Magazine article American Banker

Buybacks Seen Helping Pacific Century's Stock

Magazine article American Banker

Buybacks Seen Helping Pacific Century's Stock

Article excerpt

Pacific Century Financial Corp., the Honolulu banking company whose shares took a major blow after Sept. 11 from fears that a falloff in tourism would raise credit costs, has regained some of its lost value.

It stock has risen 25% since Oct. 9, when it hit $19.69 a share, its lowest point since March 30. Observers credit the increase to $270 million stock repurchase plan and an improvement in Hawaii's tourism outlook. On Wednesday the stock rose 0.12% to close at $24.57.

The $12.29 billion-asset company began a $70 million buyback in late July as part of a restructuring program designed to increase its focus on its assets in Hawaii, including its main subsidiary, Bank of Hawaii.

With capital freed from the sale of underperforming businesses, including the California and Arizona branches of its Pacific Century Bank, the company completed its initial buyback last month and started another program to buy back another $200 million by yearend.

By the end of October, Pacific Century had spent $103 million to repurchase 4.5 million shares, at an average price of $22.79.

"The stock has been propped up by the management buying it," said David Trone, an analyst at Prudential Securities.

Joseph Morford, an analyst at Royal Bank of Canada's RBC Capital Markets, said he predicted that Pacific Century's management would need to buy back about 180,000 shares a day, or 31% of the stock's average daily volume, to complete the repurchase by yearend. The company may buy large blocks of its stock through private, negotiated deals, he said. …

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