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Banking on the past and future


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POSTED: Thursday, October 22, 2009

Banks have played a major role in Hawaii's growth during the last 151 years. Bishop & Co., now called First Hawaiian Bank, was the only bank in the islands for 40 years and supplied loans to the emerging sugar industry, the so-called Big Five companies and others. The longtime firm of Castle & Cooke later established Bank of Hawaii, and, over the years, other banks have come and gone or been absorbed.

Today the state has eight banks based in the islands.

 

FIRST HAWAIIAN BANK

After 151 years, Bishop's legacy lives on

First Hawaiian Bank, the state's oldest financial institution, underwent a major ownership change in 2001 when French giant BNP Paribas spent $2.5 billion in cash to acquire the remaining stock it didn't already own of the bank's holding company.

But First Hawaiian remains very much a locally run operation today even though its holding company, BancWest Corp., and BNP Paribas have a broad reach.

For 15 years the face of the bank was the charismatic Chief Executive Officer Walter Dods, who was thrust into the position after the sudden death of then-CEO John Bellinger in 1989. Dods retired at the end of 2004 but remained as nonexecutive chairman of the board before relinquishing that position at the end of 2008, capping a 40-year career with the bank.

Under Dods, BancWest went on an acquisition spree that in recent years saw it expand to 10 additional Western and Midwestern states and become the seventh-largest Western bank holding company. Dods also orchestrated in 1998 the merger of San Francisco-based Bank of the West that led to the formation of BancWest, and in 1996 realized his dream with the opening of the $175 million First Hawaiian Center at the corner of Bishop and S. King streets.

Now the person at the top is Don Horner, who has stepped into Dods' shoes and has the bank continuing to churn out record profits.

First Hawaiian, which is Hawaii's largest bank in terms of assets with $13.6 billion at the end of June, began on Aug. 12, 1858, as a partnership between Charles Bishop and William Aldrich and was called Bishop & Co.

Today, First Hawaiian has 58 branches in Hawaii, three on Guam and two on Saipan. It has 291 ATMs systemwide.

Star-Bulletin staff

 

TERRITORIAL SAVINGS BANK

Treading new ground in stock shares

Territorial Savings Bank, whose selling point among depositors always has been its higher-than-average interest rates, now has something else to offer its investors: shares on the Nasdaq Stock Market.

The 88-year-old company is literally in new territory after going public in July with its conversion from mutual to full stock ownership. Depositors who were eligible to buy shares were immediately rewarded when the bank's stock jumped nearly 50 percent on the first day of trading.

A big part of Territorial's attraction to investors is its balance sheet. The bank has been able to avoid the pitfalls of commercial lending by primarily focusing on residential mortgage loans.

Chief Executive Officer Allan Kitagawa has been at the helm since 1986 and has seen the bank expand to 25 branches on four islands.

Territorial is the fifth-largest bank in the state in terms of assets with $1.5 billion as of midyear.

Star-Bulletin staff

 

CENTRAL PACIFIC BANK

A 2-bank tale with a 1-bank ending

Central Pacific Bank is really a tale of two banks even though there is just one standing today.

The state's third-largest bank in terms of assets merged with its primary rival, City Bank, in September 2004 following a more than yearlong hostile takeover attempt that was resolved only after Central Pacific upped its offer several times and agreed to let City Bank split the top executive positions.

Both financial institutions had been founded by nisei war veterans to serve the Japanese-American community—Central Pacific in 1954 and City Bank in 1959. Since that time, both expanded to include the broader Hawaii community, which is still the focus of Central Pacific today.

Former Chief Executive Officer Clint Arnoldus, the driving force of the $423.1 million stock-and-cash merger, had been hired in 2002 to replace Joichi Saito as the first non-Japanese-American to head Central Pacific. But Arnoldus created a war of words with then-City Bank CEO Ron Migita for the strong-arm tactics that Arnoldus employed in trying to accomplish the merger.

Eventually, Arnoldus succeeded in pushing through the deal, but he resigned in 2008 after watching his ill-timed expansion into the California residential construction market implode and saddle the bank with hundreds of millions of dollars in losses.

Migita, who had been serving as the nonexecutive chairman following the merger, succeeded Arnoldus as CEO on Aug. 1, and the bank subsequently began the process of trying to raise $100 million through a secondary stock offering to help boost its capital levels.

Central Pacific, with $5.5 billion in assets, operates 37 branches statewide and has 100 ATMs.

Star-Bulletin staff

 

BANK OF HAWAII

Thriving after returning to its roots

Bank of Hawaii, the state's second-largest bank in terms of assets, has flourished since returning to its roots after an ill-fated expansion overseas several years ago.

The bank began closing money-losing operations in 2001 and has enjoyed a resurgence under former Chief Executive Officer Mike O'Neill and current CEO Al Landon.

O'Neill, who stepped down in 2004 and was named a director at New York-based Citigroup Inc. earlier this year, transformed the bank into a more efficient operation, elevated earnings to record highs and increased shareholder value. Among his moves was closing or selling branches in the South Pacific and parts of the West Pacific and Asia.

Landon, the chief financial officer under O'Neill, has continued down that path as the bank has continued to focus on its key Hawaii market while still maintaining some operations in American Samoa and the West Pacific.

Bank of Hawaii, which had $12.2 billion in assets at the end of the second quarter, was ranked the country's top-performing bank—for those with assets of $3 billion or more—this past year by ABA Banking Journal.

The bank, which began doing business in the Republic of Hawaii on Dec. 27, 1897, now has 73 Hawaii branches and more ATMs than any financial institution in the state at 433. Overall, the bank has 85 branches and 486 ATMs.

Star-Bulletin staff