Honolulu Republican, Volume IV, Number 497, 15 January 1902 — FIRST NATIONAL BANK OF HAWII DIRECTORS HOLD STORMY MEETING [ARTICLE]

FIRST NATIONAL BANK OF HAWII DIRECTORS HOLD STORMY MEETING

All Proxies From Mainland Are Ruled Out in dans Proceedinas lo lie Cemmenced to Rescind Yesterday's Proceeiis-Casliiet Cooper Says laMee's BortsWl is Exploded.

The annual meeting bf the First Nr'tonal Hank of Hawaii, held yester- * of the cor-» 'ration, could hardly be said to have I"-* n a most harmonious gathering, in fa< t the proc.-edings savored very much of a warlike nature. The very s' • rounding the handsome Meini. re building portended of trouble. It wa- only after the deliberations of the stockholders drew to a close that t>‘* true condition of affairs was made known to the outside world. It was a mooting of stockholdors Shares to the amount of 5.000 were accounted for. The fight centered upon the election of a hoard of directors One faction, hacked up by President Cecil Brown, carried the day, while that for which Col. George Macfurlan* cave battle royal, was defeated. All the old directors were reeiected. They include; M. P. Hobinmi. 1,. L. McCandless. G. August Oreier. G. N. Waller and Cecil Brown. Mandamus r-iouecdings in Sight. However, those on the inside delate that the end is not yet. Threats end declarations were freely bundled •linnit yesterday evening. The poailift Mat. incut was made last night to the effect that mandamus proceedlug* would be Immediately begun acuinst the legality of yesterday’s meeting. Before the gathering came to a dose a vigorous protest was fill'd against the manner in which the def< ated faction insists it was treated, w hile holding a majority of the stock. In fact, the annual meeting of the Fii>t National Bank of Hawaii was •mo of the liveliest business meetings h.-ld In Honolulu for mauy a day. W! • difficulty will cud no one 1. 1 the present hardihood to foreshadow. Both President Brown and i c..shier Cooper do not, mince matters in referring to the action of Col. Maclarlanc They maintain that the par Pcs representing outside stockholders were vainly seeking to secure shaolute control of the financial institution. The faction supporting Col. Ms. farlane declares that yesterday’s proceedings were illegal and highandc.l coming from the parties in . ontrol of the bank. On the other hand Cecil Brown, president cf the First National Bank, and Cashier W. .1 Cooper insist that the attempt of C cnci Macfarlaae to vote the stock t i is possession was nothing more ’ oi less than a conspiracy to put his nrcs. ntatives Into the hanking Wise atu. retire the present officials. Ha* Mainland Proxies. It is -lated that all the Eastern and California stockholders In the corporation w.-re represented at the meeting bv proxies hed by Colonel George Macfarlane. When the time came to vote for a hoard of directors all the proxies held by Colonel Macfariane were ruled out by President Cecil Brown on the ground that they were not properly stamped. The proxies, so it is claimed. came in a sealed oickage from the Anglo-Culifornla (*ar>k and Colonel Macfarlane present--1 them a* they came from the Malnland. The attention of the bolder was tiled to the fact that the proxies were n»t stamped. Colonel MacfarUne claims that, then and there, he : ated that he was prepared to placo amps on the proxies if necessary.as he rvgard.'d it a technicality only, and wanted to go on record that he was w illing to put on the stamps. The fight throughout the meeting n in. red between President Cecil Brown and Colonel Macfarlane. Both parties had evidently scented trouble la advance. B'-ow Keeps the Proxies. It is barged that the Brown forces

soon as I tan take the necessary steps." Prompt Legal Proceedings. Colonel Macfarlane declared yesterday evening that an unwarranted attack had. been made nginst the AngloCalifornia Hank of California in the address of the president, which was read a' the meeting, a full context of which appears in tats issue. "I will state this much." declared Colonel Macfarlane. "Mandamus proceedings will l»e commenced against the legality of the proceedings of yesterday's meeting of the stockholders of the National Bank of Hawaii. Steps will be taken immediately to declare the whole meeting invalid. 1 am not prepared to state to what extent certain financial relief intended by the Anglo-California Bank will be affected by the action of the stockholders at yesterday's meeting, but it now appears to me as if the former pleasant relations existing between the two banks had been very much strained because of the stand taken by the minority element." CASHIER COOPER'S STATEMENT When seen at his home last night Mr. W. .1. Cooper, cashier of the First National Bank of Hawaii, made the , following statement. "Mr, Morgan was introduced to the Anglo-California Bank at San Francisco by W. J. Cooper, cashier of the first National Bank of Hawaii, ir the same manner as many other gentlemen of this city have been, but without any idea that Mr. Morgan had any desire to become the president of the First National Bank. Had I been acquainted with the ambition animating Mr. Morgan. I should have been reluctant to extend to him. under any circumstances, an introduction to the managers of the AngloCalifornia Bank, as he is a man who has absolutely no fitness or ability ; for the position nor has he the foli lowing necessary to make the bank a success. Colonel Macfarlane's Bombshell. "There can be no question that Mr. Cecil Brown has not given his whole attention to the business of the First National Bank, neither can it be any question that the success of the business of the First National Bank is solely attributable to Mr. Brown. "In regard to Mr Macfarlane's bombshell 1 feel that we have exploded It That Is all I care to say." Mr. Cooper, however, added that the bank had been a great success. During the first six months of its existence the bank paid a dividend of k per cent, and during the past six months would have paid 11 per cent, but for the expense of fitting up and moving into new quarters. Director* Held (stand Proxies. At yesterday's meeting the present directors held all the proxies, except one. from th other islands. Mr. Cooper feels that the whole conspiracy to get hokl of the control of the bank was arranged at San Francisco, but that the plans collapsed and are now a total failure. REPORT OF PRESIDENT BROWN. To th* Stockholders of the First National Bank of Hawaii, at Honolulu: Gentlemen: Under the provisions of the National Banking Act all National banks must hold their annual meetings in January of each year on the day specified in the articles of association. and almost every National back, in its articles of association, has fixed upon the second Tuesday In January as that day. and hence ocr meeting. Although this Institution has been doing business for but fifteen months, this wilt be <mr second meeting, the first covering the period from October, ISOO. to January Ist, 1901. and the present from January

accepted the proxies and took possession of them, notwithstanding the • I'laim that they were ruled out. Colonel Macfarlane protested against such action upon the part of the chairman of the meeting President Cecil Brown, and having made a protest, felt satisfied that he had protected the rights of the foreign stockholders. After calling the roll of foreign stockholders the roll of local stockholders was called. The presentation of a proxy by Mr. Wun Jenberg brought to the attention of the chairman that it was also unstamped. Chairman Brown also ruled it out. but Mr. Wundenhcrg was immediately handed a stamp by a friend who was present and who went out of the meeting to get it. Colonel Macfarlane immediately jumped to his feet, and pointed out to Chairman Brown that he had refused to allow proxies of foreign stockholders to be presented but had accepted one from a local stockholder. Mr. Macfarlane set up the claim of partiality being shown to local stockholders for a purpose. It is claimed that Chairman Brown immediately saw his error and the force of th» point made bj Colonel Macfarlane. and then reversed his decision and notified Mr. Wundenberg that his proxy was ruled out. Macfarlane Has Majority. Two or three others who had proxies. which were unstamped, refused to deposit their proxies after the reversal of the ruling. It was ascertained that the votes cast by Chairman Brown and Mr. Cooper were 2.otiS. being short of a majority. The votes cast by Colonel Macfarlane for foreign stockholders, which the chairman ruled out. l*eing votes. Out of the total of 5,000 shares in the corporation 107 were not represented at the meeting. The 33 shares ' held by Colonel Macfarlane privately were not voted, as the holder declared that the foreign stockholders had no voice In the meeting. The shares held by the Campbell estate to the number of 500 were also ruled out. It was currently reported that Mr. Brown refused to recognize letters that Mrs. James Campbell had written to him and to Joseph O. Carter. co-trustees in the Campbell estates. which letters were read at the meetings. Mrs. Campbell Is said to have requested the holders of her interests to vote for a postponement of the meeting for thirty days pending her arrival in Honolulu. Macfarlane Makes Protest. The Macfarlane faction claims that, with a minority of the stinkholders represented, namely. 2_o«iS shares, while 2.501 were a majority, the proceedings enacted at the meeting were nothing short of being high handed, as was the action taken by the president in voting with the min ority stock and the re-election of a loan! of directors. Colonel Maetgriaue waited throughout the deliberations, and just previous to the president putting a motion for an adjournment. Colonel Macfarlane immediately arose and read ths following protest; "J wish •*> enter my protest against the legality'of each and every step of the proceedings of this meeting, which I claim was arbitrary, illegal, and unauthorized by law. The course of the chairman is an attempt to prevent certain stockholders abroad, whom I represent, from having any representation at this annual meeting. and to deprive them of their rights. I now give notice that this meeting will be declared invalid, as

lit. 19"1. to December 31st, 1901. Since our tast meeting the board of directors concluded to change the place of business of the institution, the o!d quarters becoming too small and Tamped by reason of Increasing 1- n* 'S and the need of more help and made arrangements for the present quarters with the Mclntyre Building Co~ Ltd., for a term of ten years at a yearly rental of S5OO a month. Best Offices in Territory. The Fir*t American Saving* and Trust Company of Hawaii. Limited, ha* its place of business on Fort street, in a part of the premises leased to us. thus reducing our rent by $lOO a month. The removal from the old to the new quarters has entailed an expense of over $7,000 for fixtures, etc., actually needed, and we have today the finest banking offices in the Territory- These fixtures will be carried on the books asan asset and be gradually written off. The business since the last meeting of the stockholders has greatly increased, and we feel perfectly justified from that fact in making the move we have done, and in making the expenditures caused by such removal, and also feel sure that the future business of the institution will justify this action. The gross profits for the year have been $78,994.38. and the expenses $25.999.31: loss of currency per ‘‘Rio de Janeiro." $BO2. Premium written off F. S. bonds. $2911.52. leaving a net profit for the year’s business of 147.281.53. out of which has been paid a dividend of five per cent, per annum, paid semi-annually. The sum of $20.0"0 has been carried to surplus account. and the balance of $2,281.53 to profit and loss account. Mr. W. G. Cooper, the cashier, has prepared a balance sheet, copies of which are to be distributed amongst you. New Office of President. The judges of election for this meeting who are to superintend the election of directors are Messrs. H. F, Lewis. Frank Hustace and Harry Armitage. The present board of directors consists of Messrs. M. P. Robinson. G. J. Waller. L. L. McCandless. August Dreier and Cecil Brown, who are all eligible for re-election, and ask for a re-election at your hands. In this connection the writer deems it proper and necessary in his own behalf to make a statement as to what were and may be now the intention of the • correspondents of this bank in San Francisco in relation to the office of, president. Their intention accidentally became known to the present incumbent and had it not been that a mistake was made by them as to the date of the annual meeting in all probability this intention would have been carried through, and that without a majority of the stockholders being aware or cognizant of what was intended. Proposed Change of Directors. The following is what was intended as learnt from outsiders, i; e., not the correspondents. It was the intention to name a board of directors, leaving the present incumbent out. The president of the bank must be a director, and is elected to that position by the directors, the stockholders electing the directors and this action was intended to be taken without any reason or notification being given or complaint made of neglect of duty, nonattention to business or unfitness from any cause, and it is submitted that the move was intended to be made and undertaken without consultation with the stockholders (some of whom residing abroad knowing nothing of the move, and when finding out repudiated it), and entirely unknown to the stockholders resident here with. say. the exception of one or two. and one of those being an aspirant for the presidency. Bank’s Interest Not Considered. And it is submitted that this programme was intended to be carried out. without raking into consideration the best interests of the band aud its stockholders. The present incumbent has been informed that the reason for the dissatisfaction of the correspondents was. that all of bis time » was not given to the institution: be that as it may. it is true that I have not given the whole of my lime to the minor details of the office business of the institution, but I do say that in bringing business to the bank and devoting the best of my attention and efforts to that end whatever salary has been paid me has been faithful It earned, and that in looking out for the interests of the bank and seeking for business has been and is the object for which most of my time is spent. | a fact which is well known to those stockholders who reside in this 1 Territory- aud it is submitted that

what has been dime and the work as carried on shows conclusively that it has been successfully carried through: and considering the circumstances and drawbacks as to exchange and other matters under which the First American Bask of Hawaii started, the success has been remarkable. The parent icstitxlion bad not nor has th..« day any facilities for obtaining ex hane°: we have to depend upon the courti-sy of other banking institutions and oa personal friends of myself. and frequently have to ship coin to cover our drawings, which is not only expensive, but against tas interests of the Territory, as it reduces our coin circulation. Ear.k Profits Increase. This bank succeeded to the commercial business of the First American Bank of Hawaii. Ltd., on O tober Ist. 1900. bringing forward a balance to the credit of profit and lo»s account from the first American Bank of 122.810.09. For the quarter ending December 31st, 19u0. the net profits were at the rate of 0 1-10 per cent per annum, but. as a matter of fact, had it not been for the heavy expenses in connection with The organization of the National Bank, in the way of new stationery, stamps on the new issue of stock, etc., the profits w'ould have shown at the rate of about 8 per cent per annum net. For the six months ending June 30. 1901. the net profits of this bank show at the rate of 9U. per cent per annum. For the six months ending December 31st. 1901. the net profits show a little over 10 per cent per annum. Financial Exhibit. During the existence of the National Bank, the gross earnings have been $92,450.69 The operating expenses were $33.427 28 Loss written eff currency shipped on the “Rio de Janeiro’’ 802.0*1 Premium written off U. S Bonds 2,911.32 Dividends paid 31.250.00 $68,390.80 Leaving a net balance carried to profit and loss 0f..524,059.89 This added to the balance brought forward from the First American Bank of Hawaii 22,810.09 Gives a total of $46,869.98 $45,000.00 of which has be*en placed to reserve account, leaving a balance in undivided profits of $1869.98. Our United States 2 per cent Bonds stand us on the Books at date. Principal *250.000.00 Pr-mium 12.000,00 and during the past year, as above slated, we have written off about $3,000 of the amount of premium, notwithstanding the fact that the present market value of these bonds is 109 in New York, leaving a surplus st the present time in this account of over SIO,OOO. Net Earnings Satisfactory. Our profits for the last period, had it not been for the extraordinary expenses in connection with moving into our present quarters, would have shown fully 11 per cent per annum net. and we think that the stockholders have "every cause for congratnla- ; tion at the steady improvements in the net earnings <sf the bank, as above shown from period to period. The First American Savings and Trust Ocrupany of Hawaii. Ltd., which is operated under the Territorial laws, and does also a remunerative business and has paid the same dividend: the syvices rendered were evidently not taken into consideration by them, the writer being its president also, and serving as such without any remunerative whatever. If tht majority of the stockholders, or the correspondents were dissatisfied. it is submitted that in all fair ness some notification of displeasure or dissatisfaction as to the manage ment or services, should have been communicated to the present incumbent direct. »