A troublesome loan has cost the chief executive officer of Six Rivers National Bank his job and forced the Eureka, Calif., institution to charge off $1.1 million.

John F. Burger-CEO since March 1992 and one of the original Six Rivers investors in 1989-resigned Wednesday over the souring of a $2.9 million loan to a hardwood mill that filed for bankruptcy last year.

Meanwhile, the $200 million-asset bank revised its second-quarter earnings to show a loss of $499,000, or 33 cents per share, compared to a previously reported profit of $395,000, or 26 cents per share. Mr. Burger was not available to comment.

Chief financial officer Michael W. Martinez, 38, was named interim CEO. And Sheldon Francis-a 25-year banking veteran and turnaround specialist-was hired as chief lending officer. The former chief lending officer had stepped down in April because of the troubled loan.

The earnings revision was the second in six months for Six Rivers. In March, it reduced reported 1997 net income by nearly $300,000.

"The board finally decided that the collectibility of the loan was not likely and decided to take the losses," Mr. Martinez said. "We expect to take a loss in the third quarter but hope to be in good shape by the beginning of next year."

The troubled loan, originated in 1994, started as a single loan to a holding company and eventually evolved into a series of loans to an operating company and individual investors.

Since the loans were tied to one project, regulators decided last year that they should be treated as one, which put Six Rivers above its legal lending limit.

Six Rivers directors tried to bail out the bank by repurchasing about $400,000 of the loan. But late last year, the unnamed lumber company filed for bankruptcy, leaving Six Rivers in the lurch.

Under its latest balance sheet adjustment, Six Rivers said it would boost loan-loss provisions by $1 million, to $1.3 million, and increase expenses by $445,000, to $1.2 million, to cover legal, accounting, and administrative costs.

The recent turmoil could make Six Rivers vulnerable to take-over by suitors from Oregon or California, said analyst James R. Bradshaw of Pacific Crest Securities in Portland, Ore. He said Six Rivers' board may get an offer too attractive to refuse.

On the flip side, Mr. Bradshaw said, the worst is behind the bank now. With Mr. Burger stepping down, investors' faith in Six Rivers may revive. Its stock price fell more than 11% on the news, to $10.25 a share Wednesday. At midday Friday, it remained at $10.25 on volume of 7,400 shares.

"This loan problem has plagued and distracted management for more than a year," Mr. Bradshaw said. "This lets them move forward."

Mr. Bradshaw forecast a relatively modest 13-cent-per-share loss for Six Rivers in the third quarter and said he expects the bank to boost its reserves closer to peer-group levels. He added that it remains among the cheapest community bank stocks in the West, trading at 75% of book value.

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