Bankoh parent’s Pacific Century Financial Corp. today reported a 1.8 percent dip in first-quarter net income from the same quarter last year, but said its core earnings were up almost 5 percent and the lower net result largely had to do with last year's restructuring.
profits dip 1.8%
Pacific Century's core earnings
rise nearly 5% due to restructuringBy Russ Lynch
rlynch@starbulletin.comThe parent of Bank of Hawaii said it had a net profit of $31.1 million, or 41 cents a share, in the latest quarter compared to $33.7 million, or 42 cents a share, in the year-earlier quarter.
Core earnings, which don't count one-time profits or losses from the sale of businesses or expenses for restructuring, were $32.3 million this year, up $1.5 million from $30.8 million in the year-earlier quarter.
The company said its operating earnings in the second quarter may be slightly lower than the first quarter's, but it is sticking by its full-year projection of about $120 million in net income for 2002. That would be an improvement of about 2 percent from the net of $117.8 million reported for 2001.
Pacific Century's shares closed down 14 cents today to $28.21 on the New York Stock Exchange.
The company declared a dividend of 18 cents a share.
"We are generally encouraged by the results of the first quarter of 2002," said Michael E. O'Neill, chairman, chief executive officer and president. "With the expense of our restructuring behind us, we can see marked improvements in our core markets while continuing to improve our efficiency and reduce our risk," he said. O'Neill also said Hawaii's economy is continuing to strengthen and that is an encouraging sign.
Talking to securities analysts in a Web conference today, O'Neill said the company is "still far from where we want to be" in efficiency improvements but has made real progress and expects to show more improvement through the year.
Al Landon, chief financial officer, told analysts that the company still has an "unaccep- table" level of nonperforming assets, but the bank expects to clear that up by the end of the year.
Hawaii's economy is getting better and there is "observable evidence" of a return to the business levels of this time last year in Bank of Hawaii's business area, "except in Guam where the economy remains quite soft," Landon said.
Year-over-year comparison of first-quarter net income was affected by extra income in last year's period and by some restructuring charges in the 2002 quarter, as the company wrapped up the disposal of unwanted assets.
For example, the 2001 first-quarter results included a gain of $75.4 million from the sale of the company's credit card portfolio and another $20.5 million from the sale of its small interest in a large national secured-payments network.
Those one-time 2001 gains had been largely offset by special expenses of $44.4 million for restructuring and other non-core costs, as well as a special credit provision of $36.7 million.
In the 2002 quarter, there was an expense item of $2 million relating to the completion of the divestiture program, which left the company concentrating on its close-to-home businesses, of which Bank of Hawaii is by far the biggest.
Comparisons with last year in assets, deposits, loans and many other accounting aspects are less meaningful than they might have been, because of the restructuring, Pacific Century said.
Total assets on March 31 were $10.2 billion, down 25.5 percent from $13.7 billion a year earlier.
The most significant difference was in commercial loans and foreign loans, due to the divestitures.
Deposits at the end of March were $6.5 billion, down 26.1 percent from a year-earlier $8.8 billion, due mostly to the divestiture of the Pacific Century Bank branch franchise on the mainland and South Pacific operations.
Also contributing to lower deposits was the company's "managed decline" in foreign deposits as a result of leaving Asia.
Net loans of $5.4 billion were down 34.1 percent from a year-earlier $8.2 billion.