5 Directors Quit Board of North County Bank

In the first shake-up since it opened three years ago, five founding directors of First National Bank of North County, including the chairwoman, have resigned. That leaves the bank with only eight directors, four of whom are company employees.

The directors officially resigned last month, after determining that the “board no longer represents” the interests of “even the smallest of investors,” according to former Chairwoman Mary Steiger.

Steiger, co-owner of Steiger Realty in Oceanside, said Monday that she was removed as chairwoman on June 6 after director Roy J. Ward, an Orange County developer who owns nearly 20% of the bank’s stock, told her he “had enough (votes) to reorganize the board.”

Ward and several other investors, including Rep. Ron Packard (R-Carlsbad) and six bank officers, had proxies representing nearly 51% of the stock, Steiger said.

Steiger resigned with the others, she said, when a fourth bank officer was elected to the board. “It is my opinion it is absolutely essential that the board exercise independent judgment and establish good checks and balances,” she said in her resignation letter.

Ward was out of town Monday and could not be reached for comment.

However, Joseph A. Sabetta, First National Bank’s chairman and chief executive, said that Ward approached Steiger about a reorganization because “He didn’t feel we could survive with deregulation as a small, community bank.”

Ward “didn’t want to call a special shareholders meeting” to resolve the issue, Sabetta said. “He sees the big picture.”

Increased mortgage lending activity is part of that “big picture,” Sabetta said, especially in light of the rejuvenated housing activity that started last year in North County. The majority of the bank’s loans are for single-family detached homes, with an average loan of $85,000, Sabetta said.

Sabetta said the number of “inside” directors increased as the bank expanded. The head of the mortgage lending division was named to the board, as was Don L. Schempp, the bank’s newly appointed president, who took Sabetta’s old job after Steiger’s resignation.

In the next few months, “we’ll put another director on the board who is not management,” giving the board a seeming 5-to-4 non-management swing, Sabetta said.

First National last week reported $205,589 in net income for the six months ended June 30, compared to net income of $278,907 in the comparable period the year before.

Last year, the company showed its first profit, $400,000, after losing $738,000 in its first two years of operation.

“The original concept of the bank was (to be) a small community bank,” Sabetta said. “But they weren’t making it.”

For Steiger, the controversy was admittedly “very difficult.”

“We started the bank from a baby,” she said, recalling her efforts in 1979 to begin raising $3 million in capitalization.

The up side, she said, is that she is “free of responsibilities” and can concentrate on running her real estate business in Oceanside.