Magazine article American Banker

Hawaii's Top Bank to Bid Aloha to 550 Workers, 25 Branches

Magazine article American Banker

Hawaii's Top Bank to Bid Aloha to 550 Workers, 25 Branches

Article excerpt

Citing economic weakness locally and in Asia, Hawaii's largest banking company announced plans Wednesday to cut its work force by 11% and close 25 of its 100 branches.

Pacific Century Financial Corp. of Honolulu said it expects to cut annual expenses by $25 million and improve its efficiency ratio-expenses as a percentage of revenues-to 55% by yearend 2000 from the current 66%.

"Hawaii's stagnant economy coupled with economic turbulence in Asia has thwarted our attempts to significantly improve our performance," said Lawrence M. Johnson, chairman and chief executive officer. "We recognize that we must become more efficient and use our resources to improve performance."

In the fourth quarter, Pacific Century reported earnings per share of 41 cents, a penny lower than in the year-earlier period. The company's stock price, which closed at $21.6875 Wednesday, up 12.5 cents, was up 18% during 1997, while other regional banks' share prices were up, on average, about 50%, analysts said.

The slow economy in Hawaii, which accounts for roughly two-thirds of Pacific Century's assets and earnings, is the main culprit. The state has suffered through eight years of scant growth.

Pacific Century, formerly Bancorp Hawaii, "is definitely facing a challenging operating environment," said Joseph K. Morford, an analyst with BT Alex. Brown in San Francisco. "But it is encouraging that they are being aggressive in taking the steps necessary to offset the impacts."

The bank has credit exposure to some troubled Asian nations, including South Korea, Malaysia, Thailand, and Indonesia. Pacific Century's main subsidiary, $15 billion-asset Bank of Hawaii, charged off $10 million of loans to Thailand and added $18 million to the nonaccrual category in the fourth quarter.

Pacific Century decided to take action several months ago when it become obvious it would not hit goals of a 1. …

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