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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
-----------------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission file number 0-7949
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BANCWEST CORPORATION
(Exact name of registrant as specified in its charter)
-----------------------
DELAWARE 99-0156159
(State of incorporation) (I.R.S. Employer
Identification No.)
999 BISHOP STREET, HONOLULU, HAWAII 96813
(Address of principal executive offices) (Zip Code)
(808) 525-7000
(Registrant's telephone number, including area code)
-----------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or l5(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
The number of shares outstanding of each of the issuer's classes of common stock
as of April 30, 2001 was:
Class Outstanding
----------------------------- -----------------
Common Stock, $1.00 Par Value 68,635,656 Shares
Class A Common Stock, $1.00 Par Value 56,074,874 Shares
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2
PART I. FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets at March 31, 2001, December 31, 2000 and
March 31, 2000 2 - 3
Consolidated Statements of Income for the three months ended
March 31, 2001 and 2000 4
Consolidated Statements of Changes in Stockholders' Equity for the three months
ended March 31, 2001 and 2000 5
Consolidated Statements of Cash Flows for the three months ended
March 31, 2001 and 2000 6
Notes to Consolidated Financial Statements 7 - 9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10 - 26
Item 3. Quantitative and Qualitative Disclosures About Market Risk 26
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 28
SIGNATURES 29
EXHIBIT INDEX
1
3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BancWest Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS (Unaudited)
MARCH 31, December 31, March 31,
2001 2000 2000
----------- ----------- -----------
(in thousands)
ASSETS
Cash and due from banks $ 834,003 $ 873,599 $ 750,349
Interest-bearing deposits in other banks 365,261 5,972 245,510
Federal funds sold and securities purchased
under agreements to resell 373,000 307,100 217,359
Investment securities:
Held-to-maturity 86,764 92,940 125,890
Available-for-sale 2,103,515 1,960,780 2,086,309
Loans and leases:
Loans and leases 14,202,523 13,971,831 12,856,475
Less allowance for credit losses 186,246 172,443 162,666
----------- ----------- -----------
Net loans and leases 14,016,277 13,799,388 12,693,809
----------- ----------- -----------
Premises and equipment, net 288,989 276,012 279,757
Customers' acceptance liability 2,369 1,080 1,133
Core deposit intangible, net 77,365 56,640 62,878
Goodwill, net 679,107 599,139 619,281
Other real estate owned and repossessed
personal property 20,549 27,479 26,505
Other assets 572,253 456,937 419,507
----------- ----------- -----------
TOTAL ASSETS $19,419,452 $18,457,066 $17,528,287
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Domestic:
Interest-bearing $11,280,102 $10,899,009 $10,318,285
Noninterest-bearing 3,167,903 2,955,880 2,770,353
Foreign 262,168 273,250 237,780
----------- ----------- -----------
Total deposits 14,710,173 14,128,139 13,326,418
----------- ----------- -----------
Federal funds purchased and securities sold
under agreements to repurchase 648,008 577,620 603,965
Other short-term borrowings 114,526 91,448 363,817
Acceptances outstanding 2,369 1,080 1,133
Other liabilities 868,346 786,863 659,275
Long-term debt 781,039 632,423 603,560
Guaranteed preferred beneficial interests
in Company's junior subordinated debentures 250,000 250,000 100,000
----------- ----------- -----------
TOTAL LIABILITIES $17,374,461 $16,467,573 $15,658,168
----------- ----------- -----------
The accompanying notes are an integral part of these consolidated financial
statements.
2
4
BancWest Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS, CONTINUED (Unaudited)
MARCH 31, December 31, March 31,
2001 2000 2000
------------ ------------ ------------
(in thousands)
Stockholders' equity:
Preferred stock, par value $1 per share
Authorized and unissued - 50,000,000 shares $ -- $ -- $ --
Class A common stock, par value $1 per share
Authorized - 75,000,000 shares
Issued - 56,074,874 shares at March 31, 2001 and
December 31, 2000 and 54,539,936 shares at
March 31, 2000 56,075 56,075 54,540
Common stock, par value $1 per share
Authorized - 200,000,000 shares
Issued - 71,053,762, 71,041,450 and 72,530,010 shares at
March 31, 2001, December 31, 2000 and
March 31, 2000, respectively 71,054 71,041 72,530
Surplus 1,126,103 1,125,652 1,124,682
Retained earnings 808,410 770,350 666,931
Accumulated other comprehensive income, net 22,308 7,601 (10,977)
Treasury stock, at cost - 2,423,466, 2,565,581 and 2,433,765 shares
at March 31, 2001, December 31, 2000 and
March 31, 2000, respectively (38,959) (41,226) (37,587)
------------ ------------ ------------
TOTAL STOCKHOLDERS' EQUITY 2,044,991 1,989,493 1,870,119
------------ ------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 19,419,452 $ 18,457,066 $ 17,528,287
============ ============ ============
The accompanying notes are an integral part of these consolidated financial
statements.
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5
BancWest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
THREE MONTHS ENDED MARCH 31,
--------------------------------
2001 2000
------------ ------------
(in thousands, except number of
shares and per share data)
INTEREST INCOME
Interest and fees on loans $ 262,442 $ 234,145
Lease financing income 35,595 30,654
Interest on investment securities:
Taxable interest income 33,193 33,262
Exempt from Federal income taxes 118 275
Other interest income 7,503 3,051
------------ ------------
Total interest income 338,851 301,387
------------ ------------
INTEREST EXPENSE
Deposits 120,421 99,498
Short-term borrowings 10,218 11,353
Long-term debt 18,839 11,264
------------ ------------
Total interest expense 149,478 122,115
------------ ------------
Net interest income 189,373 179,272
Provision for credit losses 35,200 12,930
------------ ------------
Net interest income after provision for
credit losses 154,173 166,342
------------ ------------
NONINTEREST INCOME
Service charges on deposit accounts 20,436 16,992
Trust and investment services income 9,127 9,060
Other service charges and fees 18,374 17,988
Securities gains, net 41,300 --
Other 9,262 5,997
------------ ------------
Total noninterest income 98,499 50,037
------------ ------------
NONINTEREST EXPENSE
Salaries and wages 49,377 45,338
Employee benefits 17,973 13,847
Occupancy expense 16,235 15,357
Outside services 11,503 12,039
Intangible amortization 10,284 9,140
Equipment expense 7,532 7,186
Restructuring, integration and other
nonrecurring costs 3,935 --
Other 33,249 28,670
------------ ------------
Total noninterest expense 150,088 131,577
------------ ------------
Income before income taxes 102,584 84,802
Provision for income taxes 40,837 35,371
------------ ------------
NET INCOME $ 61,747 $ 49,431
============ ============
PER SHARE DATA(1) :
BASIC EARNINGS $ .50 $ .40
============ ============
DILUTED EARNINGS $ .49 $ .40
============ ============
CASH DIVIDENDS $ .19 $ .17
============ ============
AVERAGE SHARES OUTSTANDING(1) 124,657,896 124,629,350
============ ============
(1) Per share data and average shares outstanding were computed on a
combined basis using average Class A common stock and common stock.
The accompanying notes are an integral part of these consolidated financial
statements.
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6
BancWest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDERS' EQUITY (Unaudited)
Accumulated
Class A Other
Common Common Retained Comprehensive Treasury
Stock Stock Surplus Earnings Income, net Stock Total
-------- -------- ----------- --------- ------------- --------- -----------
(in thousands, except per share data)
Balance, December 31, 2000 $56,075 $ 71,041 $ 1,125,652 $ 770,350 $ 7,601 $(41,226) $ 1,989,493
Comprehensive income:
Net income -- -- -- 61,747 -- -- 61,747
Unrealized valuation adjustment,
net of tax and reclassification
adjustment -- -- -- -- 14,707 -- 14,707
------- -------- ----------- --------- -------- -------- -----------
Comprehensive income -- -- -- 61,747 14,707 -- 76,454
------- -------- ----------- --------- -------- -------- -----------
Issuance of common stock -- 13 5 -- -- -- 18
Incentive Plan for Key Executives -- -- 30 -- -- -- 30
Issuance of treasury stock under
Stock Incentive Plan -- -- 416 -- -- 2,267 2,683
Cash dividends ($.19 per share) -- -- -- (23,687) -- -- (23,687)
------- -------- ----------- --------- -------- -------- -----------
Balance, March 31, 2001 $56,075 $ 71,054 $ 1,126,103 $ 808,410 $ 22,308 $(38,959) $ 2,044,991
======= ======== =========== ========= ======== ======== ===========
Balance, December 31, 1999 $51,630 $ 75,419 $ 1,124,512 $ 638,687 $ (9,873) $(37,645) $ 1,842,730
Comprehensive income:
Net income -- -- -- 49,431 -- -- 49,431
Unrealized valuation adjustment,
net of tax and reclassification
adjustment -- -- -- -- (1,104) -- (1,104)
------- -------- ----------- --------- -------- -------- -----------
Comprehensive income -- -- -- 49,431 (1,104) -- 48,327
------- -------- ----------- --------- -------- -------- -----------
Conversion of common stock to
Class A common stock 2,910 (2,910) -- -- -- -- --
Issuance of common stock -- 21 172 -- -- -- 193
Incentive Plan for Key Executives -- -- (2) -- -- 58 56
Cash dividends ($.17 per share) -- -- -- (21,187) -- -- (21,187)
------- -------- ----------- --------- -------- -------- -----------
Balance, March 31, 2000 $54,540 $ 72,530 $ 1,124,682 $ 666,931 $(10,977) $(37,587) $ 1,870,119
======= ======== =========== ========= ======== ======== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
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7
BancWest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
THREE MONTHS ENDED MARCH 31,
---------------------------
2001 2000
--------- ---------
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 61,747 $ 49,431
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for credit losses 35,200 12,930
Depreciation and amortization 18,621 17,767
Income Taxes 61,624 35,122
Decrease (increase) in interest receivable 6,851 (7,653)
Decrease in interest payable (21,399) (12,630)
Increase in prepaid expenses (2,035) (4,384)
Securities gain, net (41,300) --
Accrued donation 5,000 --
Restructuring, integration and other nonrecurring costs 3,935 --
Other 23,442 (5,476)
--------- ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES 151,686 85,107
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in interest-bearing deposits
in other banks (359,289) (236,375)
Net decrease (increase) in Federal funds sold and
securities purchased under agreements to resell 159,100 (146,259)
Proceeds from maturity of held-to-maturity
investment securities 6,176 16,978
Proceeds from maturity of available-for-sale
investment securities 577,267 226,515
Purchase of available-for-sale investment securities (654,284) (446,654)
Purchase of bank owned life insurance (101,082) --
Net increase in loans and leases to customers (22,686) (347,553)
Net cash provided by acquisitions 632,965 --
Purchase of premises and equipment (5,121) (4,305)
Other (949) (167)
--------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 232,097 (937,820)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits (644,505) 448,466
Net increase in Federal funds purchased and securities
sold under agreements to repurchase 69,723 118,877
Net increase in other short-term borrowings 23,743 249,928
Proceeds from (payments on) long-term debt, net 148,616 (3,232)
Cash dividends paid (23,687) (21,187)
Proceeds from issuance of common stock 18 193
Proceeds from issuance of treasury stock 2,713 56
--------- ---------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (423,379) 793,101
--------- ---------
NET DECREASE IN CASH AND DUE FROM BANKS (39,596) (59,612)
CASH AND DUE FROM BANKS AT BEGINNING OF PERIOD 873,599 809,961
--------- ---------
CASH AND DUE FROM BANKS AT END OF PERIOD $ 834,003 $ 750,349
========= =========
SUPPLEMENTAL DISCLOSURES:
Interest paid $ 164,341 $ 134,745
========= =========
Income taxes paid (refund received) $ (20,788) $ 249
========= =========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Fair value of Concord securities received $ 41,300 $ --
========= =========
Loans converted into other real estate owned and
repossessed personal property $ 2,098 $ 5,383
========= =========
Loans made to facilitate the sale of other real estate owned $ 3,563 $ 1,948
========= =========
IN CONNECTION WITH BRANCH ACQUISITIONS, THE FOLLOWING
LIABILITIES WERE ASSUMED:
Fair value of assets acquired $ 14,682 $ --
Cash received 632,965 --
--------- ---------
LIABILITIES ASSUMED $ 647,647 $ --
========= =========
The accompanying notes are an integral part of these consolidated financial
statements.
6
8
BancWest Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of BancWest Corporation and
Subsidiaries (the "Company" or "we/our") conform with generally accepted
accounting principles and practices within the banking industry. The following
is a summary of significant accounting policies:
CONSOLIDATION
The consolidated financial statements of the Company include the
accounts of BancWest Corporation ("BWE") and its wholly-owned subsidiaries:
First Hawaiian Bank and its wholly-owned subsidiaries ("First Hawaiian"); Bank
of the West and its wholly-owned subsidiaries ("Bank of the West"); FHL Lease
Holding Company, Inc. and its wholly-owned subsidiary; First Hawaiian Capital I;
BancWest Capital I; and FHI International, Inc. All significant intercompany
balances and transactions have been eliminated in consolidation. In the opinion
of management, all adjustments (which included only normal recurring
adjustments) necessary for a fair presentation are reflected in the consolidated
financial statements.
RECLASSIFICATIONS
The 2000 Consolidated Financial Statements were reclassified in certain
respects to conform to the 2001 presentation. Such reclassifications did not
have a material effect on the Consolidated Financial Statements.
2. NEW PRONOUNCEMENTS
In September 2000, the Financial Accounting Standards Board ("FASB")
issued Statement of Accounting Standards ("SFAS") No. 140, "Accounting for
Transfer and Servicing of Financial Assets and Extinguishments of Liabilities"
(a replacement of SFAS No. 125). This statement revises the standards for
accounting for securitizations and other transfers of financial assets and
collateral and requires certain disclosures, but it carries over most of SFAS
No. 125's provisions without reconsideration. This statement is effective for
transfers and servicing of financial assets and extinguishments of liabilities
occurring after March 31, 2001. This statement is effective for the recognition
and reclassification of collateral and for disclosure relating to securitization
transactions and collateral for fiscal years ending after December 15, 2000. The
adoption of the recognition, reclassification and disclosure provisions of SFAS
No. 140 did not have a material effect on the Company's Consolidated Financial
Statements. The adoption of the transfers and servicing of financial assets and
extinguishments of liabilities provisions of SFAS No. 140 is not expected to
have a material effect on the Company's Consolidated Financial Statements.
In January 2001, the Company adopted SFAS No. 133 "Accounting for
Derivative Instruments and Hedging Activities," as amended by SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities -- Deferral of the
Effective Date of FASB Statement No. 133" and SFAS No. 138, "Accounting for
Certain Derivative Instruments and Certain Hedging Activities -- An Amendment of
FASB Statement No. 133." SFAS No. 133, as amended by SFAS Nos. 137 and 138,
requires the recognition of all derivative instruments in the statement of
financial position as either assets or liabilities and the measurement of
derivative instruments at fair value. The accounting for gains or losses
resulting from changes in the value of those derivatives depends on the intended
use of the derivative and whether it qualifies for hedge accounting. The
transition adjustment resulting from the adoption and implementation of SFAS No.
133, as amended by SFAS Nos. 137 and 138, did not have a material effect on the
Company's Consolidated Financial Statements. The adoption of these new standards
were not material because the Company does not engage in significant
transactions that are covered within the scope of SFAS No. 133, as amended by
SFAS Nos. 137 and 138, specifically as it relates to the use of derivative
financial instruments.
7
9
BancWest Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
3. COMMON STOCK INFORMATION
The following is a reconciliation of the numerators and denominators
used to calculate the Company's basic and diluted earnings per share for the
periods indicated:
THREE MONTHS ENDED MARCH 31,
----------------------------------------------------------------------------------------
2001 2000
------------------------------------------ ------------------------------------------
INCOME AVERAGE SHARES PER SHARE INCOME AVERAGE SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT (NUMERATOR) (DENOMINATOR) AMOUNT
----------- -------------- --------- ----------- -------------- ---------
(in thousands, except number of shares and per share data)
Basic:
Net income $61,747 124,657,896 $.50 $49,431 124,629,350 $.40
Effect of dilutive securities -
Stock Incentive
Plan options -- 1,473,325 -- -- 48,144 --
------- ----------- ---- ------- ----------- ----
Diluted:
Net income and
assumed conversions $61,747 126,131,221 $.49 $49,431 124,677,494 $.40
======= =========== ==== ======= =========== ====
4. IMPAIRED LOANS
The following table summarizes impaired loan information as of and for
the three months ended March 31, 2001 and 2000 and as of and for the year ended
December 31, 2000:
MARCH 31, 2001 DECEMBER 31, 2000 MARCH 31, 2000
-------------- ----------------- --------------
(in thousands)
Impaired loans with related allowance for credit
losses calculated under SFAS No. 114 $ 110,933 $ 77,518 $ 76,150
Impaired loans with no related allowance for credit
losses calculated under SFAS No. 114 35,601 35,358 14,440
-------------- -------------- --------------
Impaired loans $ 146,534 $ 112,876 $ 90,590
============== ============== ==============
Total allowance for credit losses on impaired loans $ 17,881 $ 14,702 $ 15,319
Average impaired loans 129,706 93,572 93,005
Interest income recognized on impaired loans 634 5,099 562
We consider loans to be impaired when it is probable that the Company
will be unable to collect all amounts due according to the contractual terms of
the loan agreement, including scheduled interest payments. For a loan that has
been restructured, the contractual terms of the loan agreement refer to the
terms of the original loan agreement. Not all impaired loans are necessarily
placed on nonaccrual status; for example, restructured loans performing under
restructured terms beyond a specific period may be classified as accruing, but
may still be deemed impaired. Impaired loans without a related allowance for
credit losses are generally collateralized by assets with fair values in excess
of the recorded investment in the loans. Interest payments on impaired loans are
generally applied to reduce the outstanding principal amounts of such loans.
5. MERGER WITH BANCWEST CORPORATION AND RELATED MATTERS
On November 1, 1998, we consummated the merger (the "BancWest Merger")
of the former BancWest Corporation, parent company of Bank of the West, with and
into First Hawaiian, Inc. ("FHI"). FHI, the surviving corporation of the
BancWest Merger, changed its name to BancWest Corporation on November 1, 1998.
We recorded pre-tax restructuring, BancWest Merger-related and other
nonrecurring costs totaling $25.5 million in 1998. In connection with recording
these costs, a liability of $11.3 million was recorded in 1998, of which $2.5
million remained accrued as of December 31, 2000. During the first three months
of 2001, this liability was reduced by $484,000 related to excess leased
commercial properties. As of March 31, 2001, $2 million related to excess leased
commercial properties remained accrued. The majority of the amount related to
excess leased commercial property will be fully amortized by December 2002.
6. NEVADA AND NEW MEXICO BRANCH ACQUISITIONS
In the first quarter of 2001, we consummated the acquisitions of 30
branches in Nevada and New Mexico. These branches were divested by First
Security Corporation in connection with its merger with Wells Fargo & Company.
The acquisitions added $199.5 million in loans and $1.074 billion in deposits at
March 31, 2001. We incurred a total $5.2 million in integration costs related to
these branch acquisitions since the fourth quarter of 2000, with $3.9 million
being recorded in the first quarter of 2001.
8
10
BancWest Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
7. OPERATING SEGMENTS
As of March 31, 2001, we had two reportable operating segments: Bank of
the West and First Hawaiian. The Bank of the West segment operates primarily on
the mainland United States. The First Hawaiian segment operates primarily in the
State of Hawaii.
The financial results of our operating segments are presented on an accrual
basis. There are no significant differences between the accounting policies of
the segments as compared to the Company's consolidated financial statements. We
evaluate the performance of these segments and allocate resources to them based
on net interest income and net income. There are no material intersegment
revenues.
The tables below present information about the Company's operating
segments as of or for the three months ended March 31, 2001 and 2000,
respectively.
THREE MONTHS ENDED MARCH 31,
--------------------------------------------------------------------------------------
BANK
OF THE FIRST RECONCILING CONSOLIDATED
WEST HAWAIIAN OTHER ITEMS TOTALS
------------ ------------ ------------ ------------ ------------
(in millions)
2001
NET INTEREST INCOME $ 112 $ 81 $ (4) $ -- $ 189
Net income 34 31 (3) -- 62
Segment assets 11,982 7,517 3,339 (3,419) 19,419
2000
Net interest income $ 102 $ 79 $ (2) $ -- $ 179
Net income 25 26 (2) -- 49
Segment assets 10,171 7,334 2,806 (2,783) 17,528
The reconciling items in the tables above are primarily intercompany
eliminations.
9
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Certain matters contained in this filing are "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. BancWest's
forward-looking statements (such as those concerning its plans, expectations,
estimates, strategies, projections and goals) involve risks and uncertainties
that could cause actual results to differ materially from those discussed in the
statements. Readers should carefully consider those risks and uncertainties in
reading this report. Factors that could cause or contribute to such differences
include, but are not limited to: (1) global, national and local economic and
market conditions; (2) the level and volatility of interest rates and currency
values; (3) government fiscal and monetary policies; (4) credit risks inherent
in the lending process; (5) loan and deposit demand in the geographic regions
where we conduct business; (6) the impact of intense competition in the rapidly
evolving banking and financial services business; (7) extensive federal and
state regulation of our business, including the effect of current and pending
legislation and regulations; (8) whether expected revenue enhancements and cost
savings are realized within expected time frames; (9) whether Bank of the West
is successful in retaining and further developing loan, deposit, customer and
employee relationships relating to its recently acquired Nevada and New Mexico
branches; (10) matters relating to the integration of our business with that of
past and future merger partners, including the impact of combining these
businesses on revenues, expenses, deposit attrition, customer retention and
financial performance; (11) our reliance on third parties to provide certain
critical services, including data processing; (12) the proposal or adoption of
changes in accounting standards by the Financial Accounting Standards Board, the
Securities and Exchange Commission or other standard setting bodies; (13)
technological changes; (14) other risks and uncertainties discussed in this
document or detailed from time to time in other Securities and Exchange
Commission filings that we make, including our 2000 Annual Report on Form 10-K;
and (15) management's ability to manage risks that result from these and other
factors.
BancWest's forward-looking statements are based on management's current views
about future events. Those statements speak only as of the date on which they
are made. We do not intend to update forward-looking statements, and we disclaim
any obligation or undertaking to update or revise any such statements to reflect
any change in our expectations or any change in events, conditions,
circumstances or assumptions on which forward-looking statements are based.
We analyze our performance on a net income basis determined in accordance with
generally accepted accounting principles, as well as on an operating basis
before merger-related, integration and other nonrecurring costs and/or the
effects of the amortization of intangible assets referred to in this analysis as
"operating" and "cash" earnings, respectively. Operating earnings, cash earnings
and operating cash earnings (the combination of the effect of adjustments for
both cash and operating results), as well as information calculated from them,
and related discussions are presented as supplementary information in this
analysis to enhance the readers' understanding of, and highlight trends in, our
core financial results excluding the effects of discreet business acquisitions
and other transactions. We include these additional disclosures because this
information is both relevant and useful in understanding the performance of the
company as management views it. Operating earnings and cash earnings should not
be viewed as a substitute for net income and earnings per share, among other
gauges of performance, as determined in accordance with generally accepted
accounting principles. Merger-related, integration and other nonrecurring costs,
the amortization of intangible assets and other items excluded from net income
to derive operating and cash earnings may be significant and may not be
comparable to those of other companies.
BNP PARIBAS ACQUISITION AGREEMENT
BancWest Corporation, BNP Paribas ("BNP Paribas"), and Chauchat L.L.C., a
Delaware limited liability company and wholly-owned subsidiary of BNP Paribas
("Chauchat L.L.C."), entered into a definitive Agreement and Plan of Merger,
dated as of May 8, 2001 (the "Merger Agreement"). Pursuant to the Merger
Agreement, Chauchat L.L.C. will merge with and into BancWest, with BancWest as
the surviving corporation (the "Merger"), and BancWest will become a
wholly-owned subsidiary of BNP Paribas. As a result of the Merger, (i) each
issued and outstanding share of BancWest common stock (other than shares owned
by BancWest or any wholly-owned subsidiary of BancWest and shares held by a
holder who properly demands appraisal rights under Delaware law) will be
converted into the right to receive $35.00 in cash and (ii) each issued and
outstanding share of BancWest Class A common stock will be converted into a
share of common stock of the surviving corporation. Consummation of the Merger
is subject to various conditions, including receipt of the approval of the
Merger Agreement by BancWest's stockholders and receipt of requisite regulatory
approvals. The Merger Agreement and a press release related to the execution of
the Merger Agreement were filed with a Report on a Form 8-K on May 11, 2001.
10
12
BANCWEST CORPORATION AND SUBSIDIARIES
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)
- ------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31,
---------------------------
(dollars in thousands, except per share data) 2001 2000
- ------------------------------------------------------------------------------------------------------------
EARNINGS AND DIVIDENDS:
Net income $ 61,747 $ 49,431
Operating earnings (1) 64,089 49,431
Cash earnings (2) 70,303 57,612
Operating cash earnings (1),(2) 72,645 57,612
Cash dividends 23,687 21,187
PER SHARE DATA:
Diluted:
Earnings $ .49 $ .40
Operating earnings (1) .51 .40
Cash earnings (2) .56 .46
Operating cash earnings (1),(2) .58 .46
Cash dividends .19 .17
Book value (at March 31) 16.40 15.00
Market price (NYSE close at March 31) 24.00 19.75
SELECTED FINANCIAL RATIOS:
Return on average total assets (ROA) 1.33% 1.18%
Operating return on average total assets (ROA)(1) 1.38 1.18
Return on average tangible assets(3) 1.62 1.44
Return on average stockholders' equity (ROE) 12.26 10.74
Operating return on average stockholders' equity (ROE)(1) 12.73 10.74
Return on average tangible stockholders' equity (3) 22.26 19.92
Net interest margin (taxable-equivalent basis) 4.58 4.82
Allowance for credit losses to total loans and leases (at March 31) 1.31 1.27
Nonperforming assets to total assets (at March 31) .66 .70
Allowance for credit losses to nonperforming loans and leases (at March 31) 1.72X 1.68x
(1) Excluding after-tax restructuring, integration and other nonrecurring costs
of $2,342,000 in the first quarter of 2001.
(2) Excluding amortization of goodwill and core deposit intangible.
(3) Defined as operating cash earnings as a percentage of average total assets
or average stockholders' equity minus average goodwill and core deposit
intangible.
11
13
NET INCOME
The following table compares net income, operating earnings, cash earnings and
operating cash earnings for the three months ended March 31, 2001 to the same
period in 2000:
THREE MONTHS ENDED MARCH 31, 2001(1) 2000 % Change
------------ ------------ ------------
(in thousands)
Net income $ 61,747 $ 49,431 24.9%
Operating earnings (2) 64,089 49,431 29.7
Cash earnings(3) 70,303 57,612 22.0
Operating cash earnings (2),(3) 72,645 57,612 26.1
(1) Includes $7.6 million after-tax net effect of the Concord security
gain, additional provision for credit losses and other nonrecurring
items. Excluding the after-tax net effect of the gain, additional
provision and other nonrecurring items, first quarter 2001 earnings
and cash earnings were $54.2 million and $62.7 million,
respectively. Operating earnings and operating cash earnings,
excluding the net after-tax effect of the aforementioned items, were
$56.5 million and $65.1 million, respectively.
(2) Excluding after-tax integration costs of $2.3 million related to the
Nevada and New Mexico branch acquisitions in the first quarter of
2001.
(3) Excluding after-tax amortization of goodwill and core deposit
intangibles.
The increases in net income, operating earnings, cash earnings and operating
cash earnings for the first three months of 2001 compared to the same period in
2000 were primarily due to a $24.6 million after-tax gain stemming from the sale
of the Company's approximate 5% interest in Star Systems, Inc. ("Concord
security gain"), which was acquired by Concord EFS, Inc. In addition, revenues
increased because of the growth in loan volumes in the mainland United States,
contribution from 30 newly acquired branches in Nevada and New Mexico in 2001
and increased noninterest income. These increases were partially offset by a $23
million (pre-tax) additional provision for credit losses, a committed donation
to a private charitable foundation of $5 million (pre-tax) and other
nonrecurring items totaling $398,000 (pre-tax). Considered together, the
after-tax net effect of the Concord security gain, the additional provision for
credit losses, the charitable contribution and the other nonrecurring items
added $7.6 million to our net income.
The following table shows diluted earnings, operating earnings, cash earnings
and operating cash earnings per share for the three months ended March 31, 2001
compared to the same period in 2000. All per-share data have been calculated to
include both common and Class A common shares.
2001(1) 2000 % Change
------------ ------------ ------------
THREE MONTHS ENDED MARCH 31,
Diluted earnings $ .49 $ .40 22.5%
Diluted operating earnings(2) .51 .40 27.5
Diluted cash earnings (3) .56 .46 21.7
Diluted operating cash earnings(2),(3) .58 .46 26.1
(1) Includes $7.6 million after-tax net effect of the Concord security
gain, additional provision for credit losses and other nonrecurring
items. Excluding the after-tax net effect of the gain, additional
provision and other nonrecurring items, first quarter 2001 earnings
and cash earnings per share were $.43 and $.50, respectively.
Operating earnings and operating cash earnings per share, excluding
the net after-tax effect of the aforementioned items, were $.45 and
$.52, respectively.
(2) Excluding after-tax integration costs of $2.3 million related to the
Nevada and New Mexico branch acquisitions in the first quarter of
2001.
(3) Excluding after-tax amortization of goodwill and core deposit
intangibles.
12
14
NET INCOME, CONTINUED
The table below shows the return on average total assets, the return on average
tangible assets, the return on average stockholders' equity and the return on
average tangible stockholders' equity for the first three months of 2001
compared to the same period in 2000. The return on average tangible assets is
defined as operating cash earnings as a percentage of average total tangible
assets. The return on average tangible stockholders' equity is defined as
operating cash earnings as a percentage of average stockholders' equity minus
average goodwill and core deposit tangibles.
2001 2000 % Change
---------- ---------- ----------
Return on average total assets 1.33% 1.18% 12.7%
Operating return on average total assets(1) 1.38 1.18 16.9
Return on average tangible assets(1) 1.62 1.44 12.5
Return on average stockholders' equity 12.26 10.74 14.2
Operating return on average stockholders' equity(1) 12.73 10.74 18.5
Return on average tangible stockholders' equity(1) 22.26 19.92 11.7
(1) Ratios are computed excluding after-tax integration costs related to the
Nevada and New Mexico branch acquisitions in the first quarter of 2001.
The increases in the above returns were a result of the higher profitability of
our assets and stockholders' equity, with revenues increasing at a faster pace
than expenses for the first three months of 2001 compared to the same period in
2000.
NET INTEREST INCOME
The following table compares net interest income on a taxable-equivalent basis
for the three months ended March 31, 2001 to the same period in 2000:
THREE MONTHS ENDED MARCH 31, 2001 2000 % Change
------------ ------------ ------------
(in thousands)
Net interest income $ 189,448 $ 179,437 5.6%
The increase in net interest income for the three months ended March 31, 2001
over the same period in 2000 was primarily due to a 10-basis-point rise (1%
equals 100 basis points) in the yield on average earning assets and an increase
in average earning assets of 11.9%, or $1.8 billion, for the three months ended
March 31, 2001, partially offset by a 34-basis-point increase in the rate paid
on funding sources. In addition, the higher net interest income is also a result
of higher average noninterest-bearing deposits, which increased by $392.2
million, or 15.2%, in the first quarter of 2001 over the same period in 2000.
13
15
NET INTEREST INCOME, CONTINUED
The following table compares net interest margin for the three months ended
March 31, 2001 to the same period in 2000:
THREE MONTHS ENDED MARCH 31, Change
2001 2000 (basis points)
-------------- -------------- --------------
Yield on average earning assets 8.19% 8.09% 10
Rate paid on funding sources 3.61 3.27 34
Net interest margin 4.58 4.82 (24)
The decrease in the net interest margin in the first three months of 2001 as
compared to the same period in 2000 is primarily due to the 34-basis-point
increase in the rate paid on funding sources, reflecting a rapidly changing
interest rate environment over the last 12 months. The Federal Reserve's
benchmark Federal Funds rate has changed six times in the period between January
2000 and March 2001. Although there have been three 50-basis-point decreases in
the first quarter of 2001, the effects of these decreases will take some time to
be fully reflected in the repricing of our assets and liabilities. For further
discussions on the impact that the changing interest environment has had on the
rate paid on deposits see page 18.
This increase in the rate paid on funding sources was partially offset by the
10-basis-point increase on the yield on average earning assets. The interest
rate spread, the difference between the yield on average earning assets and the
rate paid on interest-bearing deposits and liabilities, has decreased by 37
basis points to 3.54% in the first three months of 2001, as compared to the same
period in 2000.
THREE MONTHS ENDED MARCH 31, 2001 2000 % Change
----------- ----------- -----------
(in thousands)
Average earning assets $16,774,604 $14,988,195 11.9%
Average loans and leases 14,145,518 12,655,332 11.8
Average interest-bearing
deposits and liabilities 13,031,723 11,747,561 10.9
The increase in average earning assets was primarily due to increases in average
loans and leases. The increase in average loans and leases was primarily due to
the growth of our Bank of the West operating segment's loan and lease portfolio,
with significant increases in consumer loan and lease financing volumes. Also
contributing to the increase in average loans and leases was the addition of the
30 branches in Nevada and New Mexico in the first quarter of 2001. The acquired
branches added $134 million in average loans and leases.
The increase in average interest-bearing deposits and liabilities was primarily
due to an increase in interest-bearing deposits and long-term debt and capital
securities. Expansion of our customer deposit base, primarily from our Bank of
the West operating segment, contributed to the increase. The branches acquired
in Nevada and New Mexico added $671 million in average deposits in the first
quarter of 2001.
14
16
The following table sets forth consolidated average balance sheets, an analysis
of interest income/expense and average yield/rate for each major category of
interest-earning assets and interest-bearing liabilities for the periods
indicated on a taxable-equivalent basis. The tax equivalent adjustment is made
for items exempt from Federal income taxes (assuming a 35% tax rate for 2001 and
2000) to make them comparable with taxable items before any income taxes are
applied.
THREE MONTHS ENDED MARCH 31,
--------------------------------------------------------------------------------------------
2001 2000
------------------------------------------- -------------------------------------------
INTEREST Interest
AVERAGE INCOME/ YIELD/ Average Income/ Yield/
ASSETS BALANCE EXPENSE RATE (1) Balance Expense Rate (1)
----------- ----------- ----------- ----------- ----------- -----------
(dollars in thousands)
Earning assets:
Interest-bearing deposits
in other banks $ 250,727 $ 3,610 5.84% $ 121,108 $ 1,634 5.43%
Federal funds sold and
securities purchased
under agreements to
resell 278,488 3,893 5.67 97,694 1,417 5.83
Investment securities(2) 2,099,871 33,385 6.45 2,114,061 33,701 6.41
Loans and leases (3),(4) 14,145,518 298,038 8.54 12,655,332 264,800 8.42
----------- ----------- ----------- -----------
Total average earning assets 16,774,604 338,926 8.19 14,988,195 301,552 8.09
----------- -----------
Nonearning assets 2,098,985 1,832,245
----------- -----------
Total assets $18,873,589 $16,820,440
=========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest-bearing deposits
and liabilities:
Deposits:
Domestic:
Interest-bearing demand $ 313,906 $ 644 0.83% $ 291,174 $ 1,067 1.47%
Savings 4,328,651 25,230 2.36 4,010,723 22,769 2.28
Time 6,428,909 92,469 5.83 5,734,517 73,806 5.18
Foreign 203,398 2,078 4.14 191,834 1,856 3.89
----------- ----------- ----------- -----------
Total interest-bearing
deposits 11,274,864 120,421 4.33 10,228,248 99,498 3.91
Short-term borrowings 743,738 10,218 5.57 814,791 11,353 5.60
Long-term debt and
capital securities 1,013,121 18,839 7.54 704,522 11,264 6.43
----------- ----------- ----------- -----------
Total interest-bearing
deposits and
liabilities 13,031,723 149,478 4.65 11,747,561 122,115 4.18
----------- ----------- ----------- ----------- ----------- -----------
Interest rate spread 3.54% 3.91%
=========== ===========
Noninterest-bearing demand
deposits 2,978,114 2,585,877
Other liabilities 821,333 636,630
----------- -----------
Total liabilities 16,831,170 14,970,068
Stockholders' equity 2,042,419 1,850,372
----------- -----------
Total liabilities and
stockholders' equity $18,873,589 $16,820,440
=========== ===========
Net interest income
and margin on average
earning assets 189,448 4.58% 179,437 4.82%
=========== ===========
Tax equivalent adjustment 75 165
----------- -----------
Net interest income $ 189,373 $ 179,272
=========== ===========
(1) Annualized.
(2) Average debt investment securities were computed based on historical
amortized cost, excluding the effects of SFAS No. 115 adjustments.
(3) Nonaccruing loans and leases have been included in computations of average
loan balances.
(4) Interest income for loans included loan fees of $8,729 and $7,357 for 2001
and 2000, respectively.
15
17
INVESTMENT SECURITIES
HELD-TO-MATURITY
The following table presents the amortized cost, unrealized gains and losses,
and fair values of held-to-maturity investment securities as of the dates
indicated:
MARCH 31, December 31, March 31,
2001 2000 2000
------------ ------------ ------------
(in thousands)
Amortized cost $ 86,764 $ 92,940 $ 125,890
Unrealized gains 76 15 --
Unrealized losses (430) (1,330) (4,357)
------------ ------------ ------------
Fair value $ 86,410 $ 91,625 $ 121,533
============ ============ ============
Held-to-maturity investment securities decreased by $6.2 million, or 6.6%,
compared to December 31, 2000 and by $39.1 million, or 31.1%, compared to March
31, 2000, principally due to maturities of the investment securities.
AVAILABLE-FOR-SALE
The following table presents the amortized cost, unrealized gains and losses,
and fair values of available-for-sale investment securities as of the dates
indicated:
MARCH 31, December 31, March 31,
2001 2000 2000
------------- ------------- -------------
(in thousands)
Amortized cost $ 2,066,255 $ 1,948,029 $ 2,102,916
Unrealized gains 38,310 15,934 8,968
Unrealized losses (1,050) (3,183) (25,575)
------------- ------------- -------------
Fair value $ 2,103,515 $ 1,960,780 $ 2,086,309
============= ============= =============
There were no gross realized gains and losses on available-for-sale investment
securities for the three months ended March 31, 2001 and 2000, respectively.
CONCORD SECURITY GAIN
The $41.3 million pre-tax securities gain that was realized in the first quarter
of 2001 relates to the merger between Star System, Inc. ("Star") and Concord
EFS, Inc. ("Concord") on February 1, 2001. All of the outstanding shares of Star
were exchanged for Concord shares in the merger. BancWest owned approximately 5%
of the shares of Star Systems, Inc., which were reported on our Consolidated
Balance Sheet in other assets due to certain provisions of SFAS No. 115
"Accounting for Certain Investments in Debt and Equity Securities." The Concord
shares that we received in the merger are reported as available-for-sale
securities as of February 1, 2001. The gain reflects the value of the Concord
shares as of February 1, 2001, adjusted for a 25% marketability discount because
these shares remain restricted and unregistered. Once these shares become
unrestricted and registered, BancWest may record an additional gain based on
their value at disposition.
16
18
LOANS AND LEASES
The following table sets forth the loan and lease portfolio by major categories
and loan and lease mix at March 31, 2001, December 31, 2000 and March 31, 2000:
MARCH 31, 2001 December 31, 2000 March 31, 2000
-------------------------- -------------------------- --------------------------
AMOUNT % Amount % Amount %
----------- ----------- ----------- ----------- ----------- -----------
(dollars in thousands)
Commercial, financial and agricultural $ 2,562,244 18.0% $ 2,604,590 18.6% $ 2,386,466 18.6%
Real estate:
Commercial 2,758,034 19.4 2,618,312 18.7 2,459,271 19.1
Construction 406,059 2.9 405,542 2.9 402,837 3.1
Residential:
Insured, guaranteed or
conventional 1,802,486 12.7 1,919,017 13.7 1,900,634 14.8
Home equity credit lines 453,886 3.2 441,150 3.2 442,883 3.4
----------- ----------- ----------- ----------- ----------- -----------
Total real estate loans 5,420,465 38.2 5,384,021 38.5 5,205,625 40.4
----------- ----------- ----------- ----------- ----------- -----------
Consumer 3,775,198 26.6 3,599,954 25.8 3,093,137 24.1
Lease financing 2,106,486 14.8 2,038,516 14.6 1,825,224 14.2
Foreign 338,130 2.4 344,750 2.5 346,023 2.7
----------- ----------- ----------- ----------- ----------- -----------
Total loans and leases 14,202,523 100.0% 13,971,831 100.0% 12,856,475 100.0%
=========== =========== ===========
Less allowance for credit losses 186,246 172,443 162,666
----------- ----------- -----------
Total net loans and leases $14,016,277 $13,799,388 $12,693,809
=========== =========== ===========
Total loans and leases to:
Total assets 73.1% 75.7% 73.3%
Total earning assets 83.8% 86.4% 83.7%
Total deposits 96.5% 98.9% 96.5%
The loan and lease portfolio is the largest component of total earning assets
and accounts for the greatest portion of total interest income. At March 31,
2001, total net loans and leases were $14.0 billion, representing increases of
1.6% and 10.4% over December 31, 2000 and March 31, 2000, respectively. The
increase in loans as of March 31, 2001, as compared to March 31, 2000, was
primarily due to increases in consumer loans and lease financing, primarily in
our Bank of the West operating segment. Also contributing to the increase in the
loans in the Bank of the West operating segment was the $199.5 million in loans
acquired with the branches in Nevada and New Mexico. The increase was partially
offset by decreases in commercial and real estate loan categories and certain
consumer loans in our First Hawaiian operating segment.
Commercial, financial and agricultural loans as of March 31, 2001 decreased
$42.3 million, or 1.6%, over December 31, 2000, and increased $175.8 million, or
7.4%, over March 31, 2000. The Company continues its efforts to diversify its
loan and lease portfolio, both geographically and by industry, with credit
extensions on the mainland United States accounting for the majority of the
increase in loan and lease balances and the geographic and industry
diversification during the three months ended March 31, 2001.
Commercial real estate loans increased $139.7 million, or 5.3%, from December
31, 2000, and increased $298.8 million, or 12.1%, from March 31, 2000. The
increase over the past twelve months was primarily due to the growth in our Bank
of the West operating segment.
17
19
LOANS AND LEASES, CONTINUED
Consumer loans as of March 31, 2001 increased $175.2 million, or 4.9%, over
December 31, 2000, and $682.1 million, or 22.1%, over March 31, 2000. Consumer
loans consist primarily of direct and indirect automobile, recreational vehicle,
marine, credit card and unsecured financing. The increase in consumer loans at
March 31, 2001 as compared to December 31, 2000 and March 31, 2000 was primarily
a result of growth in our Bank of the West operating segment on the mainland
United States.
Lease financing as of March 31, 2001 increased $68.0 million, or 3.3%, over
December 31, 2000, and $281.3 million, or 15.4%, over March 31, 2000. The
increase in lease financing from March 31, 2000 was primarily due to an increase
in the automobile lease portfolio in our Bank of the West operating segment. The
increase in lease financing at March 31, 2001, as compared to December 31, 2000,
was primarily due to increases on the mainland United States.
The Company's foreign loans are principally in Guam and Saipan. Foreign loans as
of March 31, 2001 decreased $6.6 million, or 1.9%, compared to December 31,
2000, with approximately 93% domiciled in Guam and Saipan.
Loan concentrations are considered to exist when there are amounts loaned to
multiple borrowers engaged in similar activities, which would cause them to be
similarly impacted by economic or other conditions. At March 31, 2001, we did
not have a concentration of loans greater than 10% of total loans which is not
otherwise disclosed as a category of loans as shown in the above table.
DEPOSITS
Deposits are the largest component of our total liabilities and account for the
greatest portion of total interest expense. At March 31, 2001, total deposits
were $14.7 billion, an increase of 10.4% over March 31, 2000. The increase was
primarily due to the growth in our customer deposit base, primarily in the Bank
of the West operating segment, including the newly acquired branches in Nevada
and New Mexico, and various deposit product programs that we initiated.
The increase in nearly all of the rates paid on deposits reflects the rising
interest rate environment for most of 2000, caused primarily by rate increases
by the Federal Reserve's Open Market Committee. The 75-basis-point total
increase in the benchmark Federal Funds rate in 2000 was followed by three sharp
and rapid 50-basis-point decreases in the first quarter of 2001. The rates paid
on deposits reflect this rapidly changing interest rate environment at different
speeds, due to the repricing characteristics of each type of deposit. Time
deposits, which generally reprice more slowly than other deposits, do not yet
fully reflect the sharp decreases in interest rates implemented in 2001, while
interest-bearing and savings deposits, which can be repriced more rapidly, are
more reflective of the current decrease in the interest rate environment. The
deposits in the foreign category are a mixture of time, savings and other
interest-bearing deposits; therefore, its rate reflects both types of repricing
characteristics. Additional information on our average deposit balances and
rates paid is provided in the table on page 15.
18
20
NONPERFORMING ASSETS
Nonperforming assets at March 31, 2001, December 31, 2000 and March 31, 2000 are
as follows:
MARCH 31, December 31, March 31,
2001 2000 2000
------------- ------------- -------------
(dollars in thousands)
Nonperforming Assets:
Nonaccrual:
Commercial, financial and agricultural $ 56,165 $ 42,089 $ 15,852
Real estate:
Commercial 15,086 15,331 29,217
Construction 119 403 2,151
Residential:
Insured, guaranteed, or conventional 10,642 11,521 17,789
Home equity credit lines -- -- 728
------------- ------------- -------------
Total real estate loans 25,847 27,255 49,885
------------- ------------- -------------
Consumer 4,671 3,257 1,634
Lease financing 8,769 6,532 5,210
Foreign 5,474 5,496 4,879
------------- ------------- -------------
Total nonaccrual loans and leases 100,926 84,629 77,460
------------- ------------- -------------
Restructured:
Commercial, financial and agricultural 957 927 950
Real estate:
Commercial 5,312 7,055 7,170
Construction -- -- 9,899
Residential:
Insured, guaranteed, or conventional 938 937 1,114
Home equity credit lines -- -- --
------------- ------------- -------------
Total real estate loans 6,250 7,992 18,183
------------- ------------- -------------
Total restructured loans and leases 7,207 8,919 19,133
------------- ------------- -------------
Total nonperforming loans and leases 108,133 93,548 96,593
Other real estate owned and repossessed personal property 20,549 27,479 26,505
------------- ------------- -------------
Total nonperforming assets $ 128,682 $ 121,027 $ 123,098
============= ============= =============
Past due loans and leases(1):
Commercial, financial and agricultural $ 10,803 $ 6,183 $ 2,906
Real estate:
Commercial 411 1,987 4,181
Construction -- -- --
Residential:
Insured, guaranteed, or conventional 3,274 3,387 6,576
Home equity credit lines 332 499 606
------------- ------------- -------------
Total real estate loans 4,017 5,873 11,363
------------- ------------- -------------
Consumer 2,376 3,719 2,433
Lease financing 177 113 116
Foreign 1,237 1,321 1,392
------------- ------------- -------------
Total past due loans and leases $ 18,610 $ 17,209 $ 18,210
============= ============= =============
Nonperforming assets to total loans and leases
and other real estate owned and
repossessed personal property (end of period):
Excluding past due loans and leases .90% .86% .96%
Including past due loans and leases 1.04% .99% 1.10%
Nonperforming assets to total assets (end of period):
Excluding past due loans and leases .66% .66% .70%
Including past due loans and leases .76% .75% .81%
(1) Represents loans and leases which are past due 90 days or more as to
principal and/or interest, are still accruing interest and are adequately
collateralized and in the process of collection.
19
21
NONPERFORMING ASSETS, CONTINUED
Nonperforming assets at March 31, 2001 were $128.7 million, or .90% of total
loans and leases and other real estate owned and repossessed personal property
("OREO"), compared to .96% at March 31, 2000. Nonperforming assets at March 31,
2001 were .66% of total assets, compared to .70% at March 31, 2000.
Nonperforming assets at March 31, 2001 increased by $7.7 million, or 6.3%, from
December 31, 2000. The increase in the nonaccrual commercial, financial and
agricultural loans was primarily due to a $12.7 million commercial credit to a
West Coast franchise operator added by Bank of the West. The decreases in real
estate -- commercial and residential loans were attributable to the transfer of
nonaccrual loans and leases to OREO, payoffs and partial paydowns of nonaccrual
loans and leases. These decreases were partially offset by increases in the
consumer and lease financing components of nonaccrual loans and leases,
primarily due to our growing loan and lease volumes in these two categories. The
increase in nonperforming loans and leases was partially offset by a decrease in
OREO, primarily due to reductions in other real estate owned in the First
Hawaiian operating segment. Included in nonperforming assets are loans to small
businesses that were partially guaranteed by the Small Business Administration
("SBA"). The outstanding loan and SBA guarantee amounts were: $13.5 million and
$5.2 million at March 31, 2001; $9.8 million and $7.3 million at December 31,
2000; and $10.5 million and $7.9 million at March 31, 2000, respectively.
Nonperforming assets at March 31, 2001 increased by $5.6 million, or 4.5%, from
March 31, 2000. The increase was primarily attributable to increases in
nonaccrual commercial, financial and agricultural loans, consumer and lease
financing loans, which were partially offset by decreases in all components of
nonaccrual real estate loans and restructured real estate -- commercial loans.
We generally place a loan or lease on nonaccrual status when we believe that
collection of principal or income has become doubtful or when loans and leases
are 90 days past due as to principal or income, unless they are well secured and
in the process of collection. We may make an exception to the general
90-day-past-due rule when the fair value of the collateral exceeds our recorded
investment in the loan or when other factors indicate that the borrower will
shortly bring the loan current. While the majority of consumer loans and leases
are subject to our general policies regarding nonaccrual loans, certain past-due
consumer loans and leases are not placed on nonaccrual status, because they are
charged off upon reaching a predetermined delinquency status varying from 120 to
180 days, depending on product type.
When we place a loan or lease on nonaccrual status, previously accrued and
uncollected interest is reversed against interest income of the current period.
When we receive a cash interest payment on a nonaccrual loan, we apply it as a
reduction of the principal balance when we have doubts about the ultimate
collection of the principal. Otherwise, we record such payments as income.
Nonaccrual loans and leases are generally returned to accrual status when they:
(1) become current as to principal and interest or (2) become both well secured
and in the process of collection.
Other than the loans listed, we were not aware of any significant potential
problem loans where possible credit problems of the borrower caused us to
seriously question the borrower's ability to repay the loan under existing
terms.
Loans past due 90 days or more and still accruing interest totaled $18.6 million
at March 31, 2001, an increase of $400,000 or 2.2%, from March 31, 2000. Loans
past due 90 days or more and still accruing interest increased by $1.4 million,
or 8.1%, from December 31, 2000 to March 31, 2001. The increase is primarily due
to higher commercial, financial and agricultural loan delinquencies, which were
partially offset by decreases in real estate, consumer and foreign loans. All of
the loans that are past due 90 days or more and still accruing interest are, in
our judgment, adequately collateralized and in the process of collection.
Hawaii has finally begun to recover from the economic stagnation that plagued it
through much of the 1990's. This improvement in Hawaii's economic condition is
one of the factors that led to the decrease in nonperforming assets in the First
Hawaiian operating segment.
20
22
PROVISION AND ALLOWANCE FOR CREDIT LOSSES
The following table sets forth the activity in the allowance for credit losses
for the periods indicated:
THREE MONTHS ENDED MARCH 31,
---------------------------------------
2001 2000
-------------- --------------
(dollars in thousands)
Loans and leases outstanding (end of period) $ 14,202,523 $ 12,856,475
============== ==============
Average loans and leases outstanding $ 14,145,518 $ 12,655,332
============== ==============
Allowance for credit losses:
Balance at beginning of period $ 172,443 $ 161,418
-------------- --------------
Loans and leases charged off:
Commercial, financial and agricultural 10,656 1,983
Real estate:
Commercial 399 291
Construction -- 1,185
Residential 1,067 1,671
Consumer 8,664 6,806
Lease financing 2,998 2,209
Foreign 602 312
-------------- --------------
Total loans and leases charged off 24,386 14,457
-------------- --------------
Recoveries on loans and leases previously charged off:
Commercial, financial and agricultural 147 109
Real estate:
Commercial 50 17
Construction 131 8
Residential 200 309
Consumer 1,699 1,616
Lease financing 502 594
Foreign 260 122
-------------- --------------
Total recoveries on loans and leases
previously charged off 2,989 2,775
-------------- --------------
Net charge-offs (21,397) (11,682)
-------------- --------------
Provision for credit losses 35,200 12,930
-------------- --------------
Balance at end of period $ 186,246 $ 162,666
============== ==============
Net loans and leases charged off to average loans
and leases .61%(1) .37%(1)
Net loans and leases charged off to allowance for
credit losses 46.59%(1) 28.88%(1)
Allowance for credit losses to total
loans and leases (end of period) 1.31% 1.27%
Allowance for credit losses to nonperforming
loans and leases (end of period):
Excluding 90 days past due
accruing loans and leases 1.72X 1.68x
Including 90 days past due
accruing loans and leases 1.47X 1.42x
(1) Annualized.
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PROVISION AND ALLOWANCE FOR CREDIT LOSSES, CONTINUED
The provision for credit losses for the first three months of 2001 was $35.2
million, an increase of $22.3 million, or 172.2%, over the same period in 2000.
The increase in the provision for credit losses for the first three months of
2001 over the same period in 2000 primarily reflects the larger loan portfolio
resulting from our continued loan volume growth and certain macroeconomic and
other factors discussed below.
The provision for credit losses is based upon our judgment as to the adequacy of
the allowance for credit losses (the "Allowance") to absorb probable losses
inherent in the portfolio as of the balance sheet date. The Company uses a
systematic methodology to determine the adequacy of the Allowance and related
provision for credit losses to be reported for financial statement purposes. The
determination of the adequacy of the Allowance is ultimately one of judgment,
which includes consideration of many factors, including, among other things, the
amount of problem and potential problem loans and leases, net charge-off
experience, changes in the composition of the loan and lease portfolio by type
and location of loans and leases and in overall loan and lease risk profile and
quality, general economic factors and the fair value of collateral.
Our approach to managing exposure to credit risk involves an integrated program
of setting appropriate standards for credit underwriting and diversification,
monitoring trends that may affect the risk profile of the credit portfolio and
making appropriate adjustments to reflect changes in economic and financial
conditions that could affect the quality of the portfolio and loss probability.
The components of this integrated program include:
- Setting Underwriting and Grading Standards. In 1996, we refined our
loan grading system to ten different principal risk categories where
"1" is "no risk" and "10" is "loss" and began an effort to decrease
our exposure to customers in the weaker credit categories. We also
established risk parameters so that the cost of credit risk is an
integral part of the pricing and evaluation of credit decisions and
the setting of portfolio targets.
- Diversification. We actively manage our credit portfolio to avoid
excessive concentration by obligor, risk grade, industry, product
and geographic location. As part of this process, we also monitor
changes in risk correlation among concentration categories. In
addition, we seek to reduce our exposure to concentrations by
actively participating portions of our commercial and commercial
real estate loans to other banks.
- Risk Mitigation. Over the past few years, we have reduced our
exposure to higher-risk areas such as real estate construction
(which accounted for only 2.9% of total loans and leases at March
31, 2001), Hawaii commercial real estate, health care, hotel and
agricultural loans. We have also reduced our exposure in the
Asia-Pacific region from $101.0 million at December 31, 1997 to
$45.4 million at March 31, 2001. These outstanding loans are
collateralized by Hawaii real estate and letters of credit.
- Restricted Participation in Syndicated National Credits. In addition
to the back-up commercial paper facilities to primarily investment-
grade companies, we participate in media finance credits in the
national market, one of our traditional niches where we have
developed a special expertise over a long period of time and with
experienced personnel. At March 31, 2001, the ratio of nonperforming
shared national credits and media finance loans to total shared
national credits and media finance loans outstanding was 3%.
- Emphasis on Consumer Lending. Consumer loans represent our single
largest category of loans and leases. We focus our consumer lending
activities on loan grades with what we believe are predictable loss
rates. As a result, we are able to use formula-based approaches to
calculate appropriate reserve levels that reflect historical
experience. We generally do not participate in subprime lending
activities. We also seek to reduce our credit exposures where
feasible by obtaining third-party insurance or similar protections.
For example, in our vehicle lease portfolio (which represents
approximately 66% of our lease financing portfolio and 24% of our
combined lease financing and consumer loans at March 31, 2001), we
obtain third-party insurance for the estimated residual value of the
leased vehicle. To the extent that these policies include deductible
values we set aside reserves to fully cover the uninsured portion.
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24
PROVISION AND ALLOWANCE FOR CREDIT LOSSES, CONTINUED
Although we have taken substantial effort to attempt to mitigate risk within our
loan portfolio, a confluence of events in the first quarter of 2001 has made it
prudent to increase our provision for credit losses. While we have not
specifically identified credits that are currently losses or potential problem
loans (other than those identified in our discussion of nonperforming assets on
pages 19 and 20), certain events make it probable that there are losses inherent
in our portfolio. These events include:
- The rapid and sharp economic slowdown in certain key sectors of
the United States economy, in particular manufacturing and
technology. This slowdown is aggravated in one of our principal
markets, California, by a recurring energy supply problem.
- The steep decline in the equity markets in the United States
experienced in the first quarter of 2001 has erased a substantial
portion of household net worth that was accumulated throughout
most of the 1990s. The decline could affect our portfolio in the
form of increased charge-offs and nonaccrual loans in the coming
months.
- Although not a large part of our portfolio, certain agricultural
loans in the Pacific Northwest have become a concern.
- The purchase of 30 branches in Nevada and New Mexico, with $199.5
million in loans at March 31, 2001, necessitated additional
provision for credit losses.
Charge-offs were $24.4 million for the first three months of 2001, an increase
of $9.9 million, or 68.7%, over the same period in 2000. The increase was
primarily due to charge-offs in the commercial, financial and agricultural and
consumer loans and lease financing in the first three months of 2001. In
particular, the charge-offs in the first quarter of 2001 were higher than in the
same period of 2000 due to the write-off of $4.4 million in agricultural credits
in the Pacific Northwest and $2.5 million for commercial fraud-related losses.
For the first three months of 2001, recoveries increased by $214,000, or 7.7%,
over the same period in 2000. The increase in recoveries was primarily in real
estate -- construction and foreign loans.
The Allowance increased to 1.72 times nonperforming loans and leases (excluding
90 days or more past due accruing loans and leases) at March 31, 2001 from 1.68
times at March 31, 2000. The increase in the ratio is principally due to an
increase in the Allowance as a result of the growth in our loan portfolio and
the additional factors mentioned above. In part, the additional provision for
credit losses results from the higher charge-offs we have experienced in the
first quarter of 2001. The additional provision for credit losses is necessary
to adequately maintain our allowance for the inherent losses within our
portfolio that result from the macroeconomic factors described above.
In our judgment, the Allowance was adequate to absorb losses inherent in the
loan and lease portfolio at March 31, 2001. However, changes in prevailing
economic conditions in the Company's markets could result in changes in the
level of nonperforming assets and charge-offs in the future and, accordingly,
changes in the Allowance. We will continue to closely monitor economic
developments and those specific items mentioned above in particular and make
necessary adjustments to the Allowance accordingly.
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25
NONINTEREST INCOME
The following table reflects the key components of the change in noninterest
income for the three months ended March 31, 2001, as compared to the same
periods in 2000:
THREE MONTHS ENDED MARCH 31, 2001 2000 % Change
------------ ------------ ------------
(in thousands)
Service charges on deposit accounts $ 20,436 $ 16,992 20.3%
Trust and investment services income 9,127 9,060 0.7
Other service charges and fees 18,374 17,988 2.1
Securities gains, net 41,300 -- N/M
Other 9,262 5,997 54.4
------------ ------------
Total noninterest income $ 98,499 $ 50,037 96.9%
============ ============
N/M - Not Meaningful.
As the table above shows in more detail, noninterest income increased by 96.9%
for the three months ended March 31, 2001 compared to the same period in 2000.
Factors causing the increases include:
- - Concord security gain
- - Increase in service charges on deposit accounts for the three months ended
March 31, 2001, compared to the same periods in 2000, primarily due to
higher levels of deposits resulting from the expansion of our customer
deposit base predominately in our Bank of the West operating segment,
including the deposits from the 30 branches acquired in Nevada and New
Mexico in the first quarter of 2001.
- - Increase in other service charges and fees for the three months ended March
31, 2001, compared to the same periods in 2000, primarily due to: (1) higher
merchant services fees, due to higher fee charges, increased volume and more
merchant outlets; (2) higher bank card and ATM convenience fee income; and
(3) higher miscellaneous service fees.
- - Increase in other noninterest income primarily due to increased income from
bank-owned life insurance.
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26
NONINTEREST EXPENSE
The following table reflects the key components of the change in noninterest
expense for the three months ended March 31, 2001 as compared to the same
periods in 2000:
THREE MONTHS ENDED MARCH 31,
2001 2000 % Change
------------ ------------ ------------
(in thousands)
Salaries and wages $ 49,377 $ 45,338 8.9%
Employee benefits 17,973 13,847 29.8
Occupancy expense 16,235 15,357 5.7
Outside services 11,503 12,039 (4.5)
Intangible amortization 10,284 9,140 12.5
Equipment expense 7,532 7,186 4.8
Stationery and supplies 4,400 4,705 (6.5)
Advertising and promotion 4,333 4,079 6.2
Restructuring, integration and
other nonrecurring costs 3,935 -- N/M
Other 24,516 19,886 23.3
------------ ------------
Total noninterest expense $ 150,088 $ 131,577 14.1%
============ ============
N/M - Not Meaningful.
As the table above shows in more detail, noninterest expense increased by 14.1%
for the three months ended March 31, 2001 compared to the same periods in 2000.
Factors causing the increase include:
- - Increase in salaries and wages primarily due to increased staffing as a
result of the Nevada and New Mexico branch acquisitions in the first quarter
of 2001.
- - Increase in employee benefits due to: (1) higher employee benefits due to
increased staffing as a result of the Nevada and New Mexico branch
acquisitions and (2) higher incentive benefits. Also, change from prior year
is greater due to lower net periodic pension benefit credits in the first
quarter of 2001.
- - Increase in intangible amortization due to the Nevada and New Mexico branch
acquisitions. We recorded an additional $111 million in goodwill and core
deposit intangibles at acquisition.
- - The restructuring, integration and other nonrecurring costs relate to 30
branches acquired in Nevada and New Mexico in the first quarter of 2001.
- - Increase in other noninterest expense primarily due to a $5 million
committed charitable contribution made to the First Hawaiian Foundation, a
charitable arm of First Hawaiian that supports nonprofit and community
organizations in the markets where it operates.
ACCOUNTING DEVELOPMENTS
We have a substantial amount of intangible assets, mainly goodwill and core
deposit intangibles, that stem primarily from the BancWest Merger and the Nevada
and New Mexico branch acquisitions. The amortization of these intangible assets
has a significant effect on our net income and earnings per share, among other
items, as measured under current generally accepted accounting principles. The
FASB's Business Combination Project has recently announced a preliminary
proposal that may have a material effect on our financial information.
In summary, the FASB's proposal would end the amortization of goodwill and
instead call for review of the goodwill's carrying value for impairment. If
adopted, this proposal would also apply retroactively to goodwill arising from
acquisitions prior to the implementation date. This change in accounting
practice would have a significant effect on our earnings and related
profitability ratios. For the first quarter of 2001, our net income would
increase by approximately $7 million due to the after-tax effect of the
cessation of the amortization of goodwill.
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27
INCOME TAXES
The Company's effective income tax rates (exclusive of the tax equivalent
adjustment) for the three months ended March 31, 2001 were 39.8%, as compared to
41.7% for the same period in 2000. The decrease in the effective tax rate was
primarily due to certain benefits of restricted stock and settlement of state
tax audits.
LIQUIDITY AND CAPITAL
Stockholders' equity was $2.045 billion at March 31, 2001, an increase of 2.8%
over $1.989 billion at December 31, 2000. Compared to March 31, 2000,
stockholders' equity at March 31, 2001 increased by $174.872 million, or 9.4%.
The increase was primarily due to net income for the respective periods, less
dividends paid.
Under regulation established to ensure capital adequacy, the Company is required
to maintain minimum amounts of Tier 1 and Total Capital and minimum ratios of
Tier 1 Capital and Total Capital to risk-weighted assets, respectively, and of
Tier 1 Capital to average assets (leverage). These amounts and ratios as of
March 31, 2001 are set forth below:
For Capital
Actual Adequacy Purposes
---------------------------------- ----------------------------------
Amount Ratio Amount Ratio
-------------- -------------- -------------- --------------
(in thousands) (in thousands)
Tier 1 Capital to
Risk-Weighted
Assets $ 1,538,004 9.10% $ 677,438 4.00%
Total Capital to
Risk-Weighted
Assets $ 1,878,738 11.11% $ 1,354,876 8.00%
Tier 1 Capital to
Average Assets $ 1,538,004 8.48% $ 725,556 4.00%
As of March 31, 2001, the Company's depository institution subsidiaries were
categorized as well-capitalized under the applicable federal regulations
regarding the regulatory framework for prompt corrective action. To be
categorized as well-capitalized, a bank must have a Tier 1 risk-based capital
ratio of 6.00% or greater, a total risk-based capital ratio of 10.00% or
greater, a leverage ratio of 5.00% or greater and not be subject to any
agreement, order or directive to meet a specific capital level for any capital
measure.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE RISK MEASUREMENT AND MANAGEMENT
The net interest income of the Company is subject to interest rate risk to the
extent the Company's interest-bearing liabilities (primarily deposits and
borrowings) mature or reprice on a different basis than its interest-earning
assets (primarily loans and leases and investment securities). When
interest-bearing liabilities mature or reprice more quickly than
interest-earning assets during a given period, an increase in interest rates
could reduce net interest income. Similarly, when interest-earning assets mature
or reprice more quickly than interest-bearing liabilities, a decrease in
interest rates could have a negative impact on net interest income. In addition,
the impact of interest rate swings may be exacerbated by factors such as our
customers' propensity to manage their demand deposit balances more or less
aggressively or to refinance mortgage and other consumer loans depending on the
interest rate environment.
The Asset/Liability Committees of the Company and its major subsidiary companies
are responsible for managing interest rate risk. The frequency of meetings of
the Asset/Liability Committees generally range from monthly to quarterly.
Recommendations for changes to a particular subsidiary's interest rate profile,
should they be deemed necessary and exceed established policies, are made to
their respective Board of Directors. Other than loans and leases that are
originated and held for sale and commitments to purchase and sell foreign
currencies and mortgage-backed securities, the Company's interest rate
derivatives and other financial instruments are not entered for trading
purposes.
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INTEREST RATE RISK MEASUREMENT AND MANAGEMENT, CONTINUED
The Company models its net interest income in order to quantify its exposure to
changes in interest rates. Generally, the size of the balance sheet is held
relatively constant and then subjected to interest rate shocks up and down of
100 and 200 basis points each. Each account-level item is repriced according to
its respective contractual characteristics, including any imbedded options which
might exist (e.g. periodic interest rate caps or floors or loans and leases
which permit the borrower to prepay the principal balance of the loan or lease
prior to maturity without penalty). Off-balance-sheet instruments such as
interest rate swaps, swaptions, caps or floors are included as part of the
modeling process. For each interest rate shock scenario, net interest income
over a 12-month horizon is compared against the results of a scenario in which
no interest rate change occurs ("flat rate scenario") to determine the level of
interest rate risk at the time.
The projected impact of 100 and 200 basis-point increases and decreases in
interest rate on the Company's consolidated net interest income over the next 12
months beginning April 1 and January 1, 2001 is shown below:
(dollars in millions) +2% +1% Flat -1% -2%
- --------------------- --- --- ---- --- ---
April 1, 2001
Net Interest Income $831.9 $840.4 $834.4 $819.1 $797.7
Difference from flat $ (2.5) $ 6.0 $ -- $(15.3) $(36.7)
% variance (0.3)% 0.7% --% (1.8)% (4.4)%
- -----------------------------------------------------------------------------------
January 1, 2001
Net Interest Income $816.9 $829.2 $825.2 $811.0 $793.6
Difference from flat $ (8.3) $ 4.0 $ -- $(14.2) $(31.6)
% variance (1.0)% 0.5% --% (1.7)% (3.8)%
The changes in the models are due to differences in interest rate environments
which include the absolute level of interest rates, the shape of the yield curve
and spreads between benchmarks rates.
SIGNIFICANT ASSUMPTIONS UTILIZED AND INHERENT LIMITATIONS
The significant net interest income changes for each interest rate scenario
presented above include assumptions based on accelerating or decelerating
mortgage prepayments in declining or rising scenarios, respectively, and
adjusting deposit levels and mix in the different interest rate scenarios. The
magnitude of changes to both areas in turn are based upon analyses of customers'
behavior in differing rate environments. However, these analyses may differ from
actual future customer behavior. For example, actual prepayments may differ from
current assumptions as prepayments are affected by many variables which cannot
be predicted with certainty (e.g. prepayments of mortgages may differ on fixed
and adjustable loans depending upon current interest rates, expectations of
future interest rates, availability of refinancing, economic benefit to
borrower, financial viability of borrower, etc.).
As with any model for analyzing interest rate risk, certain limitations are
inherent in the method of analysis presented above. For example, the actual
impact on net interest income due to certain interest rare shocks may differ
from those projections presented should market conditions vary from assumptions
used in the analysis. Furthermore, the analysis does not consider the effect of
a changed level of overall economic activity that could exit in certain interest
rate environments. Moreover, the method of analysis used does not take into
account the actions that management might take to respond to changes in interest
rates because of inherent difficulties in determining the likelihood or impact
of any such response.
27
29
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 3.1.1 Certificate of Amendment of Certificate of Incorporation of BancWest Corporation.
Exhibit 10.13 BancWest Corporation 1998 Stock Incentive Plan (Amended and Restated as of
April 19, 2001).*
Exhibit 10.22 Employment Agreement between Walter A. Dods, Jr. and BancWest Corporation, executed
May 7, 2001.*
Exhibit 10.23 Termination Protection Agreement between John K. Tsui and BancWest Corporation,
executed May 7, 2001.*
Exhibit 10.24 Termination Protection Agreement between Howard H. Karr and BancWest Corporation,
executed May 7, 2001.*
Exhibit 10.25 Termination Protection Agreement between Donald G. Horner and BancWest Corporation,
executed May 7, 2001.*
Exhibit 12 Statement regarding computation of ratios.
(b) Reports on Form 8-K None.
*Management contract or compensatory plan or arrangement.
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30
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BANCWEST CORPORATION
(REGISTRANT)
Date May 14, 2001 By /s/ HOWARD H. KARR
---------------- -----------------------------------------------------
HOWARD H. KARR
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL OFFICER)
29
31
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------ -----------
3.1.1 Certificate of Amendment of Certificate of Incorporation of
BancWest Corporation.
10.13 BancWest Corporation 1998 Stock Incentive Plan
(Amended and Restated as of April 19, 2001).*
10.22 Employment Agreement between Walter A. Dods, Jr. and BancWest
Corporation, executed May 7, 2001.*
10.23 Termination Protection Agreement between John K. Tsui and
BancWest Corporation, executed May 7, 2001.*
10.24 Termination Protection Agreement between Howard H. Karr and
BancWest Corporation, executed May 7, 2001.*
10.25 Termination Protection Agreement between Donald G. Horner
and BancWest Corporation, executed May 7, 2001.*
12 Statement regarding computation of ratios.
*Management contract or compensatory plan or arrangement.