In the first earnings report since Michael E. O'Neill took over at Pacific Century Financial Corp., the chairman and chief executive officer offered evidence that the company's credit problems are beginning to fade.

Brushing aside a 13% drop in net income during the fourth quarter, Mr. O'Neill sought to highlight an improving trend in nonperforming assets. However, on a conference call on Wednesday he said, "I'm not declaring victory by any means, but I am very encouraged."

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