Their handshake brought to a close one of the most contentious battles in Hawai'i corporate history. The top executives of both banks said they wanted to forget their yearlong acrimonious battle and focus on the future.

But as one fight ends, another challenge unfolds: how to make good on Central Pacific's promises to the community, workers and Wall Street.

CB Bancshares agreed to the acquisition after Central Pacific raised its initial offer of $285 million to $420 million, just a tad above Central Pacific's market value. The combined bank would be called Central Pacific Bank, and its parent, Central Pacific Financial. Central Pacific CEO Clinton Arnoldus would retain his title at the new company. CB Bancshares CEO Ron Migita would be the non-executive chairman.

Now Arnoldus has to turn his attention to making the merger work: providing value to shareholders, melding employees, improving service and controlling costs.

Central Pacific spent $16 million pursuing the takeover, and borrowed $40 million to finance the attempt.

In a conference call with analysts on Friday, Arnoldus pledged there would be no layoffs resulting from the merger. For every overlapping branch that closes — they have identified 10 — another will be opened.

He also told Wall Street analysts Central Pacific expects $19.5 million in annual cost savings from workforce attrition and operating efficiencies.

Questions remain about how the bank would achieve the stated savings without layoffs or branch closings.

"I'm still unclear how they're going to get the job done," said Joe Morford, an analyst at RBC Capital Markets in San Francisco.

Asked at a press conference Friday how the merged bank can avoid layoffs when it would have two heads of human resources, for example, Arnoldus replied that there would be a "much bigger HR department."

The bank's stock could take a hit if Wall Street's expectations aren't met. That's a risk for CB Bancshares shareholders, since 78 percent of what they're getting is in Central Pacific stock, based on the takeover ratio.

Arnoldus also told analysts he expected to incur restructuring costs of $50 million to merge operations. Central Pacific expects to book that cost and take a hit to earnings in either the first or second quarter of fiscal 2005.

Acquiring City Bank represents a large transaction for Central Pacific that could run into snags during integration. "Whenever you have a sizable deal like this, it creates integration risk," said Brett Rabatin, a banking analyst at Midwest Research in Nashville.

Arnoldus thinks otherwise: "You never take integration lightly, but we think a lot of commonality is going to make this integration easier than others."

Central Pacific Bank, with headquarters on Alakea Street, will retain its name after the merger. The combined bank will have 45 branches across Hawai'i. Advertiser library photo

Arnoldus believes the long-term gains outweigh the short-term pain.

"What we're creating is a much stronger and much more versatile bank," he said. "The goal here is to capture market share."

Arnoldus rattled off the combined bank's statistics: $4.4 billion in assets, $3.3 billion in deposits and $530 million in shareholders equity, or net worth.

The merged bank will have 45 branches across Hawai'i and a workforce of 1,000. Customers will have access to more banking locations and ATMs. Products and services will be expanded.

Combined, the banks would have a market value of $700 million, putting it in the target of more Wall Street investors. Many major institutional investors, such as mutual funds, tend to shy away from tiny companies in part because low trading volumes make it difficult for a large mutual fund to get in and out of the stock quickly, making the shares less attractive.

By boosting its size and presence on Wall Street, the new bank might find it easier to raise capital to finance expansions. If it becomes large enough, the merged bank could take on the much bigger Bank of Hawaii and First Hawaiian Bank.

"The important thing is to focus on the future," Arnoldus said.