BANCWEST CORP/HI - 10-Q Quarterly Report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
		For the quarterly period ended June 30, 2002


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
		For the transition period from __________ to __________

Commission file number 0-7949

BANCWEST CORPORATION

(Exact name of registrant as specified in its charter)


Delaware (State of incorporation)		99-0156159 (I.R.S. Employer Identification No.)


999 Bishop Street, Honolulu, Hawaii (Address of principal executive offices)		96813 (Zip Code)

Registrant’s telephone number, including area code: (808) 525-7000

Securities registered pursuant to Section 12(b) of the Act:
9.50% Quarterly Income Preferred Securities

Securities registered pursuant to Section 12(g) of the Act:
None

(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or l5(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]

The number of shares outstanding of each of the issuer’s classes of common stock
as of August 1, 2002 was:


Class		Outstanding

Class A Common Stock, $0.01 Par Value		85,759,123 Shares

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
		CONSOLIDATED BALANCE SHEETS (Unaudited)
		CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
		CHANGES IN STOCKHOLDER’S EQUITY (Unaudited)
		CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
PART II. OTHER INFORMATION
	Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
EXHIBIT INDEX
EXHIBIT 12
BANCWEST CORPORATION
BANCWEST CORPORATION

PART I. FINANCIAL INFORMATION

Page

Item 1. Financial Statements (Unaudited)

Consolidated Balance Sheets at June 30, 2002, December 31, 2001 and June 30, 2001 2-3

Consolidated Statements of Income for the three and six months ended June 30, 2002 and 2001 4

Consolidated Statements of Changes in Stockholder’s Equity for the six months ended
June 30, 2002 and 2001

5

Consolidated Statements of Cash Flows for the six months ended June 30, 2002 and 2001 6

Notes to Consolidated Financial Statements 7-11

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 12-30

Item 3. Quantitative and Qualitative Disclosures About Market Risk 31

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K 33

SIGNATURES 34

EXHIBIT INDEX

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
BancWest Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS (Unaudited)

June 30, December 31, June 30,

2002 2001 2001

(in thousands)

Assets

Cash and due from banks
$ 1,457,969 $ 737,262 $ 780,564

Interest-bearing deposits in other banks
169,263 109,935 208,826

Federal funds sold and securities purchased under agreements to resell
322,175 233,000 85,000

Investment securities:

Held-to-maturity
— — 97,764

Available-for-sale
3,469,985 2,542,173 2,164,189

Loans and leases:

Loans and leases
24,162,810 15,223,732 14,528,631

Less allowance for credit losses
387,272 194,654 191,698

Net loans and leases
23,775,538 15,029,078 14,336,933

Premises and equipment, net
400,294 273,035 286,810

Customers’acceptance liability
15,632 1,498 1,127

Core deposit intangible, net
221,938 110,239 74,080

Goodwill, net
3,384,904 2,061,805 673,763

Other real estate owned and repossessed personal property
22,566 22,321 21,467

Other assets
742,445 526,168 585,460

Total assets
$ 33,982,709 $ 21,646,514 $ 19,315,983

Liabilities and Stockholder’s Equity

Deposits:

Domestic:

Interest-bearing
$ 17,068,061 $ 11,453,882 $ 11,169,811

Noninterest-bearing
6,300,200 3,407,209 3,200,251

Foreign
740,738 472,960 245,512

Total deposits
24,108,999 15,334,051 14,615,574

Federal funds purchased and securities sold under agreements to repurchase
940,415 713,384 561,554

Other short-term borrowings
1,690,115 240,936 147,612

Acceptances outstanding
15,632 1,498 1,127

Other liabilities
1,079,851 891,641 878,745

Long-term debt
2,087,635 2,197,954 780,334

Guaranteed preferred beneficial interests in Company’s junior subordinated debentures
260,583 265,130 250,000

Total liabilities
$ 30,183,230 $ 19,644,594 $ 17,234,946

The accompanying notes are an integral part of these consolidated financial statements.

BancWest Corporation Subsidiaries
CONSOLIDATED BALANCE SHEETS, Continued (Unaudited)

June 30, December 31, June 30,

2002 2001 2001

(in thousands, except per share data)

Stockholder’s equity:

Class A common stock, par value $.01 per share at June 30, 2002 and December 31, 2001 and $1 per share at June 30, 2001

Authorized — 150,000,000 shares at June 30, 2002, December 31, 2001 and June 30, 2001

Issued — 85,759,123 shares at June 30, 2002 and 56,074,874 shares at December 31, 2001 and June 30, 2001
$ 858 $ 561 $ 56,075

Common stock, par value $1 per share

Authorized — 400,000,000 shares at June 30, 2001

Issued — 71,102,674 shares at June 30, 2001
— — 71,103

Surplus
3,587,403 1,985,275 1,126,739

Retained earnings
170,297 8,302 850,644

Accumulated other comprehensive income, net
40,921 7,782 14,530

Treasury stock, at cost — 2,367,178 shares at June 30, 2001
— — (38,054 )

Total stockholder’s equity
3,799,479 2,001,920 2,081,037

Total liabilities and stockholder’s equity
$ 33,982,709 $ 21,646,514 $ 19,315,983

The accompanying notes are an integral part of these consolidated financial statements.

BancWest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

Three Months Ended June 30, Six Months Ended June 30,

2002 2001 2002 2001

(in thousands)

Interest income

Interest and fees on loans
$ 370,008 $ 257,400 $ 626,237 $ 519,842

Lease financing income
36,240 36,373 72,966 71,968

Interest on investment securities:

Taxable interest income
39,699 33,558 73,961 66,751

Exempt from Federal income taxes
190 119 234 237

Other interest income
1,553 6,110 3,576 13,613

Total interest income
447,690 333,560 776,974 672,411

Interest expense

Deposits
78,778 105,861 142,407 226,282

Short-term borrowings
10,263 9,894 16,056 20,112

Long-term debt
36,755 19,117 72,137 37,956

Total interest expense
125,796 134,872 230,600 284,350

Net interest income
321,894 198,688 546,374 388,061

Provision for credit losses
22,902 23,150 42,909 58,350

Net interest income after provision for credit losses
298,992 175,538 503,465 329,711

Noninterest income

Service charges on deposit accounts
36,561 22,573 62,535 43,009

Trust and investment services income
10,252 8,083 18,392 17,210

Other service charges and fees
31,912 20,198 55,410 38,572

Securities gains, net
456 19,936 684 61,236

Other
9,248 9,006 14,032 18,268

Total noninterest income
88,429 79,796 151,053 178,295

Noninterest expense

Salaries and wages
86,463 51,390 146,557 100,767

Employee benefits
35,675 18,844 59,157 36,817

Occupancy expense
23,495 17,006 39,109 33,241

Outside services
17,808 11,999 31,060 23,502

Intangible amortization
5,763 11,136 8,520 21,420

Equipment expense
14,480 7,558 22,209 15,090

Restructuring and integration costs
2,738 — 8,753 3,935

Other
42,398 29,783 72,553 63,032

Total noninterest expense
228,820 147,716 387,918 297,804

Income before income taxes
158,601 107,618 266,600 210,202

Provision for income taxes
62,023 41,677 104,605 82,514

Net income
$ 96,578 $ 65,941 $ 161,995 $ 127,688

The accompanying notes are an integral part of these consolidated financial statements.

BancWest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDER’S EQUITY (Unaudited)


												Accumulated
		Class A										Other
		Common		Common					Retained			Comprehensive		Treasury
		Stock		Stock		Surplus			Earnings			Income, net		Stock			Total

		(in thousands, except per share data)
Balance, December 31, 2001		$	561	$	—	$	1,985,275		$	8,302		$	7,782	$	—		$	2,001,920
Comprehensive income:
	Net income		—		—		—			161,995			—		—			161,995
	Unrealized valuation adjustment, net of tax and reclassification adjustment		—		—		—			—			21,946		—			21,946
	Change in fair value of cash-flow type hedge derivative instruments, net of tax and reclassification adjustment		—		—		—			—			11,193		—			11,193

	Comprehensive income		—		—		—			161,995			33,139		—			195,134

Issuance of Class A common stock			297		—		1,599,703			—			—		—			1,600,000
Discounted Share Purchase Plan			—		—		2,425			—			—		—			2,425

Balance, June 30, 2002		$	858	$	—	$	3,587,403		$	170,297		$	40,921	$	—		$	3,799,479

Balance, December 31, 2000		$	56,075	$	71,041	$	1,125,652		$	770,350		$	7,601	$	(41,226	)	$	1,989,493
Comprehensive income:
	Net income		—		—		—			127,688			—		—			127,688
	Unrealized valuation adjustment, net of tax and reclassification adjustment		—		—		—			—			6,929		—			6,929

	Comprehensive income		—		—		—			127,688			6,929		—			134,617

Issuance of common stock			—		62		(76	)		—			—		—			(14	)
Incentive Plan for Key Executives			—		—		30			—			—		—			30
Issuance of treasury stock under Stock Incentive Plan			—		—		1,133			—			—		3,172			4,305
Cash dividends ($.38 per share)			—		—		—			(47,394	)		—		—			(47,394	)

Balance, June 30, 2001		$	56,075	$	71,103	$	1,126,739		$	850,644		$	14,530	$	(38,054	)	$	2,081,037

The accompanying notes are an integral part of these consolidated financial statements.

BancWest Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

Six Months Ended June 30,

2002 2001

(in thousands)

Cash flows from operating activities:

Net income
$ 161,995 $ 127,688

Adjustments to reconcile net income to net cash provided by operating activities:

Provision for credit losses
42,909 58,350

Depreciation and amortization
31,017 38,608

Income taxes
100,293 79,398

Decrease (increase) in interest receivable
(65,274 ) 7,466

Increase (decrease) in interest payable
18,044 (43,372 )

Increase in prepaid expenses
(28,385 ) (1,641 )

Restructuring and integration costs
8,753 3,935

Other
4,475 (40,671 )

Net cash provided by operating activities
273,827 229,761

Cash flows from investing activities:

Net increase in interest-bearing deposits in other banks
(59,328 ) (202,854 )

Net decrease (increase) in Federal funds sold and securities purchased under agreements to resell
(53,175 ) 447,100

Proceeds from maturity of held-to-maturity investment securities
— 28,214

Purchase of held-to-maturity investment securities
— (33,038 )

Proceeds from sale of available-for-sale investment securities
24,908 —

Proceeds from maturity of available-for-sale investment securities
421,445 938,533

Purchase of available-for-sale investment securities
(856,639 ) (1,103,094 )

Proceeds from sale of Concord stock
— 45,359

Purchase of bank owned life insurance
— (102,708 )

Net increase in loans and leases to customers
(267,689 ) (368,196 )

Net cash provided by (paid for) acquisitions
(1,793,000 ) 632,965

Purchase of premises and equipment
(10,545 ) (9,742 )

Other
(326 ) (1,167 )

Net cash provided by (used) in investing activities
(2,594,349 ) 271,372

Cash flows from financing activities:

Net increase (decrease) in deposits
401,822 (739,104 )

Net decrease in Federal funds purchased and securities sold under agreements to repurchase
(41,906 ) (16,066 )

Net increase in other short-term borrowings
1,296,179 56,164

(Payments on) proceeds from long-term debt, net
(214,866 ) 147,911

Cash dividends paid
— (47,394 )

Proceeds from issuance of Class A common stock
1,600,000 —

Payments on exercise of common stock options
— (14 )

Proceeds from issuance of treasury stock
— 4,335

Net cash provided by (used in) financing activities
3,041,229 (594,168 )

Net increase (decrease) in cash and due from banks
720,707 (93,035 )

Cash and due from banks at beginning of period
737,262 873,599

Cash and due from banks at end of period
$ 1,457,969 $ 780,564

Supplemental disclosures:

Interest paid
$ 212,556 $ 321,186

Income taxes paid
$ 4,312 $ 3,116

Supplemental schedule of noncash investing and financing activities:

Loans converted into other real estate owned and repossessed personal property
$ 7,790 $ 3,802

Loans made to facilitate the sale of other real estate owned
$ 110 $ 3,563

In connection with acquisitions, the following liabilities were assumed:

Fair value of assets acquired
$ 10,959,000 $ 14,682

Cash (paid) received
(1,793,000 ) 632,965

Liabilities assumed
$ 9,166,000 $ 647,647

The accompanying notes are an integral part of these consolidated financial statements.

BancWest Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Summary of Significant Accounting Policies

The accounting and reporting policies of BancWest Corporation and Subsidiaries (“BancWest,” the “Company” or “we/our”) conform with generally accepted accounting principles and practices within the banking industry. The following is a summary of significant accounting policies:

Consolidation

The consolidated financial statements of the Company include the accounts of BancWest Corporation (“BWE”) and its wholly-owned subsidiaries: Bank of the West and its wholly-owned subsidiaries (“Bank of the West”); First Hawaiian Bank and its wholly-owned subsidiaries (“First Hawaiian”); FHL Lease Holding Company, Inc. and its wholly-owned subsidiary; First Hawaiian Capital I; BancWest Capital I; and FHI International, Inc. All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (which included only normal recurring adjustments) necessary for a fair presentation are reflected in the Consolidated Financial Statements.

Reclassifications

The 2001 Consolidated Financial Statements were reclassified in certain respects to conform to the 2002 presentation. Such reclassifications did not have a material effect on the Consolidated Financial Statements.

2. New Pronouncements

In July 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations.” SFAS No. 141, which supersedes Accounting Principles Board (“APB”) Opinion No. 16, “Business Combinations,” addresses financial accounting and reporting for business combinations. All business combinations in the scope of SFAS No. 141 are to be accounted for using the purchase method of accounting. Also included in the provisions of SFAS No. 141 are new criteria for identifying and recognizing intangible assets apart from goodwill and additional disclosure requirements concerning the primary reasons for a business combination and the allocation of the purchase price for the assets acquired and liabilities assumed. The provisions of SFAS No. 141 apply to all business combinations initiated after June 30, 2001, as well as to all business combinations accounted for using the purchase method of accounting for which the date of acquisition is July 1, 2001 or later. The Company adopted the provisions of SFAS No. 141 concurrent with the acquisition of BancWest by BNP Paribas (the“BNP Paribas Merger”). See further discussion in Note 3.

In July 2001, the FASB also issued SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142, which supersedes APB Opinion No. 17, “Intangible Assets,” addresses the accounting and reporting for goodwill and other intangible assets acquired individually or with a group of other assets (but not those acquired in a business combination) at and subsequent to acquisition. Under the provisions of SFAS No. 142, goodwill and certain other intangible assets which do not possess finite lives will no longer be amortized into net income over an estimated life but rather will be tested at least annually for impairment based on specific guidance provided in the new standard. Intangible assets determined to have finite lives will continue to be amortized over their estimated useful lives and also continue to be subject to impairment testing. Application of the non-amortization provisions of this statement was effective with the BNP Paribas Merger. The remaining provisions of SFAS No. 142 were adopted by the Company effective January 1, 2002. Goodwill and other indefinite lived intangible assets were subjected to a transitional impairment test during the quarter ended March 31, 2002. As of March 31, 2002, we had no impairment on our goodwill. Had we amortized the goodwill arising from the BNP Paribas Merger, pre-tax amortization of goodwill of approximately $51.6 million (assuming an amortization period of 20 years) would have been recorded on the Company’s consolidated financial statements in the first six months of 2002. In addition, the year-to-date pre-tax amortization of goodwill related to the acquisition of United California Bank (“UCB”) from March 15, 2002, which would have amounted to $19.2 million, was not recorded.

The following table reflects consolidated net income adjusted as though the adoption of SFAS Nos. 141 and 142 occurred as of the beginning of the three and six months periods ended June 30, 2002 and 2001:


Three months ended June 30,		2002		2001

		(in thousands)
Net Income:
	As reported	$	96,578	$	65,941
	Goodwill amortization		—		7,377

	As adjusted	$	96,578	$	73,318


Six months ended June 30,		2002		2001

		(in thousands)
Net Income:
	As reported	$	161,995	$	127,688
	Goodwill amortization		—		14,706

	As adjusted	$	161,995	$	142,394

BancWest Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

The estimated annual amortization expense for finite life intangible assets, primarily core deposit intangibles arising from the BNP Paribas Merger and the acquisition of UCB, is approximately $23 million (pre-tax) for each of the years from 2003 to 2007.

Goodwill increased in the six-month period ended June 30, 2002 due to the acquisition of UCB on March 15, 2002. The additional $1.3 billion of goodwill is reported in the Bank of the West operating segment.

In October 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” SFAS No. 144 supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.” However, SFAS No. 144 retains the fundamental provisions of SFAS No. 121 for the recognition and measurement of the impairment of long-lived assets to be held and used and the measurement of long-lived assets to be disposed of by sale. The scope of SFAS No. 144 excludes goodwill and other non-amortizable intangible assets to be held and used as well as goodwill associated with a reporting unit to be disposed of. The provisions of SFAS No. 144 are effective for fiscal years beginning after December 15, 2001. The adoption of SFAS No. 144 did not have a material effect on the Company’s Consolidated Financial Statements.

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” This Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (“EITF”) Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” The principal difference between SFAS No. 146 and EITF Issue No. 94-3 relates to its requirements for recognition of a liability for a cost associated with an exit or disposal activity. SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF Issue No. 94-3, a liability for an exit cost as defined in EITF Issue No. 94-3 was recognized at the date of an entity’s commitment to an exit plan. The provisions of SFAS No. 146 are effective for exit or disposal activities that are initiated after December 31, 2002, with early application encouraged. The adoption of SFAS No. 146 is not expected to have a material effect on the Company’s Consolidated Financial Statements.

On July 1, 2002, the FASB issued an Exposure Draft (“ED”) of a proposed interpretation entitled “Consolidation of Certain Special-Purpose Entities, an Interpretation of ARB 51.” If issued in a final interpretation, the provisions of the ED would establish new guidance on the accounting and reporting for the consolidation of Special-Purpose Entities (“SPEs”). The primary objective of the ED is to require that an entity that has a controlling financial interest in an SPE consolidate the SPE’s assets, liabilities and results of operations in the entity’s own financial statements. If issued as is, the provisions of the ED may apply to the REFIRST, Inc. SPE that was created by a non-related third party to construct, finance and hold title to our administrative headquarters building (see our 2001 Annual Report on Form 10-K, page 35 “Special Purpose Entities” for additional information). The provisions of the final interpretation would apply beginning April 1, 2003. We are in the process of determining the financial impact of the adoption of this ED. However, if the proposal is adopted in substantially the same form, we would expect to record approximately $160 million of additional premises and equipment and $190 million in debt on the Consolidated Balance Sheet. In addition, we would record approximately $4 million in additional depreciation expense annually.

3. Mergers and Acquisitions

United California Bank Acquisition

On March 15, 2002, BancWest, a wholly-owned subsidiary of BNP Paribas, completed its acquisition of all of the outstanding stock of UCB from UFJ Bank Ltd. of Japan. On March 15, 2002, UCB had total assets of $10.1 billion, net loans of $8.5 billion, total deposits of $8.3 billion and a total of 115 branches. The preceding amounts do not include final purchase price accounting adjustments. The purchase price of approximately $2.4 billion was paid in cash and the transaction was accounted for as a purchase. BNP Paribas funded BancWest’s acquisition of UCB by providing $1.6 billion of additional capital to BancWest and by lending it $800 million. UCB was merged with and into Bank of the West on April 1, 2002. UCB had a strong presence in Southern California, which complements Bank of the West’s existing network in Northern California, the Pacific Northwest, New Mexico and Nevada. We expect to achieve cost savings for the combined company of approximately $75 million per year beginning in 2003. These cost savings are primarily in compensation and occupancy related expenses. Branches of UCB are expected to be fully integrated into the Bank of the West branch network system in the third quarter of 2002. Results of operations of UCB are included in our Consolidated Financial Statements beginning on March 15, 2002.

BancWest estimates it will incur expenses associated with exiting certain branches, operational centers and technology platforms of pre-merged Bank of the West, as well as certain other conversion and restructuring expenses, totaling approximately $15 million. Approximately $8.8 million of these costs were incurred during the first six months of 2002. Exit costs associated with UCB were considered as part of the purchase accounting for the acquisition. BancWest has established a severance reserve of approximately $40.5 million to cover approximately 600 employees throughout the organization whose positions will be eliminated as a result of the acquisition. In addition to the severance reserve, we recorded the following restructuring reserves: $34.2 million for losses on subleases, $8.5 million for contract cancellations, $1.5 million for relocation and other. In the three months ended June 30, 2002, we made the following adjustments to the reserves: $1.2 million increase for severance, $7.0 million decrease for losses on subleases and $5.4 million increase for contract cancellations. In addition, the reserves were reduced in the first six months of 2002 as follows: $6.5 million for severance payments, $.6 million for sublease loss amortization, $3.5 million for contract cancellation payments and $.3 million for relocation payments. These amounts are estimates and subject to change, as more information becomes available.

The following unaudited pro forma financial information for the three and six months ended June 30, 2002 and 2001 assumes that the UCB acquisition occurred as of January 1, 2001, after giving effect to certain adjustments. The pro forma results have been prepared for comparative purposes only and are not necessarily indicative of the results of operations which may occur in the future or that would have occurred had the UCB acquisition been consummated on the date indicated.

BancWest Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


	Pro Forma Financial Information for the three months
	ended June 30,

	2002		2001

	(in thousands)
Net Interest Income	$	307,998	$	301,260
Noninterest Income		88,429		135,813
Noninterest Expense		229,268		241,787
Net Income		88,043		96,408


	Pro Forma Financial Information for the six months
	ended June 30,

	2002		2001

	(in thousands)
Net Interest Income	$	614,699	$	601,224
Noninterest Income		170,979		270,272
Noninterest Expense		459,264		480,207
Net Income		164,208		191,422

BNP Paribas Merger

On December 20, 2001, Chauchat L.L.C., a Delaware limited liability company (“Merger Sub”), merged with and into BancWest pursuant to an Agreement and Plan of Merger, dated as of May 8, 2001, as amended and restated as of July 19, 2001, by and among BancWest, BNP Paribas, and the Merger Sub (the “Merger Agreement”). The Merger Sub was a wholly-owned subsidiary of BNP Paribas. At the effective time of the BNP Paribas Merger, all outstanding shares of common stock, par value $1 per share (“Company Common Stock”), of BancWest were cancelled and converted solely into the right to receive $35 per share in cash. Pursuant to the Merger Agreement, each share of Class A common stock, par value $1 per share, owned by BNP Paribas and French American Banking Corporation, a wholly-owned subsidiary of BNP Paribas, remained outstanding as one share of Class A Common Stock and all of the units of the Merger Sub were cancelled without any consideration becoming payable therefor. Concurrent with the BNP Paribas Merger, the par value of the Class A common stock was changed to $.01. As a result of the BNP Paribas Merger, BancWest became a wholly-owned subsidiary of BNP Paribas.

The BNP Paribas Merger significantly affected our financial statements. “Push-down” accounting was required for this business combination. Essentially, this resulted in three major changes to our balance sheet:

•      Purchase price adjustments and new intangibles: As part of purchase accounting, our assets and liabilities were adjusted to fair value. Among the items adjusted were identifiable intangible assets related to our deposits, loans and leases, property and equipment, pension assets and liabilities and other items.

•      New debt: As part of the BNP Paribas Merger, we assumed $1.55 billion in new debt from the Merger Sub. This debt is between BancWest and another subsidiary of BNP Paribas.

•      New equity basis: Due to the use of “push-down” accounting in the BNP Paribas Merger, the equity balances at December 31, 2001 reflect BNP Paribas’ basis in the Company.

BancWest Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

4. Impaired Loans

The following table summarizes impaired loan information as of and for the six months ended June 30, 2002 and 2001 and as of and for the year ended December 31, 2001:

June 30, 2002 December 31, 2001 June 30, 2001

(in thousands)

Impaired loans with related allowance for credit losses calculated under SFAS No. 114
$ 183,742 $ 89,273 $ 91,674

Impaired loans with no related allowance for credit losses calculated under SFAS No. 114
13,566 8,253 31,604

Impaired loans
$ 197,308 $ 97,526 $ 123,278

Total allowance for credit losses on impaired loans
$ 51,499 $ 24,745 $ 20,315

Average impaired loans
133,931 118,497 127,563

Interest income recognized on impaired loans
1,661 2,462 1,036

We consider loans to be impaired when it is probable that we will be unable to collect all amounts due according to the contractual terms of the loan agreement, including scheduled interest payments. For a loan that has been restructured, the contractual terms of the loan agreement refer to the terms of the original loan agreement. Not all impaired loans are necessarily placed on nonaccrual status; for example, restructured loans performing under restructured terms beyond a specific period may be classified as accruing, but may still be deemed impaired. Impaired loans without a related allowance for credit losses are generally collateralized by assets with fair values in excess of the recorded investment in the loans. We generally apply interest payments on impaired loans to reduce the outstanding principal amount of such loans.

5. Derivative Financial Instruments

At June 30, 2002, we carried $600 million of interest rate swaps, categorized as cash flow hedges, with a fair market value of $31.0 million. We pay 3-month LIBOR on these cash flow hedges and receive fixed rates ranging from 5.64% to 5.87%. These interest rate swaps hedge LIBOR-based commercial loans and were initiated to help offset a reduction in commercial loan interest income resulting from a decrease in interest rates. The $600 million of interest rate swaps were entered into in 2001 and mature in 2006. The net settlement on the $600 million of interest rate swaps increased commercial loan interest income by $6.5 million from March 16, 2002 through June 30, 2002. We estimate net settlement gains, recorded as commercial loan interest income, of $19 million over the next twelve months resulting from these cash flow hedges.

In addition to the cash flow hedges described above, we have various derivative instruments that hedge the fair value of a recognized asset or liability or of an unrecognized firm commitment (“fair value” hedge). Any portion of the changes in fair value of derivatives designated as a hedge that is deemed ineffective is recorded in current period earnings; this amount was not material in 2002.

BancWest Corporation and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

6. Operating Segments

As of June 30, 2002, we had two reportable operating segments: Bank of the West and First Hawaiian. The Bank of the West segment includes UCB from March 15, 2002 and operates primarily in the continental United States. The First Hawaiian segment operates primarily in the State of Hawaii.

The financial results of our operating segments are presented on an accrual basis. There are no significant differences between the accounting policies of the segments as compared to the Company’s Consolidated Financial Statements. We evaluate the performance of these segments and allocate resources to them based on net interest income and net income. There are no material intersegment revenues.

The tables below present information about our operating segments as of or for the three and six months ended June 30, 2002 and 2001, respectively:

Three Months Ended June 30,

Bank of First Reconciling Consolidated

the West Hawaiian Other Items Totals

(in millions)

2002

Net interest income
$ 271 $ 82 $ (31 ) $ — $ 322

Net income
86 31 (20 ) — 97

Segment assets
25,482 8,869 7,335 (7,703 ) 33,983

Goodwill
2,218 994 173 — 3,385

2001

Net interest income
$ 120 $ 82 $ (3 ) $ — $ 199

Net income
35 33 (2 ) — 66

Segment assets
12,323 7,424 3,385 (3,816 ) 19,316

Goodwill
605 69 — — 674

Six Months Ended June 30,

Bank of First Reconciling Consolidated

the West Hawaiian Other Items Totals

(in millions)

2002

Net interest income
$ 440 $ 165 $ (59 ) $ — $ 546

Net income
137 62 (37 ) — 162

Segment assets
25,482 8,869 7,335 (7,703 ) 33,983

Goodwill
2,218 994 173 — 3,385

2001

Net interest income
$ 232 $ 163 $ (7 ) $ — $ 388

Net income
69 64 (5 ) — 128

Segment assets
12,323 7,424 3,385 (3,816 ) 19,316

Goodwill
605 69 — — 674

The reconciling items in the tables above are primarily intercompany eliminations.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

Certain matters contained in this filing are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Our forward-looking statements (such as those concerning our plans, expectations, estimates, strategies, projections and goals) involve risks and uncertainties that could cause actual results to differ materially from those discussed in the statements. Readers should carefully consider those risks and uncertainties in reading this report. Factors that could cause or contribute to such differences include, but are not limited to: (1) global, national and local economic and market conditions, specifically with respect to changes in the United States economy; (2) the level and volatility of interest rates and currency values; (3) government fiscal and monetary policies; (4) credit risks inherent in the lending process; (5) loan and deposit demand in the geographic regions where we conduct business; (6) the impact of intense competition in the rapidly evolving banking and financial services business; (7) extensive federal and state regulation of our business, including the effect of current and pending legislation and regulations; (8) whether expected revenue enhancements and cost savings are realized within expected time frames; (9) risk and uncertainties regarding the purchase of UCB, including: a) the possibility of customer or employee attrition following the UCB transaction; b) lower than expected revenues following the UCB transaction; and c) problems or delays in bringing together UCB with BancWest/Bank of the West; (10) matters relating to the integration of our business with that of past and future merger partners, including the impact of combining these businesses on revenues, expenses, deposit attrition, customer retention and financial performance; (11) our reliance on third parties to provide certain critical services, including data processing; (12) the proposal or adoption of changes in accounting standards by the Financial Accounting Standards Board (“FASB”), the Securities and Exchange Commission (“SEC”) or other standard setting bodies; (13) technological changes; (14) other risks and uncertainties discussed in this document or detailed from time to time in other SEC filings that we make; and (15) management’s ability to manage risks that result from these and other factors. Our forward-looking statements are based on management’s current views about future events. Those statements speak only as of the date on which they are made. We do not intend to update forward-looking statements, and, except as required by law, we disclaim any obligation or undertaking to update or revise any such statements to reflect any change in our expectations or any change in events, conditions, circumstances or assumptions on which forward-looking statements are based.

GAAP, OPERATING AND CASH EARNINGS

We analyze our performance on a net income basis determined in accordance with generally accepted accounting principles (“GAAP”), as well as on an operating basis before merger-related, integration and other nonrecurring costs and/or the effects of the amortization of intangible assets. We refer to the results as “operating” and “cash” earnings, respectively. Operating earnings, cash earnings and operating cash earnings (the combination of the effect of adjustments for both cash and operating results), as well as information calculated from them and related discussions, are presented as supplementary information in this analysis to enhance the readers’ understanding of, and highlight trends in, our core financial results excluding the effects of discrete business acquisitions and other transactions. We include these additional disclosures because this information is both relevant and useful in understanding the performance of the Company as management views it. Operating earnings and cash earnings should not be viewed as a substitute for net income as determined in accordance with GAAP. Merger-related and integration costs, amortization of intangible assets and other items excluded from net income to derive operating and cash earnings may be significant and may not be comparable to those of other companies.

BancWest Corporation and Subsidiaries
CONSOLIDATED FINANCIAL HIGHLIGHTS (Unaudited)

Three Months Ended June 30, Six Months Ended June 30,

(dollars in thousands) 2002 2001 2002 2001

Earnings:

Net income
$ 96,578 $ 65,941 $ 161,995 $ 127,688

Selected Financial Ratios:

Return on average total assets (ROA)
1.14 % 1.35 %

Return on average stockholder’s equity (ROE)
10.83 12.55

Net interest margin (taxable-equivalent basis)
4.62 4.62

Allowance for credit losses to total loans and leases (at June 30)
1.60 1.32

Nonperforming assets to total assets (at June 30)
.74 .68

Allowance for credit losses to nonperforming loans and leases (at June 30)
1.69x 1.74x

Non-GAAP Information⁽¹⁾

Operating earnings⁽²⁾
$ 98,188 $ 65,941 $ 167,203 $ 130,030

Cash earnings⁽³⁾
100,010 75,646 167,071 145,949

Operating cash earnings^{(2), (3)}
101,620 75,646 172,279 148,291

Selected Financial Ratios:

Operating return on average total assets (ROA)⁽²⁾
1.18 % 1.37 %

Return on average tangible assets⁽⁴⁾
1.36 1.63

Operating return on average stockholder’s equity (ROE)⁽²⁾
11.17 12.78

(1) Information presented was not calculated under generally accepted accounting principles (“GAAP”). Information is disclosed to improve readers’ understanding of how management views the results of our operations.

(2) Excluding after-tax restructuring and integration costs of $1,610,000 in the second quarter of 2002, $5,208,000 for the six months ended June 30, 2002 and $2,342,000 in the first quarter of 2001.

(3) Excluding amortization of goodwill and core deposit intangible.

(4) Defined as operating cash earnings as a percentage of average total assets minus average goodwill and core deposit intangible.

NET INCOME

The following table compares net income, operating earnings, cash earnings and operating cash earnings for the three and six months ended June 30, 2002 to the same periods in 2001:

2002 2001 % Change

(in thousands)

Three months ended June 30,

Net income
$ 96,578 $ 65,941 ⁽¹⁾ 46.5 %

Non-GAAP income:

Operating earnings⁽⁵⁾
98,188 65,941 ⁽¹⁾ 48.9

Cash earnings⁽²⁾
100,010 75,646 ⁽¹⁾ 32.2

Operating cash earnings^(2),(5)
101,620 75,646 ⁽¹⁾ 34.3

Six months ended June 30,

Net income
$ 161,995 $ 127,688 ⁽³⁾ 26.9 %

Non-GAAP income:

Operating earnings⁽⁴⁾^,⁽⁵⁾
167,203 130,030 ⁽³⁾ 28.6

Cash earnings⁽²⁾
167,071 145,949 ⁽³⁾ 14.5

Operating cash earnings⁽²⁾^,⁽⁴⁾^,⁽⁵⁾
172,279 148,291 ⁽³⁾ 16.2

(1)		Includes a $7.3 million after-tax net effect of the additional gain realized on the sale of the Concord securities in June 2001 and an additional provision for credit losses. Excluding the after-tax net effect of the gain and additional provision for credit losses, second quarter 2001 earnings and cash earnings were $58.6 million and $68.3 million, respectively.





(2)		Excluding after-tax amortization of goodwill and core deposit intangibles.





(3)		Includes $14.9 million after-tax net effect of the Concord security gain, additional provision for credit losses and other nonrecurring items. Excluding the after-tax net effect of the gain, additional provision and other nonrecurring items, earnings and cash earnings for the six months ended June 30, 2001 were $112.8 million and $131 million, respectively. Operating earnings and operating cash earnings, excluding the net after-tax effect of the aforementioned items, were $115.1 million and $133.4 million, respectively.





(4)		Excluding after-tax restructuring and integration costs of $2.3 million related to the Nevada and New Mexico branch acquisitions in the first quarter of 2001.

(5)		Excluding after-tax restructuring and integration costs of $1.6 million in the second quarter of 2002 and $5.2 million in the first six months of 2002, related to the United California Bank acquisition in March 2002.

Net income and cash earnings increased for the three months ended June 30, 2002 compared to the same period in 2001, primarily due to higher net interest income, resulting from higher average earning assets and a lower rate paid on funding sources. Also contributing to the increase in our net income and cash earnings in the second quarter of 2002 over the same period in 2001 was increased contribution from our Bank of the West operating segment, including the operations of UCB for the entire quarter.

The increases in net income, operating earnings, cash earnings and operating cash earnings for the first six months of 2002 compared to the same period in 2001 was primarily due to the acquisition of UCB on March 15, 2002, partially offset by the after-tax net effect of $14.9 million related to the Concord security gain, additional provision for credit losses and other nonrecurring items in 2001. The cessation of the amortization of goodwill in 2002 due to changes to GAAP (see Note 2 to our Consolidated Financial Statements on pages 7 and 8) also contributed to the increase in net income and operating earnings.

NET INCOME, Continued

The table below shows the return on average total assets, the return on average tangible assets and the return on average stockholder’s equity for the first six months of 2002 compared to the same period in 2001. The return on average tangible assets is defined as operating cash earnings as a percentage of average total tangible assets.


	2002			2001			% Change

Return on average total assets		1.14	%		1.35	%		(15.6	)%
Return on average stockholder’s equity		10.83			12.55			(13.7	)
Non-GAAP returns:
Operating return on average total assets⁽¹⁾		1.18			1.37			(13.9	)
Return on average tangible assets⁽¹⁾		1.36			1.63			(16.6	)
Operating return on average stockholder’s equity⁽¹⁾		11.17			12.78			(12.6	)

⁽¹⁾ Ratios are computed excluding after-tax restructuring, integration, and other nonrecurring costs related to the United California Bank acquisition in March 2002 and the Nevada and New Mexico branch acquisitions in the first quarter of 2001, respectively.

NET INTEREST INCOME

The following table compares net interest income on a taxable-equivalent basis for the three and six months ended June 30, 2002 to the same periods in 2001:


		2002		2001		% Change

		(in thousands)
Three months ended June 30,
	Net interest income	$	322,183	$	198,766		62.1	%
Six months ended June 30,
	Net interest income	$	546,741	$	388,214		40.8	%

The increase in net interest income for the three months ended June 30, 2002 over the same period in 2001 was primarily due to an increase in average earning assets of 62.2%, or $10.6 billion, and a 134-basis-point decrease (1% equals 100 basis points) in the rate paid on funding sources, offset by a 135-basis-point decline in the yield on average earning assets. In addition, lower cost of funds resulted from higher average noninterest-bearing deposits, which increased by $2.7 billion, or 87.4%, in the second quarter of 2002 over the same period in 2001.

The increase in net interest income for the six months ended June 30, 2002 over the same period in 2001 was primarily due to an increase in average earning assets of 40.8%, or $6.9 billion, and a 143-basis-point decline in the rate paid on funding sources, offset by a 143-basis-point decline in the yield on average earning assets. The lower cost of funds is also a result of higher average noninterest-bearing deposits, which increased by $1.8 billion, or 58.7%, in the first six months of 2002 over the same period in 2001.

NET INTEREST INCOME, Continued

The following table compares the net interest margin for the three and six months ended June 30, 2002 to the same periods in 2001:

Change

2002 2001 (Basis Points)

Three months ended June 30,

Yield on average earning assets
6.47 % 7.82 % (135 )

Rate paid on funding sources
1.82 3.16 (134 )

Net interest margin
4.65 4.66 (1 )

Six months ended June 30,

Yield on average earning assets
6.57 % 8.00 % (143 )

Rate paid on funding sources
1.95 3.38 (143 )

Net interest margin
4.62 4.62 —

In the three-month period ended June 30, 2002, as compared to the same period in 2001, the net interest margin decreased by 1 basis point, primarily due to the decline in the rate paid on funding sources of 134 basis points and a decrease in the yield on average earning assets of 135 basis points. The effects of the reduction of key interest rates by the Federal Reserve are primarily responsible for the decline in yields and rates.

The net interest margin for the first six months of 2002 is the same as the first six months of 2001. The Federal Reserve’s benchmark Federal Funds rate changed eleven times in the period from January 2001 through December 2001. For further discussions of the impact that the changing interest environment has had on the rate paid on deposits, see page 21.

Our cost of funds was lowered by an increase in average noninterest-bearing deposits in the three and six months ended June 30, 2002 as compared to the same periods in 2001. The percentage of average noninterest-bearing deposits to total average deposits increased to 24.5% and 23.7% over 21.6% and 21.3%, for the three and six months ended June 30, 2002 and 2001, respectively.

The following table compares average earning assets, average loans and leases and average interest-bearing deposits and liabilities for the three and six months ended June 30, 2002 to the same periods in 2001:

2002 2001 % Change

(in thousands)

Three months ended June 30,

Average earning assets
$ 27,769,418 $ 17,123,696 62.2 %

Average loans and leases
24,210,725 14,401,157 68.1

Average interest-bearing deposits and liabilities
22,774,492 13,249,065 71.9

Six months ended June 30,

Average earning assets
$ 23,864,302 $ 16,950,114 40.8 %

Average loans and leases
20,556,271 14,274,044 44.0

Average interest-bearing deposits and liabilities
19,815,177 13,140,994 50.8

The increase in average earning assets was primarily due to increases in average loans and leases. The increase in average loans and leases was primarily due to the growth of our Bank of the West operating segment’s loan and lease portfolio, including the UCB acquisition in the first quarter of 2002. Also contributing to the increase in average loans and leases were the branch acquisitions in Guam and Saipan in the fourth quarter of 2001.

The increase in average interest-bearing deposits and liabilities was due to increases in interest-bearing deposits, short-term borrowings and long-term debt. Expansion of our customer deposit base, primarily from our Bank of the West operating segment and the UCB acquisition, contributed to the increase.

The following table sets forth consolidated average balance sheets, an analysis of interest income/expense and average yield/rate for each major category of interest-earning assets and interest-bearing liabilities for the periods indicated on a taxable equivalent basis. The tax equivalent adjustment is made for items exempt from Federal income taxes (assuming a 35% tax rate for 2002 and 2001) to make them comparable with taxable items before any income taxes are applied.

Three Months Ended June 30

2002

2001

Interest

Interest

Average

Income/

Yield/

Average

Income/

Yield/

Balance

Expense

Rate⁽¹⁾

Balance

Expense

Rate⁽¹⁾

(dollars in thousands)

ASSETS

Earning assets:

Interest-bearing deposits in other banks

102,552

493

1.93

269,997

3,327

4.94

Federal funds sold and securities purchased under agreements to resell

237,677

1,060

1.79

245,639

2,783

4.54

Investment securities⁽²⁾

3,218,464

40,096

5.00

2,206,903

33,754

6.13

Loans and leases^{(3), (4)}

24,210,725

406,330

6.73

14,401,157

293,774

8.18

Total earning assets

27,769,418

447,979

6.47

17,123,696

333,638

7.82

Nonearning assets

5,632,232

2,167,039

Total assets

33,401,650

19,290,735

[Additional columns below]

⁽¹⁾ Annualized.

⁽²⁾ Average debt investment securities were computed based on historical amortized cost, excluding the effects of SFAS No. 115 adjustments.

⁽³⁾ Nonaccruing loans and leases have been included in the computations of average loan and lease balances.

⁽⁴⁾ Interest income for loans and leases included loan fees of $14,554 and $25,692 for the three and six months ended June 30, 2002, respectively, and $9,971 and $18,700 for the three and six months ended June 30, 2001, respectively.


					Three Months Ended June 30,

					2002							2001

							Interest							Interest
					Average		Income/		Yield/			Average		Income/		Yield/
					Balance		Expense		Rate⁽¹⁾			Balance		Expense		Rate⁽¹⁾

					(dollars in thousands)
LIABILITIES AND STOCKHOLDER’S EQUITY
Interest-bearing deposits and liabilities:
	Deposits:
		Domestic:
				Interest-bearing demand	$	383,840	$	262		0.27	%	$	310,703	$	492		0.64	%
				Savings		9,290,184		28,005		1.21			4,554,184		23,658		2.08
				Time		7,654,289		47,795		2.50			6,251,183		79,996		5.13
			Foreign			707,916		2,716		1.54			193,322		1,715		3.56

				Total interest-bearing deposits		18,036,229		78,778		1.75			11,309,392		105,861		3.75
	Short-term borrowings					2,422,460		10,263		1.70			910,048		9,894		4.36
	Long-term debt and capital securities					2,315,803		36,755		6.37			1,029,625		19,117		7.45

				Total interest-bearing deposits and liabilities		22,774,492		125,796		2.22			13,249,065		134,872		4.08

	Interest rate spread									4.25	%						3.74	%

Noninterest-bearing deposits						5,848,034							3,121,124
Other liabilities						1,057,518							859,739

				Total liabilities		29,680,044							17,229,928
Stockholder’s equity						3,721,606							2,060,807

				Total liabilities and stockholder’s equity	$	33,401,650						$	19,290,735

				Net interest income and margin on total earning assets				322,183		4.65	%				198,766		4.66	%

Tax equivalent adjustment								289							78

				Net interest income			$	321,894						$	198,688

[Additional columns below]

[Continued from above table, first column(s) repeated]

Six Months Ended June 30,

2002 2001

Interest Interest

Average Income/ Yield/ Average Income/ Yield/

Balance Expense Rate⁽¹⁾ Balance Expense Rate⁽¹⁾

(dollars in thousands)

LIABILITIES AND STOCKHOLDER’S EQUITY

Interest-bearing deposits and liabilities:

Deposits:

Domestic:

Interest-bearing demand
$ 360,155 $ 481 0.27 % $ 312,295 $ 1,136 0.73 %

Savings
7,526,291 44,235 1.19 4,442,041 48,888 2.22

Time
7,162,298 93,046 2.62 6,339,555 172,465 5.49

Foreign
539,953 4,645 1.73 198,332 3,793 3.86

Total interest-bearing deposits
15,588,697 142,407 1.84 11,292,223 226,282 4.04

Short-term borrowings
1,879,629 16,056 1.72 827,352 20,112 4.90

Long-term debt and capital securities
2,346,851 72,137 6.20 1,021,419 37,956 7.49

Total interest-bearing deposits and liabilities
19,815,177 230,600 2.35 13,140,994 284,350 4.36

Interest rate spread
4.22 % 3.64 %

Noninterest-bearing deposits
4,839,063 3,050,014

Other liabilities
951,984 840,643

Total liabilities
25,606,224 17,031,651

Stockholder’s equity
3,017,563 2,051,663

Total liabilities and stockholder’s equity
$ 28,623,787 $ 19,083,314

Net interest income and margin on total earning assets
546,741 4.62 % 388,214 4.62 %

Tax equivalent adjustment
367 153

Net interest income
$ 546,374 $ 388,061

⁽¹⁾ Annualized.

INVESTMENT SECURITIES

Held-to-Maturity

There were no held-to-maturity investment securities at June 30, 2002 and December 31, 2001. The following table presents the amortized cost, unrealized gains and losses, and fair values of held-to-maturity investment securities as of June 30, 2001:


	June 30,
	2001

	(in thousands)
Amortized cost	$	97,764
Unrealized gains		632
Unrealized losses		(142	)

Fair value	$	98,254

Available-for-Sale

The following table presents the amortized cost, unrealized gains and losses, and fair values of available-for-sale investment securities as of the dates indicated:


	June 30,			December 31,			June 30,
	2002			2001			2001

				(in thousands)
Amortized cost	$	3,420,299		$	2,529,133		$	2,140,191
Unrealized gains		51,979			23,672			29,216
Unrealized losses		(2,293	)		(10,632	)		(5,218	)

Fair value	$	3,469,985		$	2,542,173		$	2,164,189

Gross realized gains and losses on available-for-sale investment securities for the six months ended June 30, 2002 and 2001 were as follows:


	2002			2001

	(in thousands)
Realized gains	$	722		$	19,987
Realized losses		(38	)		(51	)

Securities gains, net	$	684		$	19,936

Gains and losses realized on the sales of available-for-sale investment securities are determined using the specific identification method. Realized gains on the sale of investment securities for the six months ended June 30, 2001 include $18.5 million in pre-tax gain on the sale of Concord stock in the second quarter of 2001. This gain is in addition to the $41.3 million pre-tax gain recognized upon recordation of the Concord stock as an available-for-sale security. See section below, “Concord Security Gain,” for more information.

Concord Security Gain

The $41.3 million pre-tax securities gain that was recognized in the first quarter of 2001 relates to the merger between Star System, Inc. (“Star”) and Concord EFS, Inc. (“Concord”) on February 1, 2001. All of the outstanding shares of Star were exchanged for Concord shares in the merger. Prior to that merger, BancWest’s shares of Star System, Inc., were reported on our Consolidated Balance Sheet in other assets due to certain provisions of SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities.”

LOANS AND LEASES

The following table sets forth the loan and lease portfolio by major categories and loan and lease mix at June 30, 2002, December 31, 2001 and June 30, 2001:

June 30, 2002 December 31, 2001 June 30, 2001

Amount % Amount % Amount %

(dollars in thousands)

Commercial, financial and agricultural
$ 4,904,660 20.3 % $ 2,387,605 15.7 % $ 2,452,008 16.9 %

Real estate:

Commercial
4,814,826 19.9 2,957,194 19.4 2,799,894 19.3

Construction
1,081,779 4.5 464,462 3.1 414,143 2.9

Residential:

Insured, guaranteed or conventional
3,908,437 16.2 1,831,824 12.0 1,786,392 12.2

Home equity credit lines
655,721 2.7 432,003 2.9 443,747 3.1

Total real estate loans
10,460,763 43.3 5,685,483 37.4 5,444,176 37.5

Consumer
6,114,384 25.3 4,471,897 29.3 4,110,766 28.3

Lease financing
2,297,967 9.5 2,293,199 15.1 2,187,144 15.0

Foreign
385,036 1.6 385,548 2.5 334,537 2.3

Total loans and leases
24,162,810 100.0 % 15,223,732 100.0 % 14,528,631 100.0 %

Less allowance for credit losses
387,272 194,654 191,698

Total net loans and leases
$ 23,775,538 $ 15,029,078 $ 14,336,933

Total loans and leases to:

Total assets
$ 33,982,709 71.1 % $ 21,646,514 70.3 % $ 19,315,983 75.2 %

Total earning assets
27,736,961 87.1 % 17,914,186 85.0 % 16,892,712 86.0 %

Total deposits
24,108,999 100.2 % 15,334,051 99.3 % 14,615,574 99.4 %

The loan and lease portfolio is the largest component of earning assets and accounts for the greatest portion of total interest income. The increase in loans and leases as of June 30, 2002, as compared to December 31, 2001, was primarily due to the acquisition of UCB on March 15, 2002 and growth in our Bank of the West operating segment. Our net loans and leases increased by 58.2% to $23.8 billion over December 31, 2001 and 65.8% over June 30, 2001.

Total commercial, financial and agricultural loans at June 30, 2002 increased by 105.4%, or $2.5 billion, over December 31, 2001 and 100%, or $2.5 billion, over June 30, 2001. The increase in this category was primarily due to the UCB acquisition.

Total real estate-commercial loans at June 30, 2002 increased by 62.8%, or $1.9 billion, over December 31, 2001 and 72.0%, or $2.0 billion, over June 30, 2001, primarily due to growth in our Bank of the West operating segment, including loans acquired with UCB.

Total real estate-construction loans at June 30, 2002 increased by 132.9%, or $617.3 million, over December 31, 2001 and 161.2%, or $667.6 million, over June 30, 2001, primarily due to the UCB acquisition.

LOANS AND LEASES, Continued

Total real estate-residential loans at June 30, 2002 increased by 101.6%, or $2.3 billion, over December 31, 2001 and 104.7% over June 30, 2001, primarily due to the UCB acquisition.

Total consumer loans at June 30, 2002 increased 36.7%, or $1.6 billion, over December 31, 2001 and increased 48.7%, or $2.0 billion, over June 30, 2001. Consumer loans consist primarily of direct and indirect automobile, recreational vehicle, marine, credit card and unsecured financing. The increase in consumer loans at June 30, 2002 as compared to December 31, 2001 and June 30, 2001 was primarily a result of growth in our Bank of the West operating segment and the acquisition of UCB.

The lease financing portfolio increased by .2%, or $4.8 million, over December 31, 2001, and increased 5.1%, or $110.8 million, over June 30, 2001 primarily due to growth in our Bank of the West operating segment.

Our foreign loans are principally in Guam and Saipan. Foreign loans as of June 30, 2002 decreased $512,000, or .1%, over December 31, 2001 and increased $50.5 million, or 15.1%, over June 30, 2001. The increase over June 30, 2001 was primarily due to our branch acquisition in November 2001.

Loan concentrations are considered to exist when there are amounts loaned to multiple borrowers engaged in similar activities, which would cause them to be similarly impacted by economic or other conditions. At June 30, 2002, we did not have a concentration of loans greater than 10% of total loans which is not otherwise disclosed as a category of loans as shown in the above table.

DEPOSITS

Deposits are the largest component of our total liabilities and account for the greatest portion of total interest expense. At June 30, 2002, total deposits were $24.1 billion, an increase of 65.0% over June 30, 2001. The increase was primarily due to the growth in our customer deposit base, primarily in the Bank of the West operating segment, especially the UCB acquisition, as well as various deposit product programs that we initiated. Contributing to the increase were the First Hawaiian branch acquisitions in Guam and Saipan from the Union Bank of California.

The decrease in all of the rates paid on deposits reflects falling rates in 2001, caused primarily by actions of the Federal Reserve’s Open Market Committee. During the 12-month period from July 1, 2001 to June 30, 2002, the benchmark federal funds rate decreased five times totaling 200 basis points. The rates paid on deposits reflect this rapidly changing interest rate environment at different speeds, due to the repricing characteristics of each type of deposit. Time deposits, which generally reprice more slowly than other deposits, do not yet fully reflect the sharp decreases in interest rates implemented in 2001, while money market and savings deposits, which can be repriced more rapidly, are more reflective of the decrease in the interest rate environment. The deposits in the foreign category are a mixture of time, savings and other interest-bearing deposits; therefore, its rate reflects both types of repricing characteristics. Additional information on our average deposit balances and rates paid is provided in the table on pages 17 and 18.

NONPERFORMING ASSETS

Nonperforming assets at June 30, 2002, December 31, 2001 and June 30, 2001 are as follows:

June 30, December 31, June 30,

2002 2001 2001

(dollars in thousands)

Nonperforming Assets:

Nonaccrual:

Commercial, financial and agricultural
$ 152,280 $ 35,908 $ 55,609

Real estate:

Commercial
43,061 27,568 19,060

Construction
— — 119

Residential:

  Insured, guaranteed, or conventional
10,551 9,003 9,887

    Total real estate loans
53,612 36,571 29,066

Consumer
2,856 6,144 3,111

Lease financing
9,193 9,570 12,180

Foreign
8,398 4,074 5,116

    Total nonaccrual loans and leases
226,339 92,267 105,082

Restructured:

Commercial, financial and agricultural
1,231 1,569 1,091

Real estate:

Commercial
1,259 3,019 3,923

Residential:

  Insured, guaranteed, or conventional
— 257 337

    Total real estate loans
1,259 3,276 4,260

    Total restructured loans and leases
2,490 4,845 5,351

    Total nonperforming loans and leases
228,829 97,112 110,433

Other real estate owned and repossessed personal property
22,566 22,321 21,467

    Total nonperforming assets
$ 251,395 $ 119,433 $ 131,900

Past due loans and leases⁽¹⁾:

Commercial, financial and agricultural
$ 22,248 $ 11,134 $ 9,230

Real estate:

Commercial
1,187 385 382

Construction
— — 136

Residential:

  Insured, guaranteed, or conventional
1,375 3,303 4,052

  Home equity credit lines
456 467 305

    Total real estate loans
3,018 4,155 4,875

Consumer
2,522 3,323 2,792

Lease financing
98 146 194

Foreign
274 2,023 965

    Total past due loans and leases
$ 28,160 $ 20,781 $ 18,056

Nonperforming assets to total loans and leases and other real estate owned and repossessed personal property (end of period):

Excluding past due loans and leases
1.04 % .78 % .91 %

Including past due loans and leases
1.16 % .92 % 1.03 %

Nonperforming assets to total assets (end of period):

Excluding past due loans and leases
.74 % .55 % .68 %

Including past due loans and leases
.82 % .65 % .78 %

⁽¹⁾ Represents loans and leases which are past due 90 days or more as to principal and/or interest, are still accruing interest and are adequately collateralized and in the process of collection.

NONPERFORMING ASSETS, Continued

Nonperforming assets at June 30, 2002 were $251.4 million, or 1.04%, of total loans and leases and other real estate owned and repossessed personal property (“OREO”), compared to .91% at June 30, 2001. Nonperforming assets at June 30, 2002 were .74% of total assets, compared to .68% at June 30, 2001.

Nonperforming assets at June 30, 2002 increased by $132.0 million, or 110.5%, from December 31, 2001. The increase in nonaccrual loans was primarily due to commercial, financial and agricultural loans and real estate-commercial loans in our Bank of the West operating segment. The increase was primarily due to the acquisition of UCB, partially offset by lower nonperforming assets in the First Hawaiian operating segment.

Nonperforming assets at June 30, 2002 increased by $119.5 million, or 90.6%, from June 30, 2001. The increase was primarily attributable to increases in nonaccrual commercial, financial and agricultural loans and real estate-commercial loans, which were partially offset by decreases in nonaccrual consumer and lease financing loans.

We generally place a loan or lease on nonaccrual status when we believe that collection of principal or income has become doubtful or when loans and leases are 90 days past due as to principal or income, unless they are well secured and in the process of collection. We may make an exception to the general 90-day-past-due rule when the fair value of the collateral exceeds our recorded investment in the loan or when other factors indicate that the borrower will shortly bring the loan current.

While the majority of consumer loans and leases are subject to our general policies regarding nonaccrual loans, certain past-due consumer loans and leases are not placed on nonaccrual status because they are charged off upon reaching a predetermined delinquency status varying from 120 to 180 days, depending on product type.

When we place a loan or lease on nonaccrual status, previously accrued and uncollected interest is reversed against interest income of the current period. When we receive a cash interest payment on a nonaccrual loan, we apply it as a reduction of the principal balance when we have doubts about the ultimate collection of the principal. Otherwise, we record such payments as income.

Nonaccrual loans and leases are generally returned to accrual status when they: (1) become current as to principal and interest or (2) become both well secured and in the process of collection.

Other than the loans listed, we were not aware of any significant potential problem loans where possible credit problems of the borrower caused us to seriously question the borrower’s ability to repay the loan under existing terms.

Loans past due 90 days or more and still accruing interest totaled $28.2 million at June 30, 2002, an increase of $10.1 million, or 56.0%, from June 30, 2001. Loans past due 90 days or more and still accruing interest increased by $7.4 million, or 35.5%, from December 31, 2001 to June 30, 2002. The increase was primarily due to higher commercial, financial and agricultural loans, which was partially offset by a decrease in real estate-residential and foreign loans. All of the loans that are past due 90 days or more and still accruing interest are, in our judgment, adequately collateralized and in the process of collection.

PROVISION AND ALLOWANCE FOR CREDIT LOSSES

The following table sets forth the activity in the allowance for credit losses for the periods indicated:

Three Months Ended Six Months Ended

June 30, June 30,

2002 2001 2002 2001

(dollars in thousands)

Loans and leases outstanding (end of period)
$ 24,162,810 $ 14,528,631 $ 24,162,810 $ 14,528,631

Average loans and leases outstanding
$ 24,210,725 $ 14,401,157 $ 20,556,271 $ 14,274,044

Allowance for credit losses:

Balance at beginning of period
$ 383,003 $ 186,246 $ 194,654 $ 172,443

Allowance of subsidiaries purchased
— — 210,000 —

Loans and leases charged off:

Commercial, financial and agricultural
4,758 6,169 33,443 16,825

Real estate:

Commercial
1,568 70 1,634 469

Construction
— — — —

Residential
315 467 709 1,534

Consumer
6,096 9,560 18,971 18,224

Lease financing
11,244 4,189 17,277 7,187

Foreign
393 273 868 875

Total loans and leases charged off
24,374 20,728 72,902 45,114

Recoveries on loans and leases previously charged off:

Commercial, financial and agricultural
776 200 3,500 347

Real estate:

Commercial
116 16 246 66

Construction
34 66 254 197

Residential
214 186 416 386

Consumer
1,950 1,848 4,141 3,547

Lease financing
2,535 493 3,787 995

Foreign
116 221 267 481

Total recoveries on loans and leases

previously charged off
5,741 3,030 12,611 6,019

Net charge-offs
(18,633 ) (17,698 ) (60,291 ) (39,095 )

Provision for credit losses
22,902 23,150 42,909 58,350

Balance at end of period
$ 387,272 $ 191,698 $ 387,272 $ 191,698

Net loans and leases charged off to average loans and leases
.31 %⁽¹⁾ .49 %⁽¹⁾ .59 %⁽¹⁾ .55 %⁽¹⁾

Net loans and leases charged off to allowance for credit losses
19.30 %⁽¹⁾ 37.03 %⁽¹⁾ 31.39 %⁽¹⁾ 41.13 %⁽¹⁾

Allowance for credit losses to total loans and leases (end of period)
1.60 % 1.32 % 1.60 % 1.32 %

Allowance for credit losses to nonperforming loans and leases (end of period):

Excluding 90 days past due accruing loans and leases
1.69x 1.74x 1.69x 1.74x

Including 90 days past due accruing loans and leases
1.51x 1.49x 1.51x 1.49x

⁽¹⁾ Annualized.

PROVISION AND ALLOWANCE FOR CREDIT LOSSES, Continued

The provision for credit losses for the first six months of 2002 was $42.9 million, a decrease of $15.4 million, or 26.5%, compared to the same period in 2001. The decrease in the provision for credit losses for the first six months of 2002 compared to the same period in 2001 primarily reflects the $22.8 million in additional provision for credit losses that we recorded in the first six months of 2001 in response to macroeconomic events.

The provision for credit losses is based upon our judgment as to the adequacy of the allowance for credit losses (the “Allowance”) to absorb probable losses inherent in the portfolio as of the balance sheet date. The Company uses a systematic methodology to determine the adequacy of the Allowance and related provision for credit losses to be reported for financial statement purposes. The determination of the adequacy of the Allowance is ultimately one of judgment, which includes consideration of many factors, including, among other things, the amount of problem and potential problem loans and leases, net charge-off experience, changes in the composition of the loan and lease portfolio by type and location of loans and leases and in overall loan and lease risk profile and quality, general economic factors and the fair value of collateral.

Our approach to managing exposure to credit risk involves an integrated program of setting appropriate standards for credit underwriting and diversification, monitoring trends that may affect the risk profile of the credit portfolio and making appropriate adjustments to reflect changes in economic and financial conditions that could affect the quality of the portfolio and loss probability. The components of this integrated program include:

       •    Setting Underwriting and Grading Standards. Our loan grading system utilizes ten different principal risk categories where “1” is “no risk” and “10” is “loss.” Risk parameters are established so that the cost of credit risk is an integral part of the pricing and evaluation of credit decisions and the setting of portfolio targets.

       •    Diversification. We actively manage our credit portfolio to avoid excessive concentration by obligor, risk grade, industry, product and geographic location. As part of this process, we also monitor changes in risk correlation among concentration categories. In addition, we seek to reduce our exposure to concentrations by actively participating portions of our commercial and commercial real estate loans to other banks.

       •    Risk Mitigation. Over the past few years, we have reduced our exposure to higher-risk areas such as real estate-construction (which accounted for only 4.5% of total loans and leases at June 30, 2002), as well as Hawaiian commercial real estate and agricultural loans.

       •    Restricted Participation in Syndicated National Credits. In addition to providing backup commercial paper facilities primarily to investment-grade companies, we participate in media finance credits in the national market, one of our traditional niches where we have developed a special expertise over a long period of time and with experienced personnel. Recently, we began a program to reduce our outstanding commitments and balances in these types of credits. At June 30, 2002, the ratio of nonperforming shared national credits and media finance loans to total shared national credits and media finance loans outstanding was 2%.

       •    Emphasis on Consumer Lending. Consumer loans represent our single largest category of loans and leases. We focus our consumer lending activities on loan grades with what we believe are predictable loss rates. As a result, we are able to use formula-based approaches to calculate appropriate reserve levels that reflect historical experience. We generally do not participate in subprime lending activities. We also seek to reduce our exposures where feasible by obtaining third-party insurance or similar protections. For example, in our vehicle lease portfolio (which represents approximately 65% of our lease financing portfolio and 18% of our combined lease financing and consumer loans at June 30, 2002), we obtain third-party insurance for the estimated residual value of the leased vehicle. To the extent that these policies include deductible values, we set aside reserves to cover the uninsured portion.

PROVISION AND ALLOWANCE FOR CREDIT LOSSES, Continued

Charge-offs were $72.9 million for the first six months of 2002, an increase of $27.8 million, or 61.6%, over the same period in 2001. The increase was primarily due to charge-offs in commercial, financial and agricultural loans, consumer loans and lease financing in the first six months of 2002. The higher charge-offs resulted from the larger loan portfolio of our Bank of the West operating segment, including the UCB acquisition.

For the first six months of 2002, recoveries increased by $6.6 million, or 109.5%, compared to the same period in 2001. The increase in recoveries was primarily in commercial, financial and agricultural loans and lease financing.

Net charge-offs for the first six months of 2002 were 0.59% (annualized) compared to 0.55% (annualized) for the same period in 2001.

The Allowance decreased to 1.69 times nonperforming loans and leases (excluding 90 days or more past due accruing loans and leases) at June 30, 2002 from 1.74 times at June 30, 2001. The decrease in the ratio is principally due to an increase in nonperforming loans and leases, primarily in our Bank of the West operating segment following the acquisition of UCB.

In our judgment, the Allowance was adequate to absorb losses inherent in the loan and lease portfolio at June 30, 2002. However, changes in prevailing economic conditions in our markets could result in changes in the level of nonperforming assets and charge-offs in the future and, accordingly, changes in the Allowance. We will continue to closely monitor economic developments and those specific items mentioned above in particular and make necessary adjustments to the Allowance accordingly.

NONINTEREST INCOME

The following table reflects the key components of the change in noninterest income for the three and six months ended June 30, 2002, as compared to the same periods in 2001:

2002 2001 % Change

(in thousands)

Three months ended June 30,

Service charges on deposit accounts
$ 36,561 $ 22,573 62.0 %

Trust and investment services income
10,252 8,083 26.8

Other service charges and fees
31,912 20,198 58.0

Securities gains, net
456 19,936 N/M

Other
9,248 9,006 2.7

Total noninterest income
$ 88,429 $ 79,796 10.8 %

Six months ended June 30,

Service charges on deposit accounts
$ 62,535 $ 43,009 45.4 %

Trust and investment services income
18,392 17,210 6.9

Other service charges and fees
55,410 38,572 43.7

Securities gains, net
684 61,236 N/M

Other
14,032 18,268 (23.2 )

Total noninterest income
$ 151,053 $ 178,295 (15.3) %

N/M — Not Meaningful.

As the table above shows in detail, noninterest income increased by 10.8% for the three months ended June 30, 2002 and decreased 15.3% for the six months ended June 30, 2002 compared to the same periods in 2001. Significant items include the following:

       •    The Concord stock securities gain in 2001 of $59.8 million was primarily responsible for the decrease in securities gains for the three and six months ended June 30, 2002 as compared to the same periods in 2001.

       •    The increases in service charges on deposit accounts for the three and six months ended June 30, 2002, compared to the same periods in 2001, were primarily due to higher levels of deposits resulting from the expansion of our customer deposit base predominately in our Bank of the West operating segment, especially the deposits from UCB.

       •    The increase in trust and investment services income for the three and six months ended June 30, 2002, compared to the same periods in 2001, resulted primarily from our Bank of the West operating segment.

       •    The increases in other service charges and fees for the three and six months ended June 30, 2002, compared to the same periods in 2001, were primarily due to: (1) higher merchant services fees, due to higher fee charges, increased volume and more merchant outlets; (2) higher bank card and ATM convenience fee income; and (3) higher miscellaneous service fees.

       •    The decrease in other noninterest income for the six months ended June 30, 2002, as compared to the same period in 2001, was primarily due to lower gains on the sale of OREO property in 2002 and a gain on the sale of securitized loans in 2001.

NONINTEREST EXPENSE

The following table reflects the key components of the change in noninterest expense for the three and six months ended June 30, 2002 as compared to the same periods in 2001:

2002 2001 % Change

(in thousands)

Three months ended June 30,

Salaries and wages
$ 86,463 $ 51,390 68.2 %

Employee benefits
35,675 18,844 89.3

Occupancy expense
23,495 17,006 38.2

Outside services
17,808 11,999 48.4

Intangible amortization
5,763 11,136 (48.2 )

Equipment expense
14,480 7,558 91.6

Stationery and supplies
7,389 5,293 39.6

Advertising and promotion
8,034 3,957 103.0

Restructuring and integration costs
2,738 — —

Other
26,975 20,533 31.4

Total noninterest expense
$ 228,820 $ 147,716 54.9 %

Six months ended June 30,

Salaries and wages
$ 146,557 $ 100,767 45.4 %

Employee benefits
59,157 36,817 60.7

Occupancy expense
39,109 33,241 17.7

Outside services
31,060 23,502 32.2

Intangible amortization
8,520 21,420 (60.2 )

Equipment expense
22,209 15,090 47.2

Stationery and supplies
13,074 9,693 34.9

Advertising and promotion
12,691 8,290 53.1

Restructuring and integration costs
8,753 3,935 122.4

Other
46,788 45,049 3.9

Total noninterest expense
$ 387,918 $ 297,804 30.3 %

As the table above shows in detail, noninterest expense increased by 54.9% and 30.3% for the three and six months ended June 30, 2002, respectively, compared to the same periods in 2001. In addition to the factors noted below, the increase in noninterest expense for the three and six months ended June 30, 2002, compared to the same periods in 2001, was primarily due to the UCB acquisition. Factors causing the increase include the following:

       •    The increases in salaries and wages and employee benefits reflect increased employees, primarily due to the UCB acquisition. Also, the increase for the three and six months ended June 30, 2002 included $4.4 million in costs related to participation in the BNPP Discounted Share Purchase Plan in June 2002. In addition, total salaries and wages for the three and six months ended June 30, 2002 increased compared to the same periods in 2001, due to lower net periodic pension benefit credits in 2002.

       •    The decrease in intangible amortization reflects the adoption of new accounting standards in 2002 that ceased the amortization of goodwill.

       •    Restructuring and integration costs relate to our acquisition of UCB in 2002 and the Nevada and New Mexico branches in 2001.

INCOME TAXES

Our effective income tax rates (exclusive of the tax equivalent adjustment) for the three and six months ended June 30, 2002 were 39.1% and 39.2%, as compared to 38.7% and 39.3%, respectively, for the same periods in 2001.

LIQUIDITY MANAGEMENT

Liquidity refers to our ability to provide sufficient short- and long-term cash flows to fund operations and to meet obligations and commitments, including depositor withdrawals and debt service, on a timely basis at reasonable costs. We achieve our liquidity objectives with both assets and liabilities.

We obtain short-term asset-based liquidity through our investment securities portfolio and short-term investments which can be readily converted to cash. These liquid assets consist of cash and due from banks, interest-bearing deposits in other banks, federal funds sold, securities purchased under agreements to resell and investment securities. Such assets represented 15.9% of total assets at June 30, 2002 compared to 16.7% at December 31, 2001.

Intermediate- and longer-term asset liquidity is primarily provided by regularly scheduled maturities and cash flows from our loans and investment securities. Additional liquidity is available from certain assets that can be sold or securitized, such as consumer and mortgage loans.

We obtain short-term liability-based liquidity primarily from deposits. Average total deposits for the six months ended June 30, 2002 increased 40.4% to $20.4 billion, over the year ended December 31, 2001, primarily due to continued expansion of our customer base in the Western United States and the acquisition of UCB. Average total deposits funded 71% of average total assets for the six months ended June 30, 2002 and 75% for the year ended December 31, 2001.

We also obtain short-term liquidity from ready access to regional and national wholesale funding sources, including issuing our own commercial paper, purchasing federal funds, selling securities under agreements to repurchase, arranging lines of credit from other banks and obtaining credit facilities from the Federal Home Loan Banks. Additional information on short-term borrowings is provided in Note 10 to the Consolidated Financial Statements on pages 57 and 58 of our 2001 Annual Report on Form 10-K. Offshore deposits in the international market provide another available source of funds.

Funds taken in the intermediate- and longer-term markets are structured to avoid concentration of maturities and to reduce refinancing risk. We also attempt to diversify the types of instruments issued to avoid undue reliance on any one market.

Liquidity for the parent company is primarily provided by dividend and interest income from its subsidiaries. Short-term cash requirements are met through liquidation of short-term investments. Longer-term liquidity is provided by access to the capital markets and the ability to obtain resources from BNP Paribas.

NONAUDIT SERVICES PROVIDED BY AUDITORS

In the period from January 1 to August 9, 2002, our audit committee has approved up to $1.1 million in fees related to non-audit services provided by our independent public accountants, PricewaterhouseCoopers, L.L.P. These fees relate primarily to assistance in the integration efforts of Bank of the West with UCB.

CAPITAL

Stockholder’s equity was $3.799 billion at June 30, 2002, an increase of 89.8% over $2.002 billion at December 31, 2001. Compared to June 30, 2001, stockholder’s equity at June 30, 2002 increased by $1.718 billion, or 82.6%. The increase was primarily due to the issuance of additional Class A common shares in connection with the UCB acquisition.

Capital adequacy regulations require the Company’s depository institution subsidiaries to maintain minimum amounts of Tier 1 Capital and Total Capital and minimum ratios of Tier 1 Capital and Total Capital to risk-weighted assets, respectively, and of Tier 1 Capital to average assets (leverage). These amounts and ratios as of June 30, 2002 are set forth below:

To Be Well

Capitalized

Under Prompt

For Capital Corrective Action

Actual Adequacy Purposes Provisions

Amount Ratio Amount Ratio Amount Ratio

(dollars in thousands)

Tier 1 Capital to Risk-Weighted Assets:

Bank of the West
$ 1,988,101 9.63 % $ 825,841 4.00 % $ 1,238,762 6.00 %

First Hawaiian
673,955 10.31 261,389 4.00 392,083 6.00

Total Capital to Risk-Weighted Assets:

Bank of the West
$ 2,471,805 11.97 % $ 1,651,682 8.00 % $ 2,064,603 10.00 %

First Hawaiian
827,046 12.66 522,778 8.00 653,472 10.00

Tier 1 Capital to Average Assets:

Bank of the West
$ 1,988,101 8.75 % $ 908,363 4.00 % $ 1,135,454 5.00 %

First Hawaiian
673,955 8.81 306,067 4.00 382,583 5.00

Due to the election to become a financial holding company done concurrently with the BNP Paribas Merger, only the Company’s depository institution subsidiaries are subject to various regulatory capital requirements administered by the Federal banking agencies. If they fail to meet minimum capital requirements, these agencies can initiate certain mandatory actions. Such regulatory actions could have a material effect on the Company’s financial statements.

Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company’s depository institution subsidiaries must each meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. These capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

INTEREST RATE RISK MEASUREMENT AND MANAGEMENT

The Company’s net interest income is subject to interest rate risk to the extent our interest-bearing liabilities (primarily deposits and borrowings) mature or reprice on a different basis than our interest-earning assets (primarily loans and leases and investment securities). When interest-bearing liabilities mature or reprice more quickly than interest-earning assets during a given period, an increase in interest rates could reduce net interest income. Similarly, when interest-earning assets mature or reprice more quickly than interest-bearing liabilities, a decrease in interest rates could have a negative impact on net interest income. In addition, the impact of interest rate swings may be exacerbated by factors such as our customers’ propensity to manage their demand deposit balances more or less aggressively or to refinance mortgage and other consumer loans depending on the interest rate environment.

The Asset/Liability Committees of the Company and its major subsidiaries are responsible for managing interest rate risk. The Asset/Liability Committees generally meet monthly or quarterly. The committees may recommend changes to a particular subsidiary’s interest rate profile to their respective Board of Directors, should changes be necessary and depart significantly from established policies. Other than commitments to purchase and sell foreign currencies and mortgage-backed securities and certain interest rates swaps and options, interest rate derivatives are not entered into for trading purposes.

We also enter into customer accommodation interest rate swaps and foreign exchange spot and forward contracts to offset either the customer’s counter-position or our foreign currency denominated deposits. These contracts basically offset each other and they do not expose us to material losses resulting from interest rate or foreign currency fluctuations.

INTEREST RATE RISK MEASUREMENT AND MANAGEMENT, Continued

The Company models its net interest income in order to quantify its exposure to changes in interest rates. Generally, the size of the balance sheet is held relatively constant and then subjected to interest rate shocks up and down in 100 basis-point increments. Each account-level item is repriced according to its respective contractual characteristics, including any imbedded options which might exist (e.g. periodic interest rate caps or floors or loans and leases which permit the borrower to prepay the principal balance of the loan or lease prior to maturity without penalty). Derivative financial instruments such as interest rate swaps, swaptions, caps or floors are included as part of the modeling process. For each interest rate shock scenario, net interest income over a 12-month horizon is compared against the results of a scenario in which no interest rate change occurs (“flat rate scenario”) to determine the level of interest rate risk at that time.

The projected impact of 100 basis-point incremental increases and decreases in interest rates on the Company’s consolidated net interest income over the 12 months beginning July 1 and January 1, 2002 is shown below:

(dollars in millions) + 3% +2% +1% Flat -1%

July 1, 2002

Net Interest Income
$ 1,305.5 $ 1,301.6 $ 1,293.1 $ 1,280.2 $ 1,255.2

Difference from flat
$ 25.3 $ 21.4 $ 12.9 $ — $ (25.0 )

% variance
2.0 % 1.7 % 1.0 % — % (2.0) %

January 1, 2002

Net Interest Income
$ 850.5 $ 855.5 $ 859.0 $ 857.9 $ 855.4

Difference from flat
$ (7.4 ) $ (2.4 ) $ 1.1 $ — $ (2.5 )

% variance
(0.9 )% (0.3 )% 0.1 % — % (0.3 )%

The changes in the models are due to differences in interest rate environments which include the absolute level of interest rates, the shape of the yield curve and spreads between benchmark rates.

SIGNIFICANT ASSUMPTIONS UTILIZED AND INHERENT LIMITATIONS

The net interest income changes for each interest rate scenario presented above include assumptions based on accelerating or decelerating mortgage and installment loan prepayments in declining or rising scenarios, respectively, and adjusting deposit levels and mix in the different interest rate scenarios. The magnitude of changes to both areas in turn are based upon analyses of customers’ historic behavior in differing rate environments. However, these analyses may differ from actual future customer behavior. For example, actual prepayments may differ from current assumptions as prepayments are affected by many variables which cannot be predicted with certainty (e.g. prepayments of mortgages may differ on fixed and adjustable loans depending upon current interest rates, expectations of future interest rates, availability of refinancing, economic benefit to borrower, financial viability of borrower, etc.).

As with any model for analyzing interest rate risk, certain limitations are inherent in the method of analysis presented above. For example, the actual impact on net interest income due to certain interest rate shocks may differ from those projections presented should market conditions vary from assumptions used in the analysis. Furthermore, the analysis does not consider the effects of a changed level of overall economic activity that could exist in certain interest rate environments. Moreover, the method of analysis used does not take into account the actions that management might take to respond to changes in interest rates because of inherent difficulties in determining the likelihood or impact of any such response.

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K

Exhibits


(a)	Exhibit 12	Statement regarding computation of ratios.

	Exhibit 99.1	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	Exhibit 99.2	Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b)	Reports on Form 8-K/A	On May 29, 2002, the registrant filed a Report on Form 8-K/A that provided information under Items 2 and 7 concerning the registrant’s acquisition of all of the outstanding stock of United California Bank on March 15, 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

BANCWEST CORPORATION
               (Registrant)

Date August 14, 2002 By /s/ Douglas C. Grigsby

Douglas C. Grigsby
Executive Vice President and Chief Financial Officer
(principal financial officer)

EXHIBIT INDEX

Exhibit

Number Description

12 Statement regarding computation of ratios.

99.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.2 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

August 14, 2002

/s/ Douglas C. Grigsby

Douglas C. Grigsby
Executive Vice President and Chief Financial Officer
(principal financial officer)


		Page

Item 1.	Financial Statements (Unaudited)

	Consolidated Balance Sheets at June 30, 2002, December 31, 2001 and June 30, 2001	2-3

	Consolidated Statements of Income for the three and six months ended June 30, 2002 and 2001	4

	Consolidated Statements of Changes in Stockholder’s Equity for the six months ended June 30, 2002 and 2001	5

	Consolidated Statements of Cash Flows for the six months ended June 30, 2002 and 2001	6

	Notes to Consolidated Financial Statements	7-11

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12-30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31

PART II.	OTHER INFORMATION

Item 6.	Exhibits and Reports on Form 8-K	33

SIGNATURES		34

EXHIBIT INDEX

•		Purchase price adjustments and new intangibles: As part of purchase accounting, our assets and liabilities were adjusted to fair value. Among the items adjusted were identifiable intangible assets related to our deposits, loans and leases, property and equipment, pension assets and liabilities and other items.

•		New debt: As part of the BNP Paribas Merger, we assumed $1.55 billion in new debt from the Merger Sub. This debt is between BancWest and another subsidiary of BNP Paribas.

•		New equity basis: Due to the use of “push-down” accounting in the BNP Paribas Merger, the equity balances at December 31, 2001 reflect BNP Paribas’ basis in the Company.


	June 30, 2002		December 31, 2001		June 30, 2001

	(in thousands)
Impaired loans with related allowance for credit losses calculated under SFAS No. 114	$	183,742	$	89,273	$	91,674
Impaired loans with no related allowance for credit losses calculated under SFAS No. 114		13,566		8,253		31,604

Impaired loans	$	197,308	$	97,526	$	123,278

Total allowance for credit losses on impaired loans	$	51,499	$	24,745	$	20,315
Average impaired loans		133,931		118,497		127,563
Interest income recognized on impaired loans		1,661		2,462		1,036


	Three Months Ended June 30,

	Bank of		First					Reconciling			Consolidated
	the West		Hawaiian		Other			Items			Totals

	(in millions)
2002
Net interest income	$	271	$	82	$	(31	)	$	—			$	322
Net income		86		31		(20	)		—				97
Segment assets		25,482		8,869		7,335			(7,703	)			33,983
Goodwill		2,218		994		173			—				3,385
2001
Net interest income	$	120	$	82	$	(3	)	$	—			$	199
Net income		35		33		(2	)		—				66
Segment assets		12,323		7,424		3,385			(3,816	)			19,316
Goodwill		605		69		—			—				674

(1)		Information presented was not calculated under generally accepted accounting principles (“GAAP”). Information is disclosed to improve readers’ understanding of how management views the results of our operations.





(2)		Excluding after-tax restructuring and integration costs of $1,610,000 in the second quarter of 2002, $5,208,000 for the six months ended June 30, 2002 and $2,342,000 in the first quarter of 2001.





(3)		Excluding amortization of goodwill and core deposit intangible.





(4)		Defined as operating cash earnings as a percentage of average total assets minus average goodwill and core deposit intangible.


								Change
		2002			2001			(Basis Points)

Three months ended June 30,
	Yield on average earning assets		6.47	%		7.82	%		(135	)
	Rate paid on funding sources		1.82			3.16			(134	)

	Net interest margin		4.65			4.66			(1	)
Six months ended June 30,
	Yield on average earning assets		6.57	%		8.00	%		(143	)
	Rate paid on funding sources		1.95			3.38			(143	)

	Net interest margin		4.62			4.62			—

⁽¹⁾		Annualized.





⁽²⁾		Average debt investment securities were computed based on historical amortized cost, excluding the effects of SFAS No. 115 adjustments.





⁽³⁾		Nonaccruing loans and leases have been included in the computations of average loan and lease balances.





⁽⁴⁾		Interest income for loans and leases included loan fees of $14,554 and $25,692 for the three and six months ended June 30, 2002, respectively, and $9,971 and $18,700 for the three and six months ended June 30, 2001, respectively.


				Three Months Ended						Six Months Ended
				June 30,						June 30,

				2002			2001			2002			2001

				(dollars in thousands)
Loans and leases outstanding (end of period)				$	24,162,810		$	14,528,631		$	24,162,810		$	14,528,631

Average loans and leases outstanding				$	24,210,725		$	14,401,157		$	20,556,271		$	14,274,044

Allowance for credit losses:
	Balance at beginning of period			$	383,003		$	186,246		$	194,654		$	172,443

	Allowance of subsidiaries purchased				—			—			210,000			—
	Loans and leases charged off:
		Commercial, financial and agricultural			4,758			6,169			33,443			16,825
		Real estate:
			Commercial		1,568			70			1,634			469
			Construction		—			—			—			—
			Residential		315			467			709			1,534
		Consumer			6,096			9,560			18,971			18,224
		Lease financing			11,244			4,189			17,277			7,187
		Foreign			393			273			868			875

			Total loans and leases charged off		24,374			20,728			72,902			45,114

	Recoveries on loans and leases previously charged off:
		Commercial, financial and agricultural			776			200			3,500			347
		Real estate:
			Commercial		116			16			246			66
			Construction		34			66			254			197
			Residential		214			186			416			386
		Consumer			1,950			1,848			4,141			3,547
		Lease financing			2,535			493			3,787			995
		Foreign			116			221			267			481

			Total recoveries on loans and leases
			previously charged off		5,741			3,030			12,611			6,019

			Net charge-offs		(18,633	)		(17,698	)		(60,291	)		(39,095	)

	Provision for credit losses				22,902			23,150			42,909			58,350

	Balance at end of period			$	387,272		$	191,698		$	387,272		$	191,698

Net loans and leases charged off to average loans and leases					.31	%⁽¹⁾		.49	%⁽¹⁾		.59	%⁽¹⁾		.55	%⁽¹⁾
Net loans and leases charged off to allowance for credit losses					19.30	%⁽¹⁾		37.03	%⁽¹⁾		31.39	%⁽¹⁾		41.13	%⁽¹⁾
Allowance for credit losses to total loans and leases (end of period)					1.60	%		1.32	%		1.60	%		1.32	%
Allowance for credit losses to nonperforming loans and leases (end of period):
		Excluding 90 days past due accruing loans and leases			1.69x			1.74x			1.69x			1.74x
		Including 90 days past due accruing loans and leases			1.51x			1.49x			1.51x			1.49x

	•		Setting Underwriting and Grading Standards. Our loan grading system utilizes ten different principal risk categories where “1” is “no risk” and “10” is “loss.” Risk parameters are established so that the cost of credit risk is an integral part of the pricing and evaluation of credit decisions and the setting of portfolio targets.

	•		Diversification. We actively manage our credit portfolio to avoid excessive concentration by obligor, risk grade, industry, product and geographic location. As part of this process, we also monitor changes in risk correlation among concentration categories. In addition, we seek to reduce our exposure to concentrations by actively participating portions of our commercial and commercial real estate loans to other banks.

	•		Risk Mitigation. Over the past few years, we have reduced our exposure to higher-risk areas such as real estate-construction (which accounted for only 4.5% of total loans and leases at June 30, 2002), as well as Hawaiian commercial real estate and agricultural loans.

	•		Restricted Participation in Syndicated National Credits. In addition to providing backup commercial paper facilities primarily to investment-grade companies, we participate in media finance credits in the national market, one of our traditional niches where we have developed a special expertise over a long period of time and with experienced personnel. Recently, we began a program to reduce our outstanding commitments and balances in these types of credits. At June 30, 2002, the ratio of nonperforming shared national credits and media finance loans to total shared national credits and media finance loans outstanding was 2%.

	•		Emphasis on Consumer Lending. Consumer loans represent our single largest category of loans and leases. We focus our consumer lending activities on loan grades with what we believe are predictable loss rates. As a result, we are able to use formula-based approaches to calculate appropriate reserve levels that reflect historical experience. We generally do not participate in subprime lending activities. We also seek to reduce our exposures where feasible by obtaining third-party insurance or similar protections. For example, in our vehicle lease portfolio (which represents approximately 65% of our lease financing portfolio and 18% of our combined lease financing and consumer loans at June 30, 2002), we obtain third-party insurance for the estimated residual value of the leased vehicle. To the extent that these policies include deductible values, we set aside reserves to cover the uninsured portion.

	•		The Concord stock securities gain in 2001 of $59.8 million was primarily responsible for the decrease in securities gains for the three and six months ended June 30, 2002 as compared to the same periods in 2001.

	•		The increases in service charges on deposit accounts for the three and six months ended June 30, 2002, compared to the same periods in 2001, were primarily due to higher levels of deposits resulting from the expansion of our customer deposit base predominately in our Bank of the West operating segment, especially the deposits from UCB.

	•		The increase in trust and investment services income for the three and six months ended June 30, 2002, compared to the same periods in 2001, resulted primarily from our Bank of the West operating segment.

	•		The increases in other service charges and fees for the three and six months ended June 30, 2002, compared to the same periods in 2001, were primarily due to: (1) higher merchant services fees, due to higher fee charges, increased volume and more merchant outlets; (2) higher bank card and ATM convenience fee income; and (3) higher miscellaneous service fees.

	•		The decrease in other noninterest income for the six months ended June 30, 2002, as compared to the same period in 2001, was primarily due to lower gains on the sale of OREO property in 2002 and a gain on the sale of securitized loans in 2001.

	•		The increases in salaries and wages and employee benefits reflect increased employees, primarily due to the UCB acquisition. Also, the increase for the three and six months ended June 30, 2002 included $4.4 million in costs related to participation in the BNPP Discounted Share Purchase Plan in June 2002. In addition, total salaries and wages for the three and six months ended June 30, 2002 increased compared to the same periods in 2001, due to lower net periodic pension benefit credits in 2002.

	•		The decrease in intangible amortization reflects the adoption of new accounting standards in 2002 that ceased the amortization of goodwill.

	•		Restructuring and integration costs relate to our acquisition of UCB in 2002 and the Nevada and New Mexico branches in 2001.


												To Be Well
												Capitalized
												Under Prompt
							For Capital					Corrective Action
		Actual					Adequacy Purposes					Provisions

		Amount		Ratio			Amount		Ratio			Amount		Ratio

(dollars in thousands)
Tier 1 Capital to Risk-Weighted Assets:
	Bank of the West	$	1,988,101		9.63	%	$	825,841		4.00	%	$	1,238,762		6.00	%
	First Hawaiian		673,955		10.31			261,389		4.00			392,083		6.00
Total Capital to Risk-Weighted Assets:
	Bank of the West	$	2,471,805		11.97	%	$	1,651,682		8.00	%	$	2,064,603		10.00	%
	First Hawaiian		827,046		12.66			522,778		8.00			653,472		10.00
Tier 1 Capital to Average Assets:
	Bank of the West	$	1,988,101		8.75	%	$	908,363		4.00	%	$	1,135,454		5.00	%
	First Hawaiian		673,955		8.81			306,067		4.00			382,583		5.00



(dollars in millions)	+ 3%			+2%			+1%			Flat			-1%

July 1, 2002
Net Interest Income	$	1,305.5		$	1,301.6		$	1,293.1		$	1,280.2		$	1,255.2
Difference from flat	$	25.3		$	21.4		$	12.9		$	—		$	(25.0	)
% variance		2.0	%		1.7	%		1.0	%		—	%		(2.0)	%

January 1, 2002
Net Interest Income	$	850.5		$	855.5		$	859.0		$	857.9		$	855.4
Difference from flat	$	(7.4	)	$	(2.4	)	$	1.1		$	—		$	(2.5	)
% variance		(0.9	)%		(0.3	)%		0.1	%		—	%		(0.3	)%


Exhibit
Number		Description

12		Statement regarding computation of ratios.

99.1		Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.2		Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.