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S.F. bank The troubled Bank of Honolulu became the Hawaii arm of the Bank of the Orient last night after the Federal Deposit Insurance Corp. approved purchase and assumption of its insured deposits by the San Francisco-based financial institution.
purchases Bank
of Honolulu assets
Some creditors and
Employees to be retained
large depositors may lose
money, says the FDICBy Harold Morse
Star-BulletinThe FDIC said some creditors and depositors may lose money.
Bank of Honolulu's former chairman, Sukamto Sia, who filed bankruptcy nearly two years ago, awaits trial accused of writing bad checks for gambling debts. But his misfortune brought in a new bank.
"This presented a good opportunity," Henry Homscher, director of operations for Bank of the Orient, said last night. "We did not buy the bank."
Rather, it had purchased Bank of Honolulu's $66.9 million in assets and its liabilities. "We're going to serve our customers," Homscher said. "We have the capital and the support behind us."
The Bank of the Orient is capitalized at $400 million and has been in existence since 1971. "All the employees are going to be taken care of," Homscher said. "I've got 51 interviews in the next couple of weeks."
Other than the main branch downtown, normally not open on Saturday, outlying Bank of Honolulu branches opened today doing business as the Bank of the Orient. The main branch at 841 Bishop St. will reopen Monday.
Bank of Honolulu had been eyed by federal watchdogs since Sia filed for bankruptcy in November 1998.
Hawaii's commissioner of financial institutions closed the bank at 6 p.m. yesterday and named the FDIC receiver.
Stacey Simpson, an FDIC senior ombudsman, said at the downtown branch that deposits are insured up to $100,000 and that depositors are guaranteed protection of their deposits up to that amount.
Depositors who have more than $100,000 in their accounts are presently assured of 65 cents on the dollar on the amount of their deposits that exceeds $100,000, she said.
Although this 65 percent return may increase with further calculations, "there is a possibility that there will not be a full return to all creditors and uninsured depositors. ... The shareholders come after the creditors and uninsured depositors."
"We recognize and appreciate the efforts of the FDIC and the Bank of the Orient in arranging this transfer and servicing the depositors, borrowers and customers of Bank of Honolulu," said Lynn Wakatsuki, commissioner of financial institutions.
Bank of the Orient issued a news release quoting Ernest Go, its chairman, who sees the bank here as a link between Asia and the West Coast.
"We are extremely pleased to establish a banking presence here in Hawaii," Go said.
William McCorriston, attorney for Sia, said his client is distressed by the bank closing.
"Upon the filing of the bankruptcy two years ago, he lost control of the bank, and a bankruptcy trustee assumed ownership and control of the bank and its assets. Unfortunately, there was a rapid deterioration of the bank from that time, and while the bank certainly was able to maintain a professional and capable staff, the staff can only operate under the guidance and ingenuity and creativity and assistance of a committed owner, and the result of the actions today appears to be that," the attorney said.
"We don't anticipate that any of the depositors or anyone in Hawaii will be hurt by this action. The big loser will be Mr. Sia because he's lost a valuable asset which could have been used to help out creditors of his bankruptcy estate. Now, of course, it's lost forever."
Sia earlier listed debts of nearly $300 million, some as gambling losses. His resignation as bank chairman came with 1998 accusations that he wrote more than $8 million worth of bad checks for gambling debts in Las Vegas.
Arrested in August, Sia has been placed in a halfway house to await trial next month.
Seized bank records may be examined for possible criminal activity, federal officials said.
Bank of the Orient prides itself on being a California state-chartered bank with deep roots in the Bay area. Bank of the Orient
to retain employeesStar-Bulletin staff
For nearly three decades, it has focused on serving small businesses and people living and working in the San Francisco and Oakland areas.
It claims a strong tradition of customer service, aiming to provide friendly, personalized service and affordable, quality products to personal and business banking customers.
With six Bay area locations, it also boasts a branch in Xiamen, China, which it says is one of the Pacific Rim's most important trading ports.
Honolulu's newest banking concern says it is committed to serving diverse and dynamic communities with a multilingual staff, and that the transition from the Bank of Honolulu will be smooth and uneventful.
Branch operations will go on as usual, and familiar employees will continue to serve customers, Bank of the Orient says.
All checks drawn, up to available account balances, on the Bank of Honolulu will be honored by Bank of the Orient, the new bank adds.
All interest paid on current insured deposit accounts will remain the same, it says.