U N I T E D S T A T E S SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) April 23, 2001 PACIFIC CENTURY FINANCIAL CORPORATION ----------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 1-6887 99-0148992 -------------------- --------------- ----------------- (State of Incorporation) (Commission (IRS Employer File Number) Identification No.) 130 Merchant Street, Honolulu, Hawaii 96813 ------------------------------------------- ------------ (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code) (808) 537-8430
Item 5. Other Events (a) Exhibit 99.1 Press Release: First Quarter 2001 Earnings (b) Exhibit 99.2 Press Release: New Strategy SIGNATURE 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. Date: April 23, 2001 PACIFIC CENTURY FINANCIAL -------------- CORPORATION /s/ Richard J. Dahl ----------------------------- (Signature) Richard J. Dahl President
EXHIBIT 99.1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 PACIFIC CENTURY FINANCIAL CORPORATION EXHIBIT TO CURRENT REPORT ON FORM 8-K DATED April 23, 2001 COMMISSION FILE NUMBER 1-6887
[PCFC LETTERHEAD] PACIFIC CENTURY FINANCIAL CORPORATION REPORTS FIRST QUARTER NET INCOME OF $33.7 MILLION AND EARNINGS PER SHARE OF 42 CENTS o NON-PERFORMING ASSETS DECLINE 35 PERCENT FROM DECEMBER 31, 2000 LEVEL o BOARD OF DIRECTORS DECLARES QUARTERLY DIVIDEND OF 18 CENTS PER SHARE FOR IMMEDIATE RELEASE HONOLULU, HI (April 23, 2001) -- Pacific Century Financial Corporation (NYSE:BOH) reported first quarter 2001 net income of $33.7 million, up 3.4 percent from $32.6 million in the fourth quarter of 2000 and down 15.3 percent from 39.8 million reported in the first quarter of 2000. Diluted earnings per share were $0.42, compared to $0.41 for the fourth quarter of 2000 and $0.50 for the first quarter of 2000. Earnings for the first quarter of 2001 included gains of $75.4 million from the sale of its $209 million credit card portfolio which was completed in March 2001, and $20.9 million related to the sale of ownership interest in Star Systems, Inc. which was acquired by Concord EFS (NASDAQ: CEFT). Pacific Century Financial Corporation's (PCFC) continuing emphasis on improving asset quality resulted in the significant reduction of credit risk during the quarter. The company reported $119.5 million in non-performing assets (NPAs), down 34.7 percent from $183.0 million reported at December 31, 2000. NPAs at the end of the first quarter represented the lowest level of NPAs since March 1998. "The first quarter's results clearly demonstrated that we are delivering on our intent to resolve credit issues and position the company for improved performance," said Michael E. O'Neill, PCFC Chairman and Chief Executive Officer. "The significant improvement in asset quality reflects the strength of our risk management group and lays a solid foundation for implementing our strategic focus." During the quarter, PCFC completed its strategic assessment process which began in December 2000. The results of that comprehensive process are highlighted in the company's announcement of its Strategic Plan, which was released today. "The next 12 to 18 months will be a transition period for us," said O'Neill. "The company's size, market franchise and business mix will change and the company's underlying performance is being positioned for improvement." Net interest income for the quarter on a fully taxable equivalent basis totaled $134.1 million, down from $139.8 million in 2000's first quarter, and down from $138.9 million in 2000's fourth quarter. The decreases resulted from relatively higher rates paid for borrowings and time deposits, as well as the recognition of $2.4 million of losses on lease residuals. -more-
PACIFIC CENTURY FINANCIAL CORPORATION REPORTS FIRST QUARTER 2001 EARNINGS PAGE 2 Net interest margin for the first quarter 2001 was 4.24 percent compared to 4.29 percent for the fourth quarter of 2000, reflecting the impact of rate decreases in 2001 and the $2.4 million loss in lease residuals. The provision for loan losses was $52.5 million, up from $13.5 million in the first quarter of 2000 and $25.8 million in the fourth quarter of 2000. The increased provision was due to the recognition of net loan losses totaling $97.7 million related to exiting several higher risk credit relationships. Non-interest income of $155.5 million for the quarter reflected the impact of $75.4 million in gains from the sale of the credit card portfolio and $20.9 million in investment securities gains related to the sale of ownership interest in Star Systems, Inc. Non-interest income, adjusted for those special items and a $3.3 million write down in an equity investment stood at $62.5 million. This compares to $63.9 million for the first quarter of 2000 and $64.7 million for the fourth quarter of 2000, which included $3.2 million from gains on sales of equity investments in foreign banks. After special items, the decrease largely was due to reduced earnings from the trust business, where fees are based partially on asset values. Non-interest expense for the quarter was $176.2 million versus $126.1 million for the first quarter of 2000 and $123.9 million for the fourth quarter of 2000. Special expense items recognized during the quarter included $44.4 million of restructuring and related costs. The largest element of those costs was $28.0 million in foreign currency translation losses that were recognized because of strategic decisions to exit foreign locations. Also included were $6.2 million of losses from the anticipated inability to recover an equity investment in a bank in the Solomon Islands, and $5.3 million of severance and other restructuring related costs. Excluding the special items, non-interest expense increased by $5.7 million over the $126.1 million reported in the first quarter of 2000. The largest component of this increase was $2.3 million in technology and consulting costs. PCFC's effective tax rate increased for the first quarter of 2001 largely due to foreign and state income taxes. Adjusted for the gains on sales, additional loan loss provisioning, restructuring and related costs, and other costs, net income for the first quarter of 2001 would be $30.8 million and diluted earnings per share would be $0.38. ASSET QUALITY IMPROVEMENT Asset quality improved for the second consecutive quarter with non-performing assets, exclusive of loans past due 90+ days, dropping 35 percent to $119.5 million compared to the fourth quarter of 2000 and down 12.4 percent compared to $136.4 million at end of the first quarter of 2000. The areas that saw the sharpest decline in NPAs from the fourth quarter of 2000 were commercial loans and foreign loans, which dropped by 57 percent ($31.6 million) and 50 percent ($16.6 million), respectively. Improvement in commercial loans resulted primarily from the sale of substantially all the non-accrual syndicated loans ($31.5 million) during the quarter. Reduction in foreign NPAs was driven by four Asia credits totaling approximately $10 million, of which two credits totaling approximately $7.4 million were sold, with $2.1 million being charged off. Two commercial real estate non-accrual credits of approximately $9.5 million were transferred to real estate owned. -more-
PACIFIC CENTURY FINANCIAL CORPORATION REPORTS FIRST QUARTER 2001 EARNINGS PAGE 3 Net charge-offs for the quarter were $97.7 million. During the quarter, PCFC charged off approximately $66.7 million related to syndicated loans, $10.0 million in commercial real estate and $5.6 million in foreign loans. Of the $97.7 million in loan losses, approximately $58.3 million was related to loans, which at the time of charge-off were performing. At quarter-end, the ratio of NPAs to total loans was 1.33 percent compared 1.89 percent at year-end 2000 and 1.39 percent at the end of the first quarter last year. The ratio of allowance for loan losses to non-performing assets (exclusive of loans past due 90+ days) increased to 167 percent from 135 percent at December 31, 2000 and 143 percent for the first quarter of 2000. The ratio of allowance for loan losses to outstanding loans stood at 2.29 percent versus 2.62 percent at year-end 2000 and 2.05 percent at the end of 2000's first quarter. OTHER FINANCIAL HIGHLIGHTS PCFC's success in lowering exposures in syndicated lending and in Asia and the sale of its credit card portfolio were reflected in the company's balance sheet. Total assets at the end of the first quarter were $13.7 billion, down 2.1 percent from $14.0 billion at year-end 2000 and down 3.5 percent from $14.2 billion at March 31, 2000. Correspondingly, loans at first quarter-end 2001 totaled $8.7 billion, down 8.5 percent from $9.5 billion at year-end 2000 and down 10.3 percent from $9.7 billion at March 31, 2000. On a linked quarter basis, PCFC managed its syndicated loan exposure lower by approximately $372 million, of which approximately $304 million were loans outstanding, with the balance being undrawn commitments. The company also reduced its Asia exposure by approximately $70 million to $708 million at the end of the first quarter. At March 31, 2001, outstanding syndicated and Asia loans were approximately $800 million and $525 million, respectively. Deposits at the end of the first quarter stood at $8.8 billion, down 3.3 percent from $9.1 billion at year-end 2000 and down 3.3 percent from March 31, 2000. On a linked quarter basis, domestic deposits grew 1.7 percent and foreign deposits declined 20.9 percent primarily due to a shift in funding strategy. OTHER HIGHLIGHTS SINCE THE END OF THE FIRST QUARTER The company's Board of Directors declared a quarterly cash dividend of 18 cents per share on the company's outstanding shares. The dividend will be payable on June 14, 2001 to shareholders of record at the close of business on May 25, 2001. PCFC's U.S. Mainland subsidiary Pacific Century Bank, N.A. (PCB) completed the sale of PCB's nine-branch Arizona franchise to Zions Bancorporation in April 2001. The sale resulted in a gain of approximately $24 million, net of expenses associated with the transaction. The net gain will be recognized in the second quarter of 2001. -more-
PACIFIC CENTURY FINANCIAL CORPORATION REPORTS FIRST QUARTER 2001 EARNINGS PAGE 4 2001 OUTLOOK FOR HAWAII'S ECONOMY Hawaii's economists continue to forecast economic expansion in 2001 with Hawaii real GSP growth estimates between 2.5 percent to 3.0 percent. The key driver of growth, according to the state's Council on Revenues, will be construction which experienced 10 percent to 15 percent growth in 2000 and is expected to have similar growth in 2001. The consensus outlook for tourism in 2001 is 2.5 percent to 3.5 percent growth in visitor arrivals, which factors in the impact of the U.S. economic slowdown. The company will review first quarter 2001 earnings and the results of its strategic assessment process at a presentation in New York today at 8:00 a.m. ET. The presentation will be accessible via teleconference as well as through the investor relations link of PCFC's web site, WWW.BOH.COM. The conference call number is (800) 230-1096 or for international locations call (612) 332-0720. A replay will be available at 12 noon ET on Monday, April 23, 2001 by calling (800) 475-6701 (USA) or (320) 365-3844 (International) and entering the number 577584 when prompted. A replay of the presentation will be available at 12 noon ET, Monday, April 23, 2001 on PCFC's web site. Pacific Century Financial Corporation is a regional financial services holding company with locations throughout the Pacific region. Pacific Century and its subsidiaries provide varied financial services to businesses, governments and consumers in four principal markets: Hawaii and the West Pacific, South Pacific, Asia and selected markets on the U.S. Mainland. Pacific Century's principal subsidiary, Bank of Hawaii, is the largest commercial bank in the state of Hawaii. # # # #
HIGHLIGHTS PACIFIC CENTURY FINANCIAL CORPORATION AND SUBSIDIARIES - -------------------------------------------------------------------------------------------------------------------------------- (in thousands of dollars except per share amounts) Percentage EARNINGS HIGHLIGHTS AND PERFORMANCE RATIOS 2001 2000 Change - -------------------------------------------------------------------------------------------------------------------------------- Three Months Ended March 31 Net Income $33,677 $39,765 -15.3% Basic Earnings Per Share 0.42 0.50 -16.0% Diluted Earnings Per Share 0.42 0.50 -16.0% Cash Dividends 14,363 13,541 Return on Average Assets 0.99% 1.13% Return on Average Equity 10.42% 13.19% Net Interest Margin 4.24% 4.31% Efficiency Ratio 65.43% 62.06% SUMMARY OF RESULTS EXCLUDING THE EFFECT OF INTANGIBLES (a) - -------------------------------------------------------------------------------------------------------------------------------- Three Months Ended March 31 Net Income $39,283 $43,889 -10.5% Basic Earnings per Share $0.49 $0.55 -10.9% Diluted Earnings per Share $0.48 $0.55 -12.7% Return on Average Assets 1.17% 1.26% Return on Average Equity 14.21% 17.54% Efficiency Ratio 63.10% 59.73% (a) Intangibles include goodwill, core deposit and trust intangibles, and other intangibles. MARCH 31 MARCH 31 Percentage STATEMENT OF CONDITION HIGHLIGHTS AND PERFORMANCE RATIOS 2001 2000 Change - -------------------------------------------------------------------------------------------------------------------------------- Total Assets $13,710,675 $14,250,386 -3.8% Net Loans 8,533,776 9,346,460 -8.7% Total Deposits 8,815,523 9,143,063 -3.6% Total Shareholders' Equity 1,371,942 1,225,907 11.9% Book Value Per Common Share $17.18 $15.39 Loss Reserve / Loans Outstanding 2.29% 2.05% Average Equity / Average Assets 9.47% 8.54% Common Stock Price Range High Low 2000 .................................... $23.19 $11.06 2001 First Quarter....................... $20.99 $16.88 - -------------------------------------------------------------------------------------------------------------------------------- Corporate Offices: Inquiries: Financial Plaza of the Pacific Allan R. Landon 130 Merchant Street Vice Chairman and Honolulu, Hawaii 96813 Chief Financial Officer (808) 538-4727
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) PACIFIC CENTURY FINANCIAL CORPORATION AND SUBSIDIARIES - ------------------------------------------------------------------------------------------------------------------------- 3 MONTHS 3 MONTHS ENDED ENDED MAR 31 MAR 31 (IN THOUSANDS OF DOLLARS EXCEPT PER SHARE AMOUNTS) 2001 2000 - ------------------------------------------------------------------------------------------------------------------------- INTEREST INCOME Interest on Loans $180,173 $180,402 Loan Fees 10,903 8,246 Income on Lease Financing 6,857 7,979 Interest and Dividends on Investment Securities Taxable 11,636 14,236 Non-taxable 140 279 Income on Investment Securities Available for Sale 39,301 41,033 Interest on Deposits 5,214 3,764 Interest on Security Resale Agreements 38 10 Interest on Funds Sold 1,059 473 - ------------------------------------------------------------------------------------------------------------------------- TOTAL INTEREST INCOME 255,321 256,422 INTEREST EXPENSE Interest on Deposits 72,019 68,214 Interest on Security Repurchase Agreements 24,630 22,953 Interest on Funds Purchased 6,123 8,527 Interest on Short-Term Borrowings 3,230 4,532 Interest on Long-Term Debt 15,314 12,688 - ------------------------------------------------------------------------------------------------------------------------- TOTAL INTEREST EXPENSE 121,316 116,914 - ------------------------------------------------------------------------------------------------------------------------- NET INTEREST INCOME 134,005 139,508 Provision for Loan Losses 52,466 13,522 - ------------------------------------------------------------------------------------------------------------------------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 81,539 125,986 NON-INTEREST INCOME Trust Income 15,795 16,887 Service Charges on Deposit Accounts 9,940 9,557 Fees, Exchange, and Other Service Charges 20,782 21,626 Other Operating Income 13,410 15,575 Gain on Sale of Credit Card Portfolio 75,414 - Investment Securities Gains (Losses) 20,203 282 - ------------------------------------------------------------------------------------------------------------------------- TOTAL NON-INTEREST INCOME 155,544 63,927 NON-INTEREST EXPENSE Salaries 47,883 47,547 Pensions and Other Employee Benefits 14,353 14,630 Net Occupancy Expense 12,124 11,816 Net Equipment Expense 13,379 12,067 Other Operating Expense 39,131 35,211 Goodwill Amortization 4,836 4,742 Restructuring and Other Related Charges 44,438 - Minority Interest 79 69 - ------------------------------------------------------------------------------------------------------------------------- TOTAL NON-INTEREST EXPENSE 176,223 126,082 - ------------------------------------------------------------------------------------------------------------------------- INCOME BEFORE INCOME TAXES 60,860 63,831 Provision for Income Taxes 27,183 24,066 - ------------------------------------------------------------------------------------------------------------------------- NET INCOME $33,677 $39,765 ========================================================================================================================= Basic Earnings Per Share $0.42 $0.50 Diluted Earnings Per Share $0.42 $0.50 Dividends Declared Per Share $0.18 $0.17 Basic Weighted Average Shares 79,720,284 79,821,365 Diluted Weighted Average Shares 81,124,713 80,017,761 =========================================================================================================================
CONSOLIDATED STATEMENTS OF CONDITION (UNAUDITED) PACIFIC CENTURY FINANCIAL CORPORATION AND SUBSIDIARIES - ---------------------------------------------------------------------------------------------------------------------------------- MARCH 31 DECEMBER 31 MARCH 31 (IN THOUSANDS OF DOLLARS) 2001 2000 2000 - ---------------------------------------------------------------------------------------------------------------------------------- ASSETS Interest-Bearing Deposits $411,070 $188,649 $225,314 Investment Securities - Held to Maturity (Market Value of $665,722; $676,621 and $721,620 respectively) 656,174 670,038 732,344 Investment Securities - Available for Sale 2,390,518 2,507,076 2,537,617 Securities Purchased Under Agreements to Resell 377 3,969 902 Funds Sold 84,732 134,644 42,208 Loans Held for Sale 308,605 179,229 115,160 Loans 8,683,416 9,489,061 9,664,473 Unearned Income (258,445) (253,903) (237,764) Allowance for Loan Losses (199,800) (246,247) (195,409) - ---------------------------------------------------------------------------------------------------------------------------------- NET LOANS 8,533,776 9,168,140 9,346,460 - ---------------------------------------------------------------------------------------------------------------------------------- TOTAL EARNING ASSETS 12,076,647 12,672,516 12,884,845 Cash and Non-Interest Bearing Deposits 559,227 523,969 491,218 Premises and Equipment 251,746 254,621 267,497 Customers' Acceptance Liability 7,225 14,690 8,262 Accrued Interest Receivable 67,875 68,585 74,597 Other Real Estate 11,336 4,526 4,633 Intangibles, including Goodwill 186,313 192,264 202,832 Other Assets 550,306 282,645 316,502 - ---------------------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $13,710,675 $14,013,816 $14,250,386 ================================================================================================================================== LIABILITIES Domestic Deposits Demand - Non-Interest Bearing $1,685,149 $1,707,724 $1,708,635 - Interest Bearing 2,042,129 2,008,730 2,110,998 Savings 665,643 665,239 693,077 Time 2,948,232 2,836,083 2,759,319 Foreign Deposits Demand - Non-Interest Bearing 337,854 385,366 380,179 Time Due to Banks 390,395 535,126 398,176 Other Savings and Time 746,121 942,313 1,092,679 - ---------------------------------------------------------------------------------------------------------------------------------- TOTAL DEPOSITS 8,815,523 9,080,581 9,143,063 Securities Sold Under Agreements to Repurchase 1,703,982 1,655,173 1,806,197 Funds Purchased 297,613 413,241 511,440 Short-Term Borrowings 278,786 211,481 424,720 Bank's Acceptances Outstanding 7,225 14,690 8,262 Accrued Retirement Expense 34,820 37,868 40,851 Accrued Interest Payable 64,113 72,460 66,456 Accrued Taxes Payable 164,893 130,766 103,826 Minority Interest 4,295 4,536 4,269 Other Liabilities 84,750 94,512 109,669 Long-Term Debt 882,733 997,152 805,726 - ---------------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 12,338,733 12,712,460 13,024,479 SHAREHOLDERS' EQUITY Common Stock ($.01 par value), authorized 500,000,000 shares; issued / outstanding; March 2001 - 80,558,704 / 79,863,450; December 2000 - 80,558,811 / 79,612,178; March 2000 - 80,551,253 / 79,661,479; 806 806 806 Capital Surplus 346,411 346,045 345,863 Accumulated Other Comprehensive Income 21,835 (25,079) (72,307) Retained Earnings 1,015,867 996,791 967,308 Treasury Stock, at Cost - (March 2001 - 695,254; December 2000 - 946,633; and March 2000 - 889,774) (12,977) (17,207) (15,763) - ---------------------------------------------------------------------------------------------------------------------------------- TOTAL SHAREHOLDERS' EQUITY 1,371,942 1,301,356 1,225,907 - ---------------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $13,710,675 $14,013,816 $14,250,386 ==================================================================================================================================
PACIFIC CENTURY FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) - ---------------------------------------------------------------------------------------------------------------------- ACCUMULATED OTHER COMMON CAPITAL COMPREHENSIVE (IN THOUSANDS OF DOLLARS) TOTAL STOCK SURPLUS INCOME - ---------------------------------------------------------------------------------------------------------------------- BALANCE AT DECEMBER 31, 2000 $1,301,356 $806 $346,045 ($25,079) Comprehensive Income Net Income 33,677 - - - Other Comprehensive Income, Net of Tax Investment Securities, Net of Reclassification Adjustment 19,510 - - 19,510 Foreign Currency Translation Adjustment 26,710 - - 26,710 Pension Liability Adjustments (159) - - (159) Stock Compensation 853 - - 853 Total Comprehensive Income Common Stock Issued 18,317 Profit Sharing Plan 370 - 92 - 184,092 Stock Option Plan 3,000 - 114 - 34,904 Dividend Reinvestment Plan 700 - 163 - 893 Directors' Restricted Shares and Deferred Compensation Plan 288 - (3) - Treasury Stock Purchased - - - - Cash Dividends Paid (14,363) - - - - ---------------------------------------------------------------------------------------------------------------------- BALANCE AT MARCH 31, 2001 $1,371,942 $806 $346,411 $21,835 ====================================================================================================================== BALANCE AT DECEMBER 31, 1999 $1,212,330 $806 $345,851 ($66,106) Comprehensive Income Net Income 39,765 - - - Other Comprehensive Income, Net of Tax Investment Securities, Net of Reclassification Adjustment (7,630) - - (7,630) Foreign Currency Translation Adjustment 1,429 - - 1,429 Pension Liability Adjustments - - - - Total Comprehensive Income Common Stock Issued 22,377 Profit Sharing Plan 361 - - - 33,932 Stock Option Plan 398 - 3 - 78,723 Dividend Reinvestment Plan 1,123 - - - 525 Directors' Restricted Shares and Deferred Compensation Plan 9 - 9 - Treasury Stock Purchased (8,337) - - - Cash Dividends Paid (13,541) - - - - ---------------------------------------------------------------------------------------------------------------------- BALANCE AT MARCH 31, 2000 $1,225,907 $806 $345,863 ($72,307) ====================================================================================================================== - ------------------------------------------------------------------------------------------------- RETAINED TREASURY COMPREHENSIVE (IN THOUSANDS OF DOLLARS) EARNINGS STOCK INCOME - ------------------------------------------------------------------------------------------------- BALANCE AT DECEMBER 31, 2000 $996,791 ($17,207) Comprehensive Income Net Income 33,677 - $33,677 Other Comprehensive Income, Net of Tax Investment Securities, Net of Reclassification Adjustment - - 19,510 Foreign Currency Translation Adjustment - - 26,710 Pension Liability Adjustments - - (159) Stock Compensation - - 853 -------------- Total Comprehensive Income $79,738 ============== Common Stock Issued 18,317 Profit Sharing Plan - 278 184,092 Stock Option Plan (238) 3,124 34,904 Dividend Reinvestment Plan - 537 893 Directors' Restricted Shares and Deferred Compensation Plan - 291 Treasury Stock Purchased - - Cash Dividends Paid (14,363) - - -------------------------------------------------------------------------------- BALANCE AT MARCH 31, 2001 $1,015,867 ($12,977) ================================================================================ BALANCE AT DECEMBER 31, 1999 $942,177 ($10,398) Comprehensive Income Net Income 39,765 - $39,765 Other Comprehensive Income, Net of Tax Investment Securities, Net of Reclassification Adjustment - - (7,630) Foreign Currency Translation Adjustment - - 1,429 Pension Liability Adjustments - - - -------------- Total Comprehensive Income $33,564 ============== Common Stock Issued 22,377 Profit Sharing Plan (128) 489 33,932 Stock Option Plan (362) 757 78,723 Dividend Reinvestment Plan (603) 1,726 525 Directors' Restricted Shares and Deferred Compensation Plan - - Treasury Stock Purchased - (8,337) Cash Dividends Paid (13,541) - - -------------------------------------------------------------------------------- BALANCE AT MARCH 31, 2000 $967,308 ($15,763) ================================================================================
CONSOLIDATED AVERAGE BALANCES AND INTEREST RATES TAXABLE EQUIVALENT (UNAUDITED) - ----------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED THREE MONTHS ENDED MARCH 31, 2001 MARCH 31, 2000 AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ (in millions of dollars) BALANCE EXPENSE RATE BALANCE EXPENSE RATE - ----------------------------------------------------------------------------------------------------------- Earning Assets Interest Bearing Deposits $332.3 $5.2 6.36% $232.1 $3.8 6.52% Investment Securities Held to Maturity -Taxable 652.6 11.7 7.23 775.5 14.2 7.38 -Tax-Exempt 3.7 0.2 23.28 10.0 0.4 17.32 Investment Securities Available for Sale 2,479.9 39.3 6.43 2,527.0 41.0 6.53 Funds Sold 80.5 1.1 5.53 35.0 0.5 5.56 Net Loans -Domestic 7,985.7 165.6 8.41 7,897.9 163.6 8.33 -Foreign 1,277.8 21.4 6.80 1,586.1 24.9 6.30 Loan Fees 10.9 8.3 -------------------------- -------------------------- Total Earning Assets 12,812.5 255.4 8.08 13,063.6 256.7 7.90 Cash and Due From Banks 438.2 506.5 Other Assets 595.1 631.4 ---------- ---------- Total Assets $13,845.8 $14,201.5 ========== ========== Interest Bearing Liabilities Domestic Deposits - Demand $2,008.2 11.7 2.36 $2,115.6 12.3 2.33 - Savings 665.7 3.4 2.04 700.1 3.5 2.03 - Time 2,902.7 43.1 6.03 2,764.9 35.1 5.10 -------------------------- -------------------------- Total Domestic 5,576.6 58.2 4.23 5,580.6 50.9 3.67 Foreign Deposits - Time Due to Banks 489.4 6.6 5.51 487.8 7.0 5.79 - Other Time and Savings 801.0 7.2 3.65 1,121.6 10.3 3.70 -------------------------- -------------------------- Total Foreign 1,290.4 13.8 4.35 1,609.4 17.3 4.33 -------------------------- -------------------------- Total Interest Bearing Deposits 6,867.0 72.0 4.25 7,190.0 68.2 3.82 Short-Term Borrowings 2,364.8 34.0 5.83 2,626.6 36.0 5.51 Long-Term Debt 916.0 15.3 6.78 773.0 12.7 6.60 -------------------------- -------------------------- Total Interest Bearing Liabilities 10,147.8 121.3 4.85 10,589.6 116.9 4.44 -------------------------- -------------------------- Net Interest Income 134.1 139.8 Interest Rate Spread 3.23% 3.46% Net Interest Margin 4.24% 4.30% Demand Deposits - Domestic 1,636.8 1,663.6 - Foreign 377.5 419.5 ---------- ---------- Total Demand Deposits 2,014.3 2,083.1 Other Liabilities 372.4 316.7 Shareholders' Equity 1,311.3 1,212.1 ---------- ---------- Total Liabilities and Shareholders' Equity $13,845.8 $14,201.5 ========== ========== Provision for Loan Losses 52.5 13.5 Net Overhead 20.6 62.2 ------ ------ Income Before Income Taxes 61.0 64.1 Provision for Income Taxes 27.2 24.1 Tax-Equivalent Adjustment 0.1 0.2 ------ ------ Net Income $33.7 $39.8 ====== ====== PACIFIC CENTURY FINANCIAL CORPORATION AND SUBSIDIARIES - ------------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED TWELVE MONTHS ENDED DECEMBER 31, 2000 DECEMBER 31, 2000 AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ (in millions of dollars) BALANCE EXPENSE RATE BALANCE EXPENSE RATE - ------------------------------------------------------------------------------------------------------------- Earning Assets Interest Bearing Deposits $215.7 $3.7 6.91% $216.2 $14.7 6.78% Investment Securities Held to Maturity -Taxable 687.0 12.5 7.24 724.3 53.0 7.32 -Tax-Exempt 3.8 0.2 22.24 7.6 1.4 18.24 Investment Securities Available for Sale 2,478.4 41.2 6.60 2,502.5 165.1 6.60 Funds Sold 66.8 1.1 6.46 43.2 2.7 6.22 Net Loans -Domestic 8,108.3 178.7 8.76 8,076.4 690.1 8.55 -Foreign 1,319.9 22.5 6.78 1,467.9 97.7 6.65 Loan Fees 8.7 33.6 ---------------------------- --------------------------- Total Earning Assets 12,879.9 268.6 8.30 13,038.1 1,058.3 8.12 Cash and Due From Banks 404.6 443.2 Other Assets 503.3 574.0 ---------- --------- Total Assets $13,787.8 $14,055.3 ========== ========= Interest Bearing Liabilities Domestic Deposits - Demand $1,991.6 12.1 2.41 $2,061.9 48.7 2.36 - Savings 667.5 3.4 2.03 684.8 13.9 2.03 - Time 2,815.6 42.3 5.98 2,781.1 154.1 5.54 ---------------------------- ---------------------------- Total Domestic 5,474.7 57.8 4.20 5,527.8 216.7 3.92 Foreign Deposits - Time Due to Banks 557.9 8.7 6.23 505.4 30.4 6.03 - Other Time and Savings 768.9 7.1 3.65 960.5 38.9 4.05 ---------------------------- ---------------------------- Total Foreign 1,326.8 15.8 4.73 1,465.9 69.3 4.73 ---------------------------- ---------------------------- Total Interest Bearing Deposits 6,801.5 73.6 4.30 6,993.7 286.0 4.09 Short-Term Borrowings 2,437.1 39.1 6.38 2,597.4 156.1 6.01 Long-Term Debt 1,001.6 17.0 6.72 886.9 59.1 6.66 ---------------------------- ---------------------------- Total Interest Bearing Liabilities 10,240.2 129.7 5.04 10,478.0 501.2 4.78 ---------------------------- ---------------------------- Net Interest Income 138.9 557.1 Interest Rate Spread 3.26% 3.34% Net Interest Margin 4.29% 4.27% Demand Deposits - Domestic 1,610.8 1,640.0 - Foreign 354.7 371.4 ---------- ---------- Total Demand Deposits 1,965.5 2,011.4 Other Liabilities 315.6 331.3 Shareholders' Equity 1,266.5 1,234.6 ---------- ---------- Total Liabilities and Shareholders' Equity $13,787.8 $14,055.3 ========== ========== Provision for Loan Losses 25.8 142.9 Net Overhead 59.2 233.4 ------- -------- Income Before Income Taxes 53.9 180.8 Provision for Income Taxes 21.2 66.3 Tax-Equivalent Adjustment 0.1 0.8 ------- -------- Net Income $32.6 $113.7 ======= ========
PACIFIC CENTURY FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED NON-PERFORMING ASSETS AND ACCRUING LOANS PAST DUE 90 DAYS OR MORE (UNAUDITED) - --------------------------------------------------------------------------------------------------------------------------- MAR 31 DEC 31 SEP 30 JUN 30 MAR 31 DEC 31 SEP 30 JUN 30 MAR 31 DEC 31 (IN MILLIONS OF DOLLARS) 2001 2000 2000 2000 2000 1999 1999 1999 1999 1998 - --------------------------------------------------------------------------------------------------------------------------- Non-Accrual Loans Commercial and Industrial $23.8 $55.4 $49.0 $52.7 $20.1 $23.7 $31.7 $37.5 $39.1 $28.2 Real Estate Construction 6.3 6.4 8.1 8.0 0.9 1.1 2.1 0.8 3.1 2.9 Commercial 42.5 60.1 86.8 62.2 18.2 19.0 20.8 17.2 18.7 5.4 Residential 18.5 22.7 22.0 23.2 23.2 29.7 33.1 35.2 37.6 36.4 Installment 0.1 - 0.1 0.1 0.5 0.5 0.7 0.8 0.5 0.8 Leases 0.2 0.4 0.2 0.3 3.7 3.9 4.8 4.4 4.5 0.7 ---------------------------------------------------------------------------------------- Total Domestic 91.4 145.0 166.2 146.5 66.6 77.9 93.2 95.9 103.5 74.4 Foreign 16.9 33.5 48.3 59.2 65.2 67.4 55.7 47.5 53.6 57.5 ---------------------------------------------------------------------------------------- Subtotal 108.3 178.5 214.5 205.7 131.8 145.3 148.9 143.4 157.1 131.9 Foreclosed Real Estate Domestic 10.9 4.2 4.9 4.6 4.3 4.3 5.6 5.8 6.1 5.5 Foreign 0.3 0.3 0.2 0.3 0.3 0.3 0.3 0.2 0.1 0.1 ---------------------------------------------------------------------------------------- Subtotal 11.2 4.5 5.1 4.9 4.6 4.6 5.9 6.0 6.2 5.6 ---------------------------------------------------------------------------------------- Total Non-Performing Assets 119.5 183.0 219.6 210.6 136.4 149.9 154.8 149.4 163.3 137.5 ---------------------------------------------------------------------------------------- Accruing Loans Past Due 90 Days or More Commercial and Industrial 3.9 5.0 2.2 4.7 6.7 5.9 6.2 3.9 4.3 0.4 Real Estate Construction - - 0.1 - - - 0.5 0.2 0.2 0.4 Commercial 0.9 1.3 4.9 2.0 2.1 1.9 2.4 0.2 0.4 - Residential 3.3 3.3 7.2 3.5 5.0 4.0 2.8 3.7 3.5 4.5 Installment 2.7 5.6 4.6 4.0 4.7 4.5 4.5 5.2 6.9 7.3 Leases 0.1 0.4 0.1 1.5 1.4 1.2 0.2 - 0.1 0.3 ---------------------------------------------------------------------------------------- Total Domestic 10.9 15.6 19.1 15.7 19.9 17.5 16.6 13.2 15.4 12.9 Foreign 0.2 3.2 1.5 1.3 3.2 1.0 5.0 8.2 6.3 7.9 ---------------------------------------------------------------------------------------- Subtotal 11.1 18.8 20.6 17.0 23.1 18.5 21.6 21.4 21.7 20.8 ---------------------------------------------------------------------------------------- Total $130.6 $201.8 $240.2 $227.6 $159.5 $168.4 $176.4 $170.8 $185.0 $158.3 ======================================================================================== - -------------------------------------------------------------------------------------------------------------------------- Ratio of Non-Performing Assets to Total Loans 1.33% 1.89% 2.25% 2.09% 1.39% 1.54% 1.59% 1.55% 1.69% 1.40% - -------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- Ratio of Non-Performing Assets and Accruing Loans Past Due 90 Days or More to Total Loans 1.45% 2.09% 2.46% 2.26% 1.63% 1.73% 1.81% 1.78% 1.92% 1.61% - --------------------------------------------------------------------------------------------------------------------------
PACIFIC CENTURY FINANCIAL CORPORATION AND SUBSIDIARIES SUMMARY OF LOAN LOSS EXPERIENCE - ----------------------------------------------------------------------------------------------------------- First Year First Quarter Ended Quarter (in millions of dollars) 2001 12/31/00 2000 - ----------------------------------------------------------------------------------------------------------- Average Amount of Loans Outstanding $9,263.5 $9,544.3 $9,484.1 - ----------------------------------------------------------------------------------------------------------- Balance of Reserve for Loan Losses at Beginning of Period $246.2 $194.2 $194.2 Loans Charged-Off Commercial and Industrial 75.5 22.1 1.4 Real Estate Construction - 0.6 - Commercial 11.9 15.2 3.9 Residential 2.5 6.5 2.4 Installment 5.4 20.1 4.7 Leases 0.1 0.5 - - ----------------------------------------------------------------------------------------------------------- Total Domestic 95.4 65.0 12.4 Foreign 10.0 45.8 3.7 - ----------------------------------------------------------------------------------------------------------- Total Charged-Off 105.4 110.8 16.1 Recoveries on Loans Previously Charged-Off Commercial and Industrial 2.7 5.5 1.7 Real Estate Construction - - - Commercial 0.3 0.6 0.1 Residential 0.2 1.1 0.5 Installment 1.8 6.9 1.7 Leases 0.1 - - - ----------------------------------------------------------------------------------------------------------- Total Domestic 5.1 14.1 4.0 Foreign 2.6 7.3 0.8 - ----------------------------------------------------------------------------------------------------------- Total Recoveries 7.7 21.4 4.8 - ----------------------------------------------------------------------------------------------------------- Net Charge-Offs (97.7) (89.4) (11.3) Provision Charged to Operating Expenses 52.5 142.9 13.5 Other Net Additions (Reductions)* (1.2) (1.5) (1.0) - ----------------------------------------------------------------------------------------------------------- Balance at End of Period $199.8 $246.2 $195.4 =========================================================================================================== Ratio of Net Charge-Offs to Average Loans Outstanding (annualized) 4.22% 0.94% 0.48% - ----------------------------------------------------------------------------------------------------------- Ratio of Reserve to Loans Outstanding 2.29% 2.62% 2.05% - ----------------------------------------------------------------------------------------------------------- * Includes balance transfers, reserves acquired, and foreign currency translation adjustments.
PACIFIC CENTURY FINANCIAL CORPORATION AND SUBSIDIARIES QUARTERLY SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA - ----------------------------------------------------------------------------------------------------- (in millions of dollars except per share amounts) MAR. 31 DEC. 31 SEPT. 30 JUN. 30 MAR. 31 2001 2000 2000 2000 2000 - ----------------------------------------------------------------------------------------------------- BALANCE SHEET TOTALS Total Assets $ 13,710.7 $ 14,013.8 $ 13,939.9 $ 14,294.6 $ 14,250.4 Net Loans 8,533.8 9,168.1 9,233.5 9,497.4 9,346.5 Deposits 8,815.5 9,080.6 8,820.7 9,109.1 9,143.1 Long-Term Debt 882.7 997.2 999.7 902.2 805.7 Shareholders' Equity 1,371.9 1,301.4 1,250.1 1,209.4 1,225.9 QUARTERLY OPERATING RESULTS Net Interest Income $ 134.0 $ 138.8 $ 139.3 $ 138.6 $ 139.5 Provision for Loan Losses 52.5 25.8 20.1 83.4 13.5 Non-Interest Income 155.5 64.7 61.3 73.6 63.9 Non-Interest Expense 176.2 123.9 124.9 121.9 126.1 Net Income 33.7 32.6 34.6 6.7 39.8 Basic Earnings Per Share $0.42 $0.41 $0.44 $0.08 $0.50 Diluted Earnings Per Share $0.42 $0.41 $0.44 $0.08 $0.50 Return on Average Assets 0.99% 0.94% 0.98% 0.19% 1.13% Return on Average Equity 10.42% 10.24% 11.20% 2.19% 13.19% Efficiency Ratio 65.43% 60.52% 62.26% 57.31% 62.06% Excluding the Effects of Intangibles (1) Net Income $39.3 $36.7 $38.8 $11.0 $43.9 Basic Earnings Per Share $0.49 $0.46 $0.49 $0.14 $0.55 Diluted Earnings Per Share $0.48 $0.46 $0.49 $0.14 $0.55 Return on Average Assets 1.17% 1.07% 1.12% 0.32% 1.26% Return on Average Equity 14.21% 13.60% 14.94% 4.30% 17.54% Efficiency Ratio 63.10% 58.19% 59.83% 54.96% 59.73% (1) Intangibles include goodwill, core deposit and trust intangibles, and other intangibles.
EXHIBIT 99.2 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 PACIFIC CENTURY FINANCIAL CORPORATION EXHIBIT TO CURRENT REPORT ON FORM 8-K DATED April 23, 2001
NEWS RELEASE [LETTERHEAD] PACIFIC CENTURY FINANCIAL CORPORATION NEW STRATEGY TO FOCUS ON HAWAII OPERATIONS WILL DIVEST NON-CORE HOLDINGS FOR IMMEDIATE RELEASE HONOLULU, HI (April 23, 2001) - Pacific Century Financial Corporation (PCFC) today announced its new corporate strategic plan designed to maximize shareholder value by strengthening its Hawaii and West Pacific operations and divesting non-core holdings. Michael E. O'Neill, PCFC and Bank of Hawaii Chairman and CEO, said, "The new strategy focuses on building on strengths in the company's core markets. We will be directing our efforts at three key business units: retail banking, commercial banking, and financial services." The company also plans to seek approval next year to change the parent company name from Pacific Century Financial Corporation to Bank of Hawaii Corporation. The new plan, which goes into effect immediately and extends through 2003, is the result of an intensive and detailed four-month strategic assessment process, during which the company made the decision to divest or wind down its holdings in California, most of the South Pacific and Asia. It will retain operations in Hawaii, the West Pacific, American Samoa and Japan, as well as an office in Arizona for its leasing operations and technology support. O'Neill said, "The decision to divest, while necessary, was certainly difficult since the company has served these regions for many years and has strong historical ties." He explained, "Although financial projections for these businesses forecast improvement, current and expected returns were insufficient when compared to those in Hawaii and the West Pacific. These lines of business were not creating value for our shareholders." The plan calls for the divestiture program to be completed by the end of 2001. PCFC and Bank of Hawaii President Richard Dahl will oversee all divestiture-related activities. -more-
PCFC NEW STRATEGY PAGE 2 Approximately 1,000 employees work throughout the impacted divisions. However, it is anticipated that many of them could continue employment under new owners. The impact on Hawaii-based employees is expected to be minimal. Successful implementation of the planned changes will have a significant potential impact on the company's profitability and the return to its shareholders. The charts attached to this release show the projected effect through 2003. In addition, implementation as planned will reduce the economic capital required to run the company by nearly half. This will result in approximately $800 million in capital that will need to either be reinvested or returned to shareholders. In our core markets, our major focus will be toward building deeper and broader relationships with existing customers and increasing the share of financial products and services provided. This will be done while maintaining a focus on efficiency and expense management. RETAIL BANKING: Bank of Hawaii's retail banking franchise and market share in Hawaii, the West Pacific and American Samoa are key strengths of the company. All locations are U.S. dollar-based with similar products and services and operating under traditional U.S. legal systems. "We see tremendous opportunity for growth in our core markets," O'Neill said. "We've always been exceptionally strong in traditional banking - checking and savings accounts and loans. But today we define financial services much more broadly. People are looking for someone to help with insurance, investments such as mutual funds and stocks, trust services, financial planning, and other needs. When you combine all of those needs, we probably have less than 10 percent market penetration. We think we can at least double that. In addition, we're paying close attention to taking care of customers at all levels, whether they're in the branch, on-line or on the phone." COMMERCIAL BANKING: Commercial banking is a core strength for the bank. O'Neill described the strategy as "improving credit quality while expanding our strong market share of high-value relationships in Hawaii and the West Pacific." He said Bank of Hawaii enjoys a solid reputation and has excellent market coverage and the expertise and products that commercial customers want and need. FINANCIAL SERVICES GROUP: Bank of Hawaii has long been a leader in private banking, trust and asset management. The growth strategy for this group is to expand the client base through integration with other areas of the bank and to deepen relationships with existing customers. This will include offering new investment products and lines of insurance. To ensure the proper oversight of the new organizational structure, the Managing Committee members and their respective responsibilities have been changed. Richard Dahl remains as President with responsibility for implementing the divestiture plan. In addition to Dahl, the Managing Committee will consist of seven vice chairs reporting directly to the Chairman and CEO. -more- 2
PCFC NEW STRATEGY PAGE 3 They are: Alton Kuioka (Commercial Banking); David Thomas (Retail Banking - will join in mid-June 2001); Walter Laskey (Financial Services); Allan Landon (Finance); William Nelson (Risk Management); Mary Carryer (Technology / Operations / Procurement / Premises); and Neal Hocklander (Human Resources). Also reporting to O'Neill are Lori McCarney (Marketing and Communications) and Joe Kiefer (General Counsel). O'Neill said the new management team represents a combination of strengths that will help ensure the company achieves its goals. "Having a flatter organization and broader span of control allows for increased efficiency in decision making." He said, "We believe our new Hawaii-focused strategy is going to be good for customers and shareholders. We will also continue our practice of being a responsible corporate citizen, providing generously to worthy charitable causes, and being meaningfully involved in community activities. We're doing tangible things that are going to provide tangible results." The company will review first quarter 2001 earnings and the results of its strategic assessment process at a presentation in New York today at 8:00 a.m. ET. The presentation will be accessible via teleconference as well as through the investor relations link of PCFC's web site, www.boh.com. The conference call number is (800) 230-1096 or for international locations call (612) 332-0720. A replay will be available at 12 noon ET on Monday, April 23, 2001 by calling (800) 475-6701 (USA) or (320) 365-3844 (International) and entering the number 577584 when prompted. A replay of the presentation will be available at 12 noon ET, Monday, April 23, 2001 on PCFC's web site. Pacific Century Financial Corporation is a regional financial services company with locations throughout the Pacific region. Pacific Century and its subsidiaries provide varied financial services to businesses, governments and consumers in four principal markets: Hawaii and the West Pacific, South Pacific, Asia and selected markets on the U.S. Mainland. Pacific Century's principal subsidiary, Bank of Hawaii, is the largest commercial bank in the state of Hawaii. This news release contains forward-looking statements. All statements in this news release that address events or developments that we anticipate may occur in the future are forward-looking statements. We believe the assumptions underlying our forward-looking statements are reasonable. However, any of the assumptions could prove to be inaccurate and actual results may differ materially from those projected for a variety of reasons including, but not limited to: we may not complete implementation of the restructuring plan within expected financial and time estimates; our credit markets may deteriorate; our credit quality initiatives may fall short of our goals; we may not achieve the expense reductions we expect; we may not be able to maintain our net interest margin; we may not be able to implement our proposed equity repurchases in the amount or at the times planned; our restructuring may cause unanticipated organizational disruptions; customer acceptance of our business as restructured may be less than expected; there may be economic or political volatility in the markets we serve; and there may be changes in business and economic conditions, competition, fiscal and monetary policies or legislation. We do not undertake any obligation to update any forward-looking statements to reflect later events or circumstances. -more- 3
PCFC NEW STRATEGY PAGE 4 PCFC STRATEGY SUMMARY - ------------------------------------------------------------------------------------------------------------- FROM 2001 TO 2003 - ------------------------------------------------------------------------------------------------------------- NAME Pacific Century Financial Corporation Bank of Hawaii Corporation - ------------------------------------------------------------------------------------------------------------- MISSION Bank of the Pacific Maximize shareholder value over time by exceeding customers' expectations - ------------------------------------------------------------------------------------------------------------- FOOTPRINT 6 Asian countries; 6 South Pacific Hawaii, West Pacific, American Samoa, locations; West Pacific; Hawaii; Japan, and Arizona (leasing) California; Arizona, New York - ------------------------------------------------------------------------------------------------------------- ORGANIZATIONAL FOCUS Business strategy by geographic Retail, Commercial and Financial Services market - ------------------------------------------------------------------------------------------------------------- EMPLOYEES 4,166 Approximately 3,070 - ------------------------------------------------------------------------------------------------------------- BRANDING Multiple brands Bank of Hawaii - ------------------------------------------------------------------------------------------------------------- COMMUNITY REINVESTMENT Outstanding Outstanding ACT RATING - ------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $14 billion Approximately $9 billion - ------------------------------------------------------------------------------------------------------------- CORE NET INCOME $119 million (+/- 2%) $131 million (+/- 2%) - ------------------------------------------------------------------------------------------------------------- CORE EPS DILUTED $1.51 (+/- 2%) $2.51 (+/- 2%) - ------------------------------------------------------------------------------------------------------------- RETURN ON EQUITY 9% - 10% 17% - ------------------------------------------------------------------------------------------------------------- ### 4
THE STRATEGIC ACTION PLAN TOTAL BUSINESS FORECAST FOR 2001 (PROJECTION PLUS OR MINUS 2%) Actual Forecast ($millions) 1Q01 Full Year 2001 ----------------------------------- Total Revenue $199 $702 Total Expense 132 453 ----------------------------------- Operating Income 67 249 Credit Provision 16 56 ----------------------------------- Pretax Income 51 193 Provision for Taxes 20 74 Core Net Income $ 31 $119 =================================== Significant Items $ 3 -------- Core EPS - Diluted $0.38 $1.51
THE STRATEGIC ACTION PLAN DIVESTED BUSINESSES FORECAST FOR 2001 (PROJECTION PLUS OR MINUS 2%) Actual Forecast ($millions) 1Q01 Full Year 2001 ------------------------------------- Total Revenue $ 51 $121 Total Expense 35 80 ------------------------------------- Operating Income 16 41 Credit Provision 4 11 ------------------------------------- Pretax Income 12 30 Provision for Taxes 5 13 ------------------------------------- Core Net Income $ 7 $ 17 ===================================== Core EPS - Diluted $0.09 $0.22
THE STRATEGIC ACTION PLAN CONTINUING BUSINESSES FORECAST FOR 2001 (PROJECTION PLUS OR MINUS 2%) Actual Forecast ($millions) 1Q01 Full Year 2001 ---------------------------------- Total Revenue $148 $581 Total Expense 97 373 ---------------------------------- Operating Income 51 208 Credit Provision 12 45 ---------------------------------- Pretax Income 39 163 Provision for Taxes 15 61 ---------------------------------- Core Net Income $ 24 $102 ================================== Core EPS - Diluted $0.29 $1.29
THE STRATEGIC ACTION PLAN FORECAST FOR 2002 - 2003 (PROJECTION PLUS OR MINUS 2%) Forecast Forecast ($millions) 2002 2003 ---------------------------------- Total Revenue $597 $619 Total Expense 369 376 ---------------------------------- Operating Income 228 243 Credit Provision 36 30 ---------------------------------- Pretax Income 192 213 Provision for Taxes 73 82 ---------------------------------- Net Income $119 $131 ================================== EPS - Diluted $2.19 $2.51
2001 STRATEGIC ACTION PLAN BALANCE SHEET TRENDS ASSETS ($millions) 2000 2003 CHANGE - ------------------------------------------------------------------------------------- Business Dispositions 2,800 100 (2,700) - ------------------------------------------------------------------------------------- Credit Concentrations: - ------------------------------------------------------------------------------------- Corporate Banking 1,130 440 (690) - ------------------------------------------------------------------------------------- Commercial Real Estate 740 500 (240) - ------------------------------------------------------------------------------------- Hawaii Commercial Banking 670 590 (80) - ------------------------------------------------------------------------------------- Mortgage Portfolio 2,620 1,670 (950) - ------------------------------------------------------------------------------------- Securities Portfolio 2,940 2,200 (740) - ------------------------------------------------------------------------------------- All Other Lines of Business 3,160 3,200 40 - ------------------------------------------------------------------------------------- TOTAL ASSETS 14,060 8,700 (5,360)
THE STRATEGIC ACTION PLAN 2001 2002 2003 ---- ---- ---- =============================================================================================================== o Restructure/Clean-up o Clearly See Benefits o Steady State o Assets $11 - 12 Billion o Assets $8 - 9 Billion o Assets $8 - 9 Billion o Capital Targets o Capital Targets o Capital Targets -leverage 8 - 9% -leverage 9 - 10% -leverage 10% -Tier 1 11 - 12% -Tier 1 12% -Tier 1 12 -13% o Financial Targets o Financial Targets o Financial Targets -EPS $1.51 (+/- 2%) -EPS $2.19 (+/- 2%) -EPS $2.51 (+/- 2%) -ROE 9 - 10% -ROE 15% -ROE 17% -ROA over 1% -ROA over 1.3% -ROA over 1.5% ===============================================================================================================