CPB head reaffirms bank's stability

By Dan Nakaso
Advertiser Staff Writer

Clint Arnoldus turned his cell phone back on after an early morning workout Monday and found it ringing like crazy with an automatic alert that his company's stock had plummeted.

CPB Inc. was stunned Monday by an 18 percent drop in shares. CPB president Clint Arnoldus in a speech yesterday said that the bank is "very clean, very solid" and wanted the public to know that the dip was caused by a single sale. Deborah Booker • The Honolulu Advertiser

"My initial reaction was that it had to be an error because the bank's doing so well," Arnoldus said. "It shocked me that someone was selling our stock."

In an era of corporate mistrust across the country, Arnoldus worried what customers would think just as CPB was getting ready to release a report describing its 12th consecutive quarter of record earnings.

And it was only 6:45 in the morning.

Company executives quickly decided to release the positive earnings report later that afternoon. And the next day Arnoldus was supposed to speak before the Rotary Club of Honolulu.

The speech gave Arnoldus the opportunity to explain what happened to CPB's shares and also wear down some of the stereotypes that have grown up around Hawai'i's third largest bank.

First Arnoldus approached the topic of the dramatic stock drop with a gentle joke. "We watched our 401(k)s just about turn into 201(k)s," Arnoldus told the Rotarians.

He cited corporate accounting fraud at companies such as Enron and said, "I just want to tell you that we're running a very clean, very solid bank."

Then Arnoldus repeated the message he had been spreading for the past 24 hours: The drop was the result of an institutional shareholder who abruptly shifted strategies.

CPB was affected so much "because we're a very thinly traded stock," Arnoldus said. "There's not a lot of liquidity out there....That's why we need to convince the public that it's a good value."

Arnoldus also wants to convince the public that Central Pacific Bank doesn't cater just to Japanese Americans.

It will be a delicate undertaking for a 55-year-old banker who describes himself as the first Mainland haole to run Central Pacific.

He went to school at Brigham Young University in Provo, Utah, and ran banks in Nevada and California. His new bank was founded in 1954 by Japanese-American soldiers from the 442nd Regimental Combat Team and 100th Battalion who fought in World War II only to find discrimination back home.

"They were encountering extreme prejudice in finding financing to buy homes and cars and everything," Arnoldus said. "So they had to create their own bank."

The history lesson has not been forgotten in the Islands. In focus groups and in talking with people in the community, Arnoldus realized that it's sunk in so well that people often think Central Pacific caters only to Japanese Americans and isn't even a full-service bank.

"As we go forward, we want the market to know that we're here as Hawai'i's bank," Arnoldus said, "but not at the expense of our tradition and the Japanese-American market that we value and will service aggressively."

Arnoldus has restructured CPB's operations and developed nine teams to focus on specific market groups divided by geography or topic, such as real estate.

But only one, a four-person team, focuses specifically on an ethnic group, Japanese Americans.

"At first we were a little concerned that our Japanese-American market might misunderstand and interpret it as if we're pulling away," Arnoldus said yesterday after his speech. "But I will never ever forget the sacrifices of the people who founded this bank. As we grow, we will never grow away from the history of this bank."

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com or 525-8085.