Filed by Central Pacific Financial Corp.
Pursuant to Rule 425 of the Securities Act of 1933, as amended, and
deemed filed pursuant to Rule 14d-2 and Rule 14a-12 under
the Securities Exchange Act of 1934, as amended
Subject Company: CB Bancshares, Inc.
Commission File No. 333-104783
The following is a copy of materials used in a presentation made to investors by Central Pacific Financial Corp. held on June 25, 2003 and posted on its website (www.cpbi.com) on June 25, 2003.
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Central Pacific Financial Corp.
Merger with
CB Bancshares, Inc.
Creating A Stronger, Focused Hawaii Bank
June 25, 2003
[LOGO]
1
This document contains forward-looking statements. Such statements include, but are not limited to, (i) statements about the benefits of a merger between Central Pacific Financial Corp. (CPF) and CB Bancshares, Inc. (CBBI), including future financial and operating results, costs savings and accretion to reported and cash earnings that may be realized from such merger; (ii) statements with respect to CPFs plans, objectives, expectations and intentions and other statements that are not historical facts; and (iii) other statements identified by words such as believes, expects, anticipates, estimates, intends, plans, targets, projects and other similar expressions. These statements are based upon the current beliefs and expectations of CPFs management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements.
The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements: (1) the business of CPF and CBBI may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (2) expected revenue synergies and cost savings from the merger may not be fully realized or realized within the expected time frame; (3) revenues following the merger may be lower than expected; (4) deposit attrition, operating costs, customer loss and business disruption, including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers, may be greater than expected following the merger; (5) the regulatory approvals required for the merger may not be obtained on the proposed terms; (6) the failure of CPFs and CBBIs shareholders to approve the merger; (7) competitive pressures among depository and other financial institutions may increase significantly and may have an effect on pricing, spending, third-party relationships and revenues; (8) the strength of the United States economy in general and the strength of the Hawaii economy may be different than expected, resulting in, among other things, a deterioration in credit quality or a reduced demand for credit, including the resultant effect on the combined companys loan portfolio and allowance for loan losses; (9) changes in the U.S. legal and regulatory framework; and (10) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) and the impact of such conditions on the combined companys activities.
2
Additional factors that could cause CPF results to differ materially from those described in the forward-looking statements can be found in CPFs reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the Securities and Exchange Commission (SEC) and available at the SECs Internet web site (www.sec.gov). All subsequent written and oral forward-looking statements concerning the proposed transaction or other matters attributable to CPF or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. CPF does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statement is made.
With respect to financial projections for CBBI contained in this document, neither CBBI nor any analyst has published any information for 2003, 2004 or 2005. In addition, CPF has not been given the opportunity to do any due diligence on CBBI other than reviewing its publicly available information. Therefore, management of CPF has created its own financial model for CBBI based on CBBIs historical performance and CPFs assumptions regarding the reasonable future performance of CBBI on a stand-alone basis. These assumptions may or may not prove to be correct. The assumptions are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of CBBI. There is no assurance that these projections will be realized and actual results are likely to differ significantly from such projections.
CPF filed with the SEC a registration statement on Form S-4 on April 28, 2003, to register the shares of CPF common stock to be issued in a proposed exchange offer, and filed amendments thereto on May 5, 2003 and May 9, 2003, respectively. The registration statement is not final and will be further amended. CPF filed a definitive proxy revocation statement on May 22, 2003 and a preliminary proxy statement on May 9, 2003 (as revised on May 20, 2003 and May 28, 2003) for solicitation of revocation of proxies and proxies, as applicable, from CBBI shareholders for special meetings of CBBI shareholders. Subject to future developments, CPF may file additional proxy statements for solicitation of proxies from CBBI or CPF shareholders, in connection with special meetings of such shareholders at a date or dates subsequent hereto and may file a tender offer statement. Investors and security holders are urged to read the registration statement and proxy statements and any other relevant documents (when available), including the tender offer statement if filed, filed with the SEC, as well as any amendments or supplements to those documents, because they contain and will contain important information. Investors and security holders may obtain a free copy of the registration statement, any amendments thereto and proxy statements and other relevant documents (when available), including the tender offer statement if filed, at the SECs Internet web site at (www.sec.gov). The registration statement, any amendments thereto and proxy statements and other relevant documents (when available), including the tender offer statement if filed, may also be obtained free of charge from CPF by directing such request to: Central Pacific Financial Corp., 220 South King Street, Honolulu, Hawaii 96813, Attention: David Morimoto, (808) 544-0627.
3
CPF, its directors and executive officers and certain other persons may be deemed to be participants if CPF solicits proxies from CBBI and CPF shareholders. A detailed list of the names, affiliations and interests of the participants in any such solicitation is contained in CPFs definitive proxy revocation statement as filed on May 22, 2003 and a preliminary proxy statement as filed on May 9, 2003 (as revised on May 20, 2003 and May 28, 2003) for solicitation of revocation of proxies and proxies, as applicable. Information about the directors and executive officers of CPF and their ownership of and interests in CPF stock is set forth in the proxy statement for CPFs 2003 Annual Meeting of Shareholders.
4
Consideration per CBBI Share (1) |
|
1.7606 shares of CPF Stock + $24.50 in cash |
Offer Price(2) |
|
$74.91 per CBBI share |
Premium Over Closing Price (4/14/03) |
|
64% |
Premium Over Unaffected Price (2/25/03)(3) |
|
74% |
Implied Transaction Value |
|
$306 million |
Pro Forma Ownership(4) |
|
70% CPF; 30% CBBI |
Anticipated Closing |
|
Q4-2003 |
Required Approvals & Conditions |
|
CPF and CBBI shareholders, regulatory approvals, satisfactory due diligence and redemption of CBBIs poison pill |
(1) Consideration is prior to stock dividend announced by CBBI to be paid 6/27/03. After stock dividend, consideration is 1.6005 shares of CPF stock + $22.27
(2) Based on CPF stock price of $28.63 on 6/23/03.
(3) Unaffected Price: Price the day before CPF began purchasing shares of CBBI in the open market.
(4) Assumes 7.1 million CPF shares issued to CBBI shareholders.
5
|
|
CBBI |
|
||
|
|
4/14/03 |
|
Transaction |
|
|
|
|
|
|
|
Price Per Share |
|
$45.60 |
|
$74.91 |
(1) |
|
|
|
|
|
|
Price/2002A EPS |
|
13.3 |
x |
21.8 |
x |
|
|
|
|
|
|
Price/2003E EPS(2) |
|
10.0 |
x |
16.4 |
x |
|
|
|
|
|
|
Price/Tangible Book(3) |
|
1.23 |
x |
2.02 |
x |
(1) Based on CPF stock price of $28.63 on 6/23/03.
(2) Assumes 2003 EPS of $4.56 (based on projections prepared by CPF Management).
(3) Based on tangible book of $151M as of 12/31/02.
6
Good For Hawaii, Local Community & Customers
Creates a stronger, locally based and managed bank for Hawaii
$2.4B in loans(1); $2.8B in deposits(1); $3.8B in assets(1)
14% deposit market share in Hawaii(2)
Provides a strong local alternative to mainland-managed and foreign-owned banks
Customers in the local community benefit
Expanded fiercely loyal personalized service
Added convenience: larger branch & ATM network
Broader menu of products and services
Larger lending capacity
(1) Source: CPF and CBBI financials as of 12/31/02.
(2) Source: SNL Securities as of 6/30/02.
7
Shareholders of Both Banks Win
Combined bank offers anticipated EPS accretion
Consolidation, scale and efficiency result in fully phased-in anticipated annual cost saves of $16 million
CBBI shareholders receive 64%(1) premium and over 220%(1)(2) increase in cash dividends
Opportunity to own a company with an outstanding track record of performance
Increased investor visibility & trading liquidity
Over $600 million pro forma market cap(3)
NYSE listing
(1) Based on CPF stock price of $28.63 on 6/23/03 and CBBI stock price of $45.60 on 4/14/03.
(2) Assumed reinvestment of cash proceeds in CPF stock at CPFs share price of $28.63 on 6/23/03.
(3) As of 6/23/03.
8
Its a Logical Fitand Easy to Integrate
Similar roots and culture
Common roots, post-WWII founding
Local values
Focused on personalized service
Same market
Small and mid-sized businesses, retail customers
Overlapping geography
Common Fiserv based technology platform
9
CPF: Our Track Record Makes The Case
10
Earnings Per Share
[CHART]
Assets(1) |
|
$ |
2.0 |
B |
Deposits(1) |
|
$ |
1.6 |
B |
Market Cap(2) |
|
$ |
459 |
M |
ROAE(3) |
|
20.55 |
% |
|
ROAA(3) |
|
1.74 |
% |
|
Price(2)/2003E EPS(4) |
|
13.6 |
x |
|
Price(2)/Book(5) |
|
2.64 |
x |
(1) As of 12/31/02.
(2) As of 6/23/03.
(3) ROAE: Return on Average Equity. ROAA: Return on Average Assets. Based on 2002 performance.
(4) 2003E EPS based on FirstCall estimates.
(5) Book value as of 12/31/02.
11
[CHART]
12
CPF: Consistent Earnings Growth
($ in millions)
CPF |
|
CBBI |
|
|
|
[CHART] |
|
[CHART] |
13
CPF |
|
CBBI |
|
|
|
[CHART] |
|
[CHART] |
14
CPF |
|
CBBI |
|
|
|
[CHART] |
|
[CHART] |
15
($ in millions)
CPF |
|
CBBI |
|
|
|
[CHART] |
|
[CHART] |
16
CPF: Superior Efficiency Ratio
CPF |
|
CBBI |
|
|
|
[CHART] |
|
[CHART] |
17
CPF-CBBI:
A Powerful Combination
18
|
|
CPF |
|
CBBI |
|
Founded in |
|
1954 |
|
1959 |
|
Operations |
|
24 branches on 4 islands |
|
22 branches on 4 islands |
|
Lead Product |
|
Commercial Mortgage |
|
Residential Mortgage |
|
|
|
(42% of loans) |
|
(42% of loans) |
|
Deposit Rank |
|
#4 |
|
#5 |
|
Common Heritage |
|
Founded to serve the Japanese-American Community in Hawaii |
|
||
Market Focus |
|
Become local bank of choice in Hawaii |
|
||
Opportunity |
|
Proven
success at creating |
|
Opportunity
for cost savings and |
|
19
CPF-CBBI: Well-Positioned for Hawaii Market Leadership
($ in millions)
|
|
CPF |
|
CBBI |
|
Pro Forma |
|
|||
|
|
|
|
|
|
|
|
|||
Net Loans |
|
$ |
1,266 |
|
$ |
1,035 |
|
$ |
2,301 |
|
|
|
|
|
|
|
|
|
|||
Assets |
|
2,028 |
|
1,674 |
|
3,840 |
|
|||
|
|
|
|
|
|
|
|
|||
Deposits |
|
1,641 |
|
1,163 |
|
2,804 |
|
|||
Note: Data as of 12/31/02 except that pro forma assets includes merger adjustments assuming that the transaction had closed then.
20
CPF-CBBI: Significantly Builds Deposit Market Share in Hawaii
[CHART]
21
CPF-CBBI: Diversified Loan Portfolio
CPF |
|
CBBI |
|
|
|
[CHART] |
|
[CHART] |
|
|
|
PRO FORMA |
||
|
||
[CHART] |
22
CPF-CBBI: Strong Core-Deposit Base
CPF |
|
CBBI |
|
|
|
[CHART] |
|
[CHART] |
|
|
|
PRO FORMA |
||
|
||
[CHART] |
23
Earnings for CPF(1)
$2.11 per share for 2003, $2.28 for 2004, 10% growth thereafter
Earnings Projections for CBBI
No due diligence performed on CBBI
No research coverage
Projections based on model prepared by CPFs management
$16 million cost saves
15% of combined operating expenses
75% in 2004, 100% in 2005
Core-deposit intangible estimated at $21 million (2), amortized over 7 years
$38 million restructuring charge
No revenue enhancements assumed
(1) Source: FirstCall.
(2) Core-deposit premium estimated at 3.0% of CBBIs estimated $700 million in core deposits as of 12/31/2002.
24
|
|
Projected for Fiscal Year |
|
||||
Earnings Projections |
|
2004 |
|
2005 |
|
||
CPFs Stand Alone GAAP EPS(1) |
|
$ |
2.28 |
|
$ |
2.51 |
|
Pro Forma GAAP EPS(2) |
|
$ |
2.43 |
|
$ |
2.76 |
|
Accretion to CPF ($) |
|
$ |
0.15 |
|
$ |
0.25 |
|
Accretion to CPF (%) |
|
7 |
% |
10 |
% |
||
Pro Forma Cash EPS(2) |
|
$ |
2.56 |
|
$ |
2.89 |
|
Accretion to CPF ($) |
|
$ |
0.28 |
|
$ |
0.38 |
|
Accretion to CPF (%) |
|
12 |
% |
15 |
% |
Note: Neither CBBI nor any analyst has published any information for 2003, 2004 and 2005. No due diligence has been performed on CBBI other than reviewing public information. All projections for CBBI based on a model prepared by CPF Management. There is no assurance that these projections will be realized and actual results are likely to differ significantly from such projections.
(1) Source: FirstCall.
(2) Assumed EPS projections for CBBI of $4.95 in 2004 and $5.33 in 2005.
25
Good For Hawaii, Customers & Shareholders of Both Banks
Creates a stronger, locally based and managed bank for Hawaiito better meet unique local needs
More customers to enjoy fiercely loyal service, added convenience, larger lending limits and a broader menu of products and services
Shareholders of both banks win
Anticipated EPS accretion
Stronger competitive position
Attractive premium and cash dividend for CBBI shareholders
Significant synergies
Low execution risk
26
27
($ in millions)
|
|
CPF |
|
CBBI |
|
Pro Forma |
|
|||
Non Performing Loans |
|
$ |
0.4 |
|
$ |
12.7(1 |
) |
$ |
13.2 |
|
Non Performing Assets |
|
2.3 |
|
14.9(1 |
) |
17.3 |
|
|||
Loan Loss Reserves |
|
24.2 |
|
27.1 |
|
51.3 |
|
|||
Net Charge-Offs |
|
0.5 |
|
9.5 |
|
10.0 |
|
|||
|
|
|
|
|
|
|
|
|||
NPL/Loans |
|
0.03 |
% |
1.10 |
% |
0.54 |
% |
|||
NPAs/Loans + OREO |
|
0.18 |
|
1.28 |
|
0.70 |
|
|||
NCOs/Avg. Loans |
|
0.04 |
|
0. 82 |
|
0.41 |
|
|||
Reserves/Loans |
|
1.88 |
|
2.34 |
|
2.09 |
|
|||
Reserves/NPL |
|
55.1 |
x |
2.13 |
x |
3.90 |
x |
|||
Reserves/NCOs |
|
52.0 |
x |
2.87 |
x |
5.18 |
x |
|||
Note: As of 12/31/02.
(1) Excludes restructured loans.
28
CBBIs Core EPS Reconciliation
($ in millions)
|
|
2001 |
|
2002 |
|
||
Net Income (as reported) |
|
$ |
6.2 |
|
$ |
13.5 |
|
Add |
|
|
|
|
|
||
Impairment of asset-backed securities (after-tax(1)) |
|
6.9 |
|
0.9 |
|
||
Realized losses on sale of securities (after-tax(1)) |
|
0.1 |
|
1.2 |
|
||
Core Net Income |
|
$ |
13.2 |
|
$ |
15.5 |
|
Average Diluted Shares |
|
3.892 |
|
3.935 |
|
||
EPS: |
|
|
|
|
|
||
As Reported |
|
$ |
1.58 |
|
$ |
3.43 |
|
Core |
|
3.39 |
|
3.95 |
|
(1) 35% assumed tax rate.
29
($ in millions)
Oahu, HI
Rank |
|
Institutions |
|
Total
Deposits |
|
Total
Market |
|
Percent of |
|
|
1 |
|
BNP Paribas (First Hawaiian Bank) |
|
$ |
4,442.5 |
|
28.5 |
% |
18.7 |
% |
2 |
|
Bank of Hawaii Corp. |
|
4,433.7 |
|
28.5 |
|
70.5 |
|
|
3 |
|
HEI (American Savings) |
|
3,052.6 |
|
19.6 |
|
81.4 |
|
|
|
|
CPFCBBI |
|
2,479.3 |
|
15.9 |
|
91.6 |
|
|
4 |
|
Central Pacific |
|
1,409.3 |
|
9.1 |
|
90.4 |
|
|
5 |
|
CBBI |
|
1,070.0 |
|
6.9 |
|
93.2 |
|
|
6 |
|
Territorial Svgs Group Inc. |
|
433.8 |
|
2.8 |
|
78.2 |
|
|
7 |
|
Finance Factors, Ltd. |
|
332.0 |
|
2.1 |
|
79.7 |
|
|
8 |
|
Hawaii National Bancshares |
|
294.6 |
|
1.9 |
|
90.3 |
|
|
9 |
|
HomeStreet Inc. |
|
61.2 |
|
0.4 |
|
8.2 |
|
|
10 |
|
Orient Bancorporation |
|
48.9 |
|
0.3 |
|
10.9 |
|
|
|
|
Totals |
|
$ |
15,579.1 |
|
|
|
|
|
Source: SNL Securities as of 6/30/02.
30
($ in millions)
Maui, HI
Rank |
|
Institutions |
|
Total
Deposits |
|
Total
Market |
|
Percent of |
|
|
1 |
|
Bank of Hawaii Corp. |
|
$ |
506.6 |
|
32.8 |
% |
8.1 |
% |
2 |
|
BNP Paribas (First Hawaiian Bank) |
|
499.8 |
|
32.3 |
|
2.1 |
|
|
3 |
|
HEI (American Savings) |
|
339.0 |
|
21.9 |
|
9.0 |
|
|
|
|
CPFCBBI |
|
109.2 |
|
7.1 |
|
4.0 |
|
|
4 |
|
Central Pacific |
|
60.3 |
|
3.9 |
|
3.9 |
|
|
5 |
|
CBBI |
|
48.9 |
|
3.2 |
|
4.3 |
|
|
6 |
|
Territorial Svgs Group Inc. |
|
43.7 |
|
2.8 |
|
7.9 |
|
|
7 |
|
Finance Factors, Ltd. |
|
35.8 |
|
2.3 |
|
8.6 |
|
|
8 |
|
Hawaii National Bancshares |
|
13.0 |
|
0.8 |
|
4.0 |
|
|
|
|
Totals |
|
$ |
1,547.0 |
|
|
|
|
|
Source: SNL Securities as of 6/30/02.
31
($ in millions)
Big Island, HI
Rank |
|
Institutions |
|
Total
Deposits |
|
Total
Market |
|
Percent of |
|
|
1 |
|
Bank of Hawaii Corp. |
|
$ |
509.4 |
|
34.5 |
% |
8.1 |
% |
2 |
|
BNP Paribas (First Hawaiian Bank) |
|
502.9 |
|
34.1 |
|
2.1 |
|
|
3 |
|
HEI (American Savings) |
|
234.9 |
|
15.9 |
|
6.3 |
|
|
|
|
CPFCBBI |
|
95.7 |
|
6.5 |
|
3.5 |
|
|
4 |
|
Central Pacific |
|
66.7 |
|
4.5 |
|
4.3 |
|
|
5 |
|
Territorial Savings Group Inc. |
|
61.2 |
|
4.2 |
|
11.0 |
|
|
6 |
|
Finance Factors, Ltd. |
|
38.3 |
|
2.6 |
|
9.2 |
|
|
7 |
|
CBBI |
|
29.0 |
|
2.0 |
|
2.5 |
|
|
8 |
|
Hawaii National Bancshares |
|
18.8 |
|
1.3 |
|
5.8 |
|
|
9 |
|
HomeStreet Inc. |
|
14.0 |
|
1.0 |
|
1.9 |
|
|
|
|
Totals |
|
$ |
1,475.2 |
|
|
|
|
|
Source: SNL Securities as of 6/30/02.
32
($ in millions)
Kauai, HI
Rank |
|
Institutions |
|
Total
Deposits |
|
Total
Market |
|
Percent of |
|
|
1 |
|
BNP Paribas (First Hawaiian Bank) |
|
$ |
292.0 |
|
42.0 |
% |
1.2 |
% |
2 |
|
Bank of Hawaii Corp. |
|
230.0 |
|
33.1 |
|
3.7 |
|
|
3 |
|
HEI (American Savings) |
|
124.2 |
|
17.9 |
|
3.3 |
|
|
|
|
CPFCBBI |
|
22.8 |
|
3.3 |
|
0.8 |
|
|
4 |
|
Central Pacific |
|
22.8 |
|
3.3 |
|
1.5 |
|
|
5 |
|
Territorial Savings Group Inc. |
|
16.1 |
|
2.3 |
|
2.9 |
|
|
6 |
|
Finance Factors, Ltd. |
|
10.6 |
|
1.5 |
|
2.5 |
|
|
|
|
Totals |
|
$ |
695.7 |
|
|
|
|
|
Source: SNL Securities as of 6/30/02.
33
Central Pacific Financial Corp.
Merger with
Creating A Stronger, Focused Hawaii Bank
June 25, 2003
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