Bank of San Pedro’s Top Shareholder Resigns

The largest shareholder of the Bank of San Pedro has resigned from its board of directors after state banking examiners raised questions about the propriety of loans he received from the bank--loans that last year totaled nearly $2 million.

The sudden resignation of San Pedro real estate developer Bill A. Moller comes eight months after his business partner, San Pedro businessman Steven G. Podesta, also left the bank’s board. Podesta retired after public disclosures that federal regulators were critical of more than $1 million in loans he received from the bank.

Unlike Podesta, who held four loans that the bank acknowledged were technically in default for four months in 1989, bank officials said Moller has never been delinquent on loans issued to him over the last decade.

Nevertheless, bank officials said state examiners intend to “classify,� or question, Moller’s loans, whose current amount they declined to reveal. The specific concerns of the bank examiners were not immediately known. Bank officials said they did not know when the examiners will issue their findings.

Moller, who had served on the board for eight years, could not be reached for comment.

Bank officials said Moller’s resignation was announced to the board last Monday and that he submitted his resignation the next day.

“While I do not agree with the classification,� Moller said in his letter, “I am concerned with the image impact that such classification of a director’s loans may have on the bank.

“My first concern must be for the bank.�

In a prepared statement, Lance Oak, president of the bank, said the examiners’ questioning reflects nothing more than the current attention by authorities to the nation’s financial institutions.

“State examiners are showing extraordinary scrutiny due to the problems suffered by other banks,� Oak said.

His remark was echoed by bank analyst Gerry Findley, publisher of the Findley Reports newsletter, which has previously identified the Bank of San Pedro as a premier performing bank. Findley said the nation’s savings and loan scandal, among other factors, has prompted regulators to pay special attention to so-called insider loans issued by lending institutions to their directors and officers.

“I’m not so sure it’s a bad thing, but they are classifying loans today that they would not have three or four years ago,� Findley said.

Although bank officials would not disclose the number or total value of Moller’s existing loans, the bank’s most recent report to shareholders in October, 1989, showed that he or his company held as much as $2.1 million in loans at one point, an amount totaling 21% of the bank’s equity capital accounts. As of Aug. 31, 1989, according to the report, his outstanding loans totaled $1.9 million or 17% of the equity capital accounts. The amounts included money authorized but not necessarily disbursed under lines of credit approved by the bank’s board of directors.

The industry standard, according to one banking official, is that no single borrower hold more than 10% of a bank’s equity capital accounts--the money shareholders have invested in the bank. Equity capital is generally considered a bank’s cushion or safety net.

The same shareholder’s report last October showed that the bank’s directors, then including Moller’s business partner, Podesta, at one point held a total of $6.6 million in loans, or 66% of the bank’s equity capital accounts. That figure, as of Aug. 31, 1989, was just under $5 million or 43% of the accounts. Again, the amounts included money authorized but not necessarily disbursed under lines of credit.

Moller, whom the report shows held almost 18% of the bank’s common stock as of last September, remains its largest shareholder, according to board Chairman Peter Mandia.

Together with Podesta, Moller held 32.3% of the bank’s stock as of last September--eight years after they joined to acquire a controlling interest in the bank, which is headquartered in a West 5th Street building they own.

The state-chartered bank was founded in 1975 and held $6.2 million in assets at the end of its first year. Today, the bank has five branches throughout the Harbor area, and its assets totaled $177 million as of the end of 1989.

Mandia said late Friday that the bank’s growth in large part coincided with Moller’s time as a director. “He has been a very strong supporter of the bank and very significant in the growth of the organization and its profitability,� Mandia said.

“I think the action (Moller) took was solely in the best interest, in his opinion, of the bank so as to protect the bank’s interests,� Mandia said.

“Clearly, we don’t like the idea of a director resigning. I think it may have some initial negative impact. But in the long run it will be in the best interest of the bank and the public’s perception of the bank.�

Like bank President Oak, Mandia said that the loans to Moller were consistent with banking regulations and that the former director had never been delinquent on loans that go back a decade, predating his time on the board.

“He has never been late,� said Mandia.

Last October, bank officials disclosed in their shareholder’s report that federal regulators had criticized six Bank of San Pedro loans to Moller’s business partner, Podesta, as apparent violations of federal banking laws and regulations. The finding was disputed by the bank. Two months after the report was released, Podesta, 75, retired from the board of directors--a move bank officials said was related to his age.

For some years, Podesta and Moller have been partners in a real estate development company that carries their names.

In addition, the two longtime San Pedro residents were once co-owners of the ill-fated former cruise ship Princess Louise. The once-popular floating restaurant was later sold and its subsequent owner went bankrupt. The ship was repossessed by the Bank of San Pedro and sank while undergoing repairs at a Terminal Island shipyard. It was scuttled in June.