(Bloomberg News) Modern Bank NA, a lender to the wealthy where former football quarterback Joe Montana is vice chairman, hired Citigroup Inc. veteran Damian Kozlowski to lead a turnaround after almost $30 million of losses in five years.

Kozlowski, who ran Citigroup's private bank from June 2005 through April 2007, said he joined New York-based Modern as chief executive officer on Nov. 8. In October 2009, the Office of the Comptroller of the Currency declared the bank in "troubled condition" and ordered it to improve management and capital while diversifying holdings of real-estate loans.

"My job is to put the right strategy and team in place, to make sure that the bank ongoing is profitable and can grow," Kozlowski, 46, said in an interview. Kozlowski also joined Modern's board of directors.

He replaced Jeffrey B. Lane, 68, who resigned Nov. 1 after serving as CEO since June 2008, according to Kozlowski. Lane is the former Travelers Group Inc. and Neuberger Berman Inc. executive who ran Bear Stearns Cos.' money-management arm for a year following the near-collapse of two hedge funds in June 2007. Lane didn't return a call for comment.

Modern caters to clients with a net worth of at least $25 million, with specialties serving Latin Americans and private-equity and real-estate entrepreneurs, Kozlowski said.

Montana, 54, who played in the National Football League for the San Francisco 49ers and the Kansas City Chiefs and won four Super Bowl titles, was one of four original officers at Modern, according to a September 2006 press release. While not currently a member of Modern's executive team, he serves on the board of directors, according to the bank's website.

"Being Joe Montana, he can be effective with client contact," Kozlowski said.

Kozlowski's Career

Modern's 2009 revenue of $16.6 million is a fraction of Citi Private Bank's $2.07 billion. Still, for Kozlowski the new post marks a return to being a banker for wealthy people.

After a series of jobs at Bank of America Corp. early in his career, he joined New York-based Citigroup in 2000 as head of strategy at Citi Private Bank, which caters to people with more than $20 million. In November 2002, he was named president of the private bank's U.S. region and was promoted to global CEO of the unit in June 2005.

Two years later, he was forced out in a shakeup under Sallie Krawcheck, 46, the head of wealth management who herself was later pushed out and now works at Bank of America. Kozlowski formed a private-equity group to buy a bank or obtain a charter for a new one, then abandoned the effort this year because regulators were reluctant to approve such deals, he said.

Modern History

Modern was formed in December 2005 by Chairman Bippy Siegal, 43, through a buyout of Excel Bank NA for an undisclosed price. Siegal is CEO of New York-based private-equity firm Raycliff Capital and a Boston University trustee. Regulatory records show $6.83 million was pumped into Modern in late 2005.

The September 2006 press release called Modern the "first new private bank in New York in 25 years," with a goal of serving "a select clientele of high-net-worth individuals and families."

Other board members include David House, a J. Crew Group Inc. director and former American Express Co. executive, and Jonathan Linen, another former AmEx manager who serves on the boards of Intercontinental Hotels Group Plc and Yum! Brands Inc.

Modern was unprofitable before Siegal bought it, and the net loss almost tripled to $16.9 million in 2008 from $5.8 million in 2005, regulatory records show. Modern Bank loaned at least $10 million to William "Boots" Del Biaggio, the co- founder of investment firm Sand Hill Capital, who filed for bankruptcy in June 2008 after being accused of fraud, according to an Associated Press report at the time.

Departed Executives

Several executives departed before Lane. Leslie Bains, Modern's head of private banking, was hired by Citi Private Bank in October 2009 to oversee new-client development in the New York area. Theresa Yoon, who was a managing director at Modern, joined First Republic Bank as a senior relationship manager in New York, according to a September 2010 press release from the San Francisco-based bank.

Modern has required $54.7 million of capital infusions since the Siegal-led buyout, regulatory records show. In July 2009 the real-estate firm Fisher Brothers Realty Corp. bought a 16 percent stake for an undisclosed price.

Under the October 2009 OCC order, known as a "formal written agreement," Modern is restricted from paying dividends unless it adheres to a three-year capital program, according to a copy on the agency's website. The company also was ordered to adopt "commercial real estate exposure limits," reduce its sensitivity to interest-rate changes and put "competent management in place," according to the agreement. It was signed by Siegal, Lane, Montana and the other board members.

The bank plans to raise capital for growth once regulators are satisfied with improvements under the OCC agreement, Kozlowski said.