Finance Factors may switch to commercial state bank
Its owners will vote on the proposal in June
Hawaii's banking industry soon may get more competitive.
Finance Factors, a 54-year-old depository financial services loan company, said it is exploring changing its charter to a commercial state bank to offer more products and services.
The approximately 50 shareholders of parent company Finance Enterprises are scheduled to vote on the strategy shift at a June 7 meeting. Spokeswoman Maureen Lichter said the change is likely to be approved, since the shareholders are all members of the six founding families of the company and have representatives on the board of directors.
If confirmed, the application process and regulatory approval is expected to take about six months, Lichter said. The new bank would be called Finance Factors Bank.
"The time has come for Finance Factors to build on our rich history and legacy, and to launch an exciting new era in the company," said Russell Lau, president and chief executive of Finance Enterprises. "Our customers' needs keep changing, and we need to keep changing with them. Unfortunately, our current charter prevents us from meeting some of their needs."
Finance Factors, started in 1952, is currently limited by charter in what it can offer. With the new charter, it would be allowed to offer checking accounts, credit cards, debit cards and trust services as well as sell property and casualty insurance and life insurance. That would complement its current services, which include real estate-secured residential and commercial loans, savings-secured loans, federally insured savings accounts and several investment vehicles.
"Whatever new direction we ultimately head, I think our founders would be very proud indeed to see Finance Factors keep pace with what our customers want and need today," said Lau, whose wife, Connie, is the president and chief executive of American Savings Bank and its parent company, Hawaiian Electric Industries Inc.
Finance Factors ended 2005 with $652.7 million in total assets, up 9.6 percent from a year earlier and an increase of 44 percent since 2000. Year-end deposits were $484.3 million, up 12.8 percent from 2004 and 24 percent over the last five years. And loans totaled $395.1 million, up 34.1 percent from a year ago and 26 percent since 2000.
Excluding multiple accounts, Finance Factors has about 12,000 unique customers, Lichter said.
Finance Factors would join First Hawaiian Bank, Bank of Hawaii, Central Pacific Bank and Pacific Rim Bank as state-chartered banks. Startup Ohana Pacific Bank is still awaiting regulatory approval.
American Savings Bank and Territorial Savings Bank are federally chartered savings banks while Hawaii National Bank is a federally chartered national bank.
"Our general feeling has been that competition in the financial service industry is always a good thing and it provides more choices for consumers," said Nick Griffin, commissioner of the state Division of Financial Institutions. "Competition is always beneficial in any industry, and that would include financial services."
Finance Enterprises, which has Finance Factors, Finance Realty and Finance Insurance under its umbrella, would have to spin off all of the real estate assets that are not part of Finance Factors to receive the charter. Finance Factors and Finance Insurance, which sells other companies' insurance products, would remain with the parent company.