City Bank appeals
state merger ruling
The nearly year-long merger standoff between City Bank's parent and Central Pacific Financial Corp. took on new life yesterday when CB Bancshares Inc. said it has appealed a state agency's ruling that gave its rival the go-ahead to proceed with a hostile takeover attempt.
CB Bancshares also said the deadline has passed for submitting proposals or nominations for its annual shareholders meeting next month.
In its petition, CB Bancshares asked the Hawaii Division of Financial Institutions to reconsider its ruling that found there were no grounds to disapprove the proposed acquisition.
At the same time, CB Bancshares' announcement that the proxy deadline had passed to submit items for a shareholder vote effectively means that Central Pacific can't nominate an opposing three-person slate to try to force CB Bancshares' board to approve the merger.
CB Bancshares spokesman Wayne Miyao said City Bank remains concerned with the negative impact a hostile takeover by Central Pacific Bank's parent would have on the level of banking competition, customer service and the state's community support.
Miyao said the appeal is based on various grounds, but include:
>> The failure of the decision to address the best interest of the bank's shareholders, customers and communities it serves;
>> The failure of the decision to explain the fact that CB Bancshares' shareholders already rejected Central Pacific's proposal at a May 28 special shareholders meeting and that the deal cannot be completed without the approval of CB Bancshares' board and shareholders;
>> The failure of the decision to address the results of a (CB Bancshares-sponsored) public opinion survey that indicated that the public opposes Central Pacific's proposed takeover.
Central Pacific spokeswoman Ann Takiguchi declined to comment on the bank's strategy but said it supported the Division of Financial Institution's decision.
"We believe the DFI conducted an extremely thorough review and we feel the decision was fair," she said.
DFI Commissioner Nick Griffin confirmed the agency had received the petition but said he was unable to comment further since "ongoing issues are under review at this time."
He said he could not provide a timeline for making a decision and said to his knowledge the agency never had received an appeal before.
Meanwhile, CB Bancshares said that three board seats will be up for grabs at its annual shareholders meeting April 29 at City Financial Tower. Central Pacific's annual shareholders meeting is set for April 27 at the Sheraton Waikiki.
Last year's CB Bancshares shareholders meeting drew an overflow crowd as shareholders and employees gathered to hear what the company had to say about Central Pacific's proposed takeover. The company gave the takeover proposal passing mention at the meeting without accepting questions, but did take media questions following the meeting at a news conference.
Miyao said the bank would not identify its board nominees until it files its proxy with the Securities and Exchange Commission. Those with terms expiring this year are Tomio Fuchu, director of Dart Coffee Inc.; Duane Kurisu, a partner of Kurisu and Fergus and a minority Star-Bulletin owner; and Mike Sayama, vice president of customer relations of Hawaii Medical Service Association.
Since another three directors' terms expire in 2005 on CB Bancshares' staggered board, it would have taken Central Pacific two years -- this year and next year -- to possibly get a six-person majority on the 10-member board.
"We did consider nominating a slate of directors, but our board elected to not pursue that route and wanted to seek meaningful discussions instead to try and reach an amicable agreement," Takiguchi said.
CB Bancshares' officials, however, never have indicated they would be willing to sit down at the table with Central Pacific.
"We cannot predict or speculate on further actions taken by CPF," Miyao said.