Hundreds turn out to support
testimony against Central Pacific's
proposed hostile takeover
Several hundred employees and supporters of City Bank, boosted by free company-provided bento lunches and soft drinks and many of them wearing company-support badges, flooded the state Capitol yesterday to protest a hostile takeover attempt by competitor Central Pacific Bank that they said will hurt workers and customers.
As more than 130 opponents testified before Nick Griffin, state commissioner of financial institutions, each received a round of applause.
When the Central Pacific supporters testified in support of the proposed merger, with an unemotional and what they said was fact-based argument in favor of a bigger bank, there was no applause.
City Bank employees Molina Gomez and George Brown protested Central Pacific Bank's takeover attempt during a May rally. The bank's employees were at it again yesterday.
Griffin is left with more testimony to hear today and a need to weigh public emotions against sober legal rules about competition.
Nearly 300 people had submitted written testimony and about 200 were heard before the hearing closed. It will continue at the Capitol auditorium at least through today to give more people a chance to be heard, with walk-in participants possibly getting an opportunity to be heard, time permitting. The Division of Financial Institutions must decide whether a merger of 25-branch Central Pacific and 22-branch City Bank is in the public interest and Griffin said he would listen to a wide range of opinions.
He did not get that yesterday, as a hall packed with City Bank supporters echoed with opposition to the merger. Both sides, however, also have submitted lengthy legal documents arguing their sides and it remains to be seen how much public opinion will matter.
It should count, said individual account-holders and operators of small businesses, who said they don't want to see City Bank's friendly service disappear.
"As soon as we allow banks to merge and take over other banks, we lose competition," said a City Bank personal account holder, Patricia Biggs.
Glenn Nohara, owner of Koga Engineering, said he has been in business locally for 30 years and employs 80 people and has done his business with City Bank for 20 years. He said he always has had great service and the bank has been attentive to his small-business needs.
Nohara said he fears that will be lost if the two banks merge to become a serious single competitor with the state's biggest banks.
Another holder of an individual City Bank account, Brian Fernandez, said he has lived and worked overseas and has seen what he called the adverse effect of mergers and consolidations. "The small, cost-efficient and community-friendly financial institution will be a thing of the past in Hawaii," he said.
Regardless of whether there is no forced loss of employees from either bank, as Central Pacific parent Central Pacific Financial Corp. now says will be the case, Fernandez claims there will be a tightening of policies about loans and some businesses might not qualify and could end up out of business. That would mean a loss of business in the community and some unemployment not directly related to the bank merger, but taking its own toll on employment outside the bank business, he said.
Several City Bank customers, some with individual accounts and others who are business bankers, said they had done business with Central Pacific and had treatment bad enough for them to switch banks.
Central Pacific Financial executives, who have made a direct takeover offer of shares and cash worth nearly $292 million -- at yesterday's market close -- to shareholders of City Bank parent CB Bancshares Inc., said the worries of City Bank workers and customers are not justified.
"We think this can be done in a very fair way," said Clint Arnoldus, CPF chairman, president and chief executive officer. Arnoldus, whose comments outran the three-minute time limit by at least two minutes despite warning bells, said he did not accept criticism that there will be layoffs regardless of his weekend comments that there won't.
"No layoffs means no layoffs," he said. "No employee will be involuntarily terminated" at either bank when the merger happens, except for a small group of management people who have their own severance deals, Arnoldus said.
Jobs will be saved by an ongoing hiring freeze at Central Pacific, natural attrition (usually through retirement and other voluntary departures) and relocation as Central Pacific opens branches in new areas to replace those closed where Central Pacific and City Bank are to close to each other, he said.