The Securities and Exchange Commission said yesterday that Michigan's second-largest bank holding company failed to give investors enough details about big cash and tax advantages reaped by bank insiders from property deals with the bank.

According to the SEC, Michigan National Corp. regularly bought property for bank branches, sold it at cost to bank officers and directors or related parties -- often providing 100 percent financing for the purchasers -- then rented the property back from the buyers at 2 percent to 4 percent above the cost of the mortgage.

The major beneficiary of these arrangements was Stanford C. Stoddard, president and chief executive officer of the bank holding company. Stoddard or persons related to him bought and leased back to the bank 13 of its branch properties, and Stoddard is a partner in partnerships that own 21 other properties, according to information contained in an administrative action filed by the SEC.

Michigan National Corp. settled the complaint with the SEC without admitting or denying any of the SEC's findings and agreed to set up an independent review committee to study past and future transactions of this type. A spokesman for the company said it had no comment on the charges.

Michigan National Corp. was formed in 1972, when five banks headed by Stoddard's father were consolidated. Federal banking laws prohibit national banks from owning bank properties worth more than the bank's capital stock. To avoid that limitation, the company entered into lease-back arrangements both before and after it became a publicly held corporation in 1972.

"The sale and lease-back arrangement for banks is not unusual, but to do it with your own officers is," said Gail Vance, an attorney in the SEC's enforcement division who handled the investigation.

According to the SEC, Stoddard and his associates were receiving approximately $930,000 in lease payments for bank properties bought under the arrangement with the holding company. At the same time, they were paying approximately $500,000 on the mortgages, Vance said.

Insiders who participated in the lease-back arrangements also reaped tax savings and were in a position to take advantage of appreciation in the value of the property. The bank holding company's leases did not contain options that would allow the bank to either renew the lease or repurchase the land at the expiration of the leases.

"To give these insiders a positive cash flow, 100 percent financing and have no renewal or repurchase option -- we thought that was the kind of thing that should be reported to shareholders," said Vance. According to the SEC's complaint, the company disclosed different parts of the arrangements at different points but failed to disclose other information including whether other options were available to accomplish the holding company's ends with terms more favorable to the company.

The SEC said that the company failed to disclose sufficient information about bank equipment lease arrangements with Stoddard. In one instance, according to the SEC, Stoddard paid $50,480 to buy eight machines that an MNC subsidiary bank had planned to buy. Stoddard then leased the equipment to the bank for three years with annual lease payments of $10,380. The lease was later renewed for four years at an annual rental of $7,488.

The arrangement gives Stoddard $10,672 more than he paid for the equipment, plus any residual value it may retain as well as investment tax credit and depreciation deductions, the SEC action pointed out.