Modern Bank, a lender to the affluent where former football quarterback Joe Montana is vice chairman, hired former Citigroup Inc. banker Damian Kozlowski to lead a turnaround after almost $30 million of losses over five years.
Kozlowski, who ran Citi's private bank from June 2005 to April 2007, said he joined the bank as chief executive on Nov. 8. In October 2009, the Office of the Comptroller of the Currency declared Modern in "troubled condition," ordering the New York company to improve management and capital.
"My job is to put the right strategy and team in place, to make sure that the bank ongoing is profitable and can grow," Kozlowski said in an interview. He also joined Modern's board.
He succeeded Jeffrey Lane, who resigned Nov. 1 after serving as CEO since June 2008. Lane is the former Travelers Group Inc. executive who ran Bear Stearns Co.'s money-management arm for a year after the near-collapse of two hedge funds in 2007. Lane did not return a call for comment.
Modern caters to clients with a net worth of at least $25 million, with specialties serving Latin Americans and private-equity and real-estate entrepreneurs.
Montana, who won four Super Bowl titles with the San Francisco 49ers in the National Football League, was an original officer at the $629 million-asset company. Though not on the executive team, Montana is a director, according to the bank's website.
Modern's 2009 revenue of $16.6 million is a fraction of Citi Private Bank's $2.07 billion. For Kozlowski, the post marks a return to being a banker for the affluent.
Kozlowski left Bank of America Corp. in 2000 to become the head of strategy at Citi Private Bank. In 2002, he was named president of the private bank's U.S. region and became the unit's global CEO in 2005.
Two years later, he was forced out in a shakeup under Sallie Krawcheck, then the head of wealth management. Kozlowski formed a private-equity group to get back into banking, then abandoned the effort this year because regulators were reluctant to approve such deals, he said.
Modern was formed in late 2005 by Bippy Siegal, the bank's chairman, after the buyout of Excel Bank. Siegal is CEO of private-equity firm Raycliff Capital. Regulatory records show $6.8 million was pumped into Modern in late 2005.
The bank was unprofitable before Siegal bought it, and the net loss almost tripled to $16.9 million in 2008, regulatory records show.
Several executives left before Lane. Leslie Bains, the head of private banking, was hired by Citi Private Bank in October 2009 to oversee new-client development around New York. Theresa Yoon, who was a managing director, joined First Republic Bank in San Francisco as a senior relationship manager in New York.
Modern has needed $54.7 million in capital infusions since Siegal's buyout, regulatory records show. In July 2009, Fisher Brothers Realty Corp. bought a 16% stake at an undisclosed price.
Under the October 2009 OCC order, Modern is barred from paying dividends unless it adheres to a three-year capital program. Modern also was ordered to adopt "commercial real estate exposure limits," reduce its sensitivity to interest-rate changes, and put "competent management in place." It was signed by Siegal, Lane, Montana and the other directors.
The bank plans to raise capital for growth once regulators are satisfied with improvements under the agreement, Kozlowski said.
