Purchase from Home Side Vaults BankAmerica Unit Into Hawaii's Top Three

Bank of America's recent deal to buy Honolulu Mortgage Co. catapults the San Francisco bank into the ranks of the top three mortgage lenders in Hawaii, a market rich in jumbo mortgages.

Last year, Honolulu Mortgage made roughly $300 million of home loans on four Hawaiian islands, while Bank of America originated just less than $100 million.

With the deal, "we almost quadruple our presence on the Hawaiian islands," said Arthur D. Ringwald, group executive vice president of BankAmerica Mortgage. And Bank of America expects that originations will climb further as Honolulu Mortgage offers the bank's portfolio-loan products.

Indeed, Hawaii is the kind of market that portfolio lenders crave.

The high cost of housing drives loan balances extremely high. Also, delinquency rates are very low because of the strong East Asian ethic about the importance of paying bills. "It's sort of a family disgrace if you don't pay your loan off," Mr. Ringwald noted.

And prepayment speeds are "perceptibly slower" than on the mainland, he said.

"It's a very natural fit for (Bank of America) and its expansion plans," Mr. Ringwald said.

"I just think the deal makes tons of sense."

Mr. Ringwald said his mortgage company continues to look for acquisitions and is particularly seeking a strong retail network in the Southeast.

Bank of America bought Honolulu Mortgage from HomeSide Lending Inc., the Jacksonville, Fla., company owned by Barnett Banks Inc., Bank of Boston Corp., and other investors.

Terms of the deal were not disclosed.