MAJURO, Marshall Islands (Marianas Variety): August 20, 2002 - Unable to find a buyer for four of its central Pacific branches, Bank of Hawaii announced that it will close its Majuro, Pohnpei, Kosrae and Yap offices on Nov. 30.

Bank of Hawaii's West Pacific Division manager Ronald H. Leach, who is based on Guam, made the announcement in Majuro Friday. The Majuro and Pohnpei branches are in the capitals of the Marshall Islands and the Federated States of Micronesia, respectively.

Last year, Bank of Hawaii issued a strategic plan to focus on its core market in Hawai'i that resulted in the sale of virtually all of the bank's South Pacific, Asia and U.S. mainland holdings.

Leach said as part of this process of refocusing on its core market, the bank had attempted to identify additional financial opportunities in the Federated States of Micronesia and the Marshall Islands that would allow these four branches to increase their earnings to meet the newly established shareholders' goal of doubling share value every four years.

When that proved impossible the bank sought buyers, he said. Four of seven financial institutions replied to a Bank of Hawaii offer earlier this year, but none showed interest to buy the branches, he said.

This led to the decision to shut the four branches, he said. About 40 employees will be affected by the closure. "We are making money, but we're not meeting the shareholders' goal," Leach said of the four branches that will be sold. To remain an independent bank, Bank of Hawaii must be able to double its share value every four years, he said.

The four bank branches have not only not produced the desired return when the cost of capital and the level of risk are factored into the equation of doing business in these far- flung islands, they are actually negative after adjusted for risk, he indicated.

The bank does not feel confident that it could move from a negative to a positive return given the current economic conditions in the Marshall Islands and Federated States of Micronesia, he said. The bank doesn't see these island economies improving dramatically, even with the second phase Compact of Free Association funding from the U.S. to begin next year, he said.

The bank will maintain branches on Guam, Saipan and Palau. All three are significantly larger commercial centers than the Marshall Islands and FSM.

In the case of Palau, Leach said that Bank of Hawaii's returns there "are strong and exceeding shareholders goals. They are well in excess of expectations and meeting risk hurdles."

Leach assured both commercial and private customers that these branches will be working hard to maintain their confidence, and will be waiving fees for closing accounts as the banks wind down operations.