Magazine article American Banker

Pacific Century Beats Its Cost-Cutting Timetable

Magazine article American Banker

Pacific Century Beats Its Cost-Cutting Timetable

Article excerpt

By OLAF de SENERPONT DOMIS Less than halfway through a two-year cost-cutting campaign, Pacific Century Financial Corp. is well ahead of schedule, according to chief executive officer Lawrence Johnson.

As of last week, the parent of Bank of Hawaii had shuttered 27 branches, 15 months before a company-imposed deadline.

The Honolulu-based company said in February it would close 25 branches as part of an effort to pare $25 million from annual expenses by 2000.

"It's a very pleasant surprise," Mr. Johnson said in an interview last week. "We planned well, executed well, and everything so far has happened to work out well."

The branch closings have already started to boost Pacific Century's performance, which had been dragged down by seven years of local economic sluggishness. The bank's efficiency ratio, which measures expenses as a percentage of revenues, improved to 66.4% in the third quarter from 67.6% in the second.

That is still well above the goal of 55%, but analysts said they were encouraged by the early results.

"They are on the right track," said Eric E. Rothmann, an analyst at Stephens Inc. in Little Rock, Ark. "Management is very methodical, and this shows their strong capabilities, especially when they are in an economy that is working against them."

Through the branch closures, the bank is aiming to eliminate 400 positions by 2000. So far, 250 have been cut.

Annual savings of $22 million from the branch closings are expected to boost fourth-quarter earnings slightly. …

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