Directors at Goleta National Bank in California are digging into their own pockets to lift it out of regulatory hot water.

With the $246 million-asset bank under orders by the Office of the Comptroller of the Currency to raise capital, the 11 board members planned to pay out an average of $1 million each to buy stock in the bank.

The OCC recently issued a "prompt corrective action" order against Goleta National, in which it states that loan securitizations worth $203 million -- completed in the fourth quarter of 1998 and the second quarter of this year -- have left the bank "significantly undercapitalized."

Lew Stone, president and chief executive officer of Goleta's parent company, Community West Bancshares, said the order was imposed because of a miscalculation of the bank's Tier 1 capital. According to Mr. Stone the OCC said Goleta lacked enough regulatory capital to support the "residual interests" it holds in connection with sale of the loans.

Mr. Stone said he received notice of the order by telephone, though he would not disclose when. He also said Goleta National had not intentionally misled the regulator and is working to resolve the matter quickly.

"It is important to understand that we have properly accounted for these transactions under generally accepted accounting principles," said Mr. Stone. "We are looking for a short-order resolution."

Since the OCC does not comment on such orders, it is not known how much Tier 1 capital Goleta was required to have. As of June 30, it had Tier 1 risk-based capital of 9.6% of assets, compared with the nationwide average of 10.15%, according to the Federal Deposit Insurance Corp.

Under the OCC order, the bank is barred from paying a dividend until further notice. Community West intends to pay down $4 million of debt early next year with dividends paid to it by the bank.

Community West, a two-bank holding company with $344 million of assets, said it would amend its 1998 10-K filing and its 10-Q filings for the first and second quarter of this year to restate for capital adjustments. Mr. Stone said the adjustments would not have an impact on earnings during these periods.

Hans Schroeder, a bank analyst at Hoefer & Arnett in San Francisco, said he was surprised by the news. He said the capital-raising would produce slightly more shares outstanding and that would probably shave a penny from Community West's 1999 earnings per share. He estimates the company will earn 90 cents a share this year.

Nonetheless, Mr. Schroeder pointed out that the board's action demonstrates its commitment to the bank's other shareholders. "It was impressive to see the board fork over the money," he said.

The market, too, applauded. Community West's stock closed at $13.375 on Monday -- the day the OCC order was disclosed -- up 10.31%. It was trading at $14, up another 4.67%, at midday Tuesday.

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