In the midst of the largest Korean-American bank merger, Center Financial Corp. has "terminated" its chief executive.
The Los Angeles company said in a press release Thursday that it had replaced Jae Whan Yoo with the California banking veteran Richard Cupp. The surprising news comes on the heels of a $286 million merger agreement, where the $2.3 billion-asset Center will sell itself to the $3 billion-asset Nara Bancorp Inc.
Alvin Kang, Nara's president and CEO, was to become CEO and Yoo would have been president.
The companies' boards issued a press release Friday saying that the termination "will not negatively impact our integration." Center did not return phone calls.
Kang said in an interview Friday that Yoo's departure was unfortunate but "the message really is that we are not going to let this stand in the way or impact the merger agreement." He said there had been no decision on who would become president. "It's more a question of perception in the community than anything else," he said.
Some analysts said the dismissal could be tied to the same social barriers that had prevented a deal in the past. "In every MOE I've ever seen, eventually someone doesn't like their role and leaves but that is usually after the deal is done," said Brett Rabatin, an analyst at Sterne, Agee & Leach Inc.
Analysts said Yoo's abrupt departure should not have a material impact on the proposed acquisition. Many expected Yoo, who has a successful record running Korean-American banks, to succeed the Kang, 65.
Having Kang and Yoo together "really would cement that company as a preeminent Korean-American Bank," Rabatin said.
Instead, Cupp, 70, will be Center's CEO until either the merger is complete or Dec. 31, whichever comes first. Cupp was an independent consultant for Western banks in recent years. Before that, he spent more than a decade as the president and CEO of banks such as 1st Century Bank, First Bank of Beverly Hills and HF Bancorp.
Cupp "is a well known and highly regarded leader in the Southern California banking industry," said Jin Chul Jhung, Center's chairman, in the press release issued Thursday. The new leader "has repeatedly demonstrated his ability as a chief executive to guide top-notch bank management teams and to deal credibly with investors and regulators."
The companies said in Friday's press release that the acquisition should close during the second half of this year.