Update: Two Local Banks Receive Cease-and-Desist Orders

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Editors’s Note:

An earlier version of this story incorrectly said Hanmi Financial Corp. and Saehan Bancorp had received a cease-and-desist order from federal regulators. They have received memorandums of understanding.

A pair of small local banks have revealed that they are among a growing number of institutions to receive cease-and-desist orders from regulators.

Beverly Hills Bancorp, the Calabasas parent of struggling First Bank of Beverly Hills, has been directed by the Federal Deposit Insurance Corp. and California Department of Financial Institutions to raise $70 million or sell itself.

First Regional Bancorp, the Century City parent of First Regional Bank, announced last week that it received a less dire but still disconcerting order to strengthen dwindling capital levels and retain qualified management.

As a flood of bad loans forces banks locally and nationwide to take increasingly large write-downs, many institutions have been subject to regulatory actions. Alliance Bancshares California, which was closed by regulators Feb. 6, received a cease-and-desist order recently. Local bank holding companies Hanmi Financial Corp. and Saehan Bancorp entered into a memorandums of understanding in October and November, respectively, directing them to strengthen board oversight and maintain capital ratios.

First Bank of Beverly Hills, which has $1.5 billion in assets, had in recent years become more heavily involved in condominium construction lending, which turned toxic as developers went belly up amid the housing bust.

With a ballooning loan loss provision, the bank fell below the “well-capitalized” level in the fourth quarter of 2008. Under the terms of the Feb. 13 regulatory order, the bank has 30 days to find a buyer if it does not believe it can raise $70 million.

“The company is presently in active negotiations with a potential merger partner,” the company said in a Feb. 19 regulatory filing in response to the order.

First Regional, which has $2.5 billion in assets, has remained “well-capitalized” despite a similarly growing loan loss provision. But the bank was ordered Feb. 24 to create a plan to diversify its lending in order to improve its capital ratios.


Proxy Battle

Santa Monica hedge fund Tennenbaum Capital Partners LLC has launched a proxy battle to get three directors elected to the board of Online Resources Corp., a Chantilly, Va., bank technology software vendor.

After Tennenbaum, which owns more than 21 percent of the company, was rebuffed in its efforts to change the company’s corporate governance, the hedge fund nominated three industry executives to Online Resources’ board: John Dorman, Edward Horowitz and Bruce Jaffe.

“The company and the board appear to be content with their current practices,” said Tennenbaum managing partners Michael Leitner and Hugh Steven Wilson in a Feb. 5 letter to the company. “As a result, we are nominating to the board three exceptional and highly qualified candidates that include past chief executives and other corporate officers.”

Tennenbaum has recommended that Online Resources split its chairman and chief executive roles in an effort to improve performance. The company’s stock, which traded as high as $11 per share in the past 12 months, is down to around $3.

Online Resources subsequently issued a statement urging shareholders to reject the nominees at the annual shareholder meeting May 6.


Investor Network

Los Angeles angel investment group Maverick Angels recently unveiled a system that will allow investors across the globe to assess and invest in emerging companies.

Dubbed AngelLink, the online system will allow accredited investors to view presentations via streaming video from entrepreneurs seeking funding. What’s more, investors can access the entrepreneurs’ business plans and reach out to the companies to request additional materials.

John Dilts, founder of Maverick Angels, said the innovation will be particularly beneficial for new companies in need of funding during the economic recession.

“We consider AngelLink to be a powerful antidote to the economic slump in which banks and other funding sources have dried up for struggling entrepreneurs seeking essential startup capital,” Dilts said in a statement.


C-Suite News

Promerica Bank, an L.A. bank catering to the Latino community, announced that John Quinn has been appointed chief executive. Martin J. Wolff & Co. Inc., an L.A. insurance agency, has appointed Brian Sullivan president of the company’s employee benefits division. Hanmi Financial Corp., a struggling L.A. bank holding company that has been ordered by regulators to make changes to its board, has appointed Jack Hall to its board. Beverly Hills-based City National Corp. announced that Ernesto Alvarez has been hired as a vice president and private client adviser on the Westside, and Richard Gershen has been appointed executive vice president and director of the wealth management services division.


Staff reporter Richard Clough can be reached at [email protected] or at (323) 549-5225, ext. 251.

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