Bank of Hawaii Announces Program to Create Growth, Streamline Operations and Create Strong, Client-Focused Future.

HONOLULU--(BUSINESS WIRE)--Sept. 13, 1999--

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--   $21 Million in New Revenues
--   $43 Million in Reduced Expenses
--   266 Employees May Be Displaced Over the Next 12 Months
--   Share Repurchase Program Expanded

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Bank of Hawaii today announced its plan to dramatically improve the delivery of financial services in Hawaii and across the Pacific. The Bank's New Era Redesign sets a new standard for client service in the financial services industry, and will also create new business growth and reduce expenses by simplifying and streamlining business processes.

When fully implemented by the fourth quarter of 2000, New Era Redesign is conservatively expected to contribute an annualized $21 million to revenues and reduce operating expenses by an annualized $43 million. The plan underscores the Bank's commitment to continue as the leader in the financial services industry in Hawaii and the Pacific. Related to redesign, Pacific Century Financial Corp., Bank of Hawaii's parent company, will incur a restructuring charge of $23 million (pre-tax) in the third quarter of 1999, or $0.17 per share after-tax.

In conjunction with the redesign results, Pacific Century also announced that its board of directors approved a share repurchase authorization of up to 300,000 shares of common stock per quarter beginning in the fourth quarter of 1999. This is in addition to the existing authorization to repurchase shares issued under the company's dividend reinvestment plan and various benefit plans.

Pacific Century Financial Corporation, and its subsidiary, Bank of Hawaii, launched New Era, a two-phase, 18-month program back in February 1998 to respond to clients' changing needs, eliminate outdated procedures, improve efficiency, and reduce expenses. New Era's phase two estimated savings announced today are on top of last year's achievements from New Era phase one, which the company estimates will save $19.7 million in 1999.

"Although we have always offered better products and services than our competitors, we realized that over time our processes had become dated, limiting our ability to provide the new, higher level of service clients demand," said Lawrence M. Johnson, chairman and chief executive officer of Pacific Century Financial Corporation and Bank of Hawaii.

"As people's lives become increasingly complex, they're not only looking for safety, convenience and performance from their financial services provider, they want a breadth of products and services, a minimum amount of hassle, and the opportunity to shape the banking experience that's best for them," Johnson explained.

"New Era Redesign gives us new tools and simplified processes that will allow us to deliver what our clients want today. And, our clients will see tangible benefits resulting from New Era no matter which way they choose to bank with us, whether its through an ATM, at their neighborhood branch, or over the phone or internet," Johnson added.

"Through New Era, we are charting our own course to ensure our continued future success," said Johnson. "We are confident these initiatives to improve efficiency, simplify processes, and enhance the quality of our products and services will benefit our clients, employees, shareholders and the community-at-large in the four markets we serve. New Era reaffirms and strengthens the company's commitment to Hawaii and to its Pacific strategy," he added.

Throughout the coming year, Bank of Hawaii will introduce a number of New Era programs and services that will result in significant advances in consumer, small business and corporate banking, as well as products that will bring added value and simplicity. Some examples include:

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--   Improved internet and phone services will provide instant answers
     and expanded capability, including loans by phone and late-night
     service.
--   Banking professionals with expertise in investments, insurance,
     trust, and other areas will be strategically located throughout
     the Bank's network to assist consumers.
--   A staffed information and welcome center in each branch will
     ensure clients' needs are met quickly and completely.
--   Teller lines will move more quickly due to the introduction of
     new card technology.
--   Bankoh debit and credit cards will allow cardholders to earn
     airline miles, and then combine them, to earn free travel faster.
--   Electronic banking services designed especially for small
     businesses will help organize and simplify their financial
     management tasks.
--   New, dedicated business banking centers staffed with specialized
     business bankers will be opened.
--   Banking teams with expertise in corporate financial services as
     well as in specific industries (such as technology, manufacturing
     or retail) will be expanded to serve the needs of business
     clients.

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"All of these initiatives add up to measurable benefits for our clients. As these improvements roll-out over the next year, our clients will notice faster and better service, have direct access to financial experts that are ready to help them, and enjoy banking that is simpler and more convenient than ever before," said Richard Dahl, president and chief operating officer.

According to Dahl, New Era served as a catalyst for energizing and focusing the entire company on both client needs and performance objectives. Every employee had the opportunity to participate in the redesign process, and staff members submitted a total of 2,100 improvement ideas for consideration.

"These changes are a result of the best thinking from our staff and are not simply top-down decisions," explained Dahl. "Our employees are among the most knowledgeable and most capable employees in the industry, and the quality of the ideas that comprise New Era reflect that," Dahl added.

"The overwhelming majority of our employees will continue in their current or comparable assignments, or will be re-deployed to new jobs within the bank. For them, New Era will result in more fulfilling jobs, as well as access to new tools and improved training that will enable them to better serve our clients," said Dahl. "Also, we expect job opportunities will be enhanced because our employees will be working for what will be the most exciting, people-oriented financial services company in the Pacific region."

Although approximately 1,015 total positions will be eliminated as a result of the redesign, it is expected that fewer than 266 individuals may be displaced over a 12-month period. The company continues to implement programs designed to reduce the actual number of employees who may lose their job to the smallest number possible. This will be accomplished through a continued hiring freeze, voluntary separations, projected attrition, and retraining and redeployment of staff.

Today's announcement culminates phase-two, or the redesign portion, of the New Era program. Phase one New Era initiatives included merging of the company's two mainland bank subsidiaries, outsourcing of credit and debit card operations, consolidation of its branch network in Hawaii, merging of First Federal Savings & Loan Association of America with Bank of Hawaii, and re-incorporation and charter changes.

Bank of Hawaii, founded in 1897, is the principal subsidiary of Pacific Century Financial Corporation, a $14.6 billion regional financial services holding company. Pacific Century Financial Corporation, the leading financial institution in the state of Hawaii, also serves the West and South Pacific, Asia, and selected markets on the U.S. Mainland.

Bank of Hawaii offers a wide range of financial products and services, including traditional banking, investments, trusts, private client services, leasing and insurance. Bankoh provides customers with convenient access to financial services through its network of branches, supermarket branches, Bankoh BankMachines, Bankoh BankPhone and e-Bankoh, its Internet banking service, which is available through its website, www.boh.com.

This press release contains forward-looking statements which are provided to assist in the understanding of certain aspects of the Company's anticipated future financial performance. The Company cautions readers not to place undue reliance on any forward-looking statements, which speak only as of the date made. Forward-looking statements are subject to significant risk and uncertainties, many of which are beyond the Company's control. Although the Company believes that the assumptions underlying its forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate and actual results may differ from those contained in or implied by such forward-looking statements for a variety of reasons. Factors which might cause such a difference include, but are not limited to, expected cost savings from New Era Redesign cannot be fully realized or realized within the expected timeframe; income or revenues from New Era Redesign are lower than expected or operating or implementation costs are higher; competitor pressures in the banking and financial services industry increase significantly, particularly in connection with product delivery and pricing; business disruption related to implementation of New Era Redesign programs or methodologies; inability to achieve expected customer acceptance of revised pricing structures and strategies; general economic conditions in the geographic areas where the Company seeks to expand its business opportunities are weaker than expected or other unanticipated occurrences which could delay or adversely impact the implementation of all or a part of New Era Redesign.

The Company does not undertake and specifically disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.