STAR-BULLETIN FILE
Continuing its campaign to fend off a hostile takeover from rival Central Pacific Financial Corp., City Bank parent CB Bancshares has held demonstrations and purchased ads. Yesterday, it filed a lawsuit.
City Bank hits back
CB Bancshares files suit against hostile
bidder Central Pacific Financial
City Bank's parent, which spent $4.2 million in legal and related expenses last quarter to fight off a hostile takeover bid, lashed back yesterday with a lawsuit against Central Pacific Financial Corp.
On a day in which CB Bancshares Inc. posted a 20.4 percent jump in second-quarter net income that included merger expenses, the bank also filed suit in state Circuit Court alleging that Central Pacific Bank's parent violated Hawaii's Control Share Acquisitions statute.
CB claims that CPF's "voting group," which include CB's largest shareholder, Ton Finance, failed to obtain shareholder approval for voting agreements and arrangements that gave CPF beneficial ownership of more than 10 percent of CB's shares.
For remedies, CB is asking the court to:
>> Suspend the voting rights of CPF and CPF's voting group for one year;CPF spokesman Ann Takiguchi, who said CPF was made aware of the suit late yesterday afternoon, said the company would have no comment until it had a chance to review the complaint. CPF was scheduled to release its second-quarter earnings results early this morning.>> Prevent CPF and the other voting group members from selling or transferring any of their CB shares for one year;
>> Allow CB to be allowed to purchase the CB shares of each member of the CPF voting group for a period of 12 months at a price of $35.84 a share, the book value -- adjusted for a 10 percent stock dividend -- of those shares as of March 31.
>> Award additional financial relief and attorney's fees.
The suit is the second one involving the two banks. Last month, CPF withdrew its complaint against CB regarding the validity of CB's May 28 shareholders meeting. Those same claims cannot be refiled.
In yet a third suit, CB said yesterday it has withdrawn its motion seeking summary judgment on a suit filed against it by CB shareholder Barbara Clarridge. The hearing was scheduled for Thursday, but CB withdrew its motion after Clarridge attorney James Bickerton amended the original complaint and made CB's arguments moot.
Meanwhile, CB posted net income in the second quarter of $4.4 million, or 99 cents a share, compared with $3.6 million, or 83 cents a share.
Excluding the merger expenses, which came to $2.7 million, or 64 cents a share, after taxes, CB would have had net income of $7.1 million in the quarter. That would have represented a 97.4 percent increase over the year-ago quarter.
CB President and Chief Executive Officer Ronald Migita repeatedly has said that CPF's $286 million offer undervalues the company.
"We are pleased with our strong financial performance this quarter," Migita said. "(The) earnings results clearly demonstrate the great progress we are making in improving asset quality, while simultaneously growing core deposits and fee income, and building our lending operations."
As of June 30, total assets were up 9.2 percent to $1.7 billion from $1.6 billion. Total loans were up 6.9 percent to $1.2 billion from $1.1 billion. And deposits were up 4 percent to $1.2 billion from $1.1 billion.
The bank's loan portfolio, which in previous years had been a blemish on the bank's earnings, continued to improve. Nonperforming loans fell 33.4 percent to $10.3 million from $15.5 million, aided by a $3.5 million decrease in the real estate loan category.
Nonperforming assets declined 40.5 percent to $11.1 million from $18.7 million.
CB's provision for credit losses also was lowered 86.6 percent to $550,000 from $4.1 million a year ago.
CB's net interest margin, the difference between what it pays depositors and what it brings in from loans, slipped to 4.82 percent from 5.31 percent a year earlier as falling interest rates compressed margins.
