CB Bancshares Inc., parent company of City Bank and International Savings and Loan, said it earned $600,000 for the three months ending March 31, 1996, down from $2.3 million in the year-earlier period. On a per-share basis, the company netted 16 cents, compared with 66 cents in the first quarter of 1995.
The bank holding company attributed the lower first quarter net to a voluntary retirement program that resulted in a $3.3 million one-time charge.
The disappointing results come as CB Bancshares is facing a proxy battle with a New York-based investment banking firm that formerly served as its financial adviser and controls about 6.2 percent of the company's common stock.
The firm, M.A. Schapiro & Co., wants to place two outside directors on CB Bancshares' board of directors, saying they would serve shareholders' interests better than management's nominees. Schapiro's nominees are William M. Griffith, who heads a Hartford, Conn.-based money management company, and H. Clifton Whiteman, a former vice president at the Bank of Tokyo Trust Co.
George Reycraft, chairman of Schapiro, on Friday said that he believes his company's proposals will prevail, saying they have a lot of shareholder support.
In a May 8 filing with the Securities & Exchange Commission that was mailed to shareholders, Schapiro said that as the banking industry was enjoying record levels of profit, CB Bancshares' per-share earnings fell 31.9 percent to $2.26 from the year-earlier's $3.32. At the same time, the company's stock price "stagnated" and was "outpaced by its peers," Schapiro said.
The investment firm was critical of a recent "golden parachute" plan that would allow senior management to retain their salaries and benefits in case of a takeover or if an outside investor were to purchase a big stake in the company.
It also objected to management's nomination of Caryn Morita as director. Morita, a CB Bancshares senior vice president and its general counsel, is the daughter of James Morita, CB Bancshares' chairman and chief executive. Caryn Morita's overall private sector and financial services experience is "less than three years," Schapiro said.
"We believe the company's recent record provides a compelling case for the election of independent nominees to the company's board," Schapiro said in its SEC filing. "The independent nominees will oppose management nepotism and programs which serve to entrench management and provide disproportionate compensation in relation to performance."
CB Bancshares defended its nomination of Caryn Morita for a board seat, saying she is qualified for the job after serving as a deputy attorney general between 1988 and 1993. The company said it was "disappointed" with Schapiro's challenge and is urging shareholders not to vote for the investor group's nominees.
"It's getting really personal," said Wayne Miyao, senior vice president and bank spokesman. "We would like to take the higher ground and base our decisions on sound business judgments."
The elder Morita told shareholders in May 9 letter that the New York group has "no apparent knowledge" of Hawaii's culture, economy and banking community.
And while Schapiro has been critical of the company recent performance, Morita pointed out that CB Bancshares has enjoyed tremendous growth during the past five years. During that time, he said the company's net assets grew from $686 million to $1.5 billion.
Morita also noted that Schapiro had worked as CB Bancshares' "trusted exclusive financial advisor" for three years but was terminated in December for a variety of reasons that he did not specify.
The shareholders' vote will be unveiled at the company's annual meeting Thursday at the Hawaii Prince Hotel. There are 3.55 million shares of CB Bancshares outstanding, with the employees' stock ownership plan holding the largest block of 11.85 percent.
An Amsterdam, Netherlands company, TON Finance B.V., owns the second largest position, with 9.61 percent of outstanding shares while Evergreen Asset Management Group, a mainland investment adviser for mutual funds, holds a 6.1 percent stake. James Morita owns roughly 1.5 percent of the company's common stock.
Analyst Richard Dole said he believes that the dispute between management and Schapiro is in part due to the company's consolidation of International Savings, which hasn't gone as well as planned. Dole, director of research at Fry & Co., said duplications still exist between International Savings and City Bank that are affecting the company's bottom line.
"They're not earning the returns that other banks are," Dole said.
Miyao, meanwhile, said the company is taking significant steps toward reducing costs and improving its balance sheets.