Falling share prices have played havoc with several pending bank mergers, but they may actually benefit shareholders of First Hawaiian Inc. as it buys BancWest Corp.

Honolulu-based First Hawaiian said late Monday that after it buys BancWest, earnings on a diluted basis would be higher than originally forecast.

The deal is scheduled to close Oct. 31.

Because First Hawaiian's share price has fallen 15% since the merger deal was announced May 28, the company is paying a lower premium above market value for BancWest, a subsidiary of Banque Nationale de Paris SA, France's second-largest banking company.

As the merger premium has fallen, so has the goodwill that would be added to First Hawaiian's balance sheet, said Keefe, Bruyette & Woods Inc. analyst David Winton. Goodwill, which refers to the price First Hawaiian would pay over BancWest's net worth, must be charged against earnings over time.

Officials of First Hawaiian now expect goodwill to cut into diluted earnings by $20.1 million per year, down from the $28.8 million originally forecast.

First Hawaiian said that because of these "refined projections of goodwill charges," it was revising earnings estimates to $2.95 per share for 1999 and $3.45 for 2000.

When the deal was announced May 28, First Hawaiian estimated that diluted earnings would be $2.76 in 1999 and $3.25 in 2000.

First Hawaiian, the state's second-largest bank with $8.6 billion of assets, received Federal Reserve Board approval for its merger with BancWest on Monday. First Hawaiian shareholders would own 55% of the combined company, to be called BankWest Corp., and Banque Nationale de Paris shareholders would own 45%. The French bank has agreed not to increase its position in First Hawaiian for four years.

The companies expect to boost profitability by cutting their combined operating expenses by 9%, or about $41 million annually, by 2000, through consolidating data processing and back-office operations.

The companies have said that about 400 positions, about 8% of their combined work force, would be eliminated over an 18-month period. Most cuts would be accomplished by attrition, First Hawaiian said.

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