BANKING : Monarch Boosts Its Capital With Money From New Investors

Monarch Bank, hurt by $2 million in losses over two years and pressured by federal regulators to restore its financial health, is rebuilding itself with fresh cash from new investors.

The beleaguered Laguna Niguel bank has completed the first of three stages in a plan that has brought it $3 million in capital--its final reserve against losses--from more than two dozen individual investors around the country, said E. Lynn Caswell, the bank’s president.

The next two steps involve federal approval of a change in control of the bank’s ownership to reflect the stake of the new investors and a stock offering to old shareholders, giving them the right to purchase more stock.

The private placement, arranged by two Chicago investment banking firms, brought more than $3 million to the bank’s parent company, Monarch Bancorp. Caswell would not identify the total amount of the investment or the names of the investors.

“The economy here seems to be slowly improving,” Caswell said. Monarch Bancorp, the bank’s holding company, earned $180,000 for the first quarter, and Caswell expects to maintain its profitability.

The improving economy has helped the bank liquidate some of the bad loans and real estate it took back through foreclosures. It now has only one foreclosed property left to sell. But with bad loans totaling 6% of all loans, the bank is not yet done getting its house in order.

“We’ve got a few problems left to resolve,” he said.