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Former Vineyard chairman and chief executive officer Norman Morales announced Monday that due to the inability to gain approval from the Federal Reserve System, he has withdrawn his application and will not serve as a board director of the Corona-based bank if elected.
Also, fellow dissident slate member Thomas Koss II has also decided not to serve as a board director if elected.
Morales initially spearheaded a successful proxy fight to ratify the bank's bylaws and allow him the opportunity to nominate an alternative slate for the board of directors.
"While we are disappointed with this direction by the regulatory agencies, our remaining slate is as committed as ever to the Vineyard franchise," said shareholder Jon Salmanson in a news release.
Jim Lucas, a spokesman for Vineyard, declined to comment.
Koss, a certified public accountant, would have been the designated financial expert for the dissident slate; a position required on all boards of directors following the Sarbanes-Oxley Act of 2002.
Vineyard Interim CEO James LeSieur and Frank Alvarez are the designated financial experts on the bank's board.
Despite the loss of Koss, the dissident slate is not worried about attaining another financial expert.
"We have two or three (dissidents) who could easily be the financial expert," said Douglas Kratz, a member of the dissident slate. "On some boards it's a problem, but on this one it won't be a problem."
The bank voluntarily agreed to comply with a consent order issued by the Office of the Comptroller of the Currency on July 22.
The decision provided further ammunition for the dissident slate to use against the current board of directors regarding the status of the bank.
Three independent proxy firms sided with the dissident slate and gave recommendations for as many as five out of seven board seats.
But the loss of Morales could greatly hinder the dissidents' efforts to gain control of the bank, said Michael Natzic, community bank specialist with San Francisco-based analyst Stone & Youngberg.
In losing Koss, the dissidents also lose a member of the slate unanimously recommended by all three proxy firms.
"We'll see how everything turns out (Tuesday)," Kratz said. "This is a pretty nimble group and we were prepared to handle this type of thing."
Kratz attributed the regulators' decision against Morales to the current housing market situation that Vineyard invested in under Morales' leadership.
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