East West Bancorp Inc. bought a small bank in California's High Desert region partly to broaden its customer base beyond its traditional Chinese-American clientele in and around Los Angeles.
East West's chairman and chief executive Dominic Ng thought everything was going smoothly during the weeks after the deal's mid-August closing. But then he got a shock: Ronald L. Wilson, the executive who was slated to run the operation, abruptly quit.
"I was stunned, because he seemed very excited about the merger and had repeatedly told me that things just couldn't be better," Mr. Ng said last week.
East West's plan from the get-go had been to operate Desert as its own division and let its existing chief executive Mr. Wilson — who had a reputation as a respected banker, philanthropist, and who hosted a television talk show in the region north of Riverside — continue to run it.
His decision was made known to the public via a farewell letter he hand-delivered to the local paper, and to Mr. Ng by an after-hours e-mail. Former colleagues say they have not seen Mr. Wilson since.
Mr. Wilson's decision to depart was apparently connected to a situation Mr. Ng thought had blown over long ago. Shortly after East West announced the deal to acquire $576 million-asset Desert Community Bank in Victorville, KIXW-AM radio talk show host Barbara Stanton criticized the sale, saying, falsely, that Desert had sold out to a company was not run by "true Americans" and that customers should pull their money. According to local accounts, she also accused Mr. Wilson of lying.
Ms. Stanton did not answer repeated requests for an interview. Her radio show was canceled shortly after the broadcast by station parent Clear Channel Communications Inc. Ms. Stanton has since begun a daily Webcast.
East West officials brushed off the controversy, but Mr. Wilson's communications suggest that he was unable to do so.
Steve Williams, the Victorville Daily Press' opinion editor, said Mr. Wilson delivered a letter to the editor to him on Aug. 31 that the newspaper included in a Sept. 2 article.
"I can no longer face the many people in the community who feel I 'stabbed them in the back' and 'sold out,'" Mr. Wilson wrote. "I am saddened to see the change in people's lives that the merger has wrought."
Local papers reported in September that Mr. Wilson had sold his house in California almost a month before delivering the letter. American Banker's attempts to reach him were unsuccessful.
Robert Lovingood, the president of ICR Staffing in Victorville and a longtime friend of Mr. Wilson, said most of the High Desert community was sad that he had quit.
"Most successful businesses do not give a fraction of what Ron had given to this community," he said. "Far more people truly miss him and want him back."
Mr. Wilson had hosted on a weekly local cable-TV talk show about business and finance that was rebroadcast on two cable systems to viewers from Las Vegas to Los Angeles.
Despite the distractions, Brett K. Rabatin, an analyst at First Horizon National Corp.'s FTN Midwest Securities Research Corp. in Nashville, said the merger should work out fine.
"This is not a slash-and-burn-type acquisition; they'll make sure they'll keep the top producers, and management is going to stay involved, so I don't think there will be much of a backlash," he said.
Aaron J. Deer, an analyst at Sandler O'Neill & Partners LLP in San Francisco, said that Mr. Wilson's departure could lead to a few customer defections but that, since Desert Community has just 5% of East West's assets, the impact on East West should be limited.
"For those customers that stick around though, I think they'll find that under East West's leadership, Desert Community remains a community-focused bank," Mr. Deer said. "East West has a good reputation for responsive customer service, and Desert Community customers should have access to more products and services as well as a greater borrowing capacity."
Mr. Ng said that most members of the community support the deal, and there has been little evidence of any customer runoff.
Several East West and Desert officers have since stepped in to handle the integration and Mr. Ng said that it remains on target.
"There is no void in leadership because there's a whole team in place there," including much of the management and lending team that had worked for Mr. Wilson, Mr. Ng said. "We are still generating business, and when the system conversion is complete, we'll begin to aggressively market to get new customers."
