Sunday, September 29, 2002



Bank of Hawaii’s return
to roots is profitable

The company's new name reflects
its focus on servicing the state

A Bankoh time line

By Dave Segal

Bank of Hawaii, which at one time pegged its future to expansion in the Pacific Rim, learned the hard way that it's all right to go home again.

But returning to its roots may not be such a bad thing for the state's second-oldest financial institution.

The company, which changed its name to Pacific Century Financial Corp. in 1997 to better reflect its geographic diversity, renamed itself Bank of Hawaii Corp. earlier this year to re-emphasize its commitment to the state. This followed on the heels of an accelerated divestiture of many of the company's South Pacific holdings, which were purchased during a series of acquisitions dating to the late 1960s.

"Most companies today are starting to really look at what their roots are and going back to them," said Hawaii-born Paul Loo, the 71-year-old senior vice president of Morgan Stanley's Honolulu brokerage. "You're beginning to see that in accounting procedures. All these companies that made 60, 70 acquisitions a year are all coming back to roost. I think we've come full circle. And Bank of Hawaii has gone back to what they really do best as a consumer bank: servicing the needs of Hawaii."

After more than a century of expansion, Bankoh is refocusing on Hawaii with improved, strategic services for clients here. Randall Mukai recently used the BankMachine at Manoa Marketplace.

The bank, which was chartered in 1897 and opened its first neighbor island branch in 1903 on Kauai, initially made its mark servicing the larger companies of Hawaii. It was not until Rudolph Peterson took over as president in 1956 that the bank began changing its focus.

"It wasn't quite the people's bank until Rudy Peterson came in and changed it to a consumer bank and hired a lot of local people," Loo said. "One of those he hired was (former Executive Vice President) Robert Sasaki, who recently died. Sasaki brought to the bank the business of the growing Asian population of Hawaii, and the bank very much became the people's bank. I think that's how they, many years ago, passed Bishop National Bank, which is now First Hawaiian Bank, as the No. 1 bank in Hawaii in terms of deposits, assets and number of branches."

Lawrence Johnson, who left the posts of chairman and chief executive of Pacific Century in late 2000 in the wake of declining earnings, bad loans and a poor stock performance, was blamed by some for the bank's misfortune. But Sam Cooke, whose great-grandfather C.M. Cooke founded the bank with P.C. Jones, said Johnson's initial decision to expand west was the right move at the time.

In 1927, Bank of Hawaii moved into its main office at the corner of King and Bishop streets. The lobby featured a colorful tile fountain and imported marble throughout the interior.

"It was the right thing to do," said Cooke, now a Bank of Hawaii shareholder. "Japan was very strong and was a financial giant in this area, and Bank of Hawaii opened all these offices on all these different island kingdoms. Initially, it did very well."

But Johnson, who was instrumental in developing and expanding the bank's in-store branch network during his 42 years with the company, ran into trouble with the Asian crisis, a stagnating Hawaii economy and a record number of state bankruptcies.

In November 2000, former Bank of America Vice Chairman Michael O'Neill was brought in to right the ship after Johnson retired. O'Neill immediately began divesting the bank of its overseas holdings, and its share price has responded positively.


A Bankoh time line

>> 1897: Bank of Hawaii Ltd. chartered and incorporated.

>> 1903: Opens first neighbor isle branch in Lihue, Kauai.

>> 1961: Enters the West Pacific market when it opens its doors on Guam.

Bank of Hawaii >> 1969: Enters the South Pacific market when it acquires the Bank of America-American Samoa Branch.

>> 1970: Introduces the first ATM to Hawaii, called CashTel. It was the predecessor to the Bankoh BankMachine.

>> 1971: Establishes the state's first bank holding company, Hawaii Bancorporation Inc., with Bank of Hawaii as principal subsidiary.

>> 1981: Opens a representative office in Tokyo.

>> 1985: Acquires Hawaiian Trust Co. Ltd.

>> 1989: Makes first mainland acquisition by buying First National Bank of Arizona.

>> 1990: Acquires FirstFed American Inc., a holding company for First Federal Savings & Loan Association of America and First Savings & Loan Association of Guam.

>> 1991: Begins trading on the New York Stock Exchange under the ticker symbol BOH. Previously traded on Nasdaq.

>> 1995: Opens Hale O Kapolei in the city of Kapolei.

>> 1997: Purchases CU Bancorp, a holding company for California United Bank, which was renamed Pacific Century Bank.

>> 1997: Changes name to Pacific Century Financial Corp.

>> 1998: Becomes the first financial institution in Hawaii to offer online banking services.

>> 1999: Announces cuts of more than 1,000 positions as part of its New Era Redesign.

>> 2000: Chairman and CEO Lawrence Johnson retires; former Bank of America Vice Chairman Michael O'Neill named to replace him.

>> 2000: Implements strategic plan to refocus operations in Hawaii, West Pacific and American Samoa. Divests itself of many non-Hawaii assets.

>> 2002: Changes name to Bank of Hawaii Corp.

Bank of Hawaii

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