Hawaii Business 2012 CEO of the Year: John Dean of Central Pacific Bank
The complicated deal to save CPB
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Photo: Mark Arbeit
The toughest challenge was recapitalizing the bank,” says John Dean, Central Pacific Bank’s soft-spoken CEO.
Dean, who came out of retirement in 2010 to help save the struggling community bank, knew what he was getting into. This was his fifth bank and his fourth turnaround as a CEO, so he was keenly aware of how much money he had to raise and how bad the timing was.
“If you look at the goodwill write-off,” he says, “we had over $700 million in losses, so we were running out of capital. And, if you remember, there were a lot of people chasing capital at that time. So, the toughest thing for me was to get investors to believe our vision that, with $325 million, we could return the bank to profitability.”
That’s exactly what Dean and his team did. In a series of road trips and Byzantine negotiations during the spring and summer of 2010, they persuaded dozens of institutional investors not only to buy into Dean’s vision, but to do it on terms that met the elaborate requirements of federal regulators and preserved the bank’s core values. The result was one of the most convoluted business deals in Hawaii history.
“It was probably the most complex transaction I’ve ever worked on,” Dean says. “That’s because there were so many parties involved and everything had to come together just right.”
The story of that transaction, and its enduring impact on Hawaii, is the reason John Dean is Hawaii Business’ 2012 CEO of the Year. Before we tell that story, you’ll need some background.
In order to grasp the extent of what he did at Central Pacific, you have to understand just how improbable it was for a troubled, relatively small community bank in Hawaii to find a leader as experienced and highly regarded as Dean. He had already turned around four banks on the mainland. At his last, Silicon Valley Bank in California, he came into an institution that, much like CPB, was under a regulatory order and wallowing in losses. After restructuring, Dean and the investors rode the tech boom of the 1990s, and Silicon Valley Bank’s market capitalization grew from $60 million to $3 billion. That’s a deal people remember.
After Silicon Valley Bank, Dean went into semiretirement, founding Startup Capital Ventures, a successful venture-capital firm that specialized in smaller tech startups, some of them in Hawaii.
When CPB found Dean, he had been living part time in Waimanalo since 1993. In fact, although most of his professional career was spent on the mainland, he had strong ties to Hawaii and the Pacific. As a young man, he served in the Peace Corps in Western Samoa, where he met his wife, Sue, who was also a Peace Corps volunteer. After their tour in Samoa was over, they spent time in Hawaii and developed a love for the Islands. After they bought their Waimanalo home, they tried to spend about 20 percent of their time there, which became easier when Dean retired from Silicon Valley in 2003. Since then, the Deans have become deeply involved in the philanthropic community in Hawaii. They donated $250,000 to sponsor a scholarship at the University of Hawaii’s Shidler College of Business; they established a nonprofit called the Entrepreneurs Foundation of Hawaii; and they sponsor a math program at Waimanalo Elementary School.
It’s easy to see why Central Pacific wanted Dean; it’s harder to see why he left retirement to save the bank. It wasn’t for money. In his first year at CPB, he drew a salary of $1. He dedicated most of his stock options to the bank’s new charitable foundation. And, even though he began to draw a salary in 2011, he’s been busy giving it away to organizations like Catholic Charities and the Aloha United Way, where he’s chair of the 2012 campaign.
Catherine Ngo, the bank’s chief administrative officer, has been with Dean longer than anyone else at the bank. One of a handful of executive staff members he brought to Central Pacific, she’s worked for Dean for more than 20 years, first at Silicon Valley Bank, then as a partner at Startup Capital Ventures. She says she was surprised that he took the CPB job.
“I knew that people had approached him about the position. But I also know that he was at a point in his life where he was quite satisfied. He had a nice balance of work and time to spend with his family. I know what he was trying to do was help them find good candidates. He introduced the board members to people he knew in the banking community. I think the board actually met with a couple of candidates, but Crystal Rose, who is chair of the board, and the other board members saw that John was clearly the strongest and best fit for the bank.”
Ngo also helps explain why Dean eventually said yes. “There were several quarters of significant losses. I think potential failure was staring us in the face. But John has always been up for a good challenge. In that sense, it didn’t really surprise me.”
For his part, Dean says if you had asked him three weeks earlier if he would ever come out of retirement to work at another bank, he would have said, “Never.” He says his wife is the reason he took the job. “I talked to Sue, and she said, ‘How many employees are there?’ And I said about a thousand. And she said, ‘What happens if the bank doesn’t make it?’ And I said, ‘Unfortunately, most of them are going to end up on the street.’ And Sue said, ‘Then you’ve got to go do it.’ ”
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