Pacific Century Financial Corp. of Honolulu has reauthorized a stock repurchase program, a move observers considered a positive sign for a company stung by the Asian economic turmoil.
Pacific Century, parent of Bank of Hawaii, put the buybacks on hold in January to conserve capital in the face of the Asian woes.
Though those troubles have not gone away, officials have taken steps to strengthen the $14.7 billion-asset company, and they said its stock price- $16.1875, up 25 cents, at midday Thursday-is too low, said chief financial officer David A. Houle.
The resumption of buybacks, announced last Friday, should boost earnings per share, a common benchmark of profitability.
"Current market prices are at levels we think don't fully reflect the value of our company," Mr. Houle said in an interview. "Rather than issue new shares cheap and have that impact shareholders adversely, we are going to buy them back."
To protect itself from volatility in Asian markets, Pacific Century said in July that it had added $42 million in the second quarter to loan-loss reserves. With the provision, and a $19.4 million restructuring charge related to previously announced branch closings and mergers, the company's second-quarter profit was about $3.1 million. It also slashed top executives' bonuses.
"We have taken very positive steps to deal with our exposure along the Asian rim," Mr. Houle said.
With its stock pushed even lower amid the recent dip in bank stock prices, Pacific Century "recognized the opportunity we have to repurchase our shares at a low market price," he said.
The buyback "is pretty encouraging," said Jeffrey T. Runnfeldt, an analyst at Van Kasper & Co. in San Francisco. "This is a sign that there is renewed optimism in the future over there."
Most of the shares to be repurchased are issued under the company's dividend reinvestment, employee profit-sharing, and stock option programs, Mr. Houle said.
Pacific Century could have begun buying its shares Wednesday. It waits three business days after a board decision to carry out buybacks, the CFO said. He declined to specify how many shares Pacific Century plans to buy.
