CPB continues to press case

Central Pacific Bank today fired its latest volley in an unusually aggressive campaign to convince the management of rival CityBank to join forces, issuing a public statement in response to a letter CityBank sent directly to shareholders. “Since [CityBank] has not indicated publicly or privately that it is willing to enter into any discussions with us concerning our proposal, we will proceed to bring it directly to the shareholders,” CPB noted. CPB also published the CityBank letter, which sought to “clarify and correct” information reported by the media last week.

CPB, the state’s fourth-largest bank, announced Wednesday that it was seeking a merger — or barring that, a hostile takeover — of fifth-ranked CityBank. CPB asserted that it had previously approached CityBank management privately, but that the lack of response prompted the public notice.

CityBank has refused comment, citing regulatory concerns, but its shareholder letter offers a peek into its stance.

“News articles have suggested that there have been negotiations between CPB and CityBank for some time,” wrote CityBank chairman Lionel Y. Tokioka and vice chairman Ronald K. Migita. “For the record, there have been no such negotiations. While Mr. Arnoldus complains of inaction on the part of CityBank management, we have in fact been involved in serious fact-finding, and have engaged specialized legal counsel and a financial advisor to assist the Board in carefully and thoroughly evaluating the proposal.”

CPB took the letter to the press, along with its response.

“We are pleased that CityBank has retained financial advisors and legal counsel and announced that it will carefully evaluate our proposal of March 17th,” reads the CPB statement. “That evaluation should lead CityBank to enter into meaningful discussions to merge because this proposal is good for shareholders, customers, employees, and the state of Hawaii.”

“The shareholders of both companies deserve to receive the benefits of this compelling proposal as soon as possible,” it asserts.

CPB’s controversial public campaign — which most recently included running full-page ads in local newspapers promoting the merger — touched off a firestorm of accusations and criticism.

In an April 17 conference call with investors, CPB chairman Clint Arnoldus sought to emphasize both banks’ local roots and focus, but in the process took a dig at First Hawaiian Bank’s French ownership and said Bank of Hawaii has been loading its senior management with “Mainland imports.”

First Hawaiian Bank chairman and CEO Walter Dods fired back, saying, “It’s kind of sad to see a malihini who’s been in town for a year taking cheap shots at 2,000 local employees of our bank.”

“I was born and raised here,” he went on to say. “I didn’t just get off the boat from California and learn the shaka sign… If [Arnoldus] really understood what ‘local’ means, he’d know local people don’t make hostile attacks on honorable competitors.”

“Any time he wants to debate in pidgin on ‘local,’ I’m available,” Dods quipped.

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