The directors of Monarch Bank in Laguna Niguel have ousted the institution's president, Michael Pollock, as they continue to refocus the community bank's direction and recover from losses in 1984.
Pollock, who also was chief executive officer and a director of the bank, had been in conflict with fellow directors "for some time" over his lending policies, which other directors considered too liberal, director Thomas H. Thornton said.
"It was a mutual decision on a separation of ways," said Thornton, who took over Tuesday as acting president while directors search for a replacement.
Pollock, who joined the 4-year-old bank as executive vice president, could not be reached for comment about Monday's decision.
Thornton and Thomas L. Lowe, chairman of the bank's parent holding company, Monarch Bancorp, would not give details of the board's differences with Pollock.
But Brea-based financial institutions consultant Gerry Findley said that Pollock "took Monarch from a little community bank to a real estate-oriented, fast-buck operation. Mistakes were made and they paid for it. A more conservative board of directors decided that was not the way to go."
The jump into real estate was Pollock's effort to put the bank on a fast-growth track, Huntington Beach financial institutions consultant Larry Tanguay said.
Statistics from Findley and Thornton show that Monarch nearly trebled its assets to $91 million from the time Pollock took over as president and chief executive in late 1981 to September, 1984. That kind of growth, Findley and Tanguay said, cut into capital and loan loss reserves needed to operate soundly.
By the end of 1984, the ratio of Monarch's capital to assets had dropped to 5.7%, according to statistics from the state Department of Banking. Federal regulators require community banks to maintain a capital-to-assets ratio of at least 6%, and often require a 7.5% ratio of banks they have identified as troubled institutions.
By the end of September, 1985, according to the state agency and figures supplied by Thornton, Monarch had cut its assets, increased its capital and brought its ratio up to 6.7%.
Like many other lending institutions during the real estate boom, Monarch put loans it had originated into packages that were sold in the secondary market, gleaning income from origination and servicing fees. But, Findley said, Monarch got stuck with delinquent loans and over-appraised collateral. It wound up losing $775,000 in 1984, according to the state Department of Banking.
Thornton said the bank earned $330,000 through the first nine months of 1985.