Hawaii may be considered paradise for vacationers, but apparently, not so much for the nation’s largest banks. Hawaii’s distance from the U.S. Mainland, the state’s small population and high real estate costs are among the factors analysts say are keeping the nation’s 10 largest banks from establishing a retail presence in the islands.
Astonishingly, Hawaiit is the only state in the Union where big banks such as Bank of America (NYSE: BAC), Citigroup (NYSE: C), Wells Fargo (NYSE: WFC), and JPMorgan Chase (NYSE: JPM) have no branches or ATMs. The two largest banks in Hawaii, First Hawaiian Bank and Bank of Hawaii (NYSE: BOH) have nearly 70 percent of the market share in the islands.
Bank of America once had a presence in Hawaii after it purchased Honolulu Federal Savings & Loan in 1992, but sold its branches to American Savings Bank five years later. Historically the reasoning for the big banks not having a presence in Hawaii was pegged to the cost of operating in a state that is five or six house behind the East Coast and more than 2,000 miles from the West Coast. However, the biggest US banks already deal with these issues and greater, with their Asia pacific presence. Retail bank expansion does not seem key on the radar, given the industry continues to struggle with broader banking issues – but the market potential of Hawaiit could soon lure one of the banks onto the island, and create a new market opportunity for them.
