Central Pacific’s
Arnoldus takes
merger pitch
to shareholders
The bank needs 75% of
shareholders to approve a
merger with City Bank's parent
It was a small turnout of only about 12 Central Pacific Financial Corp. shareholders, but Clint Arnoldus worked the room yesterday like a smiling politician with an outstretched hand.
After spending about a year and a half on the company's pending acquisition of City Bank's parent, Arnoldus, the chairman, president and chief executive of Central Pacific, wasn't taking any chances with 75 percent approval of shareholders needed by a Sept. 13 deadline. Arnoldus' efforts have been magnified further by the fact that unreturned voting statements will be counted as votes against the merger.
"I think you never know who will show up beyond the RSVPs," Arnoldus said about the sparsely attended presentation to Central Pacific shareholders in the top-floor Business Club at the bank's downtown headquarters.
"But anytime they have questions, this is an important step in our history and we have to be available to answer them. I think the fact that we had a smaller crowd today is probably a reflection of the effectiveness of our campaign to educate our shareholders. I think they feel pretty well informed and know the process."
Arnoldus, who will repeat his presentation from 5:30 to 7:30 tonight at the Japanese Cultural Center, said he knows what the early tally is on the merger but declined to provide any figures.
He did say, however, that Central Pacific recently received final federal and state regulatory approvals for the acquisition.
"We're working extremely hard to make sure we hit that very high threshold of 75 percent," Arnoldus said.
Jason McCandless, a research analyst for San Francisco-based proxy advisory firm Glass, Lewis & Co., said, "They'll have to pound the street for retail investors' attention to make sure the proxy cards get returned on time."
Arnoldus remains confident the shareholders will oblige.
"If you look at shareholder votes generically just for annual shareholder meeting agenda items, we'll typically get in excess of a 75 percent response," he said.
Stan Higa, one of the shareholders at yesterday's meeting, said blending the two financial institutions will give Central Pacific a more solid base.
"We actually would stand on a much better foundation as far as our investment is concerned," Higa said. "I think it's a good idea. I'm for it. ... I think Mr. Arnoldus made a good point when he said they're not trying to become the biggest bank, but they're trying to become a sounder financial facility to support the community."
Marge Lui, who retired from Central Pacific in April 2003 after 16 years as an executive secretary, said a merger makes sense because of the similarity between the banks.
"I think it gives you a more competitive edge in the community and (I think both banks have the same commitment to customer service)," she said.
If the acquisition is approved, Arnoldus said the holding companies would merge two days later with the banks uniting sometime in the first quarter after working out the integration. He said the branches that will be consolidated and the make-up of the board will be announced shortly after the merger goes through. Arnoldus said a natural 20 percent attrition rate of each bank and a hiring freeze at Central Pacific are helping lower the staffing levels. No decision has been made yet whether there will be a voluntary severance plan offered.
Brian Conn, a financial services analyst for San Francisco-based RBC Capital Markets, said the roughly 45 percent institutional ownership of each bank puts them on solid footing to get the 75 percent vote. Add in the 16 percent of shares in Central Pacific held by insiders and the 11 percent of CB Bancshares controlled by insiders and the banks are well on their way, Conn added.
"After that, they'll need roughly half of the shares held by retail investors," Conn said. "And in five years, I have never seen any of these not go through because of the vote."
