UNITED STATES

FormFORM 10-K

BancWest Corporation and Subsidiaries
PART I

intermediaries and volunteer participation in such organizations as California Community Reinvestment Corporation, California Environmental Redevelopment Fund and the Low Income Housing Fund.

     Bank of the West has set a goal of $30 billion in loans, investments, contributions and services to low- and moderate-income individuals, small businesses and community-based organizations over a 10-year period. ThisSince the announcement of this initiative was announced in March 2002, and since its announcement, Bank of the West has contributed $11 billion to–date, $6 billion in 2003 and $5 billion in 2002.

     First Hawaiian Bank is a State of Hawaii-chartered bank that is not a member of the Federal Reserve System. At December 31, 2004, First Hawaiian was the largest bank in Hawaii in terms of total assets and total deposits. The deposits of First Hawaiian Bank are insured by the BIF and the SAIF of the FDIC to the extent and subject to the limitations set forth in the FDIA. First Hawaiian, Bank, the oldest financial institution in Hawaii, was established as Bishop & Co. in 1858 in Honolulu.

     At December 31, 2003,2004, First Hawaiian Bank had total assets of $9.9$10.6 billion, total loans and leases of $5.0$5.5 billion, total deposits of $7.1$7.7 billion and stockholder’s equity of $1.9$2.0 billion. It is Hawaii’s largest bank based on total assets.

     First Hawaiian Bank is a full-service bank conducting a general commercial and consumer banking business and offering trust and insurance services to individuals, institutions, businesses and governments through 61 branches in Hawaii, Guam and Saipan.

     First Hawaiian Bank also conducts business through the following subsidiaries:Hawaiian’s principal subsidiaries include:

	•	Bishop Street Capital Management Corporation,, a registered investment adviser that serves the institutional and high net worth investment markets primarily in Hawaii and the Western United States. It is also the advisor to the Bishop Street Funds mutual fund family.
	•	FH Center, Inc., the Company’s headquarters, owns certain real property in connection with First Hawaiian Center.Insurance, Inc.,an insurance agency, and
	•	FHB Properties, Inc., holds title to certain property and premises used by First Hawaiian Bank.
	•	First Hawaiian Insurance, Inc., is an insurance agency.
	•	First Hawaiian Leasing, Inc.,,which engages in commercial equipment and vehicle leasing.
	•	Real Estate Delivery, Inc., holds title to certain real property acquired by First Hawaiian Bank in business activities.
	•	Hawaii Community Reinvestment Corporation

     In an effort toTo support affordable housing and as part of its community reinvestment program, First Hawaiian Bank is a member of the Hawaii Community Reinvestment Corporation (the “HCRC”(“HCRC”). The HCRC is, a nonprofit consortium of localHawaii financial institutions that provides $50 million in long-term financing for affordable housing rental projects throughout Hawaii for low- and moderate-income residents.

The $50 million loan pool is funded by the member financial institutions, which participate pro rata (based on deposit size) in each HCRC loan. First Hawaiian Bank’sHawaiian’s participation in these HCRC loans is included in its loan portfolio.

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     To further enhance First Hawaiian Bank’sHawaiian’s community reinvestment program and provide support for the development of additional affordable-housing rental units in Hawaii, First Hawaiian and other HCRC member institutions have subscribed toto: (i) a $20.0 million tax-credit equity fund (“Hawaii Affordable Housing Fund II”) and, (ii) a $12.5 million tax-credit equity fund (“Hawaii Affordable Housing Fund III”). A fourth, and (iii) a $15.15 million tax-credit equity fund (“Hawaii Equity Fund IV, LLC (Class A)”). In addition, a subscription in a $35.9 million tax-credit equity fund (“Hawaii Equity Fund IV, LLC (Class B)”) is being contemplated to continue the support of additional affordable housing projects.finalized.

     Hawaii Affordable Housing Fund II, and Hawaii Affordable Housing Fund III, and Hawaii Equity Fund IV, LLC (Class A) (the “Funds”) have been established to invest in qualified low-income housing tax credit rental projects and to ensure that these projects are maintained as low-income housing throughout the required compliance period. First Hawaiian Bank’sHawaiian’s investments in these Funds are included in other assets. ProjectsThe investment in projects associated with the Hawaii Affordable Housing Fund I were completedwas sold in 2003.

FHL Lease Holding Company, Inc. (“FHL”)

     FHL, a direct subsidiary of BancWest, primarily finances and leases personal and real property, including equipment and vehicles. FHL is in a run-off mode and allhas ceased entering into new leveraged and direct financing leases are recorded by First Hawaiian Leasing, Inc.leases. At December 31, 2003,2004, FHL’s net investment in leases amounted to $52.3$34.7 million and its total assets were $52.9$35.6 million.

BWIS was purchased from Primevest Financial on November 10, 2003.2

BancWest Corporation and Subsidiaries
PART I

EMPLOYEES

     At December 31, 2003, BWIS had total assets of $2.6 million. BWIS is a broker-dealer registered with the NASD and sells mutual funds and annuities to the general public from locations in the branches of its affiliates, Bank of the West and First Hawaiian Bank.

Employees

At December 31, 2003,2004, the Corporation had 7,4619,829 full-time equivalent employees. Bank of the West and First Hawaiian Bank employed 5,863had 8,049 and 2,264 persons,2,227 employees, including part-time employees, respectively. None of our employees are represented by any collective bargaining agreements and our relations with employees are considered excellent.

Monetary Policy and Economic ConditionsMONETARY POLICY AND ECONOMIC CONDITIONS

     Our earnings and businesses are affected not only by general economic conditions (both domestic and international), but also by the monetary policies of various governmental regulatory authorities of (i) the United States and foreign governments and (ii) international agencies. In particular, our earnings and growth may be affected by actions of the Federal Reserve Board in connection with its implementation of national monetary policy through its open market operations in United States Government securities, control of the discount rate and establishment of reserve requirements against both member and non-member financial institutions’ deposits. These actions may have a significant effect on the overall growth and distribution of loans and leases, investments and deposits, as well as on the rates earned on investment securities, loans and leases or paid on deposits. It is difficult to predict future changes in monetary policies.

COMPETITION

Competition

     Competition in the financial services industry is intense. We compete with a large number of commercial banks (including domestic, foreign and foreign-affiliated banks), savings institutions, finance companies, leasing companies, credit unions and other entities that provide financial services such as mutual funds, insurance companies and brokerage firms.brokerage. Many of these competitors are significantly larger and have greater financial resources than the Corporation.resources. In addition, the increasing use of the Internet and other electronic distribution channels has resulted in increased competition with respect to many of the products and services that we offer. As a result, we compete with financial service providers located not only in our home markets

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Changes in federal law over the past several years have also made it easier for out-of-state banks to enter and compete in the states in which our bank subsidiaries operate. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the “Riegle-Neal Act”), among other things, eliminated substantially all state law barriers to the acquisition of banks by out-of-state bank holding companies. A bank holding company may acquire banks in states other than its home state, without regard to the permissibility of such acquisitions under state law, but subject to any state requirement that the acquired bank has been organized and operating for a minimum period of time (not to exceed five years), and the requirement that the acquiring bank holding company, prior to or following the proposed acquisition, controls no more than 10 percent of the total amount of deposits of insured depository institutions in the United States and no more than 30 percent of such deposits in that state (or such lesser or greater amount as may be established by state law). The Riegle-Neal Act also permits banks to acquire branches located in another state by purchasing or merging with a bank chartered in that state or a national banking association having its headquarters located in that state.SUPERVISION AND REGULATION

Supervision and Regulation

     As a registered financial holding company, we are subject to regulation and supervision by the Federal Reserve Board. Our subsidiaries are subject to regulation and supervision by the banking authorities of Arizona, California, Colorado, Hawaii, Idaho, Iowa, Minnesota, Nebraska, Nevada, Washington, Oregon, Idaho, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington, Wisconsin, Wyoming, Guam and the Commonwealth of the Northern Mariana Islands, as well as by the FDIC (which is the primary federal regulator of our two bank subsidiaries) and various other regulatory agencies.

     The consumer lending and finance activities of the Corporation’sParent’s subsidiaries are also subject to extensive regulation under various Federal laws, including the Truth-in-Lending, Equal Credit Opportunity, Fair Credit Reporting, Fair Debt Collection Practice and Electronic Funds Transfer Acts, as well as various state laws. These statutes impose requirements on the making, enforcement and collection of consumer loans and on the types of disclosures that need to be made in connection with such loans.

     Holding Company Structure.On November 12, 1999, the Gramm-Leach-Bliley Act (“GLBA”) was signed into law. The GLBA permits bank holding companies that qualify for, and elect to be regulated as, financial holding companies, to engage in a wide range of financial activities, including certain activities, such as insurance, merchant banking and real estate investment that are not permissible for other bank holding companies. Each activity is regulated by a functional regulator: a state insurance regulator in the case of insurance activities, the Securities and Exchange Commission in the case of broker-dealer or investment advisory activities, or the appropriate federal banking regulator in the case of a bank or thrift institution. The Federal Reserve Board is the “umbrella” supervisor of financial holding companies. Section 23A of the Federal Reserve Act, which severely restricts lending by an insured bank subsidiary to nonbank affiliates, remains in place.

     Financial holding companies are permitted to acquire nonbank companies without the prior approval of the Federal Reserve Board, but approval of the Federal Reserve Board continues to be required before acquiring more than 5% of the voting shares of another bank or bank holding company, before merging or consolidating with another bank holding company andor before acquiring substantially all the assets of any additional bank or savings association. In addition, all acquisitions are reviewed by the Department of Justice for antitrust considerations. In conjunction with the 2001 BNP Paribas Merger, we elected to become a financial holding company.

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BancWest Corporation and Subsidiaries
PART I

Dividend Restrictions.As a holding company, the principal source of our cash revenue has been dividends and interest received from our bank subsidiaries. Each of the bank subsidiaries is subject to various federal regulatory restrictions relating to the payment of dividends. For example, if, in the opinion of the FDIC, a bank under its jurisdiction is engaged in or is about to engage in an unsafe or unsound practice (which depending on the financial condition of the bank, could include the payment of dividends), the FDIC may require, after notice and hearing, that such bank cease and desist from such practice. In addition, the Federal Reserve Board has issued a policy statement which provides that, as a general matter, insured banks

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     There are also statutory limits on the transfer of funds to the Corporation and its nonbanking subsidiaries by its banking subsidiaries, whether in the form of loans or other extensions of credit, investments or asset purchases. Such transfers by a bank subsidiary to any single affiliate are limited in amount to 10% of the bank’s capital and surplus, or 20% in the aggregate to all affiliates. Furthermore, such loans and extensions of credit are required to be collateralized in specified amounts.

     Under Federal Reserve Board policy, a bankfinancial holding company is expected to act as a source of financial strength to each subsidiary bank and to make capital infusions into a troubled subsidiary bank. The Federal Reserve Board may charge a bankfinancial holding company with engaging in unsafe and unsound practices for failure to commit resources to a subsidiary bank. This capital infusion may be required at times when a bankfinancial holding company may not have the resources to provide it. Any capital loansloan by us to one of our subsidiary banks would be subordinate in right of payment to deposits and to certain other indebtedness of such subsidiary bank.

     In addition, depository institutions insured by the FDIC can be held liable for any losses incurred, or reasonably expected to be incurred, by the FDIC in connection with (i) the default of a commonly controlled FDIC-insured depository institution or (ii) any assistance provided by the FDIC to a commonly controlled FDIC-insured depository institution in danger of default. “Default” is defined generally as the appointment of a conservator or receiver and “in danger of default” is defined generally as the existence of certain conditions indicating that a “default” is likely to occur in the absence of regulatory assistance. Accordingly, in the event that any insured subsidiary of the Corporation causes a loss to the FDIC, other insured subsidiaries of the Corporation could be required to compensate the FDIC by reimbursing it for the amount of such loss. Any such obligation by our insured subsidiaries to reimburse the FDIC would rank senior to their obligations, if any, to the Corporation.

     Prompt Corrective Action.Pursuant to the Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”), the federal banking agencies are required to take “prompt corrective action” with respect to insured depository institutions that do not meet minimum capital requirements. FDICIA established a five-tier framework for measuring the capital adequacy of insured depository institutions (including Bank of the West and First Hawaiian Bank), with each depository institution being classified into one of the following categories: “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.”

     Under the regulations adopted by the federal banking agencies to implement these provisions of FDICIA (commonly referred to as the “prompt corrective action” rules), a depository institution is “well capitalized” if it has (i) a total risk-based capital ratio of 10% or greater, (ii) a Tier 1 risk-based capital ratio of 6% or greater, (iii) a leverage ratio of 5% or greater and (iv) is not subject to any written agreement, order or directive to meet and maintain a specific capital level for any capital measure. An “adequately capitalized” depository institution is defined as one that has (i) a total risk-based capital ratio of 8% or greater, (ii) a Tier 1 risk-based capital ratio of 4% or greater and (iii) a leverage ratio of 4% or greater (or 3% or greater in the case of a bank rated a composite 1 under the Uniform Financial Institution Rating System, “CAMELS rating,” established by the Federal Financial Institution Examinations Council). A depository institution is considered (i) “undercapitalized” if it has (A) a total risk-based capital ratio of less than 8%, (B) a Tier 1 risk-based capital ratio of less than 4% or (C) a leverage ratio of less than 4% (or 3% in the case of an institution with a CAMELS rating of 1), (ii) “significantly undercapitalized” if it has (A) a total risk-based capital ratio of less than 6%, (B) a Tier 1 risk-based capital ratio of less than 3% or (C) a leverage ratio of less than 3% and (iii) “critically undercapitalized” if it has a ratio of tangible equity to total assets equal to or less than 2%. An institution may be deemed by the regulators to be in a capitalization category that is lower than is indicated by its actual capital position if, among other things, it receives an unsatisfactory examination rating. At December 31, 2003,2004, all of the Corporation’s subsidiary depository institutions were “well capitalized.”

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     FDICIA generally prohibits a depository institution from making any capital distribution (including payment of a cash dividend) or paying any management fees to its holding company if the depository institution is, or would thereafter be, undercapitalized. Undercapitalized depository institutions are subject to growth limitations and are required to submit a capital restoration plan. The federal banking agencies may not accept a capital plan without determining, among other things, that the plan is based on realistic

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BancWest Corporation and Subsidiaries
PART I

assumptions and is likely to succeed in restoring the depository institution’s capital. In addition, for a capital restoration plan to be acceptable, the depository institution’s parent holding company must guarantee that the institution will comply with such capital restoration plan. The aggregate liability of the parent holding company under such guarantee is limited to the lesser of (i) an amount equal to 5% of the depository institution’s total assets at the time it became undercapitalized, or (ii) the amount which is necessary (or would have been necessary) to bring the institution into compliance with all capital standards applicable to such institution as of the time it fails to comply with the plan. If a depository institution fails to submit an acceptable plan, it is treated as if it is significantly undercapitalized.

     Significantly undercapitalized depository institutions may be subject to a number of other requirements and restrictions, including orders to sell sufficient voting stock to become adequately capitalized, requirements to reduce total assets and cessation of receipt of deposits from correspondent banks. Critically undercapitalized institutions may not make any payments of interest or principal on their subordinated debt and are subject to the appointment of a conservator or receiver, generally within 90 days of the date such institution becomes critically undercapitalized. In addition, the FDIC has adopted regulations under FDICIA prohibiting an insured depository institution from accepting brokered deposits (as defined by the regulations) unless the institution is “well capitalized” or is “adequately capitalized” and receives a waiver from the FDIC.

     FDIC Insurance Assessments.The FDIC has implemented a risk-based deposit insurance assessment system under which the assessment rate for an insured institution may vary according to the regulatory capital levels of the institution and other factors (including supervisory evaluations). Depository institutions insured by the BIF which are ranked in the least risky category currently have no annual assessment for deposit insurance while all other banks are required to pay premiums ranging from 3 to 27 basis points of domestic deposits. As a result of the enactment on September 30, 1996 of the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (the “Deposit(“the Deposit Funds Act”), the deposit insurance premium assessment rates for depository institutions insured by the SAIF were reduced, effective January 1, 1997, to the same rates that were applied to depository institutions insured by the BIF. The Deposit Funds Act also provided for a one-time assessment of 65.7 basis points on all SAIF-insured deposits in order to fully recapitalize the SAIF (which assessment was paid by the Corporation in 1996), and imposes annual assessments on all depository institutions to pay interest on bonds issued by the Financing Corporation (the “FICO”) in connection with the resolution of savings association insolvencies occurring prior to 1991. The FICO assessment rate for the first quarter of 20042005 was 1.51.44 basis points annualized. These rate schedules are adjusted quarterly by the FDIC. In addition, the FDIC has authority to impose special assessments from time to time, subject to certain limitations specified in the Deposit Funds Act.

     Capital Requirements.Under the GLBA, our insured depository institutions are subject to regulatory capital guidelines issued by the federal banking agencies. Information with respect to the applicable capital requirements is included in Note 15,16, Regulatory Capital Requirements.

     FDICIA required each federal banking agency to revise its risk-based capital standards to ensure that those standards take adequate account of interest rate risk, concentration of credit risk and the risk of nontraditional activities, as well as reflect the actual performance and expected risk of loss on multi-family mortgages. The federal banking agencies have adopted amendments to their respective risk-based capital requirements that explicitly identify concentrations of credit risk and certain risks arising from nontraditional activities, and the management of such risks, as important factors to consider in assessing an institution’s overall capital adequacy. The amendments do not, however, mandate any specific adjustments to the risk-based capital calculations as a result of such factors.

     In August 1996, the federal banking regulators adopted amendments to their risk-based capital rules to incorporate a measure for market risk in foreign exchange and commodity activities and in the trading of debt

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     On November 29, 2001, the federal bank regulatory agencies published a regulation that addresses the capital treatment of recourse arrangements, direct credit substitutes and residual interests. “Recourse” means any retained credit risk associated with any asset transferred by a banking organization that exceeds a pro rata share of the banking organization’s remaining claim on the asset, if any. “Direct credit substitute” means any assumed credit risk associated with any asset or other claim not previously owned by a banking organization that exceeds the banking organization’s pro rata share of the asset or claim, if any. “Residual interest” means any on-balanceon-

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BancWest Corporation and Subsidiaries
PART I

balance sheet asset that represents interests retained by a banking organization after a transfer of financial assets that qualifies as a sale for purposes of generally accepted accounting principles, which interests are structured to absorb more than a pro rata share of credit loss relating to the transferred assets. “Residual interests” do not include interests purchased from a third party, except for credit-enhancing interest-only strips (credit-enhancing I/O strips).

     The regulation assesses risk-based capital requirements on recourse obligations, residual interests (except credit-enhancing I/O strips), direct credit substitutes, and senior and subordinated securities in asset securitizations based on ratings assigned by nationally recognized statistical rating agencies. The risk weights range from 20% for a position that is rated AA or better, to 200% for a position that is rated BB. A banking organization that holds a recourse obligation or a direct credit substitute (other than a residual interest) that does not qualify for the ratings-based approach is required by the new regulation to maintain capital against that position and all senior positions in the securitization, but is not required to hold more capital than if assets had not been transferred. A banking organization that holds a residual interest that does not qualify for the ratings-based approach is required to hold capital on a dollar-for-dollar basis against the position and all senior positions, even if the capital charge exceeds the full risk-based capital charge that would have been held against the transferred assets.

     The regulation limits credit-enhancing I/O strips, whether retained or purchased, to 25% of Tier 1 capital, with any excess amount to be deducted from Tier 1 capital and from assets. (The deducted amount is not subject to the dollar-for-dollar capital charge discussed above.) Credit-enhancing I/O strips are not aggregated with non-mortgage servicing assets and purchased credit card relationships for purposes of calculating the 25% limit. The regulation became effective on January 1, 2002 for transactions settled on or after that date and became effective December 31, 2002 for all other transactions. The regulation did not have a material effect on the Corporation’s operations or financial position.

     The U.S. federal bank regulatory agencies’ risk-based capital guidelines are based upon the 1988 capital accord of the Basel Committee on Banking Supervision (the “Basel Committee”). The Basel Committee is a committee of central banks and bank supervisors from the major industrialized countries that develops broad policy guidelines that each country’s supervisors can use to determine the supervisory policies they apply. In January 2001, theThe Basel Committee released a proposal to replace the 1988 capital accord with a new capital accord that would set capital requirementstitled “Basel II.” The goal for operationalBasel II is to promote the adequate capitalization of banks and to encourage improvements in risk and refine the existing capital requirements for credit risk exposures. Operational risk is defined to mean the risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems or from external events. The 1988 capital accord does not include separate capital requirements for operational risk.management. The Basel Committee hasbelieves the new standards are necessary due to the adoption of more advanced risk measurement techniques and the use of sophisticated risk management practices. Basel II will be accomplished through the introduction of three pillars that reinforce each other, while creating incentives for banks to enhance the quality of their control processes. The three pillars are as follows: (1) minimum capital requirements (2) supervisory oversight and (3) heightened market discipline. The United States bank regulatory agencies recently stated that its objective is to have member countries implementthey anticipate that the new accord at year-end 2006. The ultimate timing for a new accord, andwould become effective in the specifics of capital assessments for addressing operational risk, are uncertain. However, the Corporation expects that a new capital accord addressing operational risk will eventually be adopted by the Basel Committee and implemented by the U.S. federal bank regulatory agencies.United States in January 2008. The new capital requirements that may arise out of a new Basel Committee capital accord could increase minimum capital requirements applicable to the Corporation.

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Company.

     In order for us to remain a financial holding company, Bank of the West and First Hawaiian Bank (as well as each foreign bank that is controlled by BNP Paribas and that has a branch, agency or bank subsidiary in the United States) must remain “well capitalized” and “well managed.” In the case of Bank of the West and First Hawaiian Bank, “well capitalized” has the same meaning as under the “prompt corrective action” guidelines described above and “well managed” means that at their most recent examination the banks received at least a satisfactory composite rating and at least a satisfactory rating for management.

     The USA PATRIOT Act.On October 26, 2001, President Bush signed into law the USA PATRIOT Act of 2001 (the “Act”). The Act includes numerous provisions designed to fight international money laundering and to block terrorist access to the U.S. financial system. The provisions of the Act generally affect banking institutions, broker-dealers and certain other financial institutions, and require all “financial institutions,” as defined in the Act, to establish anti-money laundering compliance and due diligence programs. The Act also grants the Secretary of the Treasury broad authority to establish regulations and to impose requirements and restrictions on subsidiary operations. We believe the Corporation’s programs satisfy the requirements of the Act.

     Real Estate Activities.The FDIC adopted regulations, effective January 1, 1999, that make it significantly easier for state non-member banks to engage in a variety of real estate investment activities. These regulations generally allow a majority-owned corporate subsidiary of a state non-member bank to make equity investments in real estate if the bank complies with certain investment and transaction limits and satisfies certain capital requirements (after giving effect to its investment in the majority-owned subsidiary). In addition, the regulations permit a subsidiary of an insured state non-member bank to act as a lessor under a real property lease that is the equivalent of a financing transaction, meets certain criteria applicable to the lease and the underlying real estate and does not represent a significant risk to the deposit insurance funds.

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BancWest Corporation and Subsidiaries
PART I

FUTURE LEGISLATION

Future Legislation

Legislation relating to banking and other financial services has been introduced from time to time in Congress and is likely to be introduced in the future. If enacted, such legislation could significantly change the competitive environment in which we and our subsidiaries operate. Management cannot predict whether these or any other proposals will be enacted or the ultimate impact of any such legislation on our competitive situation, financial condition or results of operations.

FOREIGN OPERATIONS

Foreign Operations

Foreign outstandings are defined as the balances outstanding of cross-border loans, acceptances, interest-bearing deposits with other banks, other interest-bearing investments and any other monetary assets. At December 31, 2004, 2003 2002 and 2001,2002, we had no foreign outstandings to any country which exceeded 1% of total assets. Additional information concerning foreign operations is also included in Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Note 22, International Operations.

OPERATING SEGMENTS

Operating Segments

     Information regarding the Corporation’s operating segments is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations and in Note 21, Operating Segments.20 (Operating Segments) to the Consolidated Financial Statements.

The Corporation’s website iswww.bancwestcorp.com.     We make available free of charge on our website (www.bancwestcorp.com) our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reportreports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act. These reports are posted on our website as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the Securities and Exchange Commission.

Item 2. Properties

     Bank of the West leases a site in Walnut Creek, California, which is its primary administrative headquarters. The administrative headquarters office is a 133,000-square-foot, three-story building. Bank of

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     Through the acquisition of Community First Bankshares, Inc., Bank of the West acquired two large facilities in Fargo, North Dakota. One office is located at 520 Main Avenue, consists of approximately 105,000 square feet, and is currently utilized as a branch, regional headquarters for our Midwest operations and space for sublease. The second office is approximately 47,000 square feet and is used as a data center.

     As of December 31, 2003, 1052004, 236 of Bank of the West’s active branches arewere located on land owned by Bank of the West. The remaining 190214 active branches arewere located on leasehold properties. Bank of the West also has 1014 surplus branch properties, 5seven of which are currently subleased to others. Bank of the West leases 2441 properties that are utilized for administrative (including warehouses), lease support, management information systems and regional management services and 21 additional office facilities.purposes.

     First HawaiianIn addition, through the acquisition of USDB Bancorp (USDB), we acquired 19 branches and four administrative facilities. In January 2005, when USDB was merged into Bank indirectly (through two subsidiaries) owns a city block in downtown Honolulu.of the West, three branches and three administrative facilities were closed.

     The administrative headquarters of theBancWest Corporation and First Hawaiian, Bank, as well as the main branch of First Hawaiian Bank,main branch, are located in a modern banking center situated on thisa city block.block in downtown Honolulu owned in fee simple by First Hawaiian. That headquarters building, First Hawaiian Center, (“FHC”), includes 418,000 square feet of office space. FHC was constructed and financed byFirst Hawaiian owns an operations center located on approximately 126,000 square feet of fee simple land in an industrial area near downtown Honolulu. First Hawaiian occupies most of this four-story building. On Guam, First Hawaiian owns a nonrelated third party, REFIRST, Inc. We held an operating lease for FHC with REFIRST, Inc. that terminatedfive-story, 75,000-square-foot office building, including a branch, situated on December 1, 2003. At the end of the term, we used cash to repay $193.9 million in debt and acquire all interests in FHC held by REFIRST, Inc. For additional information concerning REFIRST, Inc., see Note 5 to the Consolidated Financial Statements.fee simple property.

     As of December 31, 2003, 192004, 21 of First Hawaiian Bank’sBank offices in Hawaii and one in Guam are located on land owned in fee simple by First Hawaiian Bank. The otherHawaiian. It had 40 branches of First Hawaiian Bank in Hawaii, two branches in Guam and one branch in Saipan are situated on leasehold premises or in buildings constructed on leased land. In addition, First Hawaiian Bank owns an operations center which is located on approximately 126,000 square feet of land owned in fee simple by First Hawaiian Bank in an industrial area near downtown Honolulu. First Hawaiian Bank occupies most of this four-story building.

     First Hawaiian Bank owns a five-story, 75,000-square-foot office building, including a branch, which is situated on property owned in fee simple in Maite, Guam, where it maintains a branch.

See Note 9, Premises10 (Premises and equipment,Equipment) to the Consolidated Financial Statements for further information.

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     The information required by this Item is set forth in Note 2321 (Litigation) to the Consolidated Financial StatementsStatements.

Item 4. Submission of this Form 10-K, and is incorporated herein by reference.Matters to a Vote of Security Holders

     No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended December 31, 2003.2004.

PART II

PART IIItem 5. Market for Registrant’s Common Equity and Related Stockholder Matters

     BancWest is a wholly-ownedwholly owned subsidiary of BNP Paribas and there is no public trading market for BancWest’s common equity. BancWest has no compensation plans that provide for issuance of its equity securities.

     State regulations place restrictions on the ability of our bank subsidiaries to pay dividends. Under Hawaii law, First Hawaiian Bank is prohibited from declaring or paying any dividends in excess of its retained earnings. California law generally prohibits Bank of the West from paying cash dividends to the extent such payments exceed the lesser of retained earnings and net income for the three most recent fiscal years (less any distributions to stockholders during such three-year period). At December 31, 2003,2004, the aggregate amount of dividends that such subsidiaries could pay to the CorporationParent under the foregoing limitations without prior regulatory approval was $810.5$823.2 million.

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During the years ended December 31, 2004, 2003 and 2002, no quarterly or annual cash dividends were paid on the Class A common stock. During the year ended December 31, 2001, the Company paid quarterly cash dividends totaling $0.80 per share of common stock and Class A common stock.

Basis of Presentation8

On December 20, 2001, BNP Paribas acquired all of the outstanding common shares of BancWest. As a result of the transaction, BancWest became a wholly-owned subsidiary of BNP Paribas. The business combination was accounted for as a purchase with BNP Paribas’ accounting basis being “pushed down” to BancWest. See Note 2 to the Consolidated Financial Statements for additional information regarding this business combination. It is generally not appropriate to combine pre- and post- “push-down” periods. However, financial information for the period from December 20, 2001 through December 31, 2001 was not material and certain information presented in this section combines the Company’s consolidated results of operations from December 20, 2001 to December 31, 2001 with those for the period from January 1, 2001 to December 19, 2001. These combined results for 2001 will generally serve as comparable amounts to the 12-month periods ended December 31, 2003, 2002, 2000 and 1999 and will be utilized for purposes of providing discussion and analysis of results of operations.

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BancWest Corporation and Subsidiaries
PART II

Item 6. Selected Financial Data

(1)	The Company adopted the consolidation provisions of FIN 46 in the third quarter for one variable interest entity (REFIRST, Inc.) formed prior to February 1, 2003, REFIRST,Inc.2003.
	(2)	These balances include loans held-for-sale and are not adjusted for loan and lease losses.
	(3)	The efficiency ratio is noninterest expense as a percentage of total operating revenue (netnet interest income plus noninterest income).income.
	(4)	The capital leverage ratios are based on quarterly averages.
	(5)	Union Safe Deposit Bank was acquired on November 1, 2004. See Note 2 to the Consolidated Financial Statements for additional information.

139

BancWest Corporation and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF

     On July 1, 1999, we acquired SierraWest Bancorp. That merger was accounted for as a poolingItem 7. Management’s Discussion and Analysis of interests.

On March 15, 2002 the Company completed its acquisitionFinancial Condition and Results of all of the outstanding common stock of UCB. The acquisition was accounted for as a purchase.

Forward-looking StatementsFORWARD-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. FactorsIn addition to factors discussed elsewhere in this report, other factors that could cause or contributeour results to such differencesdiffer include, but are not limited to:

(1)
	(1) global, national and local economic and market conditions, specifically with respect to changes in the United States economy and geopolitical uncertainty;
(2)	(2) the level and volatility of interest rates and currency values;
(3)	(3) government fiscal and monetary policies;
(4)	(4) credit risks inherent in the lending process;
(5)	(5) loan and deposit demand in the geographic regions where we conduct business;
(6)	(6) the impact of intense competition in the rapidly evolving banking and financial services business;
(7)	(7) extensive federal and state regulation of our business, including the effects of current and pending legislation and regulations;
(8)	(8) whether expected revenue enhancements and cost savings are realized within expected time frames;
(9)	(9) 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;
(10)	(10) our reliance on third parties to provide certain critical services, including data processing;
(11)	(11) 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;
(12)	(12) technological changes;
(13)	(13) other risks and uncertainties discussed in this document or detailed from time to time in other SEC filings that we make; and
(14)	(14) 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.

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     The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K. Our actual results could differ from the results contemplated by these forward-looking statements due to certain factors, including those discussed in Item 7

10

BancWest Corporation and elsewhere in this report.

GlossarySubsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Glossary

See “Glossary of Financial Terms” for definitions of certain terms used in this annual report.

OVERVIEW

Overview

Headquartered in Honolulu, Hawaii, with offices in San Francisco,     BancWest Corporation (www.bancwestcorp.com) is a financial holding company with assets of $38.4 billion at$50.1 billion. It is a wholly owned subsidiary of Paris-based BNP Paribas. The Company is headquartered in Honolulu, Hawaii, with an administrative headquarters in San Francisco, California. As of December 31, 2003. BancWest, through2004, its principal subsidiaries operates a general commercial banking business and other businesses related to banking. Its principal assets are its investments inwere Bank of the West a State(Bank of California-chartered bank,the West or BOW) (466 full service retail branches and 14 limited service retail offices in Arizona, California, Colorado, Idaho, Iowa, Minnesota, Nebraska, Nevada, New Mexico, North Dakota, Oregon, South Dakota, Utah, Washington, Wisconsin and Wyoming) and First Hawaiian Bank a State of Hawaii-chartered bank. We provide a wide range of general commercial banking services, providing retail(First Hawaiian or FHB) (61 branches in Hawaii, Guam and corporate banking, trustSaipan). In this report, BancWest Corporation and insurance servicesSubsidiaries is referred to individuals, institutions, businesses and governments.

BancWest Corporation and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Company expects to accrue approximately $25 million related to change of control payments. We recorded $170 million of goodwill and $15 million of identifiable intangibles related to the USDB acquisition.

     As of October 31, 2003, up 10.4%2004, USDB had total assets of $1.2 billion, total deposits of $899 million and total loans of $676 million. Exit costs related to USDB activities are expected to be approximately $7 million and are accrued as a liability. Approximately 160 employees have been or will be displaced in conjunction with the acquisition. The Company is also expecting to incur conversion and restructuring expenses totaling approximately $4 million. In 2004, the Company incurred approximately $2 million in restructuring expenses. We anticipate that cash outlays for exit and restructuring costs should be substantially completed by the end of 2005.

     The conversion and merger of Union Safe Deposit Bank into Bank of the West occurred in January of 2005. Expanding Bank of the West’s presence in California has been one of the Company’s strategic goals. This acquisition gives us the opportunity to service a broader region of the Central Valley. The Company has estimated net cost savings of approximately $20 million per year beginning in 2006 from restructuring efforts. In 2005, the Company expects to realize net cost savings of more than $15 million.

Strategic Initiatives

     The Company has continued to implement a year earlier. Investment securities totaled $5.9 billion, anseries of initiatives that are designed to improve customer service and expand our physical footprint through branch expansion and acquisitions. The focus of the Company is to promote long-lasting customer service relationships through upgrading technology and implementing new training vehicles. The Company strives for a “high touch” personalized marketing position, promoting brand recognition through logos and community outreach. The Company is expanding its line of financial services to its customers through internal initiatives as well as acquisitions. This includes insurance services that it attained through its acquisition of Community First. Bank of the West currently operates 57 insurance agencies in eight states and is planning to expand the insurance operations through acquisitions.

     Bank of the West’s Commercial Banking Group is planning to expand geographically and also increase its product offering for the Commercial Banking Division, the Agribusiness Banking Division and the Real Estate Industries Division. The Commercial Banking Group has created two new departments, National Middle Market Leasing and the Commercial Finance Department. The Government Banking Department is in the process of 50.4%expanding to include a Public Finance program. The geographic expansion plans will include locations in Colorado as a first step, and one or two other states to be determined. Denver will be the initial location for the first office to take advantage of the new footprint as a result of the merger with Community First. National Middle Market Leasing will originate lease transactions nationwide, targeting middle market companies with sales of $25 million - $500 million. The focus will be on leases of $250 thousand - $10 million.

     Bank of the West’s Consumer Finance Group is planning to expand geographically and also increase its product offerings. The geographic expansion includes the Midwest and other states in the new footprint resulting from the same datemerger with Community First. Additional expansion of the auto loan product in 2002. Loansadjacent markets is also being considered.

     First Hawaiian Bank’s focus is on its core markets of Hawaii, Guam and leases totaled $25.7 billion, up 6.5% from the prior year. Deposits were $26.4 billion, up 7.5% from a year earlier.

BancWest’s nonperforming assets were reducedSaipan. The primary effort is to 0.59% of loans, leasesdeepen our relationships with existing customers by offering new products and foreclosed properties at December 31, 2003, an improvement from 1.02% at December 31, 2002. The provision foraggressively attempting to meet their needs. In addition, due to improving economic conditions in Hawaii, Guam and Saipan, First Hawaiian Bank seeks to increase loan and lease losses was $81.3deposit volumes by developing relationships with new customers. Also, as part of the effort to focus on our core markets First Hawaiian Bank’s Commercial Banking Group has nearly completed its planned reduction in the Media Finance and Corporate National areas.

     First Hawaiian Bank’s Consumer Banking Group is growing its commercial card business, offering sophisticated credit card products to serve the needs of our business customers at both First Hawaiian Bank and Bank of the West. Investments are being made in this business line to enhance customer service and improve staff efficiencies.

     First Hawaiian Bank’s Financial Management Group will also be making investments in technology to enhance customer service and create synergies to develop new business. In addition, on June 1, 2004, Bishop Street Capital Management, the investment management subsidiary of First Hawaiian Bank, acquired CIC/HCM Asset Management, Inc., the largest independent institutional fixed-income specialist in Hawaii with $300 million comparedunder management. The acquisition reaffirms First Hawaiian Bank’s commitment to $95.4 million. BancWest’s allowance forexpanding its strong, Hawaii-based investment team.

     Key among the elements of the Company’s profitability has been the interest rate environment, from both a deposit and loan pricing standpoint. As an industry, banks and lease losses was 1.52%other financial intermediaries have seen net interest margins decline over the past year

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BancWest Corporation and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

principally as a result of total loansthe absolute level and leases at December 31, 2003, compared to 1.59% at December 31, 2002. The decreaseshape of the yield curve. We manage the interest rate and market risks inherent in nonperforming assets was primarily due to loan prepaymentsour asset and sales. Loanliability balances, while ensuring ample liquidity and lease charge-offs and workouts also contributed to the decrease.diverse funding.

Critical Accounting EstimatesCRITICAL ACCOUNTING ESTIMATES

     The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make a number of judgments, estimates and

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     Our accounting policies are discussed in detail in the notesNote 1 (Summary of Significant Accounting Policies) to the Consolidated Financial Statements, Note 1 Summary of Significant Accounting Policies.Statements. Various elements of our accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. We have identified the following accounting estimates that we believe are material due to the levels of subjectivity and judgment necessary to account for uncertain matters or where these matters are particularly subject to change.

	•	Allowance for Loanloan and Lease Losseslease losses (the Allowance)“Allowance”): The Company’s allowance for loan and lease losses represents management’s best estimate of probable losses inherent in the existing loan and lease portfolio as of the balance sheet date. The determination of the adequacy of the Allowance is ultimately one of management judgment, which includes consideration of many factors such as: (1) the amount of problem and potential problem loans and leases; (2) net charge-off experience; (3) changes in the composition of the loan and lease portfolio by type and location of loans and leases; (4) changes in overall loan and lease risk profile and quality; (5) general economic factors; (6) specific regional economic factors; and (7) the fair value of collateral. Using this methodology, we allocate the Allowance to individual loans and leases and to the categories of loans and leases representing probable losses based on available information. At least quarterly, we conduct internal credit analyses to determine which loans and leases are impaired. As a result, we allocate specific amounts of the Allowance to individual loan and lease relationships. Note 1 Summary(Summary of Significant Accounting Policies in the notesPolicies) to the Consolidated Financial Statements describes how we evaluate loans for impairment. Some categories of loans and leases are not subjected to a loan-by-loan credit analysis. Management makes an allocation to these categories based on our statistical analysis of historic trends of impairment and charge-offs of such loans and leases. Additionally, we allocate a portion of the Allowance based on risk classifications of certain loan and lease types. If general or specific regional economic factors were to improve or deteriorate significantly, we may need to revise our loss factors, thereby decreasing or increasing our allowance. Furthermore, the estimated fair value of collateral may differ from what is realized upon the sale of that collateral. Due to the subjective nature of estimating an adequate allowance for loan and lease losses, economic uncertainties and other factors, some of the allowance is not allocated to specific categories of loans and leases. The Corporation monitors differences between estimated and actual incurred loan and lease losses. This monitoring process includes periodic assessments by senior management of credit portfolios and the methodologies used to estimate incurred losses in those portfolios. In management’s judgment, the Allowance has historically been adequate to absorb losses inherent in the loan and lease portfolios. However, changes in prevailing economic conditions in our markets could result in changes in the level of nonperforming loans and leases, and charge-offs in the future. We will continue to monitor economic developments closely and make necessary adjustments to the Allowance accordingly.
	•	Goodwill: Goodwill recorded on the books of BancWestthe Company resulted from business acquisitions. It arose when the purchase price exceeded the assigned value of the net assets of acquired businesses. In each situation, it was based on estimates and assumptions that were subject to management’s judgment and was recorded at its estimated fair value at the time purchase accounting estimates of acquired entities were concluded. As of December 31, 2003,2004, we had $3.2$4.3 billion in goodwill on our Consolidated Balance Sheet. The value of this goodwill is supported by the revenue we generate from our business segments. A decline in earnings as a result of material lack of growth, or our inability to deliver services

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		in a cost-effective manner over a long time period could lead to possible impairment of goodwill, and this would be booked as a write-down in our income statement. We perform an impairment test for goodwill annually, or as circumstances dictate. The evaluation methodology for potential impairment is centered on the projection of cash flows into the future using present value techniques and, as such, involves significant management judgment in the modeling of estimates and assumptions. If the projected net cash flow assumptions are too high, or if the discount rate used is too low, there is a risk that impairment should have been recognized, but was not recorded. We use a two-step process to evaluate possible impairment. The first step compares the fair value of a reporting unit, which is an individual business segment of the Company, to its carrying amount. If the fair value exceeds the carrying amount, no impairment exists. If the carrying amount exceeds the fair value, then a second step is conducted whereby we assign fair values to identifiable assets and liabilities, leaving an implied fair value for goodwill. The implied fair value of goodwill is compared with the carrying amount of goodwill. If the implied fair value of goodwill is less than the carrying amount, an impairment loss is recognized. We performed the impairment testing of goodwill required under SFAS No. 142 for the year ended December 31, 2003, in the fourth quarter. Due to the inherent imprecision of projections used in the impairment test, a number of different scenarios were used. In addition to using anticipated balance sheet growth, scenarios for 25% more and 20% less than the anticipated growth were used. Furthermore, in projecting cash flows, a continuing value scenario as well as a terminal value scenario were used. Finally, two separate discount rate scenarios were used. The first discount rate used was the weighted average cost of capital, which is a composite of the after-tax cost of debt and cost of equity. The second discount rate was the cost of equity using a capital asset pricing model. The conclusion after testing under each of these scenarios is that there is no impairment of goodwill.
	•	Lease Financing: We provide lease financing under a variety of arrangements, primarily consumer automobile leases and commercial equipment leases. Leases for consumer automobiles and commercial equipment are classified as financing leases if they conform to the definition set out in SFAS 13, “Accounting for Leases.” At the time the leasing transaction is executed, we record the gross lease receivable and the estimated residual value of leased equipment on our balance sheet. Unearned income on direct financing leases is accreted over the lives of the leases to provide a constant periodic rate of return on the net investment in the lease. Estimates are made to predict what our unguaranteed lease residual values will be at the end of their lease term. Historically we have not experienced significant losses from overestimating residual values in our leasing portfolio. If these estimates differ significantly from our actual results, there may be an impact to our financial statements.

13

BancWest Corporation and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

assumptions are too high, or if the discount rate used is too low, there is a risk that impairment should have been recognized, but was not recorded. We use a two-step process to evaluate possible impairment. The first step compares the fair value of a reporting unit, which is an individual business segment of the Company, to its carrying amount. If the fair value exceeds the carrying amount, no impairment exists. If the carrying amount exceeds the fair value, then a second step is conducted whereby we assign fair values to identifiable assets and liabilities, leaving an implied fair value for goodwill. The implied fair value of goodwill is compared with the carrying amount of goodwill. If the implied fair value of goodwill is less than the carrying amount, an impairment loss is recognized. We performed the impairment testing of goodwill required under FAS No. 142 for the year ended December 31, 2004, in the fourth quarter. Due to the inherent imprecision of projections used in the impairment test, a number of different scenarios were used. In addition to using anticipated balance sheet growth, scenarios for 25% more and 20% less than the anticipated growth were used. Furthermore, in projecting cash flows, a continuing value scenario as well as a terminal value scenario were used. Finally, two separate discount rate scenarios were used. The first discount rate used was the weighted average cost of capital, which is a composite of the after-tax cost of debt and cost of equity. The second discount rate was the cost of equity using a capital asset pricing model. The conclusion after testing under each of these scenarios was that there was no impairment of goodwill.

FINANCIAL OVERVIEW

Income Statement Analysis

2004 compared with 2003

     The Company reported net income of $473.4 million for the year ended December 31, 2004, compared with $436.6 million for the year ended December 31, 2003. Net interest income was $1,352 million compared with $1,294 million, primarily due to an increase in interest earning assets resulting from organic growth and the acquisitions of Community First and USDB. Average loans increased by $3.0 billion; average securities available for sale increased by $1.6 billion. The Company increased its consumer lending and purchased residential mortgage loans and securities in a year when commercial borrowing was still relatively slow. The acquisitions of Community First and USDB also contributed to the increase in both average loans and leases and average investment securities. The net interest margin decreased 43 basis points (1% equals 100 basis points) as a result of the effects of a flattening yield curve in which short-term rates have risen more quickly than long-term rates. Noninterest income was $431.5 million compared with $392.2 million. The increase was predominately due to the requirement of accounting for certain automobile leases as operating leases rather than direct finance leases, increased service charges on deposit accounts and other service charges and fees as well as increased revenue from the sales of other real estate owned and miscellaneous assets. The increase in noninterest income was also impacted by the acquisitions of Community First and USDB in November 2004. Noninterest expense was $962.5 million compared with $892.8 million, with the increase primarily due to increased salaries and wages expense resulting from a higher full-time equivalent employee count that resulted from the acquisitions, restructuring expenses related to the acquisitions of Community First and USDB and vehicle depreciation incurred from the change in accounting for auto leases.

Balance Sheet Analysis

     The Company had total assets of $50.1 billion at December 31, 2004, up 30.5% from a year earlier. Securities available for sale totaled $8.0 billion, an increase of 37.8% from the same date in 2003. Loans and leases totaled $32.7 billion, up 27.1% from the prior year. Deposits were $33.6 billion, up 27.3% from a year earlier. The increases were due to both internal growth and the acquisitions of Community First and USDB.

     Nonperforming assets were reduced to 0.45% of loans, leases and foreclosed properties at December 31, 2004, an improvement from 0.59% at December 31, 2003. The allowance for loan and lease losses was 1.33% of total loans and leases at December 31, 2004, compared with 1.52% at December 31, 2003. The decrease in nonperforming assets was primarily due to loan repayments and sales. Loan and lease charge-offs and workouts also contributed to the decrease.

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BancWest Corporation and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

ResultsRESULTS OF OPERATIONS

Net Interest Income

2004 compared with 2003

     Net interest income increased to $1,352 million from $1,294 million.

     The increase in net interest income was primarily the result of Operationsa $4.8 billion, or 16.1%, increase in average earning assets. The increase in our average earning assets was predominately the result of growth in loans (from originations and purchases) and securities available for sale. The effect of the increase from average earning assets was offset by a 43 basis point reduction in our net interest margin. The effect of a flattening yield curve has continued to hold down the yield on earning assets while rates paid on sources of funds fell only slightly from prior year.

     Average Earning AssetsBancWest Corporation and Subsidiaries
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

2003 as Comparedcompared with 2002

     The full-year contribution of earning assets from the UCB acquisition, continuing internal growth of Bank of the West’s loan and lease portfolio and higher levels of investment securities in both Banks, are primarily responsible for the increase in average earning assets. The $2.4 billion, or 10.8%, increase in average total loans and leases was primarily due to increased consumer lending, purchased residential mortgages and the UCB acquisition. As commercial lending was relatively slow in 2003, funds were used to purchase residential mortgages as well as investment securities.securities available for sale. Consequently, average total investment securities available for sale also increased to $4.9$4.7 billion, up $1.6 billion, or 47.8%50.2%.

2002 as ComparedAverage Loans and Leases

2004 compared with 20012003

     The UCB acquisition and the continuing growth of BankA significant portion of the West’sincrease was due to loans and leases are primarily responsible for the increase in average earning assets.acquired from Community First and USDB. Average consumer loans increased $7.8$1.4 billion, or 53.2%20.7%, primarily due to growth in financing for autos, recreational vehicles and pleasure boats, while loan purchases increased the UCB acquisition.average residential mortgage portfolio. Average total investment securitiesresidential real estate loans increased by $1.0 billion, or 45.1%,$0.7 billion. The modest increase in commercial, financial and agricultural loans in both banks also contributed to $3.3 billion.the increase.

Average Loans and Leases

2003 as Comparedcompared with 2002

     The increase in average loans and leases was primarily due to the full-year contribution of loans acquired through UCB and growth in Bank of the West.internal growth. Average consumer loans within Bank of the West increased approximately $1.0 billion, or 18.9%, primarily due to growth in financing for autos, recreational vehicles and pleasure boats, while purchases increased the average residential mortgage portfolio. Average loans and leases in First Hawaiian Bank decreased slightly, primarily due to the planned reduction in certain syndicated national credits, partially offset by increased consumer loans.

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2002 as Compared with 2001

     The increase in average loans and leases was primarily due to the UCB acquisition and growth in Bank of the West. All categories, except lease financing, increased significantly due to the UCB acquisition. Average loans and leases in First Hawaiian Bank decreased, primarily due to the planned reduction in certain syndicated national credits, partially offset by loans and leases acquired from Union Bank of California in the fourth quarter of 2001.

Average Interest-Bearing Deposits and Liabilities

2004 compared with 2003

     The $3.9 billion, or 16.6%, increase in average interest-bearing deposits and liabilities was substantially due to growth in our customer deposit base and an increase in average long-term debt and average short-term borrowings. Average deposits increased substantially due to internal growth in the regular and money market savings, foreign and time deposits, demand deposit and interest-bearing checking portfolios and partly due to the Community First and USDB acquisitions. Borrowings from the Federal Home Loan Bank increased average long-term debt, while overnight Federal funds purchases were largely responsible for the increase in short-term borrowings.

2003 as Comparedcompared with 2002

     The increase in average interest-bearing deposits and liabilities was primarily due to an increase in average long-term debt and growth in our customer deposit base. Average interest-bearing deposits increased due to the full-year contribution to averages from the UCB acquisition, as well as internal growth in the demand deposit and interest-bearing checking, regular and money market savings portfolios. These increases were partially offset by a decrease in average certificates of deposit. Average short-term borrowings decreased primarily due to the replacement of $800 million of short-term financing, entered into with BNP Paribas in conjunction with the BNP Paribas Merger, with long-term financing in November 2002. The reduction of this short-term borrowing for all of 2003, as opposed to only a portion of 2002, is partially responsible for the decrease in average short-term debt, while increasing average long-term debt. Long-term borrowings from the Federal Home Loan Bank also increased average long-term debt.

2002 as Compared with 200116

     The increase in average deposits and liabilities was principally due to growth in our customer deposit base. Average deposits increased due to the UCB acquisition as well as the Guam and Saipan branches acquired by First Hawaiian Bank from Union Bank of California. Average short-term borrowings increased primarily due to higher Federal Home Loan Bank advances and the $800 million in short-term debt financing for the UCB acquisition. Average long-term debt and capital securities increased primarily due to $1.550 billion in long-term debt, issued to BNP Paribas in conjunction with the BNP Paribas Merger, which was outstanding for all of 2002, as opposed to only a portion of December 2001.

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