A spokeswoman for the Federal Reserve Bank in San Francisco said she could not comment about the matter. Tom Bay, supervisor of banks for the Utah Department of Financial Institutions, likewise declined to discuss specifics or the background of the matter.

"It's more management issues as opposed to financial issues," Bay said. "It's changed practices we need to see the bank make managerially. The areas listed on the cease-and-desist order are more the management style of the bank as opposed to any financial concerns."

Miller was particularly upset about language in the order related to ethics and avoiding conflicts of interest in the administration of loans to "insiders, shareholders and their immediate families and any transaction from which any such individual may derive personal benefit." The order requires policies and procedures to comply with regulations that restrict credit that the bank may extend to executive officers, directors and principal shareholders.

The bank has never had an issue with an insider loan or an insider taking advantage of the bank, Miller said. He said one transaction about five years ago involved the bank owners buying loans out of the bank because they were concerned they might become a problem, and the owners ultimately took a loss on those loans, he said.

"We felt this was history and it was reopened (in the regulators' review)," Miller said.

"I don't know that there has ever been a situation where the regulators, in all the hunting they've done, none have ever cited us for an issue with anybody having taken advantage of the bank. The language they used was quite misleading. ... We have not had any insider types of activity to have the bank in any financial hardship in any way."

Total loans to bank insiders amount to less than $250,000, he said. As of Dec. 31, the bank had $179 million in total assets, according to Bay. "We have not had major problems with insider issues that have put the bank or its customer base in any precarious situation," Miller said.

If it has not already done so, the bank will implement the various requirements spelled out in the cease-and-desist order, Miller added. "I believe that with the people we have in place, that we're optimistic that our problems are behind us," he said, "and we hope to go forward without a lot of these issues."

---

E-mail: bwallace@desnews.com