RBB Bancorp, Gateway Bank in Bay Area call off merger

Nick Kontostavlakis/Nick - stock.adobe.com

RBB Bancorp in Los Angeles said its planned acquisition of Gateway Bank in Oakland, California, has been nixed.

The $4.1 billion-asset RBB did not provide a reason but said in a press release on Thursday that it and the $186 million-asset Gateway had "mutually agreed to terminate" the cash transaction and "neither party has or will have any liability or pay any penalty to the other party as a result." 

Representatives of both companies did not respond to requests for comment.

The $23 million deal, announced in December 2021 and originally expected to close in the second quarter of 2022, was advertised as a bid for RBB to enter the Greater San Francisco Bay Area. But the acquisition had been delayed multiple times since then.

During that time, RBB faced several challenges. These included the resignation of then-President and CEO Alan Thian in April 2022 after a company investigation found he had violated unspecified bank policies and procedures. 

A month later, a pair of board members stepped down. Vice Chairman Raymond Yu, who joined RBB's board in 2018, wrote in a one-page resignation letter in May 2022 that he resigned due to "disagreements with the board regarding corporate governance and other matters." RBB said Alfonso Lau, who had served as a director since 2018, also resigned at the time.

In May of this year, board member Paul Lin resigned, citing disagreements regarding governance and policy matters.

Then, in July, RBB said it was cooperating with informal requests from the Securities and Exchange Commission for information about certain company policies and procedures, expenditures, former officers and directors and other matters. The SEC's request also included information related to potential violations of laws or regulations, the company disclosed in a regulatory filing.

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RBB's stock, through the end of September, was down about 50% since it announced the Gateway deal in 2021. RBB specializes in providing business banking services to Asian communities in Los Angeles, Las Vegas, New York City and Chicago.

RBB's failed attempt to buy Gateway marked the seventh deal that was canceled this year, following 13 in 2022, according to S&P Global Market Intelligence data. The largest deal called off in 2023 so far was Toronto-Dominion Bank's $13 billion attempt to acquire Memphis, Tenn.-based First Horizon Corp.

That deal was announced in February 2022 and was initially expected to close in the fall of last year. But it was delayed several times as the banks worked to navigate intense scrutiny of the transaction.

The Biden administration called for ramped-up examinations of pending mergers and acquisitions over the past couple of years, particularly large deals, and the TD-First Horizon combination was among those to get derailed amid the shifting environment.