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  • Central Pacific Bank

    Please tell me. Should I close my CPB checking account and bank elsewhere? The only account I have with CPB is an interest bearing checking account with a few thousand dollars. I've had it for 30 years. It's very active; I pay all my bills with this account, and I have automatic utility deductions and automatic payroll deposit. Needless to say, it will be a pain to close this and undo and redo everything with another bank... but of course, I'd rather go through this than lose everything.

    A friend told me not to bother. She said if they do go under, their accounts will be taken over by another solvent bank. I told her, I am also concerned about a screw up in the transition from one bank to another. She felt there was potential for screw up if I closed and opened, too, and that I should just leave it as is.

    What would you do? Thank you!

    http://www.starbulletin.com/business...huge_loss.html

    http://pacific.bizjournals.com/pacif...7/daily45.html

  • #2
    Re: Central Pacific Bank

    I am completely out of my element here, but I'd say leave it where it is if you were already so inclined. Closing the account for something like that is the thing panics are made of. Of course, it's not my money, so perhaps that's easy for me to say.
    But I'm disturbed! I'm depressed! I'm inadequate! I GOT IT ALL! (George Costanza)
    GrouchyTeacher.com

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    • #3
      Re: Central Pacific Bank

      Sharilyn, I could have written your post, word for word! I'm leaving my accounts alone but have a list of automatic deductions and deposits with corresponding contact info so I can manually pay or update the depositor, if needed. I also have a small money market account in a mainland bank that includes check writing and a debit card. While I didn't open this account as a back-up to the CPB situation, it's nice to have it...just in case. In the meantime I'm going to take a watch and wait position.

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      • #4
        Re: Central Pacific Bank

        Thanks, you guys, for helping me think this thru. I'm going to mull over it for the next few days.

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        • #5
          Re: Central Pacific Bank

          Originally posted by Sharilyn View Post
          Thanks, you guys, for helping me think this thru. I'm going to mull over it for the next few days.
          A friend of mine used to be a bank analyst for a small hedge fund, and now he works for the NY branch of the Fed. He's spent a lot of time analyzing shaky banks, and now he's spending his time fixing them. He's taught me a lot about the process, and we've spent some time pondering CPB.

          Let's say the worst happens... CPB gets taken over by the authorities. They'll "close" the bank on Friday night, spend the weekend going over the books and deciding what needs to be done, and then open on Monday "under new management" with a few more newspaper headlines.

          Customers should be able to use their checking accounts as normal, especially if you don't need to withdraw money "right now" or if you're just paying bills via web billpay or EFTs. If you wanted to get $100 out of an ATM on Tuesday morning, though, you might still have long lines at CPB ATMs or have trouble finding a network ATM willing to cover the transaction. But things would settle down within the week.

          Your CPB mortgage payments would still be due, of course, and your CDs would accumulate interest and mature as usual. If you had over the $250K FDIC-insured limit in one CD account then you might have a delay when it matured, but you'd eventually get your principle and maybe even your interest.

          You wouldn't lose anything, let alone everything. The depositor's accounts would be fine no matter who was running the bank. But CPB would become unusually vicious (even for them) about fees, penalties, and extra charges. Checking accounts might no longer earn interest below a certain minimum balance or debit-card activity. Your billpay service might no longer be free. Interest rates on credit cards would rise. Customer service might go out the window. You'd also go through hell if your mortgage fell behind, or even if you applied for a new one. As for business loans and lines of credit... hard to imagine.

          Meanwhile you could easily open an account at Pentagon Federal Credit Union. Everyone is eligible for membership, military or not, and they're especially good if you're comfortable banking over the Web. I've had an account for nearly five years and I've never even talked to them on the phone, let alone set foot in a PenFed branch office. CD rates are higher than banks, HELOCs and mortgage rates are generally lower, and there's no fear of receivership. You could say the same for Navy Federal Credit Union (which may be tougher to join) or any of a dozen other local credit unions (which are almost as easy to join as PenFed). Credit unions are non-profit (unlike banks) so they generally pay more interest and charge less interest/fees. You might even continue to have free billpay.

          Changing banks/credit unions is surely a hassle. But if your guts twist every time you see CPB on the news or in the headlines, or if you're laying awake at night wondering whether you'll be able to get cash out of an ATM, then the peace of mind might be worth the hassle.

          Incidentally, remember nine years ago when Mike O'Neill parachuted in to take over Bank of Hawaii? BOH had gotten in trouble with Japanese loans and an expansion into the Pacific Rim just in time to get snared by the 1998 Russian bond default, the late '90s Asian currency devaluations, and other economic problems. The bank's bad loans were soaring, their cash flow sucked, their executives were struggling, and investors/depositors were fleeing in droves. The situation looked pretty ugly until O'Neill turned around the public's perception. He took no salary for years and actually bought $10M of BOH stock with his own money. IIRC the share price was about $5, and over the next 6-7 years it slowly climbed to over $50. Things have been rocky the last couple years but today BOH is literally ranked #1 in the nation for financial stability.

          When BOH shares were flailing around $5, CPB was up around $12. As BOH shares climbed, CPB shares followed to about $40 and then fell off a cliff. Last November they actually broke under $1/share. Today CPB is struggling with bad construction/housing loans in California. Their cash flow is more like a hemorrhage and their execs are definitely struggling. The difference is that CPB was more highly leveraged and their loan default rate is much higher than BOH's ever was. Executive salvation does not appear to be at hand, and their stock is priced pretty much at bankruptcy liquidation levels. So for those thinking that CPB shares appear to be underpriced... they're probably not. Not at any level where I'd care to risk my money. How ironic it would be to see CPB going under right next door to the nation's #1 bank. And you certainly won't be seeing CPB at the top of any "good" lists for a few years.

          I've kvetched a number of times about NFCU and even PenFed over the last few years, but they've never kept me awake at night...
          Youth may be wasted on the young, but retirement is wasted on the old.
          Live like you're dying, invest like you're immortal.
          We grow old if we stop playing, but it's never too late to have a happy childhood.
          Forget about who you were-- discover who you are.

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          • #6
            Re: Central Pacific Bank

            Wow...a lot of info, Nords. Thanks for taking the time to explain it. I like the customer service at CPB which is why I've stayed with them. Well, that, and they had some high interest bearing checking accounts!

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            • #7
              Re: Central Pacific Bank

              Personally, I would convert most of the "extra" savings into something tangible and keep an amount in the bank that will cover your monthly expenses. It really depends on how much mullah you have.

              For the time being, the FDIC has a little money (like $93 billion) from the 3-year advance they charged the banks recently, but that's not going to cover the 200+ banks many experts are predicting will fall this year. As of today, 15 banks failed since Jan. 1. 140 of them dissolved in all of 2009.

              WHEN a banking and currency crisis hits, you won't have the time or ability to make the needed withdrawals. Cash will be king for a while, especially if the banks declare holidays, furloughs (or whatever you wanna call it), and you can't use credit or debit cards. Withdrawals may be limited to just $500-$1000 per week.

              Bank holidays were called 4x during the Great Depression. In my opinion, we're facing an even greater one, so you can count on longer holidays.

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              • #8
                Re: Central Pacific Bank

                Thank you, Nords...and Bob.
                I'm leaning more and more toward changing banks.

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                • #9
                  Re: Central Pacific Bank

                  I am also a big supporter of credit unions. They offer the same services as banks and, in my experience, have much better customer service. A lot of them even offer better perks than banks, such as smaller or no fees and better interest rates on loans. I worked for the Texas Credit Union League several years ago, and I loved it. I also used to work for Bank of America, and the difference between those two companies was like day and night. BOA was all about the bottom line and profits and TCUL was about the customer.

                  Just thought I'd throw my 2 cents in.

                  Can't think of anything creative this time

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                  • #10
                    Re: Central Pacific Bank

                    Originally posted by Sharilyn View Post
                    I'm leaning more and more toward changing banks.
                    Like maybe under your pillow?

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                    • #11
                      Re: Central Pacific Bank

                      Originally posted by surlygirly View Post
                      I am also a big supporter of credit unions. They offer the same services as banks and, in my experience, have much better customer service. A lot of them even offer better perks than banks, such as smaller or no fees and better interest rates on loans. I worked for the Texas Credit Union League several years ago, and I loved it. I also used to work for Bank of America, and the difference between those two companies was like day and night. BOA was all about the bottom line and profits and TCUL was about the customer.

                      Just thought I'd throw my 2 cents in.
                      Under normal circumstances, yes. But I understand the credit unions work through the banks. We're facing a crisis the world has never seen.

                      Here's Congressman Ron Paul warning of possible civil unrest and martial law as a result of the looming crisis. 99% of the public has no idea what's really happening in the banking world, even bank employees.
                      http://www.blacklistednews.com/news-7286-0-15-15--.html

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