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CINDY ELLEN RUSSELL / CRUSSELL@STARBULLETIN.COM
Ronald Migita, president and CEO of CB Bancshares, left, and Clint Arnoldus, chairman, president and CEO of Central Pacific Bank, shared the table April 23 at a press conference detailing the merger of the two banks.




Central Pacific Bank plans
to build on market share

More acquisitions could be
in the offing after working
through the City Bank deal


When Central Pacific Financial Corp.'s board of directors brought in Clint Arnoldus more than two years ago, his mandate was to grow the bank.

A merger with City Bank's parent wasn't dictated, but it certainly was on board members' minds, according to someone familiar with the situation.

After a 13-month battle, Arnoldus, the chairman, president and chief executive of Central Pacific, is on the verge of accomplishing a $420 million transaction that will boost the bank's visibility both in the state and on Wall Street.

"How many of you a year ago thought we'd have (CB Bancshares Inc. President and CEO) Ron Migita at our annual meeting?" Arnoldus asked Central Pacific's shareholders Tuesday night.

Now that Central Pacific and CB Bancshares are about to join forces, Arnoldus is eager to improve upon the nearly 14 percent deposit market share the two banks collectively would have in Hawaii.

"Our growth plan is a relatively simple one," said Arnoldus, who will be CEO of the combined company. "We're going to capture more market share. With a 14 percent deposit market share, there's a lot of opportunity out there. We'll have more convenience. We'll have better products and services. We'll have a more aggressive market plan."

Bank of Hawaii and First Hawaiian Bank are in a virtual dead heat for first when it comes to deposit market share in Hawaii, according to April 22 data that Central Pacific obtained from research firm SNL Securities. Bank of Hawaii has 30 percent of Hawaii's deposits while First Hawaiian holds 29.8 percent. American Savings Bank is third with 18.4 percent.

A combined Central Pacific and City Bank institution would have a deposit market share of 13.7 percent and be a strong No. 4 in the marketplace. Without the merger, Central Pacific and CB Bancshares would be a distant fourth and fifth at 8.1 percent and 5.6 percent, respectively.

"We're certainly within striking distance of the No. 3 position," Arnoldus said of the combined bank.

In fact, the 57-year-old Arnoldus, who left this weekend with other bank executives on an East Coast swing to address institutional investors and analysts, hinted that he may not be through wheeling and dealing.

"We're on the outlook for any acquisitions that make sense, but I think it would make sense that we first digest this one," he said.

"And I think we've satisfied our appetite for hostile," Arnoldus added with a wry smile.

The deal that was once referred to as hostile and unsolicited is now being called friendly with CB Bancshares' poison pill, the anti-takeover defense, no longer an issue.

"In the community at large, much is going to be made of the acrimony that exists between Ron and me and between our two institutions, and I have to tell you that Ron and I are just looking forward," Arnoldus said. "We think that we're going to be able to work together very well ...and I can tell you throughout our institution, there's a feeling of welcome to City Bank."

Migita, who also said he's put the past behind him, won't be an employee of the company in his role as nonexecutive chairman. However, he said he'll be working with the board to provide strategic guidance to the management team.

"We believe that joining with Central Pacific will create many concrete benefits for City Bank customers and employees that quickly will become apparent as we begin to realize the full potential of our combined capabilities," Migita said.

Arnoldus said blending Central Pacific's commercial mortgage concentration with City Bank's residential mortgage lending will reduce portfolio risk as the combined bank continues to serve small- and medium-sized business and becomes more of a full-service bank.

"What we're creating is really a stronger and a more versatile bank focused on the business needs of Hawaii," Arnoldus said.

Still, Arnoldus was quick to point out that the combined bank won't abandon its niche, or its heritage.

"There's been some fear with the two banks coming together that we may change our character," he said. "(There's concern) that we may be striving to become a big bank and to start looking at our customers differently and our markets differently and get more into the cookie-cutter type of bank that's more prevalent in the larger banks today. That's absolutely not going to be the case.

"We're going to remember our heritage. We're going to be true to the market of Hawaii. The Japanese-American market will always have a soft spot in our hearts because that's what these banks were founded to serve, and we're gong to make sure that market is served. But we're also going to serve the greater market as well."



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