Pacific Century Financial Corp. of Honolulu is still looking to buy banks on the mainland, said president and chief operating officer Richard Dahl.
He said the $14.5 billion-asset holding company, the parent of Bank of Hawaii, is actively looking to buy banks in Southern California that primarily lend to small and midsize businesses.
"We need more exposure in Southern California in particular, either by de novo expansion or by acquisition," Mr. Dahl said in a recent interview. "We have the ability to do more than one thing at a time, and we never stop looking."
Pacific Century, which last month unveiled a plan to cut annual costs by $43 million and boost revenues by $21 million by the fourth quarter of next year, has a $1.3 billion-asset operation in California that uses the name Pacific Century Bank. The Los Angeles-based unit focuses on small to middle-market business lending and shies away from consumer loans, Mr. Dahl said.
With years of successful growth in Polynesia, Micronesia, Hong Kong, and the Philippines, the Hawaii banking company for the most part has satisfied its appetite for Pacific Rim acquisitions, he said.
"We have been expanding west and south for many years," he said. "Geographically we have no great need to expand by acquisition in those markets."
Several hurdles stand between Pacific Century and its California dreams, including other institutions on the acquisition trail. U.S. Bancorp has been especially busy, having acquired or reached deals to buy three relatively small banks in the region this year. Wells Fargo & Co. on Sept. 30 said it would acquire $349 million-asset North County Bancorp in Escondido, which specializes in small-business lending.
Mainland-based banks have a leg up on Pacific Century. Mainly because of the stagnant island economy, Pacific Century's stock has been trading at roughly 9.5 times estimated 2000 earnings, while competitors have been trading at multiples of 13 to 14, according to Erika L. Hill, an analyst with Pacific Crest Securities in Seattle.
"Their biggest problem is the pricing of their stock," Ms. Hill said. "This could put them at a disadvantage, especially because others with better stock prices are actively looking."
Regardless, Mr. Dahl said his organization would be interested in both small and large targets. "Size is irrelevant until you're looking at someone bigger than yourself," he said.
Because of Pacific Century's extensive Pacific Rim operations, banks that specialize in Asian trade finance or serve customers with overseas operations would be apt targets for the banking company, Mr. Dahl said.
"Our strategy is finding markets where we can continue to add value with the rest of our franchise," Mr. Dahl said. "To the extent that a possible acquisition serves local businesses that have activities in the Asian Pacific, we are perfect."
He declined to cite any particular banks that would be of interest to Pacific Century, but Ms. Hill pointed to several candidates including $2 billion-asset East West Bank of San Marino, $1.7 billion-asset GBC Bancorp in Los Angeles, $507 billion-asset First National Bank in San Diego, and $276 million-asset Nara Bank in Los Angeles.