Pacific Century Warns Earnings Will Plunge

Pacific Century Financial Corp., the parent of Bank of Hawaii, said bad loans will all but wipe out second-quarter earnings, becoming the third U.S. bank in a week to issue such a profit warning. The Honolulu-based bank’s shares dropped $3.56, or 18%, to close at $16.25, on the New York Stock Exchange, in response. The bank said it will set aside an additional $55 million to $65 million to offset bad loans and increase its provision for possible future bad loans. The charges will result in “nominal” earnings for the second quarter, it said. Analysts in a First Call/Thomson Financial survey were expecting earnings of 51 cents a share. Most of Pacific Century’s write-offs and provisions stemmed from bad commercial real estate loans in Hawaii and syndicated loans, which are divided among a number of banks, the company said. They also cover recent political and economic turmoil in Fiji, where Bank of Hawaii has three branches, the company said.