Lender coming
to islands

First Horizon Home Loans
has hired 20 workers laid off
by Washington Mutual,
which is closing up

A fast-expanding mainland financial group is laying plans to become Hawaii's newest bank.

About the company

First Horizon National Corp. is launching local mortgage-lending services in a plan to become the newest full-fledged bank in Hawaii.

Headquarters: Memphis, Tenn.

Total assets, as of Dec. 31: $24.5 billion

Employees: 12,000 in 42 states

First Horizon Home Loans will begin offering mortgage lending services in Hawaii as early as next week, the first step in a plan by its Tennessee-based parent, First Horizon National Corp., to open full-fledged banking operations in the islands.

"Hawaii will be new for us and we'll see how rapidly we can develop a customer base there and then see when to add additional services," said FHHL President and Chief Executive Jerry Baker, who is based in Dallas.

To help launch its mortgage business, FHHL has hired about 20 sales staff and managers due to be laid off by struggling mortgage lender Washington Mutual, which announced last month it was leaving the islands.

First Horizon National, which had total assets of $24.5 billion at the end of 2003 and employs about 12,000 people in 42 states, is one of the country's biggest mortgage providers and recently embarked on a nationwide strategy to expand its retail banking operations out of its home market of Tennessee.

It changed its name earlier this year from First Tennessee National Corp. to reflect that broadened focus. The company's shares are traded on the New York Stock Exchange.

The strategy has involved using its mortgage operations as a conduit for eventually introducing full banking, credit card and investment services.

Nancy Mercer, western region executive vice president for FHHL, said there is no firm timetable for introducing full banking services in Hawaii but the establishment of a mortgage presence reflects the same strategy being adopted nationwide.

"We are absolutely committed to embedding ourselves in the local community as a full-fledged bank in Hawaii," she said.

Mercer said FHHL's recent hires include Washington Mutual's Hawaii manager Hiroshi Imamura, who will assume the same role for FHHL. Further hirings are possible but it is unlikely there would be jobs for all of Washington Mutual's staff, she said.

Washington Mutual announced last month that it would pull out of Hawaii by late September to focus its operations on mainland markets where it has a retail banking presence and that all 81 local staff would lose their jobs as a result.

FHHL, which has set up headquarters in downtown Honolulu's Alii Place office tower, also is in talks to take over the leases for Washington Mutual's offices in Wailuku and Kailua-Kona. However, it was not interested in the lender's two Honolulu offices, one of which also is in Alii Place.

Jasen Takei, president of the Mortgage Bankers Association of Hawaii, said recently that the shrinking loan activity that hurt Washington Mutual also is causing other mortgage lenders in Hawaii to shed staff.

"They're either explicitly cutting people or just not replacing them. It's pretty systematic," he said.

But Baker brushed aside any concerns about FHHL's timing.

"For us, it's not so important that the mortgage business is profitable. We need that mortgage presence so that over time we can expand our other lines of business in Hawaii," he said.

Jacqueline Reeves, a Florida-based banking analyst who covers both First Horizon and Bank of Hawaii, said a new bank is needed in a market now dominated by Bankoh and First Hawaiian Bank.

"I think the Hawaii market could use another player. It's over-consolidated now," Reeves said, adding that First Horizon's presence could make more products available to customers.

She added that while Washington Mutual was a victim of an overly aggressive expansion strategy, First Horizon has a track record of savvy investments and marketing strategies.

"Some companies like First Horizon have positioned themselves to capitalize on other companies' weaknesses," she said.

First Horizon Home Loans



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