Central Pacific Bank
buys home loan
competitor

The bank plans to purchase
Hawaii HomeLoans to expand
its residential loan business

Four months after absorbing rival City Bank, Central Pacific Bank has made a move to further strengthen its residential mortgage business by signing a letter of intent to acquire Hawaii HomeLoans.

The 3-year-old, full-service mortgage broker has one office in Honolulu and another in Kona on the Big Island. It originated $555 million in residential loans in the fiscal year ended Feb. 28, and services about $750 million in loans owned by other companies. No purchase price was disclosed.

The combination of Central Pacific and Hawaii HomeLoans will double the bank's residential loan business and make Central Pacific one of the largest mortgage originators in the state. The acquisition will not increase the amount of residential mortgages in Central Pacific's loan portfolio because Hawaii HomeLoans sells all its mortgages to third parties.

Central Pacific expects the deal to close within the next two months. There will be no change for Hawaii HomeLoans customers except that their loans now will be serviced by Central Pacific, and the Hawaii HomeLoans name will no longer exist.

Central Pacific, which had a concentration in commercial mortgage loans before acquiring City Bank, acquired its rival partly to balance Central Pacific's loan portfolio. City Bank's emphasis had been in residential lending.

Clint Arnoldus, chief executive of Central Pacific, said the acquisition of Hawaii HomeLoans is consistent with the company's focus to grow its residential and commercial lending business.

"With an expanded portfolio and the addition of top mortgage professionals, our bank will be better positioned to service larger residential real estate development projects from start to finish," Arnoldus said.

Blenn Fujimoto, executive vice president of the Hawaii market for Central Pacific, said the bank will be able to finance both a construction project and the individual sales of the homes that are built.

Hawaii HomeLoans President Tom Zimmerman will oversee the bank's residential mortgage operations upon completion of the deal. Former City Bank President Richard Lim previously had been in charge of that division before leaving Central Pacific in early May after the merger of the banks. Hawaii HomeLoans Chairman and CEO Ron Schmid has elected to retire.

Fujimoto said the majority of Hawaii HomeLoans' 80 employees will be retained. He said Zimmerman will decide exactly how many to keep after assessing the combined operation.

"In joining with Central Pacific Bank, we will have an increased customer base, allowing for greater opportunity to expand our residential lending business in a robust Hawaii economy," Zimmerman said.

Schmid said it was "exciting" to see the progression of the company, "especially given such an ideal combination where there are clear synergies."