Orange County Business Bank in Irvine, Calif., is facing a proxy battle from a Dallas investment firm.
Commerce Street Investment Management plans to nominate at least three members to the $201 million-asset bank's board as part of an effort to push governance changes. Commerce Street also wants to address the bank's "subpar performance, overcapitalization, excessive executive compensation and failure to initiate a strategic plan," Mark Ruh and Thomas Lykos, the firm's managing directors, wrote in a Monday letter to James Gough, Orange County's chairman, president and chief executive.
"The status quo is no longer tolerable to your outside investors," the letter added.
Commerce Street in December urged the bank to adopt slash executive compensation and split its chairman and CEO roles, the letter said. Ruh and Lykos also requested that the bank hire an adviser to evaluate the possibility of selling itself.
Commerce Street, which is affiliated with advisory firm Commerce Street Capital, also accused the bank of misleading investors in its fourth-quarter earnings release. The bank omitted information about its pretax income, along with profitability metrics for return on average assets, Ruh and Lykos wrote in the letter.
Commerce Street claimed in the letter that a request to meet with the bank's board was denied earlier this month. "Your rejection of our request, without any substantive explanation, is in fact unproductive and inappropriate given your fiduciary duties as directors of a publicly traded company," the letter said.
The bank did not immediately respond to a request for comment.