Local Bank Led U.S. in Student Default Rate : Lending: Ventura County National Bank had the highest percentage of bad education loans in 1992.

A new federal report shows that Ventura County National Bank led the nation in percentage of student loan defaults in 1992, the latest year such figures are available.

The U.S. Department of Education report says that 3,616 of the Oxnard-based bank’s student borrowers--or 47%--had missed payments for at least 180 days that year.

Richard Cupp, the bank’s president, said Friday that he does not know why his bank led the nation in bad student loans, but that it has since discontinued making student loans because they are more trouble than they are worth.

In fact, the bank sold off its entire portfolio of student loans in 1992, he said. He noted, however, that the loans did not lose the bank money, because repayment is guaranteed by the federal government.

The bank president dismissed the new report as irrelevant.

“To me, it’s a non-event,” Cupp said. “It was a disappointment to see it because we’re just no longer active in it.”

The bank’s 47.3% default rate was by far the highest of the nation’s 100 financial institutions that issue the most student loans, the report said. And the bank ranked third nationally the previous year, with a 45% default rate.

For 1992, the Bank of New England in Charlestown, Mass., posted the second highest default rate at 37.9%, while the First National Bank of Commerce in New Orleans was third with a rate of 36.7%.

No other Ventura County banks were listed among the nation’s top 100 lenders in 1992.

Peter Banks, chief financial officer of Ventura County National, said he thinks that most of the bank’s bad loans were to students at colleges in California, but he did not know which schools the borrowers attended.

Among the county’s three community colleges, Oxnard College had the highest default rate, 25.7% in 1992, down from 40% in 1990.

Ventura College posted a 19.6% default rate for 1992, while Moorpark College listed a rate of 12.6%--both figures that fell below the state average of about 20%. Cal Lutheran University showed a 4.7% default rate.

The decline of Oxnard College’s default rate mirrors a trend. The nationwide number of bad student loans was 15% in 1992, down from a high of 22.4% in 1990.

Education officials said they think the improvement stems from tougher loan rules that allow the government to garnish the wages and income-tax refunds of delinquent borrowers.

Cupp said he could not explain his bank’s high default rate because the bank sold its loans to other investors two years ago along with records of those accounts.

The bank’s student loan department, which had been headquartered at the Camarillo branch, was then shut down.

According to Banks, the decision to stop handling student loans was not related to default rates.

“It was an economic decision,” he said. “Costs were becoming higher than what made sense to continue.”

Stephanie Babyak, spokeswoman for the U.S. Department of Education, said high default rates may not reflect bad loan policies.

“The bank may simply be loaning to schools that have high default rates,” she said. “It doesn’t mean the bank necessarily has some questionable practices.”

Default rates were based on the number of borrowers who were scheduled to begin making payments in 1992 but went at least 180 days without a payment that year or the following year.