Hawaii's second-biggest bank is coming to the mainland.
On Monday, First Hawaiian Inc. announced plans to buy 30 branches with $720 million of deposits in Oregon, Washington, and Idaho that U.S. Bancorp is selling as part of a planned merger with West One Bancorp.
The branch sale, which is expected to close in the middle of next year, would give First Hawaiian a 4% share of Portland, Ore.'s bank deposits and its first branch network on the U.S. mainland.
But the $7.4 billion-asset bank may not stop there. Although no transactions are imminent, First Hawaiian is interested in other mainland buys of the same size or smaller, said chairman and chief executive Walter A. Dods Jr. in an interview. "This is a remarkable opportunity for us to diversify our earnings stream at a reasonable cost," Mr. Dods said.
He added that First Hawaiian can't make any more major acquisitions in Hawaii without violating antitrust rules. The bank and its biggest rival, Bancorp Hawaii, each have about 40% of the state's bank deposits.
As part of the deal, First Hawaiian is buying $457 million of consumer and commercial loans at book value, and paying a deposit premium of $38 million, or 5.25% of the deposits acquired. The bank is also buying $14 million of branch equipment. This makes the total transaction worth $509 million.
Sixteen of the branches are in the Portland area. Five are in Lincoln County on the Oregon coast. The rest are split between central and eastern Oregon, Washington, and western Idaho.
Analysts said that stretching into the U.S. mainland seemed like a smart move for First Hawaiian. "To get some diversity of income, especially in a high-growth area like the Pacific Northwest, makes sense," said Wendy Gleichmann, of Merrill Lynch & Co.
U.S. Bancorp, based in Portland, plans to complete its merger with Boise-based West One this month. The bank had said it would sell a total of 31 branches to comply with bank antitrust rules. The remaining branch, with $16 million of deposits, it being sold to Bank of Bellingham, in Washington.
