Bank Limits Directors’ Borrowing

The Bank of San Pedro has imposed a new limit on borrowing by its board of directors, hoping to avoid further controversy over lending practices that have twice drawn the attention of banking regulators in the last year.

The new policy, according to bank President Lance Oak, will limit each of the bank’s four directors to loans of $250,000 unless additional amounts of borrowing are secured with cash, such as certificates of deposit. Under California banking laws, which limit loans to a percentage of a bank’s equity capital accounts, each of the Bank of San Pedro’s directors would normally be allowed the equivalent of $3 million in secured loans and $2 million in unsecured loans, Oak said.

Oak said the new policy was aimed at avoiding further challenges from federal and state banking regulators, whose inquiries have been followed by the resignations of two bank directors.

Last December, San Pedro businessman Steven G. Podesta retired from the board after federal regulators criticized more than $1 million in loans he received from the bank. Three months ago, Podesta’s business partner, San Pedro real estate developer Bill A. Moller, also resigned after state banking examiners raised questions about his loans from the bank, which totaled nearly $2 million at one point last year.

Although authorities have not raised any new objections to the bank’s lending policies, Oak said, directors decided that those practices should be tightened. “We want to eliminate any potential for conflict of interest or the appearance of conflict of interest,” he said.