A long-simmering family dispute has morphed into a lawsuit against Lawrence-based The University National Bank and its board of directors.
Martha Sutherland — a shareholder of University National Bank’s holding company and the sister of University National Bank executive officer Todd Sutherland — has filed a lawsuit in Douglas County District Court alleging improper lending practices and management have cost the bank in excess of $20 million.
Todd Sutherland, president and chairman of the bank’s holding company, said he and the board “vigorously oppose” the allegations made in the lawsuit. He characterized the bank as being caught in the middle of a family disagreement that has resulted in Martha Sutherland filing several lawsuits against business holdings of the Sutherland family.
“It is part of a long-standing family feud that has been going on for several years,” Sutherland said. “Several other lawsuits involving other members of my family have been filed, and now unfortunately directors of the bank are drawn into this.
“What the community needs to know is it is part of a long-standing family feud, and the lawsuit really is more about that than it is about the bank.”
The lawsuit lists all board members of University National Bank and its holding company, Lawrence Financial Corporation, as defendants: Sam Campbell; Tim Fritzel; Mike Flory; Monte C. Johnson; Dolph Simons III; Perry Sutherland; Todd Sutherland; Darrel G. Walters; and Richard Zinn. Simons is an executive with The World Company, which owns the Journal-World.
The lawsuit comes about three months after University National Bank and Wichita-based Equity Bank scrapped a planned merger. When the companies announced in December that the merger had been canceled, they said it was a mutual decision. This week, Sutherland said the threat of the lawsuit likely caused parties in the merger to take pause.
University National Bank in 2008 entered into an agreement with the Office of the Comptroller of the Currency to take steps to strengthen the bank’s position. The bank remains under that agreement, and Sutherland said several other banks in the region are under similar regulatory agreements. Sutherland said the bank is making significant progress in complying with the conditions, and has maintained capital levels well above what is needed for a well-capitalized bank. He said the lawsuit should not hamper the bank’s progress in complying with the order.
“We have made tremendous progress in complying with the formal agreement and hope to be off of it soon,” Todd Sutherland said.