Establishes $1.75-Million Fund for Payments : Crocker Will Settle Stockholder Suits

Crocker National Corp. said Tuesday that it will pay some of its stockholders a total of $1.75 million to settle several shareholder suits charging that imprudent loan practices by the company’s principal subsidiary, Crocker National Bank, caused hundreds of millions of dollars in stock losses.

The settlement, filed Tuesday with the Securities and Exchange Commission, also puts to rest an allied lawsuit challenging the proposed merger between San Francisco-based Crocker and London-based Midland Bank PLC. Negotiations aimed at resolving a second suit challenging the merger are continuing, a bank spokesman said.

Crocker officials said settlement of the suits clears the way for Midland to acquire 100% of the bank holding company’s common stock. Midland currently controls 57% and is awaiting approval from shareholders and the SEC for complete takeover of the bank’s shares.

Crocker National lost $324.4 million in 1984 and $10.2 million in 1983, largely as a result of bad agricultural, real estate and foreign loans. The nation’s 14th-largest bank, with assets of $21.5 billion, has more than $1.3 billion in outstanding problem loans and the highest ratio of problem loans to total loans of America’s 25 largest banks.

The shareholder suits were brought in Delaware, where Crocker is incorporated, and in California.

In the settlement document, Crocker and Midland said they “vigorously” deny the shareholders’ allegations of fraud and mismanagement “but nevertheless consider it desirable that any and all controversies and disputes . . . be conclusively settled and terminated” to avoid the cost and inconvenience of continued litigation.

Attorneys for the shareholders could not be reached for comment.

Under terms of the agreement, investors who sold shares of Crocker common stock between Dec. 15, 1983, and Oct. 26, 1984, at less than $29.50 a share will be paid between 10 cents and $1 a share.

On Dec. 15, 1983, when the bank announced a $107-million write-off because of bad loans, Crocker common fell 17%, from $29.50 to $24.50.

Persons who sold $2.18 preferred shares during the same period at less than $23.37 will receive between 7 cents and 67 cents a share.

Reimbursements also will be paid to certain holders of $3 preferred stock and 5.75% debentures.

Crocker common stock closed at $25.50 Tuesday, unchanged.

It was not immediately known how many investors will be eligible for payments from the $1.75-million fund, which will be administered by a Delaware bank.