's operations in Southern California to 164 branches. The company added that the transaction will immediately boost company income.

Allan Landon, Pacific Century's vice chairman and chief financial officer, said the company received substantial interest on the California branches.

Broker C.S. First Boston received statements of interest from more than 10 mainland companies before narrowing its choice to U.S. Bancorp several weeks ago, Landon said.

He said the buyer's commitment to the community and to the bank's employees played a role in the selection.

The buyer has already completed its due diligence review of the branches, Landon said.

U.S. Bancorp, the parent of U.S. Bank and Firstar Banks, is the nation's eighth largest bank holding company with assets of $160 billion.

Pacific Century, with assets of about $14 billion, is in the midst of a major restructuring. In April, the company said it was selling its California and Asia-Pacific holdings in a move that would eliminate about 1,000 non-Hawaii jobs.

The company also said it will change its name to Bank of Hawaii Corp.

In a related move, Pacific Century yesterday said it will eliminate 40 jobs in Hawaii under the new restructuring plan.

In a filing with the state Department of Labor and Industrial Relations, the company said the cuts will cover support positions for the company's Asia, South Pacific and California operations.

Of the 40 positions, the company said it expects to lay off about 10 employees starting July 31. The remaining 30 jobs will likely be eliminated through attrition or voluntary retirement.

Previously, Pacific Century said the job impact in Hawaii would be minimal.

The Bank of Hawaii employs about 2,700 in the isles.

The job cuts are the latest in a series announced by the Bank of Hawaii in recent years.

As part of its New Era Redesign, the company eliminated about 1,000 jobs from its payroll starting in 1999. The program was completed in September and most of the positions eliminated were in Hawaii.