Bank Imposes New Limit on Borrowing by Directors

The Bank of San Pedro has imposed a new limit on borrowing by its board of directors, hoping to avoid further controversy over lending practices that twice in the last year have drawn the attention of banking regulators.

The new policy, according to bank President Lance Oak, will limit each of the bank’s four directors to loans of $250,000 unless additional amounts of borrowing are secured with cash. Under California banking laws, which limit loans to a percentage of a bank’s equity capital accounts, each of the Bank of San Pedro’s directors would normally be allowed the equivalent of $3 million in secured loans and $2 million in unsecured loans, Oak said.

Oak said the new policy was aimed at avoiding further challenges from federal and state banking regulators, whose inquiries have been followed by the resignations of two bank directors.