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Bankoh puts
Ariz. branches
on the market

It wants to refocus
its mainland business

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By Russ Lynch
Star-Bulletin

Pacific Century Financial Corp. is seeking to sell the nine bank branches it owns in Arizona, in a move it says will allow it to concentrate its mainland efforts on its small- and mid-sized banks in Southern California.

Pacific Century, the parent of Bank of Hawaii, said yesterday it has retained the investment banking company Credit Suisse First Boston to help it find a buyer.

The Honolulu-based bank's stock rose 25 cents to close at $15.13 on the New York Stock Exchange today.

Richard Dahl, president of Pacific Century, said shareholders "would be better rewarded by focusing on developing our strong franchise in the small and middle market business of Southern California."

Analyst Robert Patten of UBS Warburg in New York said today that the decision to sell the Arizona operation is in line with the changes at Pacific Century that led to the Nov. 3 appointment of Michael O'Neill as chairman and chief executive officer. O'Neill replaced Lawrence Johnson, who retired after failing to revive Bankoh's sagging stock.

Patten, who has a "hold" rating on the stock, said he believes that before the end of the year Pacific Century will hire another key executive, a credit officer to clean up the bank's loan portfolio.

"Clearly what the management of the company is trying to do is focus their resources on getting the bank on a profitable track and that includes its revenue and earnings growth, coupled with credit quality," Patten said.

Just as O'Neill is well known in banking circles, the new credit officer also will be someone with a high profile, he said.

The company does intend to hire someone soon for that work, O'Neill said today through a spokesman. He will be a "chief risk officer" and should be in place by mid-January, reporting directly to O'Neill, said the spokesman.

Bank of Hawaii entered the Arizona market in 1987, with the purchase of the five branches of First National Bank of Arizona, making it the first Hawaii financial institution to have out-of-state operations. In 1997, it expanded its Arizona presence with the acquisition of four branches of Home Savings of America.

Operating under a Pacific Century subsidiary, Pacific Century Bank N.A., the Arizona branches have total deposits of $410 million and about 75 employees. The unit also operates 19 branches in Southern California.