Lagging financial performance and charges of improper business dealings by directors has made work tough for some chief executives at Connecticut banks.

During the past few weeks, the chairmen of Essex Savings Bank and Maritime Bank and Trust Co. have resigned amid allegations of improper insider relationships involving them or their directors.

A third Connecticut institution, Bank of South Windsor, just appointed a new chief executive, replacing one fired a year ago because of derivatives losses. His supporters have alleged that he was actually dismissed because he disagreed with board philosophies and resisted business ties among his directors.

The turmoil comes as Connecticut's banks are emerging from several years of poor performance caused by a struggling economy. The recession caused collective losses of about $2.6 billion among the state's banks from 1989 to 1991, and a quarter of the banks failed - 38 in all.

"Being a community bank president has been hazardous duty for many people these days," said John Carusone, president of Bank Analysis Center in Hartford, Conn. "There was a time when community bank presidents were looked upon as a social club of the town power structure. Shareholders have become much more demanding and are looking for a return on their investment."

In fact, inadequate performance was a main factor in the firings of at least eight presidents at Connecticut institutions since the beginning of 1994.

Poor relationships between directors and executives are often made worse by a failure to follow clear ethical standards, including those governing conflicts of interest, said Jon A. Doukas, senior consultant at Professional Bank Services in Louisville, Ky. He added that there has been growing interest in codes of ethics among directors of financial institutions because of regulatory pressure.

"If a bank does not have a code of ethics, it is in the best interests of the institution and the responsibility of the board to develop one," he said. "Where standards are in place, they work and that should be a lesson for banks that don't have them."

The recent action in Connecticut highlights the potential for problems. In December, Douglas Olson, former president of $133 million-asset Essex Savings, resigned his post under pressure following allegations of favoritism toward borrowers by a local builder and disgruntled borrower. The builder is also suing the thrift.

The charges, made to both thrift officials and the Federal Deposit Insurance Corp., prompted the thrift's board to launch an internal investigation in early fall, shortly before a routine FDIC exam. The agency was also kept informed of what the thrift was doing, according to new chairman Rowland Ballek.

The investigation produced no results, but in mid-December, Mr. Olson suddenly admitted to having had an improper relationship with another area builder in the 1980s. The board is continuing the investigation and expects to have preliminary results within a week.

Mr. Olson declined to comment, except to say that local press coverage was wrong.

Mr. Olson, who had been at the bank for 27 years, has not yet been replaced, but the thrift has appointed the chief financial officer as acting CEO. Essex is also reorganizing its management structure, keeping an outside chairman and a separate chief lender.

Almost simultaneously, Richard Manning, the chairman and largest shareholder of Maritime Bank and Trust in Essex, also resigned, citing policy disagreements with other directors. According to the Connecticut Commercial Record, Mr. Manning claimed that some directors sought to have the bank purchase properties they owned for use as new branch locations.

Mr. Manning could not be reached for comment.

The bank didn't purchase the properties, but Mr. Manning told the Connecticut newspaper that he was still concerned about changes in directors' attitudes. And he called for the directors and president William Attridge to resign.

Mr. Attridge denied that the properties were owned by the directors and said bank officials are confused by Mr. Manning's charges.

"We do not know exactly what he is talking about," Mr. Attridge said. "There has been no unethical behavior on the part of Maritime's directors."

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