BNP Unit, First Hawaiian in Merger

Banque Nationale de Paris’ California unit and First Hawaiian Inc. agreed to a $971-million merger that would give France’s third-largest bank a stake in a company it can use to make more acquisitions in the U.S. First Hawaiian will pay 25.9 million shares for the BNP unit, BancWest Corp., and shareholders of the Honolulu-based bank would own 55% of the merged entity. The new bank will have $14 billion of assets, more than 200 branches and about 800,000 customers in Hawaii, Northern California, Oregon, Washington, Idaho, Guam and Saipan. The transaction would give BNP publicly traded U.S. shares to make more acquisitions at a time when the banking industry is being transformed by takeovers. First Hawaiian would be combining with California’s fifth-largest bank, thus reducing its dependence on the sluggish Hawaiian economy. First Hawaiian shares rose 75 cents to close at $37.50 in Nasdaq trading. The transactions will form a bank “that’s large enough to effectively compete,” said First Hawaiian Chairman and Chief Executive Walter Dods. “It’s an important next step in First Hawaiian’s strategy to diversify geographically.” The merger, expected to be completed in the fourth quarter, would immediately add to First Hawaiian cash earnings and would boost reported earnings by 2000. First Hawaiian is paying about 17.9 times BancWest’s 1997 earnings and about 2.9 times book value. Both banks concentrate on lending to consumers and small businesses.