Reeling from problem loans to California developers, Central Pacific Financial Corp. named company Chairman Ronald Migita as its new president and chief executive officer.

The 67-year-old Migita replaces retiring CEO Clint Arnoldus, 61, who has served as the public face of the state's fourth-largest bank for the past six years and was the architect of the company's 2004 merger with City Bank parent CB Bancshares Inc.

Also yesterday, Central Pacific slashed its quarterly dividend from 25 cents per share to 10 cents per share and reported an operating loss of $52 million, or $1.81 per share, for the second quarter.

Shares of Central Pacific declined 70 cents yesterday to $11.07 on the New York Stock Exchange.

"These are difficult times for financial institutions across the country. But during my career, I have seen difficult times before, and met every challenge head on," Migita said in a news release.

Central Pacific is just one of scores of financial institutions that have been affected by the turmoil in the global credit markets. According to The Associated Press, banks and financial companies around the world have been forced to take more than $300 billion in write-downs in the past year.

Migita, whose appointment is expected to take effect today, stressed that Central Pacific's core Hawai'i operations are profitable and that the company remains committed to its customers, investors and employees.

Central Pacific, which does not make loans to subprime borrowers, said its problems stem from construction loans to developers in Southern California. Many of those developers have been hard-hit by the subprime lending crisis and the downturn in real estate values.

In its second quarter earnings report, Central Pacific said it wrote down $74 million of its Mainland portfolio after selling off a large chunk of those construction loans. Since January, the company has charged off more than $129 million worth of the troubled loans.

The loan charge-offs don't include a $94 million, non-cash goodwill impairment charge that the bank took during the quarter to reflect the decline in value of its Mainland loan portfolio.

Including the impairment charge, Central Pacific had a net loss of $146.3 million, or $5.10 per share.

Central Pacific executives said they believe the company will rebound over the next several quarters.

At the beginning of the year, the company's overall exposure to the California residential market was about $320 million, or about 5.7 percent of the bank's total assets of $5.6 billion. Since then, Central Pacific has reduced its loan volume to that sector to about $144 million, said Dean Hirata, Central Pacific's chief financial officer.

"They have been very aggressive in writing down loans on the Mainland," said Brett Rabatin, senior research analyst with FTN Midwest Securities Corp. in Nashville, Tenn. "They are taking the right steps."

REMAINS AS CHAIRMAN

Migita served as Central Pacific's chairman since the 2004 merger with CB Bancshares and was president and chief executive officer of CB Bancshares before the merger.

Prior to joining City Bank in 1995, Migita held several executive positions at the Bank of Hawaii.

He is a member of the University of Hawai'i Board of Regents and is a trustee for the Public Schools of Hawaii Foundation.

Migita, who will remain as Central Pacific's chairman, declined to disclose his compensation as CEO, saying it will be made public at a later date.

Migita's charismatic predecessor, Arnoldus, has served as the bank's No. 1 executive since 2002.

Arnoldus, who announced his retirement plans in March, cut a high profile as he tried to broaden Central Pacific's appeal beyond its roots as a small bank founded by Japanese-American World War II veterans.

Arnoldus orchestrated Central Pacific's merger with City Bank's parent, in a $430 million deal that combined the state's fourth- and fifth-largest banks.

The deal increased the company's earnings and market capitalization, added dozens of branches, reduced overhead and allowed the combined banks to better compete with Hawai'i's three major banks.

The merger was initially rebuffed by City Bank's management, which considered it a hostile takeover attempt. City Bank officials later accepted the deal after Central Pacific sweetened its offer.

As a result of the deal, Central Pacific has $5.6 billion in assets and operates 39 branches.

'MOUSE THAT ROARED'

During the merger, Arnoldus made headlines with his criticism of Hawai'i's two largest banks, saying they had lost favor with local customers. He noted First Hawaiian Bank had been bought by BNP Paribas of France, at a time when anti-French sentiment was high in the U.S. He said Bank of Hawaii alienated customers "by loading the senior management with Mainland imports."

Bank of Hawaii's then-CEO Mike O'Neill likened Arnoldus to the leader of the small country in "The Mouse That Roared," a satire about a country that declares war on the United States.

Walter Dods, who was chief executive of First Hawaiian at the time, offered to debate Arnoldus in pidgin on what is "local" and said he "didn't just get off the boat from California and learn the shaka sign."

Arnoldus eventually backtracked, saying he didn't mean to say that First Hawaiian's employees are French and not local.

Arnoldus said yesterday that he plans to relocate to Arizona to spend more time with his family, which includes six children and 14 grandchildren. Arnoldus will receive a retirement package worth $5 million.