SAN FRANCISCO - Making good on a promise to resign if his company's stock failed to rebound, Lawrence M. Johnson, chairman and chief executive officer of Bank of Hawaii and its holding company, said Tuesday that he plans to retire as soon as a successor is found.
"After several years of not creating shareholder value, I acknowledged that this was one of my primary responsibilities. In fact, it's my entire report card with investors," Mr. Johnson said in an interview Tuesday. Bank of Hawaii is the flagship operation of Pacific Century Financial Corp., Honolulu.
The company said in a statement that it is starting a national search for a successor, but the next chief may come from within. Indeed, Richard J. Dahl, 49, president and chief operating officer, is a candidate.
Mr. Johnson, 60, is leaving a company that - despite its best efforts at a turnaround - has been beset by one series of problems after another since the 1997 Asian financial crisis.
Over the last three decades Bank of Hawaii has grown from a community bank seeking to expand in its local market of Hawaii, where it now holds the No. 1 market position, to a company with a string of branches and alliances across the South Pacific and Pacific Rim.
Much of that expansion occurred when Mr. Johnson held senior management roles. He presided over the expansion on the U.S. mainland with the 1997 acquisition of CU Bancorp of Encino, Calif., and in Guam with the acquisition of First Federal Savings and Loan Association of America. He also forged several alliances with foreign financial institutions in the Pacific.
To reflect its increasingly outward-looking expansion strategy, the holding company traded in its Bancorp Hawaii Inc. name for Pacific Century Financial in 1997.
But the $14.3 billion-asset company has also had several setbacks the last few years. Hawaii's depressed economy, which stagnated for much of the 1990s, and the Asian crisis hindered the company's growth. And just when it seemed Pacific Century had put those problems behind it, a slew of bad loans and a profit warning before the second quarter ended dragged down its share price again.
Pacific Century shares, which trade under the BOH ticker symbol, have sunk about 31% since June 20, the day before it issued the second-quarter profit warning. They closed up/down Tuesday, at $TK. American Banker's index of the top 50 U.S. banks rose close to 10% over the same period.
The company's recent credit problems have been a disappointment to investors, particularly in light of the progress Bank of Hawaii appeared to be making with a cost-saving and revenue enhancement program that will have been Mr. Johnson's last major initiative.
When asked whether, if he had to do it all over again, he would push the bank to enter syndicated lending, a business that caused credit blips at many large banks last quarter, Mr. Johnson suggested that the bank did not have that much of a choice. "We were faced with virtually no revenue growth from our primary market, Hawaii," he said. This pressure caused the bank to take advantage of opportunities that included "a degree of risk that was unacceptable," he said.
But the choice was clear. "If we hadn't done that, we probably would have been acquired," he said.
Mr. Johnson will also get some personal satisfaction upon retiring if the stock rebounds under a new chief executive: At the time of Pacific Century's March 2000 proxy statement, Mr. Johnson owned 2% of the company's outstanding shares, a stake valued at $6 million.
Mr. Johnson began as a teller in 1958 and rose to became president of Bank of Hawaii and the holding company in 1989. He became chairman and CEO in August 1994, after the retirement of Howard Stephenson. He said he plans to stay active in the Hawaiian business and public community once he retires but is not "enthusiastically looking for any full-time position."
From Our Archive:
- Pacific Century Chief Credit Officer Plans to Retire This Year - July 27, 2000
- Pacific Century Issues Profit Warning - June 22, 2000
- Pacific Century of Hawaii Plans to Cut 22% of Staff - September 15, 1999
- Pacific Century Set To Tell 5,000 Whether They'll Lose Their Jobs - August 25, 1999
- Former B of A Executives Join Bank of Hawaii Board - March 12, 1999
- Pacific Century Financial's second quarter 2000 earnings (Source: Pacific Century)
- Pacific Century Financial's 12-month stock performance (Source: Thomson Investors Network)