After a critical review by federal regulators, Ventura County National Bancorp's two subsidiaries have agreed to stringent new financial requirements to improve management and performance of their operations.
Ventura County National Bank and Frontier Bank, units of the Oxnard-based bank holding company, each made the agreements after the Office of the Comptroller of the Currency alleged certain violations of federal banking laws.
In a consent order signed last week, Frontier Bank, which is based in La Palma, agreed to develop an asset diversification program and appoint a full-time president and chief executive officer.
As a result, William E. McAleer, the holding company's president since 1982, resigned from his posts at Frontier Bank.
James Hussey, Ventura County National Bancorp's chairman, was elected chairman of Frontier, and Larry Sallinger, a Frontier senior vice president, was named acting president and chief executive of Frontier, pending approval from federal regulators.
McAleer, 54, said in an interview Monday that he resigned to "give more attention to Ventura County National Bank," where he is also chairman.
He declined to comment about the agreements beyond the company's release, which was issued last week along with the bank's quarterly report.
In its report, the bank said provisions for loan losses more than tripled in the first quarter, to $750,000, and the company has been contending with bad real estate loans in the past year.
The company reported total assets of $409.6 million as of March 31.
Since last year, however, the company has tightened its operations, cutting non-performing assets in half--to $7.4 million as of March 31, from $15 million a year earlier.
The bank also reduced its loans past due 90 days to $204,000 as of March 31, compared to $9.8 million last year, the company said.
For the first quarter, the bank-holding company also said it earned $518,000, about the same as last year, mainly because of an increase in net interest margin--the difference between what it charges on loans and what it pays on deposits.
Federal regulators, who examined the bank's operations as of June, declined to comment but provided copies of the consent order and a separate formal agreement that Ventura County National Bank entered with the agency last month.
Ventura County National Bank is the larger of the two and has three branches in the county.
The order and the agreement, each about 20 pages long, generally require the two banks to develop specific operations and management programs to strengthen assets, loan portfolio and capital conditions.
In the formal agreement, Ventura County National Bank agreed, among other things, to revise its written loan policy, adequately staff its loan department with qualified people, review its liquidity policy and establish a written strategic plan covering at least three years.
The consent order, besides requiring many of the same things, mandates that Frontier Bank maintain as of May 31 a so-called Tier 1 capital ratio of 9.5% and a leverage ratio of 7%.
As of March 31, the bank had a Tier 1 capital ratio of 8.72% and a leverage ratio of 6.96%.
Both ratios reflect a bank's equity as a percentage of risk-based assets.
The order also requires that Frontier develop a three-year program to strengthen capital, and states that the bank may not pay any dividends until it is in compliance with certain federal rules and the capital program.