Alvin Rice, the one-time heir apparent at Bank of America and former chairman and chief executive at Imperial Bank, was named Tuesday as chairman of tiny American Interstate Bank in Newport Beach.
He obtained the job as part of a deal in which Bay Area real estate investor Joseph A. Duffel--Rice's longtime personal business associate--has agreed to buy controlling interest in the bank by purchasing $4 million worth of newly issued stock at $3.75 per share.
John Engeberg, American Interstate's president since 1981 and the man generally credited with saving the two-branch bank from insolvency, resigned shortly after Rice's election.
Engeberg could not be reached for comment, but Rice said the resignation was unexpected. He said he believes that Engeberg thought that the bank, with only about $53 million in assets, was too small to have two senior bankers share the helm.
Rice was vice chairman and head of international commercial banking operations for Bank of America and was considered the leading contender to replace A. W. Clausen as president of the huge bank when he abruptly resigned in August, 1978.
No reason for the resignation was given at the time, but it subsequently was revealed that Rice had been asked to resign because of an apparent conflict of interest stemming from his approval of loans to Duffel, with whom Rice was personally involved in several real estate transactions.
Rice, 62, said in a telephone interview Tuesday evening that while his resignation from B of A "got many headlines, it was like fighting a shadow." Those who said his involvement with Duffel was improper "could never get their hands on what they were talking about," Rice said.
In formally announcing the reasons for the resignation nearly a year after it occurred, Clausen said only that Rice resigned because of the "appearance" of a conflict in his dealings with Duffel.
"If you look at the words Clausen used," Rice said Tuesday, "you can see they had to be worked on by an attorney for years. 'There might have been the appearance of an impropriety.' I was investigated by the (federal) grand jury and the investigation was dropped. I was vindicated."
About a year after leaving Bank of America, Rice was named chairman and chief executive of Imperial Bank in Los Angeles.
Under what observers characterized as an aggressive commercial lending policy, Imperial nearly tripled in size, from $500 million in assets to $1.5 billion, in the three years Rice was there.
He left Imperial Bank in 1982 to head a spinoff data processing operation, Imperial Automation Corp., and subsequently started a new company, Bancshare Insurance Services, which developed methods for computer delivery of various financial and insurance services.
Move to Mission Viejo
He said that Bancshare, originally headquartered in Santa Monica, moved to Mission Viejo last week.
Rice said he sold his share in the company to his partner at the end of last year in order to spend his time putting together "a bank deal."
That deal, under which Duffel on Tuesday acquired 9.9% of American Interstate for about $820,000 and installed Rice as chairman, was cleared with federal and state banking regulators, Rice said.
The second part of the package, under which Duffel will purchase an additional 848,033 shares of new stock to raise his stake to 48.3% and his investment to $4 million, will take about 90 days to clear the regulatory review process, Rice said. He said he has no financial investment in the bank, but will receive stock options.
Rice said he believes American Interstate, which has reversed earlier real estate lending problems and loan losses and now has a capital-to-asset ratio of about 8%, "will be in a very strong capital position" after the Duffel investment is completed. "We hope to make it look a little different than most other banks in California, particularly small banks," by earning a high return on equity through business developed "by offering a high degree of service," he said.
"If you do a survey of businessmen in California today, most will say they are not particularly happy with their current banking arrangement" because of poor service and an inability to deal directly with top officials, Rice said. "We hope to provide a service that will satisfy. We want to operate an efficient small operation."
Explosive Growth Not Seen
That doesn't mean, he said, that he intends American Interstate to remain a $50-million or $60-million bank. But the growth won't be as explosive as it was at Imperial, he said, "because the days are past that you can do what we did . . . which was to make it grow rapidly."