Bankoh, S&L on Guam set for merger
By Frank Cho
Advertiser Staff Writer
The parent company of Bank of Hawaii is preparing to merge its Guam savings and loan subsidiary with the bank by the end of the year to streamline operations.
Plans call for Guam's First Savings and Loan Association of America to merge its two free-standing and four in-store branches and $168 million in assets into Bank of Hawaii. The bank has a 76-branch network, including three on Guam, and a $10 billion asset base.
It is not clear how much money the move will save. The merger will affect about 30 employees with First Savings on Guam, according to the bank, and no interruption or changes in service are expected.
"We've said over and over we were not a particularly efficient bank and we needed to improve that," said Allan Landon, vice chairman, treasurer and chief financial officer at Bank of Hawaii.
Bank officials expect to file the request with federal regulators to begin the process by the end of the week.
The move is the bank's latest to restructure operations, streamline expenses and improve profitability. Since Bank of Hawaii first announced plans to restructure operations in April 2001, it has sold or closed nearly all of its operations in Asia and the South Pacific and on the U.S. Mainland. It has kept operations in Hawai'i, Guam and American Samoa.
Bank officials said that once the application is filed, it will be reviewed by the Federal Reserve's regional office in San Francisco and by Guam banking regulators, a process that should take no longer than 90 days.
"We would like to get this done soon. We think it is straightforward and should be approved routinely," Landon said.
Strict anti-branching bank laws on Guam had prevented out-of-state banks with existing operations on Guam from adding branches. But when three Guam-based banks challenged a move by First Hawaiian Bank to open a branch on Guam earlier this year, a judge there struck down the law saying out-of-state banks must be treated the same as national banks operating on Guam.
The ruling opened the way for Bank of Hawaii to merge the savings and loan and reopen its branches as Bank of Hawaii branches.
Landon said the bank has been marketing two brands in Guam — Bank of Hawaii and First Savings. He said the bank would like to consolidate that marketing effort behind just one brand and reduce its regulatory burden.
Before it began divesting businesses last year, the bank reported to as many as 12 regulatory agencies that oversaw various aspects of the bank's far-flung operations. That number dwindled to three as the bank sold, merged, or closed various lines of business.
In February, Bank of Hawaii's parent holding company, Bank of Hawaii Corp., became a Federal Reserve System bank after it dropped the Federal Deposit Insurance Corp. as its primary regulator. The FDIC had put the bank under increased regulatory scrutiny and stationed an FDIC inspector at the bank after it ran into asset-quality problems several years ago.
The FDIC has since lifted its increased scrutiny and recalled the inspector.
Bank of Hawaii remains a state-chartered bank. Its parent company, Bank of Hawaii Corp., changed its incorporation from Hawai'i to Delaware four years ago.
Reach Frank Cho at 525-8088, or at fcho@honoluluadvertiser.com.
