Irvine-based Banc of California will expand the size of its board after reaching a deal with Legion Partners Asset Management to avoid a proxy battle. Legion owns 6.6 percent of the company’s stock.
A proxy battle is a contest for control over an organization that occurs when certain shareholders seek changes in the group’s governance.
The board size will be expanded by two members, who will be chosen with Legion Partners. Legion’s proposed nominees Marjorie Bowen and Roger H. Ballou will be considered.
“This agreement is an important next step in our ongoing efforts to increase shareholder involvement and add capable, qualified new talent to our Board of Directors,” Robert D. Sznewajs, chairman of the board, said in a statement. “We value the constructive input we have received from Legion Partners and look forward to working with them as we identify the best independent candidates for the board.”
Legion Partners has agreed to support proposals and recommendations of the board, including director nominations. Legion Partners has also agreed that it will not acquire more than 10 percent of the company’s outstanding common stock.
There have been some big changes at Banc of California this year.
On Jan. 12 the Securities and Exchange Commission launched a probe of the bank. Steven Sugarman, the bank’s CEO and chairman, resigned shortly after.
He joined the bank in 2010 and became CEO in 2013, helping to recapitalize the company and grow its assets. In 2014, the bank acquired Popular Community Bank’s branch network in California, creating the largest Orange County-based bank.
Under his leadership, Banc of California paid $100 million for the naming rights on Los Angeles’s new soccer stadium, one of the richest prices ever in Major League Soccer. Additionally, its market-beating returns have come despite concerns raised about deals benefiting Sugarman’s family and board members. Sugarman’s brother is a minority investor in the soccer team.
In February the bank sold its home loan division to Texas-based Caliber Home Loans, which will cut its employee count by half.
Caliber is buying the bank’s “Banc Home Loans.” Banc of California will receive a $25 million cash premium payment. The transaction is expected to close March 30.
The bank also sold its mortgage servicing rights to Caliber for $36 million.
Banc of California expects many of its employees will transition to Caliber. The deal is part of a previously announced strategy to reduce the bank’s mortgage service business, making its earnings more predictable.
The bank has assets of roughly $11 billion.
Contact the writer: hmadans@ocregister.com or Twitter: @HannahMadans
