The accidental release of a confidential document has jeopardized a California bank's sale to Oregon's U.S. Bancorp.

In a proxy statement sent out to shareholders Jan. 31, Business and Professional Bank, based in Woodland, near Sacramento, inadvertently enclosed a detailed breakdown of borrowers with current or potential problems.

The list, one of the most closely guarded documents at any bank, details a $1.8 million reserve that covers $11.1 million of so-called "criticized" loans from more than 80 borrowers.

The mistake has already caused a major public embarrassment for the $210 million-asset bank. Officials are trying to placate customers and prevent any damage to the bank.

But that may not be enough for U.S. Bancorp. According to a Feb. 14 statement from Business and Professional, U.S. Bancorp considers the "inadvertent inclusion of inappropriate information" to be a "material adverse change" affecting the banks' $36 million deal.

Under the merger agreement, the Portland-based superregional late last week gave the smaller bank 45 days to "cure the effects of the events."

The sale, which awaits shareholder and regulatory approval, is slated to close in the second quarter.

Business and Professional officials did not return repeated telephone calls. In their statement, officials said they're "working diligently" to "minimize and mitigate" the problem. But they've also postponed the bank's shareholder meeting, scheduled for today, to April 2.

Bank officials told a local business paper last week they didn't know how the blunder occurred. The list of credits and borrowers was part of the formal merger agreement between the two banks, but was not supposed to be included in the publicly available proxy.

The proxy was drafted by the Los Angeles-based law firm of Graham James and reviewed by the bank before it was sent out.

"Somebody goofed," said John W. Carr, banking attorney with Bronson Bronson & McKinnon in San Francisco. "This is something that ought not to happen, given the scrutiny that this kind of document normally gets. I quite frankly can't remember a similar gaffe and I've been practicing for about 20 years."

Bank officials have asked shareholders to return all copies and the Federal Deposit Insurance Corp. to make the list confidential under agency regulations and the Freedom of Information Act. The FDIC has announced no decision.

"I am incredibly disappointed that a screwup of this nature could occur," said Eric D. Hovde, Business and Professional Bank's second-largest shareholder, with 6.16% of the stock.

"It does create legal liability to the institution," said Mr. Hovde, executive vice president of investment bank Hovde Financial Inc. He expressed doubt the deal would go through unless "some of these professional organizations ... step up to the plate" to assume liability.

Business and Professional Bank has retained a second law firm to represent it in the event of a lawsuit against Graham James. Graham James officials said they're working with the bank.

The detailed list, known as the specific loss reserve, included five loans for a total of $121,000 classified as "doubtful," 56 loans for $8.6 million listed as "substandard," and 27 for $2.4 million considered worth "special mention."

Calls to several customers on the list yielded reactions generally ranging from anger to uncertainty.

"I'm not happy I'm on that list," which was sent to 674 shareholders, said Elizabeth Marcelis, owner of Bella Bru Coffee Co. The company had planned to seek an expansion loan using Business and Professional as a credit reference.

"I don't consider myself a bad loan," Ms. Marcelis said, "and I don't know how that's going to affect me in the future with trying to get a loan."

She said she needs to consult with the bank before deciding what action, if any, she will take.

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