Banc of California's (BANC) president has resigned after the Irvine company reported a large quarterly loss and dive in its capital ratios.
Robert Franko also resigned as president and chief executive of the company's bank. Steven Sugarman, Banc of California's CEO, succeeded Franko, the company said Friday.
Banc of California lost $9.5 million in the third quarter, after taking into account dividends on preferred stock, compared to a $9.2 million profit a year earlier. The company's total risk-based capital ratio at Sept. 30 was 12.64%, compared with 19.34% a year earlier.
Noninterest expense roughly doubled that of a year earlier, to $52.3 million. Compensation costs more than doubled from a year earlier, $30.2 million.
Acquisitions may have played a role in the quarterly results. In August the company announced an agreement to buy the Beverly Hills, Calif., mortgage lender CS Financial for $10 million. CS Financial was majority owned by Jeffrey Seabold, a managing director of the bank's residential lending unit and a former company director. Sugarman's relatives were also part-owners of the mortgage lender.
During the third quarter, Banc of California also agreed to pay $40 million for property in Costa Mesa, Calif., it disclosed in a regulatory filing. In September, Banc of California agreed to buy the investment advisory firm Palisades for an undisclosed amount.
The company's assets increased by 48% from the second quarter, to $3.7 billion
Sugarman, 38, became sole CEO of the company last year when Gregory Mitchell resigned, a month after the company announced that the executives would share CEO duties. Sugarman became a director of the company when Southern California investment firm COR Capital, where he is a manager, recapitalized Banc of California in November 2010.
Franko, 65, joined the company last year, after it bought Beach Business Bank, where he had been CEO. He was later named president and CEO of First PacTrust Bank, the company's other banking unit. The company consolidated its banks and changed its name to Banc of California during the third quarter.
In its separation agreement with Franko, Banc of California agreed to pay him a $200,000 bonus, a $50,000 payment to cancel his stock awards and $40,000 for lawyer's fees he incurred as part of his separation from the company.
"Since the beginning of the third quarter, we have completed the acquisitions of The Private Bank of California, The Palisades Group and CS Financial; consolidated our banking subsidiaries under a single national bank charter; and converted to a new core operating system," Sugarman said in a press release. "Banc of California now ... boasts a single, consolidated full service banking platform able to meet the needs of California's small businesses, entrepreneurs and homeowners."