SAN FRANCISCO Investors have been snapping up bank stocks recently, and among some of the larger buyers are the banks themselves.
Pacific Century Financial Corp., the Honolulu bank parent of Bank of Hawaii, has embarked on one of the most ambitious stock buyback plans. As it aims to sell or close most of its non-Hawaiian holdings, Pacific Century hopes to free up about $800 million in economic capital and to funnel $650 million of that into acquiring its own stock. 
On Tuesday the company told investors that the buyback, which began July 26, three days after its second-quarter earnings were released, is proceeding fast. In about two weeks Pacific Century bought 491,200 of its own shares at a cost of $12.6 million, it said in its quarterly 10-Q filing with the Securities and Exchange Commission.
If this pace about 250,000 shares per week keeps up, the company could buy more than two million shares this quarter. But it still may not reach the 26 million-share goal set by its new chief executive officer, Michael E. ONeill, when he announced the restructuring plan in April.
Investors liked the strategy so much that the stock had already passed its price target of $24 when second-quarter earnings were reported, prompting Mr. ONeill to warn that we may retire fewer shares than originally thought.
Signs that the company is making headway in its divestiture plans, such as an agreement to sell a 20-branch network of Pacific Century Bank in Southern California, as well as its stock repurchases have helped lift the stock by 26% since the restructuring plan was announced April 23. On Tuesday it closed up 0.25%, at $27.77.
The rise over the last few months is mainly driven by investors liking what theyre hearing, about the companys plans for the future, as well as the stock repurchase program, said Brock Vandervliet, an analyst at Lehman Brothers.
Indeed, the buyback will shave its outstanding shares by such a degree that analysts expect next years earnings per share could benefit by as much as 60 cents.
The fact that the bank has been a steady buyer of its own stock over the last few weeks is also a factor in the stocks rise, but probably a secondary one, Mr. Vandervliet said. Its similar to if a very large mutual fund was buying, that many shares over a period of time, he said.
Pacific Century is not the only banking company to acquire a taste for its own shares. Minneapolis-based U.S. Bancorp has been in the market buying shares under a 56.4-million-share acquisition program to replace those issued when it acquired merchant credit card processor Nova Corp. in late July.
Whereas U.S. Bancorp has been making big block trades often exceeding a million shares each, Pacific Century has taken smaller bites.
Joseph K. Morford, an analyst with RBC Dain Rauscher Wessels in San Francisco, says Pacific Century will likely use a combination of open market, smaller tender offers, and block trades to buy the rest of the shares.
