Jul
31
Ron Migita’s story may be the most interesting in the history of Hawaii banking.
Migita, born and raised on Maui, worked his way up from the bottom of the Bankoh management until taking early retirement 29 years later as a senior vice president at the age of 53.
City Bank Chairman James Morita recruited him to come over as president, effectively promising that Migita would succeed him, only to deny him any real authority and then push him out for asking for it.
A revolt against Morita, led by mainland institutional investors, led to his ouster in 1997 — the stock value grew by a third on the news – with Migita brought back to run the bank.
City Bank’s closest rival was Central Pacific Bank. Both were founded in the 1950s to serve the ethnic Japanese business community. Both had close ties to banks in Japan. By the 1990s, both were working hard to expand beyond their original constituencies. Central Pacific hired Clint Arnoldus from California to broaden its base, and one of the first things Arnoldus decided was that he should acquire City Bank.
Migita, who had earlier tried without success to acquire Central Pacific Bank, resisted acquisition. The two men traded sometimes acrimonious news releases, and City Bank fought merger with everything from poison pill stock policies to grass roots sign-waving campaigns by employees that resembled politics more than corporate merger battles. Someone should have written a book about it.
In the end, and ironically after pressure from City Bank’s institutional investors on the mainland, Central Pacific won City Bank, but at a higher price, and Migita was made a non-executive board chairman while Arnoldus was left running the combined bank.
The merger was consummated in 2004. I attended the last City Bank shareholders meeting and it felt like a funeral (and I felt like a vulture, because I had gleefully covered the dueling press releases and other sideshows).
I confess to thinking to myself when I learned the terms of the deal, I wonder how Migita will regain the ascendancy this time? Because, in a quiet, dignified way, he seemed really scrappy. And he had come back from exile before.
The answer turned out to be that Arnoldus would stumble eventually, and people would look to Migita to save the day.
Arnoldus stumbled by doing something that he probably thought was very sensible. Looking to diversify the bank and make it less vulnerable to the vagaries of the Hawaii economy, he decided to get into the California market, and lent a lot of money to developers there.
Then the housing boom in California ended.
Central Pacific was left with hundreds of millions in non-performing debt — while the Hawaii economy outperformed California’s. Arnoldus had diversified into an economy weaker than ours.
In March, Arnoldus announced he would retire at the end of the year, while a national search for his successor would be conducted.
On Thursday, the bank announced that its board has chosen its chairman to be CEO. Ron Migita, while keeping the until now titular role as chairman, would also become president and chief executive officer.
“These are difficult times,” Migita said in a statement. “But, during my career, I have seen difficult times before.”
He takes the reins officially Friday — four months before Arnoldus had said he would retire. The official announcement didn’t play this up, but to me it means this: Migita has won again.
And get this. Migita is the first Hawaii-born CEO that Central Pacific Bank has ever had.
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