Federal action against Santa Lucia Bank
March 2, 2011
Santa Lucia Bank received an enforcement action by federal regulators telling its board of directors to improve oversight of the bank’s management staff and operations, according to a written agreement signed late last year.
Bank officials agreed to correct all violations of law and regulation cited in an examination report (which is not available to the public), the agreement says.
During an examination of the bank last year by the Federal Reserve Bank of San Francisco, regulators discovered an originally reported loss of $1.9 million for the first quarter of 2010 was incorrect and that the actual amount was approximately $9.1 million.
Shortly thereafter, bank officials fired James Cowan, former chief administrative and chief credit officer of the bank.
On Dec. 31, a week after regulators signed a written agreement with the bank, the bank announced the retirement of John McNinch as executive vice president and credit administrator.
The bank, which operates four branches in San Luis Obispo and Santa Barbara counties, reported a 2010 net loss of $14.8 million. Stock plummeted from $10 a year ago to a current $1.80.
“Their (regulators) main concern is undercapitalization,” said Doug Filipponi, vice chairman of the bank’s board of directors. “The economy is the main thing that is happening here and in a few years we will be back on our feet.”
In a February news release, the bank reported it had in excess of $26 million in non-performing loans, referring to loans in which borrowers are behind on their payments.
As part of the Dec. 23 enforcement action, federal regulators ordered officials of Santa Lucia Bank to come up with a plan to improve the banks financial stability by getting repayment, amortization, liquidation or recapitalization of every nonperforming loan in excess of $500,000.
The bank has less than 30 days to submit a business plan that outlines how the bank plans to improve its overall condition in 2011.
Newly elected Assemblyman Katcho Achadjian (R-San Luis Obispo), John Hansen, Jerry DeCou III, Larry Putnam, Paul Moerman, Stanley Cherry, Jack Stinchfield, Jean Hawkins and Filipponi occupy salaried seats on the bank’s board of directors.