Mission Viejo Bank Fight Resolved at Last Minute

A once-bitter battle among members of the board of directors of Mission Viejo National Bank’s holding company, Viejo Bancorp, was resolved quietly Monday just in time to avert a dissident shareholder’s attempt to oust the current board majority.

The settlement, reached just hours before the holding company’s annual shareholder meeting began, removes a major obstacle to Viejo Bancorp’s efforts to raise between $1.5 million and $4 million in new capital through a series of private stock sales.

The agreement between attorneys for Viejo Bancorp and Frank Wood, Viejo director and major shareholder, calls for the holding company and several directors to drop three lawsuits filed against Wood in December. Wood, in turn, agreed to drop his challenge to the reelection of the current board majority.

The pact turned what could have been a fiery shareholder meeting into a relatively mild session Monday night.

Although not under any order from regulators to raise new capital, Viejo wants the additional funds to erase the bank’s red ink and to finance expansion of the bank and the holding company, which currently operates a small escrow firm.

Shareholders were told Monday that Viejo Bancorp’s financial results for 1984 included the bank’s $1.18 million loss and the holding company’s additional loss of $120,000, for a total of $1.3 million. But bank officials gave shareholders the good news that the bank posted modest profits for the past three months, the first quarter of 1985.

In a Jan. 4 letter to shareholders, the holding company said that $975,000 of the bank’s 1984 losses was caused by non-recurring expenses related to correcting “past management’s mistakes.”

The battle between Wood and other Viejo directors began more than a year ago when the board majority rejected Wood’s business plans and replaced the bank’s president and several other managers.

Under its new president, Lloyd Miller, the holding company last summer tried to launch a $4-million public offering but canceled it when Wood began criticizing the move.

In August, Wood was voted out as chairman of the bank’s board of directors and he was removed from the bank board entirely in September--although he remains a member of the holding company’s board. Following his ouster, Wood launched his bid to unseat the holding company’s current board and began blaming the bank’s current management for the huge 1984 losses.

Offered to Resign

Also, Wood revealed that Miller, 36, was not a graduate of the University of Southern California, as he had claimed on his resume. Miller, who had been president of Newport Harbour National Bank when it failed in 1983, offered last month to resign as Mission Viejo National Bank’s president.

The holding company board, however, refused to accept his resignation and Miller said in a brief interview Monday that the incident “is water under the bridge. The primary objective now is running this organization and my record speaks for itself. We were losing $150,000 a month when I joined, and now, one year later, we are operating on a profitable basis.”

In a letter to board members last month, Miller said he lied on his resume because he was embarrassed by his lack of a college degree.