BANKING / FINANCE : After Three Years, the State Lifts Its Restrictions on Monarch Bank

Monarch Bank is out from under regulatory restrictions for the first time in three years.

The California Department of State Banking recently lifted its order requiring the bank to raise more capital and to correct lending and management problems. In March, federal regulators lifted a similar order.

Removal of the restrictions is “a significant step in our recovery,” said E. Lynn Caswell, the bank’s chairman, president and chief executive.

A stock offering last year raised $1.7 million in new capital for the bank, enough to bring it above federal requirements. It also has been profitable every month for more than a year, Caswell said.

The bank posted $3.2 million in losses for 1986 and 1987. Last year, it produced a modest $26,000 profit, and it earned $46,000 in the first six months of this year. Meantime, assets shrunk from $88.1 million at the end of 1984 to $52.1 million at the end of last year.

The bank also has whittled down its bad loans. It has only $50,000 in delinquent loans out of $40 million, compared to a high of $2 million in bad loans out of about $44 million two years ago.