Security Pacific Ousts Corteway From Post of Chief Credit Officer
LOS ANGELES - In an effort to combat its mounting bad loans, Security Pacific Corp. has quietly reshuffled the top officers of its credit management team, bringing back vice chairman George H. Benter as chief credit officer.
The changes were made last month but not publicly announced, a Security spokeswoman confirmed Thursday. Mr. Benter, 49, was chief credit officer in the mid-1980s and succeeds vice chairman Robert C. Corteway, who held the position for about four years. Mr. Corteway, 47, has not been reassigned, the spokeswoman said.
Security, like many other banks, has experienced a surge in problem loans as the economy slumped. Earnings have taken a beating as the bank set aside big provisions for loan losses.
Getting a Hold on Credit Risk
The Security spokeswoman said Mr. Benter's reappointment was part of a move to "strengthen and reinforce" the company's credit and risk management activities.
A source close to the bank said that Mr. Corteway was made "the fall guy" for Security's credit problems, although many bad loans were booked through its merchant bank, which was beyond his control. The merchant bank, since disbanded, oversaw Security's overseas and securities businesses. As well, there had been growing tension between Mr. Corteway and Security Pacific chairman and chief executive Robert Smith, sources said.
Before becoming chief credit officer, Mr. Corteway was executive vice president and administrator of the special assets or workout group.
Mr. Corteway could not be reached for comment. He has been with Security Pacific since 1967.
Mr. Benter was chief credit officer from June 1984 to April 1987. The 26-year veteran of the company most recently oversaw international banking, trading, and securities activities. He also was responsible for unwinding some of Security's merchant bank operations.
"The board views George [Benter] as a Steady Eddie," said one executive close to Security Pacific.
The reshuffling at the top is part of a months-long initiative to strengthen the ranks of credit executives. In April Security Pacific put Richard L. Heilman, an executive vice president who has been with the bank since 1977, in charge of a new "risk, compliance, and control group."
Stephen G. Carpenter, a bank vice chairman who had been running the corporate middle-market business, took charge of the bank's loan collection activities. Several real estate executives have been hired from other banks, including Daniel B. Platt, who came from Union Bank.
Donald Crowley, director of research at Keefe, Bruyette and Woods Inc., earlier this week cut his earnings estimates on Security Pacific and said he expects the company's nonperforming assets to rise $600 million to $700 million in the second half of the year.
In the second quarter, nonperforming assets including foreclosed real estate rose 19%, or $614 million, to $3.86 billion. The total represents an increase of 41% from the $2.72 billion at the end of 1990.