Pacific Century profit rises 4.8% in quarter
By Frank Cho
Advertiser Staff Writer
Pacific Century Financial Corp., the parent company of Bank of Hawaii, said its first-quarter profit from continuing operations rose 4.8 percent from a year ago, reflecting improved asset quality and reduced expenses in its banking business.
The bank holding company reported core earnings of $32.3 million, 43 cents a share, for the three months ended March 31, compared with $30.8 million, 38 cents, in the year-earlier period.
"We are generally encouraged by the results in the first quarter of 2002. With the expense of restructuring behind us, we can see marked improvements in our financial performance," said Michael O'Neill, the company's president, chairman and chief executive officer.
After a $2 million restructuring charge related primarily to the company's divestiture of overseas operations in the most recent quarter, Pacific Century reported net income of $31.1 million, down 7 percent from $33.7 million in the first quarter of 2001. On a per-share basis, the company earned 41 cents a share, compared with 42 cents a year ago.
The year-ago quarter included one-time gains of $75.4 million from the sale of the bank's credit card portfolio and $20.9 million related to the sale of its interest in Star Systems, an electronic payments network. The gains were partially offset by $44.4 million in restructuring charges, a $36.7 million in credit provision and $5.7 million in other charges.
Pacific Century's earnings, released yesterday before the market opened, beat Wall Street average estimates of 39 cents a share. The Honolulu-based company's stock fell 14 cents to $28.21.
"Overall, the numbers were very close to we were expecting," said James Bradshaw, a banking analyst with D.A. Davidson & Co. "I think asset quality is settling down and the economy in Hawai'i is cooperating. If anything surprised us, it was how resilient the Hawaiian economy is."
Pacific Century warned investors that it expects profits to fall in the second quarter as its mortgage banking business returns to normal levels and it prepares to spend several million dollars on technology upgrades. Nevertheless, the company confirmed that it still expects to meet its previous estimate of $120 million in net income for 2002.
Interest income for the quarter fell to $94.9 million from $125.3 million a year ago, primarily due to the company's divestiture and planned reduction in loans to reduce credit risk.
The company's total assets fell to $10.2 billion.
As the bank finishes selling off operations in Asia, the South Pacific and Mainland, it will now focus on banking in Hawai'i.
