Bank of Hawaii lost nearly a quarter of the value of its stock yesterday as local bank stocks plunged, three days after the market rallied following news of a federal government bailout of bad debt estimated at an unprecedented $700 billion.

The bank's stock fell by $15.76, or 22.5 percent, to $54.24. The stock closed at $70 on Friday, with a two-day gain of 28 percent, or $15.30. Bankoh Chief Executive Al Landon was unavailable for comment.

Central Pacific Bank, which posted the highest two-day gain on Friday at nearly 50 percent, or $6.81, to $20.75, saw its stock fall nearly 14 percent yesterday, or $2.90, to $17.85, directly attributable to a U.S. Securities and Exchange Commission ban on short sales - a trading method that bets the value of a stock will decline, said David Morimoto, Central Pacific's senior vice president and treasurer.

“;On Thursday and Friday most financial company stocks traded up to values higher than their fundamentals warrant,”; he said yesterday. “;It's a supply-demand imbalance. Prices will trade to levels not justified. Today is a reversion back to the norm.”;

In traditional short selling, a seller would borrow shares and sell them to someone else, betting that the stock will go down so that the seller can repurchase them at a lower price, repay the borrowed shares and pocket the remaining profit.

A short seller loses more money every time stocks go up. As a result, the market rally late last week was primarily due to a flood of short sellers unwilling to risk stocks rising further, a San Francisco analyst with Keefe, Bruyette & Woods told the Star-Bulletin on Friday.