BBCN Bancorp is facing criticism from a former director who had objected to the Los Angeles company's plan to buy Wilshire Bancorp.
C.K. Hong wrote in a resignation letter to Kevin Kim, BBCN's chairman, that he was leaving after observing "fundamental governance issues and a dysfunctional board environment characterized by factionalism and a lack of transparency." The letter was included in a Wednesday regulatory filing disclosing Hong's resignation.
Hong, chairman and CEO of a publicly traded technology company, complained in his letter that BBCN missed a "unique opportunity" to maximize value when it decided to deal exclusively with Wilshire. "As I clearly stated to you and the other directors, this process was not consistent with best practices and, in my view, yielded a poor outcome for our shareholders," Hong wrote.
BBCN agreed to buy the Los Angeles company for $1 billion in a move that will cement BBCN's status as the nation's biggest Korean-American bank.
Hanmi Financial, also in Los Angeles, made a public overture to merge with BBCN, revealing that the company had spurned private efforts to discuss a combination. Hanmi rescinded its proposal shortly after the BBCN-Wilshire deal was announced.
Hong, who had only been on the board since October 2014, also claimed that the other directors refused to listen to his ideas on improving governance.
Hong's letter heaped more criticism on the board.
"I have provided recommendations to address these specific problems as well as those aimed at general reform," Hong wrote. "The recommendations have been ignored. I have also voiced my strong disapproval of your actions, many imbued with self-interest and counter to advancing shareholder interest."
BBCN said in its filing that Hong's resignation came after he was informed of plans to reduce the size of the board from 13 to nine directors and that he would not be among those included on the smaller body.
Hong "has characterized the process leading to the merger as opaque, not consistent with best practices and yielding a poor outcome for the company's shareholders," BBCN said in its filing.
"The company disagrees," the filing stated, noting that "a substantial majority" of directors, excluding Hong, had backed the Wilshire deal.
BBCN also took issue with Hong's view of board governance. "The company disagrees with the assertions in … Hong's letter that there is a dysfunctional board environment," the letter said.
Separately, the company disclosed in its filing that Kiho Choi, a certified public accounting, had also resigned from the board. Choi, however, sent a message "noting appreciation for the opportunity and experience of serving on the board [while] wishing the best for the company," the filing said.