City Bank sticks to cautious approach
By John Duchemin
Advertiser Staff Writer
In a tightly scripted annual shareholders' meeting yesterday, officials at CB Bancshares walked smoothly through some routine housekeeping matters, elected new board members — and barely mentioned that the bank is the subject of a hostile takeover attempt by local rival Central Pacific Bank.
Despite the lack of attention paid to Central Pacific's $285 million buyout offer, the takeover attempt was on the minds of CB Bancshares officials. In a press conference after the meeting, company chief executive Ronald K. Migita repeatedly insisted his company, the parent of $1.6 billion local bank City Bank, wasn't ruling out the possibility of a merger.
"As I have said before, we have to give this deal a very thorough evaluation," Migita said.
But Migita reiterated earlier comments that Central Pacific, by publicly announcing its intent to buy City Bank last week, was engaging in improper business behavior that had disrupted the two banks' normally harmonious relationship.
Central Pacific, which is offering $70 per CB Bancshares share, had threatened to take its buyout offer to CB's stockholders if Migita and fellow officials don't agree to negotiate.
"For someone like me, born and raised in Hawai'i, we work on a cooperative basis," Migita said. "It's not our culture to be hostile or strong-arm."
Migita's statements yesterday revealed few details of City Bank's position on the takeover attempt. The bank has retained Wall Street firm Sandler O'Neill & Partners as a financial adviser and hired New York law firm Skadden Arps Slate Meagher & Flom to provide legal counsel. But City Bank executives have said little other than that they are seriously considering the bid.
"We are being very, very cautious not to give any impression that we have pre-judged the issue," said Fred White, the Skadden lawyer assigned to counsel City Bank. "The (CB Bancshares) board is most concerned about gathering information necessary to make a decision. We're in a period that is filled with more silence ... I understand people are frustrated, but these things take time."
City Bank has so far resisted requests from Central Pacific chairman Clint Arnoldus that it support the buyout bid, which Arnoldus says will create a stronger No. 4 bank in Hawai'i. Several CB Bancshares shareholders, including two of the company's largest institutional investors, have announced their support for the deal. But Migita yesterday said most shareholders seem to be supporting City Bank's cautious approach.
"We have had various reactions," Migita said. "But generally speaking, the calls have been in support of our decision to look carefully at the proposal and not to rush."
Central Pacific is the state's fourth-largest banking company and City Bank is No. 5. Central Pacific officials announced the takeover bid April 16, saying the combined entity, with nearly $4 billion in assets, would be more competitive with the state's three largest bank companies.
CB Bancshares' annual meeting — usually a "non-event," according to bank spokesman Wayne Miyao — was attended by several dozen stockholders, most of whom appeared to be City Bank workers who have stock through the company's employee stock ownership plan.
The half-hour meeting, presided over by bank chairman Lionel Tokioka, proceeded quickly through the re-election of four board members and extension of a stock compensation plan.
Migita summarized the bank's finances and talked about its expanding profits.
Then Tokioka mentioned the hostile takeover attempt and asked for shareholders' patience.
The meeting concluded with no further discussion.
