To Our Shareholders:
We are pleased to report that Pacific Century Financial
Corporation's first quarter 2000 earnings were among the
strongest in your company's history. For the first three months
of this year, earnings reached $39.8 million, up 12.3 percent
from $35.4 million reported for the same period last year.
Diluted earnings per share were 50 cents, up 13.6 percent from 44
cents reported for 1999's first quarter.
Tangible earnings for the quarter were $43.9 million
compared to $39.3 million reported for the same period last year.
Tangible diluted earnings per share for the quarter were 55
cents, up 14.6 percent from 48 cents reported for the first
quarter of 1999.
Return on average assets for the quarter was 1.13 percent
compared to 0.96 percent for 1999's first quarter. Return on
average equity was 13.19 percent versus 12.00 percent for the
same period last year.
The first quarter's improved performance reflects your
company's steady progress in implementing its New Era Redesign
initiatives.
Pacific Century saw improvement in non-interest expense in
the first quarter, which stood at $126.1 million, down 6.5
percent from the first quarter of 1999. Factors contributing to
the improvement in expenses include the implementation of New Era
initiatives and the reduction in costs related to Y2K readiness.
We are encouraged to note that Hawaii's economy continues to
gain momentum, causing economists to revise growth forecasts for
2000 upward, with consensus forecasts for real GSP growth this
year between 2.5 and 3.0 percent. Continued strength in U.S.
mainland tourism, stabilization in Asian tourism, and increased
construction and investment activity are among the factors
contributing to the economic expansion.
Bank of Hawaii recently made headlines when we introduced
cutting-edge automated banking technology and service
enhancements at our relocated Waikiki Branch--some of which will
also be incorporated into other Hawaii branches. Clients can
conduct their banking via "virtual" tellers, online and telephone
banking kiosks, and a BankLanai featuring advanced-function ATMs
and bank machines for businesses. In addition, the branch offers
personalized services through personal and business bankers, Asia
Division personnel and a BranchConcierge. Bank of Hawaii also
recently launched e-Bankoh for Business, an Internet banking
service designed for small businesses.
At your company's annual meeting in April, you and your
fellow shareholders voted to approve all of the proposals listed
in this year's proxy statement: the re-election of four
directors to the holding company board, David A. Heenan, Stuart
T.K. Ho, Lawrence M. Johnson, and Fred E. Trotter, and the re-
election of Ernst & Young LLP as independent auditor.
At its April 28th meeting, your board of directors declared
a quarterly cash dividend of 18 cents per share on the
outstanding common stock--an increase of 5.9% over last quarter's
dividend. The dividend will be payable on June 14, 2000 to
shareholders of record at the close of business on May 26, 2000.
We remain confident in the strength of your company and its
ability to build upon the positive momentum reflected in the
first quarter earnings. We appreciate your continuing support as
we move forward in our New Era and in the new millennium.
Sincerely,
/s/ LARRY JOHNSON
Lawrence M. Johnson
Chairman and CEO
Corporate Offices:
Financial Plaza of the Pacific
130 Merchant Street
Honolulu, Hawaii 96813
Website:
www.boh.com
Investor or Analyst Inquiries:
David A. Houle
Executive Vice President, Treasurer and Chief Financial Officer
Phone: (808) 537-8288
E-mail: dhoule@boh.com
or
Sharlene K. Bliss
Investor Relations
Phone: (808) 537-8037
E-mail: sbliss@boh.com
or
Cori C. Weston
Corporate Secretary
Phone: (808) 537-8272
E-mail: cweston@boh.com
Highlights (Unaudited) Pacific Century Financial Corporation and subsidiaries
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March 31 March 31
2000 1999
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Return on Average Assets 1.13% 0.96%
Return on Average Equity 13.19% 12.00%
Average Spread on Earning Assets 4.31% 4.24%
Average Equity/Average Assets 8.54% 7.98%
Book Value Per Common Share $15.39 $15.01
Loss Reserve/Loans Outstanding 2.05% 2.22%
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Common Stock Price Range High Low Dividend
- ---------------------------------------------------------------------------------------------------------
1999 $24.94 $17.38 $0.68
2000 First Quarter $20.38 $14.35 $0.17
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Consolidated Statements of Income (Unaudited)
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3 Months 3 Months
Ended Ended
Mar 31 Mar 31
(in thousands of dollars except per share amounts) 2000 1999
- ---------------------------------------------------------------------------------------------------------
Total Interest Income $259,552 $260,466
Total Interest Expense 120,044 116,622
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Net Interest Income 139,508 143,844
Provision for Loan Losses 13,522 12,590
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Net Interest Income After Provision for Loan Losses 125,986 131,254
Total Non-Interest Income 63,927 61,170
Total Non-Interest Expense 126,082 134,840
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Income Before Income Taxes 63,831 57,584
Provision for Income Taxes 24,066 22,167
- ---------------------------------------------------------------------------------------------------------
Net Income $39,765 $35,417
=========================================================================================================
Basic Earnings Per Share $0.50 $0.44
Diluted Earnings Per Share $0.50 $0.44
Basic Weighted Average Shares 79,821,365 80,421,563
Diluted Weighted Average Shares 80,017,761 81,405,868
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Consolidated Statements of Condition (Unaudited)
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March 31 December 31 March 31
(in thousands of dollars) 2000 1999 1999
- ---------------------------------------------------------------------------------------------------------
Assets
Interest-Bearing Deposits $225,314 $278,473 $494,202
Investment Securities
(Market Value of $3,259,237, $3,329,952,
and $3,636,296, respectively) 3,269,961 3,338,554 3,627,968
Securities Purchased Under Agreements to Resell 902 0 4,083
Funds Sold 42,208 52,740 111,894
Loans 9,779,633 9,717,556 9,637,661
Unearned Income (237,764) (242,503) (220,206)
Reserve for Loan Losses (195,409) (194,205) (209,329)
- ---------------------------------------------------------------------------------------------------------
Net Loans 9,346,460 9,280,848 9,208,126
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Total Earning Assets 12,884,845 12,950,615 13,446,273
Cash and Non-Interest Bearing Deposits 491,218 639,895 617,362
Premises and Equipment 267,497 271,728 292,583
Other Assets 606,826 578,077 572,068
- ---------------------------------------------------------------------------------------------------------
Total Assets $14,250,386 $14,440,315 $14,928,286
=========================================================================================================
Liabilities
Deposits $9,143,063 $9,394,218 $9,434,427
Securities Sold Under Agreements to Repurchase 1,806,197 1,490,655 2,090,663
Funds Purchased 511,440 839,962 775,577
Short-Term Borrowings 424,720 458,962 377,387
Other Liabilities 333,333 316,531 367,039
Long-Term Debt 805,726 727,657 675,634
- ---------------------------------------------------------------------------------------------------------
Total Liabilities 13,024,479 13,227,985 13,720,727
Shareholders' Equity
Common Stock ($.01 par value), authorized 500,000,000 shares;
issued / outstanding; March 2000 - 80,551,253 / 79,661,479;
December 1999 - 80,550,728 / 80,036,417;
March 1999 - 80,537,756 / 80,398,067 806 806 805
Capital Surplus 345,863 345,851 344,955
Accumulated Other Comprehensive Income (72,307) (66,106) (23,536)
Retained Earnings 967,308 942,177 888,367
Treasury Stock, at Cost - (March 2000 - 889,774;
December 1999 - 514,311 and March 1999 - 139,689 shares) (15,763) (10,398) (3,032)
- ---------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 1,225,907 1,212,330 1,207,559
- ---------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $14,250,386 $14,440,315 $14,928,286
=========================================================================================================