SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14 (a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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/ / Preliminary Proxy Statement / / Confidential, for use of the
Commission only (as permitted
By Rule 14a-6(e) (2))
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/x/ Soliciting Material Pursuant to Rule 14a-12
CB BANCSHARES, INC.
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PRESS RELEASE ISSUED BY CB BANCSHARES, INC. REGARDING COMMENTS TO HAWAII
COMMISSIONER OF FINANCIAL INSTITUTIONS
May 13, 2003
FOR IMMEDIATE RELEASE
Contact: Wayne T. Miyao
Senior Vice President, City Bank
Corporate Communications
Ph: (808) 535-2590
Email: wmiyao@cb-hi.net
Website: www.citybankhawaii.com
CB BANCSHARES SUBMITS COMMENTS TO HAWAII COMMISSIONER OF
FINANCIAL INSTITUTIONS REQUESTING THAT CENTRAL PACIFIC'S APPLICATION TO
ACQUIRE CB BANCSHARES BE DENIED
NOTES THAT CENTRAL PACIFIC'S PROPOSED HOSTILE TAKEOVER RAISES SIGNIFICANT
COMPETITIVE ISSUES FOR BANKING SERVICES IN HAWAII
CITES CENTRAL PACIFIC'S "LOW SATISFACTORY" COMMUNITY REINVESTMENT ACT LENDING
RATING WHICH CB BANCSHARES BELIEVES COULD JEOPARDIZE REGULATORY APPROVAL
HONOLULU, May 13, 2003 - CB Bancshares, Inc. (Nasdaq: CBBI), the holding
company of City Bank, has submitted comments to the Hawaii Commissioner of
Financial Institutions (the "Commissioner"), who is charged with the overall
supervision and regulation of all state-chartered and licensed financial
institutions, regarding Central Pacific Financial Corp.'s (NYSE: CPF) ("CPF")
application for approval to proceed with its proposed hostile takeover. CB
Bancshares has requested that the Commissioner deny CPF's application based on
the factors discussed in the comments, including the adverse effect that CB
Bancshares believes CPF's proposal will have on competition for banking
services to small- and medium-sized businesses and retail customers in Hawaii.
ANTITRUST CONCERNS -- REDUCED COMPETITION
CB Bancshares stated its view that the proposed hostile takeover by CPF will
have substantial anticompetitive effects in Hawaii. Among other things, CB
Bancshares believes that the proposed hostile takeover will significantly
reduce competition because City Bank is Central Pacific's closest rival for
Hawaii's small and medium-sized business and retail customers. CB Bancshares
noted that the proposed hostile takeover would raise market concentrations well
above relevant thresholds for competitive concerns, raising the possibility
that the transaction will be challenged by State and Federal antitrust
authorities.
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CB Bancshares noted that the anticompetitive effects of CPF's proposed hostile
takeover would exacerbate the existing situation because:
o Hawaii already has fewer banking alternatives per person than any other
state in the country;
o City Bank and Central Pacific are two of only three local community banks
that provide a significant amount of working capital loans to small and
medium-sized businesses in Hawaii; and
o In terms of banking alternatives, Honolulu ranks next to last out of all
3,115 U.S. counties that have at least one office of an insured
depository institution and would rank dead last if the takeover were to
occur.
Based on these and other factors, CB Bancshares believes that CPF's proposed
hostile takeover presents significant antitrust issues.
WOULD NOT SERVE THE CONVENIENCE AND NEEDS OF HAWAII'S COMMUNITIES
City Bank has a proud legacy of commitment to helping Hawaii's underserved
communities, as demonstrated by its CRA (Community Reinvestment Act) lending
rating of "high satisfactory" on providing needed loans to the communities it
serves. In contrast, Central Pacific's CRA lending rating of "low satisfactory"
is the lowest lending rating among commercial banks in Hawaii.
Based on the most recent publicly available home mortgage loan data, City Bank
originates more than six times the number of home mortgage loans to low- and
moderate-income individuals than Central Pacific and more than four times the
number of loans to small businesses in low and moderate-income areas. These
loans help propel Hawaii's recovering economy and benefit all members of the
community.
Central Pacific's low CRA lending rating and comparatively poorer community
lending record could jeopardize its ability to obtain regulatory approval.
Moreover, Hawaii's communities could be materially harmed by the
discontinuation of support that they have come to rely on from City Bank.
POTENTIAL FOR SIGNIFICANT REDUCTION IN CPF'S CAPITAL LEVELS
CB Bancshares stated its belief that CPF's proposed hostile takeover has the
potential to substantially reduce CPF's capital below the levels projected by
CPF in its public disclosure. Using CPF's own assumptions set forth in its
public filings, its proposed takeover of CB Bancshares would result in a 23.5%
decline in its "leverage capital ratio," a key measure of bank capital, on a
pro forma basis as of December 31, 2002. However, as CB Bancshares pointed out
in its comment, CPF's public filings fail to even mention the possibility that
significantly more capital could be required to complete CPF's proposed
second-step merger as a result of the absolute right of Hawaii shareholders of
a merged company to receive the "fair value" of their shares entirely in cash.
Assuming Central Pacific were to complete its exchange offer and acquire 75% of
the fully diluted outstanding shares of CB Bancshares:
o If all remaining shareholders of CB Bancshares exercised dissenters'
rights in the merger, CB Bancshares believes CPF's projected leverage
capital ratio on a pro forma basis as of December 31, 2002 would drop
by more than 37% to approximately 5.61% when compared to CPF's actual
leverage capital ratio as of December 31, 2002, which would be
dramatically lower than the 8.15% average leverage capital ratio
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reported by the federal banking agencies for CPF's peer group as of
December 31, 2002; and
o If half of all remaining shareholders of CB Bancshares exercised
dissenters' rights in the merger, CB Bancshares believes CPF's
projected leverage capital ratio on a pro forma basis as of December
31, 2002 would drop by more than 30% to approximately 6.25% when
compared to CPF's actual leverage capital ratio as of December 31,
2002, which still would be well below the comparable peer group
average leverage capital ratio of 8.15% as of December 31, 2002.
PERCEIVED LACK OF MANAGERIAL EXPERTISE
CB Bancshares further noted its view that CPF does not have the experience or
expertise to accomplish the challenging task of acquiring CB Bancshares and
successfully integrating and managing the two companies. CB Bancshares pointed
out that, among other things:
o CPF has not acquired another bank in its entire 49-year history;
o The proposed acquisition would nearly double the size of CPF; and
o CPF's Clinton L. Arnoldus, who has not previously managed a public
company, and his senior management team have no relevant experience
overseeing the combination and integration of two public banking
institutions.
For these reasons and the other reasons stated in its comments, CB Bancshares
believes that CPF has failed to provide evidence that, among other things, the
proposed acquisition of CB Bancshares would meet the Hawaii banking statute
requirement that the transaction be "fair and reasonable to the depositors,
beneficiaries, creditors, or shareholders," and that CPF's application should
be denied.
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Sandler O'Neill & Partners, L.P. is serving as financial advisor to CB
Bancshares and Kobayashi, Sugita & Goda, a Honolulu law firm, is serving as
local legal counsel.
CB Bancshares, Inc. is a bank holding company, which provides a full range of
banking products and services for small-and-medium-sized businesses and retail
customers through its principal subsidiary, City Bank. City Bank maintains 21
branches on the islands of Oahu, Hawaii, Maui and Kauai.
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This communication may be deemed to include forward-looking statements, such as
statements that relate to CB Bancshares' financial results. Forward-looking
statements are typically identified by words or phrases such as "believe,"
"expect," "anticipate," "intent," "estimate," "may increase," "may fluctuate,"
and similar expressions or future or conditional verbs such as "will,"
"should," "would," and "could." Forward-looking statements are CB Bancshares'
current estimates or expectations of future events or future results. For such
statements, CB Bancshares claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. Actual results could differ materially from those indicated
by these statements because the realization of those results is subject to many
risks and uncertainties. CB Bancshares' 2002 Annual Report on Form 10-K and
other periodic reports to the Securities and Exchange Commission contain
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additional information about factors that could affect actual results. All
forward-looking statements included in this communication are based on
information available at the time of the release, and CB Bancshares assumes no
obligation to update any forward-looking statement.
The directors and certain executive officers of CB Bancshares may be deemed to
be participants in the solicitation of proxies from the shareholders of CB
Bancshares in connection with CB Bancshares' special meeting of shareholders
(the "Special Meeting") under the Hawaii Control Share Acquisitions Statute.
Information concerning such participants is contained in CB Bancshares'
definitive proxy statement on Schedule 14A relating to CB Bancshares' 2003
Annual Meeting filed with the Securities and Exchange Commission (the "SEC") on
March 12, 2003.
CB Bancshares filed a preliminary proxy statement on Schedule 14A with the SEC
on May 5, 2003 with respect to its solicitation of proxies for use at the
Special Meeting and, subject to future developments, CB Bancshares may file
with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 relating
to any tender/exchange offer made by Central Pacific Financial Corp.
Shareholders of CB Bancshares are advised to read CB Bancshares'
Solicitation/Recommendation Statement on Schedule 14D-9 and CB Bancshares'
proxy statement for the Special Meeting when such documents become available
because they will contain important information. Shareholders of CB Bancshares
and other interested parties may obtain, free of charge, copies of the Schedule
14D-9 (when available), CB Bancshares' proxy statement and other documents
filed by CB Bancshares with the SEC at the SEC's internet website at
www.sec.gov. Each of these documents (when available) may also be obtained,
free of charge, by calling investor relations at CB Bancshares at 808-546-8413.
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