An official of American Commerce National Bank, a fast-growing, profitable Anaheim bank, has told shareholders that the bank has been under investigation by a federal regulatory agency since 1985.
In a recent letter to stockholders, Chairman Gerald J. Garner said the U.S. Office of the Comptroller of the Currency has been investigating alleged failures to disclose information about Garner's yearlong suspension from his New York law practice and the actual amount of his ownership interest in the bank.
"We've disclosed it now, so it's over," Garner said in a telephone interview Monday. "There are no problems. There is no cease-and-desist order. This was not the supervisory section (of the OCC) doing this."
Agency officials could not be reached for comment.
Garner said in the letter to shareholders that the comptroller's office claims that he violated stock ownership limitations set up in the circular that offered the bank's initial stock and that he failed to disclose information that he was suspended from his legal practice in New York for a year over his actions as an attorney in an adoption matter.
The Dec. 15, 1983, stock offering circular limited initial ownership in American Commerce to 5% per investor and stated that "no person will, upon completion of the offering, beneficially own more than 5% of the bank's outstanding stock."
In the offering, Garner, who is also chief executive officer, bought 1,000 shares, or 0.3% of the bank's stock, in his own name. He also was the beneficiary of a trust that bought 15,000 shares, or 4.7%.
Wife Acquired Shares
His wife, Joan G. Garner, a bank director and board secretary, acquired 15,000 shares, or 4.7% of the bank.
Additionally, each of the Garners controls a trust that acquired 3,000 shares, for a total of 6,000 shares, and Garner's three children purchased a total of 100 shares.
Garner's letter to shareholders said that his total potential beneficial ownership at the time of the initial offering was 37,100 shares, or 11.6%. Since then, the trusts have purchased additional bank stock, and Garner's beneficial interest has grown to 17.46%, his letter said. Gerald and Joan Garner and a dozen other investors own 80% of the bank, he said in the interview.
Garner also said in his letter that the New York courts in 1984 suspended him from the practice of law for a year because he cooperated with his clients in their use of an assumed name in adopting a child and because he notarized documents that used the false names.
The court decision said his "serious professional misconduct" in helping the couple to adopt a California woman's infant was mitigated by his "impressive record of past and present community activities, as well as the ample evidence of (his) good character."
Probe Could Continue
Despite the disclosure to shareholders, Garner's letter said "there can be no assurance, however, that the comptroller will not continue its investigative proceedings and will not commence administrative proceedings against the bank and/or Mr. Garner."
Garner also faces a number of lawsuits, including one from bank investor and former director Donald J. Daniel, a Santa Ana physician who says Garner mismanaged his pension fund. Daniel was a director when he filed the suit March 9 but has since resigned. Garner on Monday labeled the suit as groundless.
American Commerce nearly quadrupled in size in the two years ended Dec. 31, growing to $69.6 million in assets from $18.1 million. Its net income last year was $576,000, more than 2 1/2 times the $201,000 in earnings it reported the previous year. It posted a $73,000 loss in the first 10 months of operation in 1984.
For the first five months of 1987, according to an unaudited statement provided by the bank, American Commerce earned $414,000. The bank said it had assets of $73.4 million on May 31.