Steven Sugarman is out at Banc of California in Irvine.
The $11.2 billion-asset company said in a press release Monday that Sugarman had resigned as its chairman and CEO just days after the Securities and Exchange Commission launched a formal investigation into questionable statements made last fall.
His departure also comes three months after an anonymous blog post raised questions about related-party transactions at the company.
Banc of California said that Robert Sznewajs, chairman of its joint audit committee, had become board chairman. Hugh Boyle, the company's chief risk officer, was named interim CEO. Boyle and Francisco Turner, Banc of California's chief strategy officer, will serve as interim chief financial officer and president.
"Banc of California is well positioned to continue to produce solid growth and attractive returns for shareholders," Sznewajs said in the release. Boyle and Turner "are both capable and experienced executives who have played key roles in building the company to where it stands today. They are well suited to ensure a smooth transition."
The company said it plans to find a permanent replacement for Sugarman.
Banc of California disclosed the SEC's subpoena — issued Jan. 12 — in a separate press release. The agency is looking into an October press release where Banc of California stated that its board had launched an investigation into related-party transactions.
The company disclosed on Monday that the release "contained inaccurate statements," notably that management — and not the board — had authorized the internal investigation. The release also characterized the investigation as independent when the law firm involved had previously represented Sugarman and the company.
Finally, the October release stated that certain directors and regulators had received "regular reports." That comment "overstated both the degree to which the company had been in contact with regulatory agencies about the subject matter … as well as the involvement of the directors in oversight or direction of the inquiry," the release said.
Banc of California, however, said that its board's investigation – handled by an outside law firm in Chicago – hasn't uncovered any evidence that "any loan, related-party transaction or any other circumstance has impaired the independence of any director."
Banc of California had also been publicly criticized by PL Capital, an activist investor that owns nearly 7% of the company's stock, for
Richard Lashley, a PL Capital principal, also complained last fall that Banc of California's board had refused to meet with him to discuss his concerns.
Banc of California and PL Capital
Efforts to reach Lashley and John Palmer, PL Capital's other principal, to discuss Sugarman's resignation were unsuccessful.
Banc of California is fortunate to have Sznewajs on its board, said Todd Baker, managing principal at Broadmoor Consulting and a senior fellow at Mossavar-Rahmani Center for Business and Government at Harvard Kennedy School.
Sznewajs "is really one of the best-qualified and most experienced bankers on the West Coast," Baker said in an interview. "He's an excellent person to be chairman … in a turnaround situation like this."
Sznewajs previously served as president and CEO at West Coast Bancorp in Lake Oswego, Ore., where he righted a company that was hit hard by nonperforming construction loans during the financial crisis. After restoring it to health, Sznejaws helped engineer West Coast's $506 million sale to Columbia Banking System of Tacoma, Wash., in September 2012.
Paul Davis contributed to this report.
