Former Banc of California chief resurfaces with new financial firm
Steven Sugarman is getting the Banc of California gang back together.
Sugarman, who resigned as Banc of California’s chairman and CEO in January, has formed Capital Corps, a company that will provide funding to homeowners and small businesses “with non-traditional prime credit needs.” The new firm said in a Friday press release that it will target people who are “unserved by banks and traditional financial institutions.”
Several former Banc of California executives have joined the venture, including Jeffrey Seabold, who was once the Irvine company’s vice chairman and chief banking officer. Paul Simmons, a former chief credit officer at Banc of California, and Thedora Nickel, who recently stepped down as chief administrative officer, are also part of the new company's management team.
The new firm, which will pursue certification to operate as a community development financial institution, has already formed partnerships with the National Diversity Coalition and the National Asian American Coalition. It has also appointed Faith Bautista, CEO of the National Diversity Coalition, to chair its community advisory board.
The creation of Capital Corps makes good on a community reinvestment commitment Sugarman made while at the helm of Banc of California, the release said. During a Clinton Global Initiative event in 2015, Sugarman announced plans to raise $200 million from a dozen banks to tackle issues such as affordable housing, small-business lending, asset building and financial education.
Banc of California briefly faced opposition from the California Reinvestment Coalition for a 2014 agreement to buy 20 branches from Banco Popular. Banc of California secured the group’s approval by, among other things, committing to increased lending, investment and donations to low-income and underserved communities.
“We pledged to collaborate with community leaders to create a lending platform focused on providing access to capital to credit-worthy borrowers who need it most,” Sugarman said in Friday’s release. “Our goal was to reshape lending under the Community Reinvestment Act to be more impactful to underserved communities with better risk adjusted returns for banks. It gives me great pride today to make good on that commitment.”
Sugarman led the 2010 recapitalization of First PacTrust Bancorp, which later rebranded itself as Banc of California. He eventually became the company’s chairman and CEO.
Banc of California, under Sugarman’s leadership, faced criticism last year for a $100 million stadium naming rights deal with the Los Angeles Football Club, a professional soccer franchise that lists Sugarman’s brother among its investors. An anonymous blogger late last year raised questions about related-party transactions, though Banc of California quickly responded with a press release stating that its board had launched an independent investigation into the claims.
Sugarman’s resignation coincided with a disclosure by the company’s board that the release had inaccurate statements, notably that management — not the board — had authorized the probe. While the release had characterized the investigation as independent, the law firm involved had previously represented Sugarman and the company.
Though a separate investigation by the board found no signs of wrongdoing, other than the accuracy of the October release, the Securities and Exchange Commission launched its own inquiry into company disclosures.
The company’s board has enacted a number of corporate governance measures, splitting the roles of chairman and CEO after Sugarman’s resignation. It also added Kirk Wycoff, a managing partner of Patriot Financial Partners with banking experience, and Richard Lashley, a managing principal at PL Capital Advisors and former KPMG corporate financial adviser, to its board.
Banc of California has also pared back in certain areas this year, selling its mortgage business and cutting 140 corporate jobs.