Manhattan Bancorp in El Segundo, Calif., failed to disclose the retirement of Terry Robinson or his sudden death in the days before the company agreed to sell itself to another Southern California bank.
The company never publicly disclosed Robinson's Dec. 31 retirement as chief executive, or his Jan. 11 death. Manhattan did, however, announce on Jan. 14 that it was merging with Plaza Bancorp.
The banker's retirement and death were confirmed Friday by Manhattan spokeswoman Heather Wilson, who said the closely held company was not required by the Securities and Exchange Commission to disclose such developments.
Several California bankers and shareholders were surprised by the death, especially since Robinson had spent recent months negotiating Manhattan's sale to the $525 million-asset Plaza Bancorp in Irvine, Calif. The failure to disclose Robinson's death is even more surprising since the company's $496 million-asset Bank of Manhattan has been operating under a consent order with Office of the Comptroller of the Currency since late November.
Robinson, 67, died in Alamo, Calif., east of San Francisco, according to a Jan. 21 obituary in the Idaho Statesman. Wilson said she did not know the cause of death, though an email to employees had said the recently retired CEO had died "unexpectedly."
"His passing is a private family matter," Wilson stated in a Sunday email.
Banks should promptly announce the departure or death of a CEO even if the company is not subject to SEC reporting requirements, industry experts said. A pending merger makes such disclosure even more important.
"The best thing to do is to disclose early and clearly, especially if the executive was key to a deal or was one of several top executives," said Chip MacDonald, a lawyer at Jones Day in Atlanta.
Shareholders at closely held banks "are already those with not enough information, and this is why they should be very scrupulous in their disclosures," MacDonald added. "The thing everyone worries about when a bank CEO or president dies is if something was going amiss at the bank."
Robinson's retirement was only announced internally to Manhattan's employees and certain shareholders, Wilson said. On Monday, Robinson was still listed as CEO on certain sections of Bank of Manhattan's web site.
Robinson also had ties to Plaza, where he had been president and CEO from June 2009 to November 2010. During that time, he worked closely with Gene Galloway, Plaza's current president and CEO.
Galloway is set to become president and CEO of the combined bank after the merger. Rick Sowers, Bank of Manhattan's current president and COO, will join the bank's executive team. The merger, which is expected to close by June 30, would create a bank with $1 billion in assets and $850 million in deposits. Bank of Manhattan had 175 employees as of Sept. 30; Plaza had 85.
Sowers did not return calls seeking comment.
Manhattan Bancorp and Plaza trade on the OTC Bulletin Board. Plaza agreed to pay about $70 million in cash and stock, or $5.59 a share, for Manhattan Bancorp. The purchase price was based on the seller's outstanding stock at Sept. 30.
The consent order with the OCC required Bank of Manhattan to develop a three-year capital plan and risk-management procedures. The bank also agreed not to make any new loans through its leveraged lending and indirect auto lending programs.
Manhattan Bancorp is majority owned by Carpenter & Co., an Irvine, Calif., investment firm that holds a 75% stake, according to the company's 2014 proxy statement. Its bank has six branches in Southern California.
Under the 17-page OCC consent order, dated Nov. 20, Bank of Manhattan's board also agreed to maintain appropriate loan-loss allowances and repurchase reserves. The order states that the bank cannot introduce new products, enter new markets or grow excessively "until it adopts an appropriate credit culture, implements sound risk management principles, and returns the Bank's condition to a satisfactory condition."
Bank of Manhattan's chairman, J. Grant Couch Jr., had been president and chief operating officer of Countrywide Capital Markets, which specialized in trading and underwriting mortgage-backed securities. Bank of America bought Countrywide Financial in 2008.
Robinson was a community banker at heart.
Before joining Plaza, Robinson was president and CEO of Vintage Bank and its parent, North Bay Bancorp in Napa, Calif., where he worked from 1988 until its sale in 2007. He was responsible for taking Vintage to $675 million in assets from $26 million over nearly 20 years.