Loan Officer Is Dismissed by Landmark : Banking: Internal audit revealed at least $4.5 million in improper loans. Despite the loss, the bank expects to post a ’91 profit.

Landmark Bank has dismissed a loan officer after bank officials discovered at least $4.5 million in unauthorized loans, bank officials said Tuesday.

The bank’s holding company, Landmark Bancorp, said it will add $3.2 million to its loan loss reserves to cover potential losses, which will erase most of the company’s profit for the year. The small bank, which has never had an annual loss, still expects to post a small net profit for 1991, President Craig Collette said Tuesday.

The unauthorized loans were made by the former employee over a period of several months, Collette said, and were discovered during a routine internal audit.

The loan officer was terminated on Dec. 13 when an internal audit uncovered the improper loans to a dozen small businesses. The bank did not name the loan officer, who was only described as one of several vice presidents in the bank’s middle-management team.

Landmark has not yet discovered what, if any, link existed between the loan officer and the borrowers, Collette said.

The loans, averaging $375,000 each, were made to Southland businesses that Collette described as “newer and less established than we like to do business with.” He would not identify any of the borrowers.

The loan officer approved the loans in violation of internal regulations that required them to be reviewed by the bank’s lending committee, Collette said.

He said the matter has been reported to local law enforcement officials as well as to state and federal bank regulators.

Collette, founding president of the 13-year-old bank, said Landmark was publicizing the situation because “word has gotten around that we had such a good year, and we didn’t want anyone buying stock” based on the assumption that Landmark would post a big profit.

For the nine months ending Sept. 30, Landmark’s earnings fell 7% to $1.4 million, or 93 cents a share, from $1.5 million, or $1.02 a share. Over-the-counter trading in Landmark shares was halted on news of the unauthorized loans.

Collette said Landmark’s financial stability has not been damaged. The bank’s $17.7 million in capital remains well above the minimum regulatory requirements, he said. Landmark had assets of $245 million on Dec. 31 and has posted an annual profit each year since it opened in January, 1979.