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



 

FORWARD LOOKING INFORMATION

 

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 CPF’s 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 CPF’s 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 CPF’s and CBBI’s 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 company’s 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 company’s activities.

 

2



 

Additional factors that could cause CPF results to differ materially from those described in the forward-looking statements can be found in CPF’s 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 SEC’s 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 CBBI’s historical performance and CPF’s 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 SEC’s 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 CPF’s 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 CPF’s 2003 Annual Meeting of Shareholders.

 

4



 

Transaction Summary

 

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 CBBI’s 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



 

An Attractive Offer

 

 

 

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 CPF’s share price of $28.63 on 6/23/03.

(3)         As of 6/23/03.

 

8



 

It’s a Logical Fit—and 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



 

CPF Snapshot

 

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



 

CPF Stock Outperforms

 

[CHART]

 

12



 

CPF:  Consistent Earnings Growth

 

($ in millions)

 

CPF

 

CBBI

 

 

 

[CHART]

 

[CHART]

 

13



 

CPF:  Rising Returns

 

CPF

 

CBBI

 

 

 

[CHART]

 

[CHART]

 

14



 

CPF:  Unmatched Credit Quality

 

CPF

 

CBBI

 

 

 

[CHART]

 

[CHART]

 

15



 

CPF:  Strong Deposit Growth

 

($ in millions)

 

CPF

 

CBBI

 

 

 

[CHART]

 

[CHART]

 

16



 

CPF:  Superior Efficiency Ratio

 

CPF

 

CBBI

 

 

 

[CHART]

 

[CHART]

 

17



 

CPF-CBBI:
A Powerful Combination

 

18



 

CPF-CBBI:  A Great Fit

 

 

 

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
value for shareholders

 

Opportunity for cost savings and
performance enhancement

 

 

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



 

Transaction Assumptions

 

                              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 CPF’s 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 CBBI’s estimated $700 million in core deposits as of 12/31/2002.

 

24



 

Pro Forma EPS Impact

 

 

 

Projected for Fiscal Year

 

Earnings Projections

 

2004

 

2005

 

CPF’s 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 Hawaii—to 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



 

Appendix

 

27



 

Credit Quality

 

($ 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

2.13

3.90

Reserves/NCOs

 

52.0

x

2.87

x

5.18

x

 

Note:  As of 12/31/02.

 


(1)         Excludes restructured loans.

 

28



 

CBBI’s 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



 

Market Share in Key Markets

 

($ in millions)

 

Oahu, HI

Rank

 

Institutions

 

Total Deposits
in Market

 

Total Market
Share

 

Percent of
Parent Deposits

 

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

 

 

 

CPF–CBBI

 

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



 

Market Share in Key Markets

($ in millions)

 

Maui, HI

Rank

 

Institutions

 

Total Deposits
in Market

 

Total Market
Share

 

Percent of
Parent Deposits

 

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

 

 

 

CPF–CBBI

 

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



 

Market Share in Key Markets

($ in millions)

 

Big Island, HI

Rank

 

Institutions

 

Total Deposits
in Market

 

Total Market
Share

 

Percent of
Parent Deposits

 

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

 

 

 

CPF–CBBI

 

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



 

Market Share in Key Markets

($ in millions)

 

Kauai, HI

Rank

 

Institutions

 

Total Deposits
in Market

 

Total Market
Share

 

Percent of
Parent Deposits

 

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

 

 

 

CPF–CBBI

 

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

 

CB Bancshares, Inc.

 

Creating A Stronger, Focused Hawaii Bank

 

June 25, 2003

 

34