BANKING/FINANCE

Monarch Bank executives, flush from raising $1.6 million in new capital, hope that regulators can now lift an order requiring it to increase its capital base.

In a four-month effort by Monarch Bancorp, the bank’s holding company, more than 1.6 million shares were sold at $1 a share. The money will be put into the bank’s capital to raise its ratio of capital to 7% of its assets, which regulators had required.

“More importantly, (the new money) gives us the ability to grow moderately once again,” E. Lynn Caswell, the company’s chairman and president, said in prepared remarks.

The offering represents 58% of the common stock now outstanding. About 60% of the offering was picked up by 152 new shareholders, and the rest was bought by some of the 548 shareholders already owning stock in the company, said Carole Bowman, a bank senior vice president.

As previously reported, four new directors were added to the company’s board during the offering.

Bad loans in the early 1980s caused the 8-year-old bank to lose about $4 million in the last four years. But the bank should be in the black by the end of the second quarter or early in the third quarter, Caswell has said. The bank lost $60,000 in the first quarter.

Monarch Bank, which grew in its first four years to more than $88 million in assets, had shrunk its size to $55.4 million in assets by the end of May, a tactical decision that also was intended to help the bank comply with the regulatory order.