Banc of California chooses outsider to replace CEO who resigned amid scandal
Banc of California this week named a new chief executive, an outsider who will be tasked with leading the institution as it tries to emerge from a shake-up and scandal that led to the last CEO’s resignation.
Doug Bowers, formerly the chief executive of Square 1 Financial in Durham, N.C., will take over as the Orange County lender’s CEO on May 8, the bank said in statement
Bowers led Square 1, a bank that specialized in lending to tech firms and other companies backed by venture capital investors, until it was acquired in 2015 by West Los Angeles’ PacWest Bancorp.
He’ll replace Steven Sugarman, who led the bank through a period of rapid growth and aggressive brand building but was pushed out in January after months of controversy, both about bank deals that benefited members of Sugarman’s family and alleged connections between bank insiders and a convicted fraudster.
Among the deals was an agreement by the bank to pay $100 million over the next 15 years for the naming rights to a new soccer stadium being built near USC. The stadium will be home to the Los Angeles Football Club, a new Major League Soccer franchise partly owned by Sugarman’s brother Jason.
The SEC does not comment on ongoing investigations, but bank filings suggest the inquiry is centered on false statements that the bank acknowledged were made in response to a short-seller’s allegations that the bank was controlled by Jason Galanis, a Los Angeles financier who pleaded guilty to securities fraud charges last summer.
In a statement issued after those allegations, the bank said its board of directors had hired an independent law firm to investigate the claims. But the bank later acknowledged that the law firm was hired by company management, not the board, and that the firm had previously represented the bank and Sugarman.
The board later commissioned a different law firm to investigate the claims about Galanis. The bank said in February that the investigation found no evidence that Galanis had any influence over the bank, but has not released the report.
In the months since Sugarman resigned, the board has gone through a dramatic shake-up. Two longtime investors — including a critic of Sugarman and the board — took the spots of the former CEO and influential board member Chad Brownstein, who also stepped down.
The bank also agreed to expand the board with two new members, part of an agreement with an activist investment firm that had criticized a lack of corporate oversight at the bank and pushed for changes, including a possible sale.
The bank itself, meanwhile, sold its mortgage banking division, part of an effort to focus on its core business of commercial banking. It also moved its headquarters to Santa Ana from Irvine.
Shares fell as low as $11.26 in October after the initial allegations by the short seller, but they have since recovered and closed at $21.70 on Friday.
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