With a painful public controversy about ownership and control now entered in the history books, officials of Diploamt National Bank in the District are picking up the pieces.
Last year, South Korean evangelist Sun Myung Moon's Unification Church International and the Securities and Exchange Commissions reached a compromise settlement on agency charges that the Moon organization had taken part in a "scheme" to obtain undisclosed control over Diplomat. The bank, established as a minority institution to serve Asian-Americans, was not really involved. Still, publicity hurt.
But Diplomat had suffered from its own management problems since it first opened, problems which included continual losses and bad loans. More recently, the bank agreed to a consent order issued by the Comptroller of the Currency, in which Diplomat's officers promised to take positive steps to improve financial and operating conditions. The bank must raise not less than $1 million in capital by July 15.
In addition, Diplomat must improve bank operations, based on regulatory criticisms that have been mounting for more than a year. Chairman Soo Young Oh, a physician, and a new management team were installed last September with a mandate to correct mismanagement and try to keep the bank alive. Diplomat has sustained losses ever since its doors were opened on Dec. 15, 1975, resulting in an erosion of original equity capital. Last year, the bank lost $1.0, million vs. a loss of $518,337 in 1978.
Oh, who had been a director, and new president John Ricche have curtailed under profigable operations and reduced Diplomat's staff, but not its customer services. They also trimmed the first-quarter loss to $70,213. Deposits are up to $8.3 million.
Currently, officers are seeking to raise new capital and deposits from several groups of private investors. Oh said some tentative offers already have been made.With new capital, expected from a private placement with investors who can help attract deposits, Diplomat's legal lending limit will be boosted, allowing a more aggressive business development program.
Diplomat stockholders will meet on June 30 and they will be asked to authorize new capital stock as well as approve several new directors.