Is it a bold new strategy? Or is it a makeover ahead of a sale?

When Pacific Century Financial Corp. announced a three-year restructuring plan at an investor presentation last Monday, it didn’t take long for one audience member to ask the question on everyone’s mind: “As you become a more understandable franchise … what sort of strategy does that create for yourself in terms of becoming an outpost for a West Coast bank?” The answer from the Honolulu banking company’s new chief executive, Michael E. O’Neill, showed he had given the idea some thought.

“In my experience, the better you perform, the more expensive it is for third parties to consider acquiring you,” he said.

He continued: “It strikes me that if we perform well in line with this plan, we have every expectation that the share price will go up, that the ability to stay independent will increase. That was your question, wasn’t it?”

Those remarks didn’t stop investors from driving up the stock 4% Monday, to $22.10. To them, the restructuring plan seemed to point squarely to a sale down the line.

Laurie Buntain, a co-portfolio manager for the SIFE Trust Fund, said Pacific Century’s restructuring — which includes selling or winding down a smattering of holdings in Asia, the South Pacific, and California — will make it a more viable takeover candidate.

“Clearly it will be much more attractive,” because selling less-profitable businesses improves margins, Ms. Buntain said.

Then there is the question of whether there is an interested buyer. Analysts said that, when asset quality problems in its syndicated loan portfolio contributed to lower earnings and a declining stock price last year, Pacific Century was trading at book value and could have been secured at a rock-bottom price.

But many investors couldn’t fathom a buyer that could afford to take on an institution whose weak spots range from the Hawaiian real estate market to political disturbances in the South Pacific. For regional banks, which with few exceptions have shied away from foreign markets, Pacific Century’s lending relationships in Asia and the turmoil in some of its key markets made it too risky. For larger, global banks, its Asian operations lacked scale.

“For most banks, I can name four or five creditable buyout possibilities,” said Jim Bradshaw, an analyst with the Portland brokerage D.A. Davidson. But for Pacific Century as it looked last year, “it was difficult to come up with more than one or two.”

Now the thinking is that Pacific Century’s decision to focus on Hawaii will make it a much easier fit with a mainland bank. Zions Bancorp. of Salt Lake City, Unionbancal Corp. of San Francisco, and Detroit’s Comerica Inc. have built or are quickly building large operations on the West Coast and could be potential acquirers, Mr. Bradshaw said.

But everyone’s favorite would-be buyer is Wells Fargo & Co.

Miles Seifert, chairman of Grey, Seifert & Co., said of Pacific Century that “the perception is that once it’s cleaned up, Wells Fargo or another institution might be an interested buyer. But I’m not sure management or the board would want to sell the bank.”

Asked about the Hawaiian market’s appeal, Wells spokesman Larry Haeg said the San Francisco company “has never identified Hawaii specifically as a contiguous state where we would see it as having a customer composition or economy similar to ones where we do business.” In contrast, it has expressed a desire to expand in Missouri, Kansas, and Oklahoma.

But it is no secret that Wells Fargo always aims to be the No. 1 or 2 depository institution in any market it enters. And Pacific Century’s flagship Bank of Hawaii is the state’s largest bank, with a 26% share of deposits, slightly ahead of rival BancWest Corp.

Another reason Wells tops the list of candidates to buy Pacific Century is the unwavering position of chief executive Richard Kovacevich on his company’s geographic expansion. He’ll expand in states contiguous to Wells Fargo’s operations in the western U.S. and the Midwest, particularly if the price is right.

While Hawaii may not fit that description, Wells Fargo did break its own rule in buying National Bancorp of Alaska last year.

In fact, at Wells’ annual shareholder meeting Tuesday, Mr. Kovacevich reiterated his intention to focus on the West, saying he will continue to shun bank deals in the South and Southeast in favor of solidifying relationships with customers it already has.

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