Federal bank regulators have imposed civil penalties on the former president of Dwelling House Savings & Loan and two members of its board of directors for failing to take steps to protect the institution from potential fraud after they were warned to do so five years ago.

Robert M. Lavelle, former president and CEO of the Hill District institution, was ordered Friday by the Office of Thrift Supervision to pay a $5,000 fine to the U.S. Treasury.

Richard A. Thornton, chairman of the board of directors, and board member Barry Balliet were fined $1,000 each.

The order requires each to pay the fines from their own funds and prohibits them from seeking donations or accepting any gifts to help meet the obligation. The order allows the OTS to take further action, if it becomes appropriate to do so.

"It sounds like a slap on the wrist," said Cornelius Hurley, director of the Morin Center for Banking and Financial Law at Boston University School of Law. "If this were viewed much more seriously by regulators, they could take another step and bar those people from the banking industry."

Robert M. Lavelle, who now works for Lavelle Real Estate, next door to the bank, declined comment. Mr. Thornton and Mr. Balliet, who both continue to serve on the Dwelling House board, could not be reached for comment.

When auditors from the Office of Thrift Supervision examined records at Dwelling House in July 2004, inspectors found several material deficiencies and weaknesses in its anti-money laundering program, according to an order released in May 2006. They required the bank's officers to make immediate changes.

One of regulators' major concerns had been Dwelling House's role in providing banking services to prison inmates, a rare practice in the financial industry. Regulators felt the bank was failing to properly monitor those accounts and suspected some were being used for money laundering and criminal activity.

Federal authorities ordered the bank to stop opening new prisoner accounts, to keep all existing accounts to $25 maximum deposits and to no longer permit prison inmates to make electronic transactions.

While the OTS had been concerned about weaknesses in Dwelling House's anti-money-laundering program since 2004, it issued the formal "Order to Cease and Desist" in May 2006, which bank officers continued to violate on multiple occasions, according to the federal agency.

It is unclear if the security weaknesses are what ultimately caused Dwelling House to lose $3 million of its reserve capital last year via electronic bank transfers, which bank officers have blamed on the work of a ring of cyber thieves.

The historic thrift was spared from being shut down in late June after members of the community rallied to raise the necessary capital to keep it open, and four of Pittsburgh's largest charities pledged to fill the gap.

The OTS is still evaluating a recapitalization plan that Dwelling House submitted last month.

FBI spokesman Jeff Killeen said yesterday that the bureau was working to unravel what happened to the funds that were siphoned out of Dwelling House's capital account over more than a one-year period.

Robert M. Lavelle, the son of Dwelling House's retired founder Robert R. Lavelle, had worked more than 40 years at the $13.4 million minority-owned thrift. He rose to the rank of president before being fired by order of the OTS in November 2008 for gross negligence in his performance as the bank's chief officer.

In addition to ordering that Robert M. Lavelle and Gonzell Phillips, the former controller, be terminated, the agency order prohibited the institution from granting them any form of severance.