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 California, Hawaii, Nevada, Washington, Oregon, Idaho, New Mexico, 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’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 GLBAGramm-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 to be conducted in a separate subsidiary that is regulated by a functional regulator: a state insurance regulator in the case of an insurance subsidiary,activities, the Securities and Exchange Commission in the case of a broker-dealer or investment advisory subsidiary,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 and before acquiring substantially all the assets of any additional bank.bank or savings association. In addition, all acquisitions are reviewed by the Department of Justice for antitrust considerations. In conjunction with the BNP Paribas Merger, we elected to become a financial holding corporation.company.

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 bank 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 bank 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 bank holding company may not have the resources to provide it. Any capital loans 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

9

Part I(continued)

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)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, 2001,2003, 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 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

10

Part I(continued)

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 .03%3 to .27%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 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 20022004 was 1.81.5 basis points.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 1315, Regulatory Capital Requirements, on pages 59 and 60.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

8

     On November 29, 2001, the federal bank regulatory agencies published a final 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-balance sheet asset that representrepresents 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 new 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

11

Part I(continued)

the capital charge exceeds the full risk-based capital charge that would have been held against the transferred assets.

     The new 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 new regulation became effective on January 1, 2002 for transactions settled on or after that date and becomesbecame effective December 31, 2002 for all other transactions. The Corporation doesregulation did not believe the new regulation will have a material effect on itsthe Corporation’s operations or financial position.

     On January 16, 2001,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 “Committee”“Basel Committee”) proposed. 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, the Basel Committee released a proposal to replace the 1988 capital accord with a new capital adequacy framework to replaceaccord that would set capital requirements for operational risk and refine the framework adopted in 1988. Under the new framework, risk weightsexisting capital requirements for certain types of claims, including corporate credits, would be based on ratings assigned by rating agencies. Certain low quality exposures would be assigned a risk weight greater than 100%. Short-term commitments to lend, which currently do not require capital, would be subject to a 20% conversion factor. In addition to this “standardized” approach, banks with more advanced risk management capabilities, which can meet rigorous supervisory standards, can make use of an internal ratings-based approach under which some of the key elements of credit risk such asexposures. Operational risk is defined to mean the probabilityrisk of default, will be estimated internally by a bank.direct or indirect loss resulting from inadequate or failed internal processes, people and systems or from external events. The Committee also proposes1988 capital chargesaccord does not include separate capital requirements for operational risk. The Basel Committee indicatedhas stated that it intendsits objective is to finalizehave member countries implement the proposednew accord at year-end 2006. The ultimate timing for a new accord, and the specifics of capital assessments for addressing operational risk, are uncertain. However, the Corporation expects that a new capital adequacy requirement by the end of 2001, with implementation in 2005. Ifaccord addressing operational risk will eventually be adopted by the Basel Committee the new accord would then be the subject of rulemakingand implemented by the U.S. federal bank regulatory agencies. BecauseThe new capital requirements that may arise out of a new Basel Committee capital accord could increase minimum capital requirements applicable to the timing and final contentCorporation.

9

     In order for us to remain a financial holding company, Bank of the proposal are not yet clear,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 Corporation cannot predictUnited 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 this timetheir most recent examination the potential effect thatbanks 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 adoptionUSA PATRIOT Act of such a proposal will have on its regulatory capital2001 (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 financial position.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.

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 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, 2001, 20002003, 2002 and 1999,2001, 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 2022, International Operations, on pages 65 and 66.Operations.

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 1921, Operating Segments,Segments.

The Corporation’s website iswww.bancwestcorp.com. We make available free of charge on pages 20our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current report on Form 8-K, and 64amendments 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 65, respectively.Exchange Commission.

     Bank of the West leases a site in Walnut Creek, California, which is its primary administrative headquarters. The administrative headquarters office is a 132,000-square-foot,133,000-square-foot, three-story building. Bank of

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     As of December 31, 2001, 662003, 105 of Bank of the West’s active branches are located on land owned by Bank of the West. The remaining 127190 active branches are located on leasehold properties. Bank of the West also has 12

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Part I(continued)

10 surplus branch properties, 115 of which are currently leasedsubleased to others. In addition, Bank of the West leases 2524 properties that are utilized for administrative (including warehouses), lease support, management information systems and regional management services. See Noteservices and 21 Lease Commitments (page 66).additional office facilities.

     First Hawaiian Bank indirectly (through two subsidiaries) owns all of a city block in downtown Honolulu. The administrative headquarters of the Corporation and First Hawaiian Bank, as well as the main branch of First Hawaiian Bank, are located in a modern banking center on this city block. TheThat headquarters building, First Hawaiian Center (“FHC”), includes 418,000 square feet of gross office space. Information aboutFHC was constructed and financed by a nonrelated third party, REFIRST, Inc. We held an operating lease for FHC with REFIRST, Inc. that terminated on December 1, 2003. At the lease financingend of the headquarters building is includedterm, 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 21 Lease Commitments (page 66).5 to the Consolidated Financial Statements.

     As of December 31, 2001,2003, 19 of First Hawaiian’sHawaiian Bank’s offices in Hawaii and one in Guam are located on land owned in fee simple by First Hawaiian.Hawaiian Bank. The other branches of First Hawaiian Bank in Hawaii, two branches in Guam and one branch each in Guam and Saipan are situated on leasehold premises or in buildings constructed on leased land. See Note 21 Lease Commitments (page 66). In addition, First Hawaiian Bank owns an operations center which is located on 125,919approximately 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, Premises and equipment, for further information.

Item 3. Legal Proceedings

The information required by this Item is set forth in Note 2223 to the Consolidated Financial Statements on page 67 of this Form 10-K, and is incorporated herein by reference.

Item 4. Submission of 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, 2001.2003.

PART II

     BancWest is a wholly-owned subsidiary of BNP Paribas and there is no public trading market for BancWest’s common equity.

     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, 2001,2003, the aggregate amount of dividends that such subsidiaries could pay to the Corporation under the foregoing limitations without prior regulatory approval was $10.5$810.5 million.

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     Here areDuring the years ended December 31, 2003 and 2002, no quarterly andor 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 data, computed using theof common stock and Class A common shares and restated for the effects of a two-for-one stock split:

On July 1, 1999, we acquired SierraWest Bancorp. That merger was accounted for as a pooling of interests. Therefore, all financial information has been restated for all periods presented.

     As we no longer have outstanding shares of common stock, future dividends will be paid only on Class A common shares. The declaration and payment of cash dividends are subject to future earnings, capital requirements, financial condition and certain limitations as described in Note 14 to the Consolidated Financial Statements on page 60.

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Part II(continued)stock.

Item 6. Selected Financial DataBasis of Presentation

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, “push-down” periods. However, financial information for purposes of comparison only, the following tables combine our results of operationsperiod 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 throughto December 19, 2001. TheThese combined results for 2001 will generally serve as comparable amounts to the 12-month periodperiods 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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(1)	The Company adopted the consolidation provisions of FIN 46 in the third quarter for one variable interest entity formed prior to February 1, 2003, REFIRST,Inc.
(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 (net interest income plus noninterest income).
(4)	The capital leverage ratios are based on quarterly averages.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

On July 1, 1999, we acquired SierraWest Bancorp. That merger was accounted for as a pooling of interests. Therefore,

On March 15, 2002 the Company completed its acquisition of all financial information has been restated for all periods presented.

(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, integration and other nonrecurring costs of:

	(a)		$2.3 million in the first quarter of 2001 for the outstanding common stock of UCB. The acquisition of branches in New Mexico and Nevada,
	(b)		$755,000 in 2000 for the acquisition of branches in Nevada and New Mexico completed in the first quarter of 2001,
	(c)		$11.6 million in connection with the acquisition of SierraWest Bancorp and the consolidation of data centers in 1999, and
	(d)		$21.9 million in connection with the merger of the former BancWest Corporation with and into First Hawaiian, Inc. on November 1, 1998 (“BancWest Merger”).

(3)

Excluding amortization of goodwill and core deposit intangible.

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Part II(continued)

Item 6. Selected Financial Data(continued)

On July 1, 1999, we acquired SierraWest Bancorp. That merger was accounted for as a pooling of interests. Therefore, all financial information has been restated for all periods presented.

purchase.

	(a)		$2.3 million in the first quarter of 2001 for the acquisition of branches in New Mexico and Nevada,
	(b)		$755,000 in 2000 for the acquisition of branches in Nevada and New Mexico completed in the first quarter of 2001,
	(c)		$11.6 million in connection with the acquisition of SierraWest Bancorp and the consolidation of data centers in 1999, and
	(d)		$21.9 million in connection with the merger of the former BancWest Corporation with and into First Hawaiian, Inc. on November 1, 1998 (“BancWest Merger”).

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Part II(continued)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-LookingForward-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 itsour 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)
	(1) global, national and local economic and market conditions, specifically with respect to changes in the United States economy;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 effecteffects of current and pending legislation and regulations;
(8)		(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 transaction; and
	c)		problems or delays in bringing together UCB with BancWest/Bank of the West;

(10)		(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;
(11)		(10) our reliance on third parties to provide certain critical services, including data processing;
(12)		(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;
(13)		(12) technological changes;
(14)		(13) other risks and uncertainties discussed in this document or detailed from time to time in other SEC filings that we make; and
(15)		(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 and elsewhere in this report.

Glossary

See “Glossary of Financial Terms” on page 70 for definitions of certain terms used in this annual report.

GAAP, Operating and Cash EarningsOverview

     Headquartered in Honolulu, Hawaii, with offices in San Francisco, BancWest is a financial holding company with assets of $38.4 billion at December 31, 2003. BancWest, through its subsidiaries, operates a general commercial banking business and other businesses related to banking. Its principal assets are its investments in Bank of the West, a State of California-chartered bank, and First Hawaiian Bank, a State of Hawaii-chartered bank. We analyze our performance onprovide a wide range of general commercial banking services, providing retail and corporate banking, trust and insurance services to individuals, institutions, businesses and governments.

     BancWest reported net income of $436.6 million for the year ended December 31, 2003, compared with $361.3 million for the year ended December 31, 2002. Net interest income was $1.298 billion compared with $1.194 billion, primarily due to an increase in interest earning assets resulting from organic growth and the full year impact of the UCB acquisition. Average loans increased by $2.4 billion; average investment securities 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 net interest margin decreased 26 basis determinedpoints (1% equals 100 basis points) as a declining interest rate environment caused rates on interest earning assets to decrease more than rates paid on funding sources. Noninterest income was $387.3 million compared with $332.4 million. The increase was primarily due to increased service charges on deposit accounts and other service charges and fees related to broker servicing fees, higher commissions from the issuance of letters of credit, and higher merchant services fees. The increase in noninterest income is also impacted by higher gains on the sale of lease residual interests, OREO property and miscellaneous assets as well as increased revenue from derivative sale activities and the full year impact of the UCB acquisition. The Company’s strategy to increase noninterest income included growth in average deposit balances, repricing efforts in account analysis as well as growth in debit card interchange revenue. The Company also focused on niche markets where the Company would have a competitive advantage in growing its portfolio related to equipment leasing, and SBA, church and healthcare lending. Noninterest expense was $892.8 million compared with $836.1 million, primarily due to increased employee salaries and benefits expense resulting from the full year impact of the UCB acquisition and the increased cost of healthcare and retirement benefits, and other noninterest expense related to depreciation on software and general liability and property insurance.

     BancWest had total assets of $38.4 billion at December 31, 2003, up 10.4% from a year earlier. Investment securities totaled $5.9 billion, an increase of 50.4% from the same date in 2002. Loans 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 reduced to 0.59% of loans, leases and foreclosed properties at December 31, 2003, an improvement from 1.02% at December 31, 2002. The provision for loan and lease losses was $81.3 million compared to $95.4 million. BancWest’s allowance for loan and lease losses was 1.52% of total loans and leases at December 31, 2003, compared to 1.59% at December 31, 2002. The decrease in nonperforming assets was primarily due to loan prepayments and sales. Loan and lease charge-offs and workouts also contributed to the decrease.

Critical Accounting Estimates

     The preparation of financial statements in accordance with accounting principles 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. This presentation is intended 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, among other gauges of performance, as determined in accordance with GAAP. Merger-related, integration and other nonrecurring 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.

Basis of Presentation

     The BNP Paribas Merger was accounted for as a purchase, with BNP Paribas’ accounting basis being “pushed down” to BancWest Corporation. Although BancWest Corporation was the surviving entity in the BNP Paribas Merger, its ownership changed dueUnited States of America requires management to the transaction. Prior to the BNP Paribas Merger, BancWestmake a number of judgments, estimates and

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Part II(continued)

Corporation was 55% publicly owned and 45% owned by BNP Paribas (“Predecessor” basis). Starting on December 20, 2001, BancWest Corporation’s financial statements reflected BNP Paribas’ “pushed-down basis.” See Note 2 of     Our accounting policies are discussed in detail in the notes to the Consolidated Financial Statements, for additional information regarding this business combination.

     It is generally not appropriateNote 1 Summary of Significant Accounting Policies. Various elements of our accounting policies, by their nature, are inherently subject to combine pre-estimation techniques, valuation assumptions and post-“push-down” periods; however, for purposes of comparison only, certain information presented in this section combines BancWest Corporation’s results of operations from December 20, 2001 through December 31, 2001 with those ofother subjective assessments. We have identified the Predecessor for the period from January 1, 2001 through December 19, 2001. The combined results will generally serve as comparable amountsfollowing accounting estimates that we believe are material due to the 12-month period ended December 31, 2000levels of subjectivity and will be utilizedjudgment necessary to account for purposes of providing discussion and analysis of results of operations. In addition, annual average balances discussed in this section were computed on a similarly combined basis.

Overview

     Thanksuncertain matters or where these matters are particularly subject to strong performances in both West Coast and Hawaii operations, our operating earnings during 2001 increased 18.4% over 2000 to a record $257.1 million. These were some of the key events affecting our financial statements: