A new wave of boardroom turmoil has hit RBB Bancorp in Los Angeles two days before the $4 billion-asset company is scheduled to hold its first in-person annual meeting since the pandemic began.
RBB disclosed Monday that two directors have resigned and that it has agreed to investigate questions involving conflicts of interest raised by one of them.
Vice Chairman Raymond Yu, who joined RBB’s board in 2018, wrote in a one-page resignation letter May 10 that he was stepping down because of “disagreements with the Board regarding corporate governance and other matters … including historical and potential current conflicts of interest among certain board members and senior management that were just disclosed to the board in March [and] determinations of the independence of various board members with which I disagree.”
RBB said Alfonso Lau, who had served as a director since 2018, resigned on May 5 citing personal reasons.
RBB, in an 8-K filed Monday with the Securities and Exchange Commission, said the board “takes Mr. Yu’s accusations very seriously,” adding that “in an abundance of caution” it had opted to temporarily withdraw the independence classifications of two directors, Peter Chang and Chie-Min Koo. RBB also revealed it planned to investigate the issues Yu raised in his resignation letter “in order to determine whether the involved directors may be deemed to be independent.”
Neither Yu nor RBB CEO David Morris responded to calls and emails seeking comment at deadline.
Last month, RBB revealed in a proxy statement filed with the SEC both Chang and Koo, were involved in a previously undisclosed business venture with Simon Pang, its executive vice president and chief strategy officer. According to RBB, the venture did not do business with the bank, and both Chang and Koo still met the standard for independence set by the SEC and the NASDAQ stock market.
RBB, however, maintains a stricter independence standard for service on its audit and nominating and governance committees. The business venture violated those stricter standards, so Chang and Koo stepped down from both committees in March, though they’ve continued serving on the board, RBB said in its April 14 proxy.
The resignations of Yu and Lau come a month after longtime chairman and CEO Alan Thian resigned. An internal investigation concluded in April that Thian had violated unspecified company policies and procedures.
Following Yu’s resignation, the board shrank itself from 14 seats to 13. At the May 16 annual meeting, shareholders will vote whether to reelect the 12 remaining director nominees.
In a research note Monday, Timothy Coffey, who covers RBB for Janney Montgomery Scott, maintained a neutral rating on the company’s stock but lowered his fair value estimate of the shares to $22 from $25. Coffey wrote that Yu’s resignation “could create headwinds to multiple expansion on RBB stock near-term, given the leadership uncertainty and pending acquisition of Gateway Bank.”
RBB announced plans to acquire the $176.7 million-asset Gateway in December for $22.9 million in cash, in a move that would mark its expansion into the San Francisco Bay region. Last week, in a 10-Q report filed with the SEC, RBB stated that it expects the transaction to close in the fourth quarter.