Bank to Revise Loan Policy for Directors

The Bank of San Pedro’s directors will adopt tighter restrictions on loans to themselves and other bank officers in the wake of the resignation of a director whose loans attracted the attention of state bank examiners.

Although insisting that the bank’s current policies are consistent with state regulations, bank President Lance Oak said this week that loan policies to officers and directors will be toughened in the next several weeks. Just how strict they will become is still subject to debate among bank officials, he said.

“We are in the process of revising the policies because we want them to be more conservative and preclude any possible misinterpretation about conflicts of interest,” Oak said.

The action follows last week’s resignation of San Pedro real estate developer Bill A. Moller, who left the board because state bank examiners raised questions about his loans. It could not be determined how much Moller owes the bank.

A shareholders report last year showed that his loans as of Aug. 31, 1989, totaled $1.9 million or 17% of the bank’s equity capital accounts, which are the bank’s cash reserves. Under California banking laws, which govern the state-chartered Bank of San Pedro, secured loans to a director cannot exceed 25% of a bank’s equity capital accounts. Unsecured loans to a director cannot exceed 15%, Oak said.

Although Moller’s loans are within those restrictions, Oak said the bank’s directors have decided to further limit loans to directors and officers.

A replacement for Moller, a director for eight years, has not been named, Oak said.

The bank’s board is considering expanding its membership from five to seven directors, he said.