As loan losses pile up at banks across Los Angeles, a number of institutions have recently signed agreements with regulators to shore up capital and overhaul management.
Since the beginning of November, American Continental Bank, Hanmi Financial Corp. and Saehan Bancorp have been subject to enforcement actions related to their issues.
“Problems are coming to the surface and regulators are starting to come to grips with them,” said Bert Ely, a bank consultant in Alexandria, Va.
More recently, Center Financial Corp. announced that it entered into an informal agreement with regulators to strengthen its capital levels and reduce classified assets. The move came as Center, the Koreatown holding company for Center Bank, announced that it raised $73.5 million in a private placement of preferred stock. Management said it expects to report a fourth quarter loss of $25 million.
The Federal Deposit Insurance Corp. recently issued consent orders to American Continental, a small Chinese-American bank in City of Industry, and Saehan, a Korean-American bank.
Hanmi, the Koreatown holding company for Hanmi Bank, reported that it has entered into a pair of regulatory agreements: a final order from the California Department of Financial Institutions and a written agreement with the Federal Reserve Bank of San Francisco. Among the requirements, Hanmi must raise $100 million in new capital by July.
That could be challenging, Ely said, since Hanmi’s total market capitalization is only $59 million.
“You’re talking about a capital injection that is more than the current market value of the company,” he said. “That essentially means whoever puts in that money is going to be effectively taking control. The big question is who’s willing to put that kind of money in.”
Fund Liquidation
As part of ongoing fallout from its decision to fire its star fund manager, investment giant TCW Group Inc. said last week that it will pull out of the government’s program to buy toxic assets from banks.
TCW, headquartered in Los Angeles, said it will return the $500 million it had raised from investors for the U.S. Treasury Dept.’s Public-Private Investment Program.
Last month, the firm ousted its chief investment officer, Jeffrey Gundlach, in a move that shook the world of bond investing. After the termination, which led investors to withdraw billions from the firm, government officials suspended TCW’s public-private program, which Gundlach would have managed.
Gundlach recently started his own firm, DoubleLine Capital LP, and has hired about 40 employees away from TCW, which was one of a handful of firms selected by the government to participate in the public-private program.
In a statement, TCW cited “the recent changes in the portfolio management team” in opting out of the Treasury program.
In a lawsuit filed last week, TCW said it had fired due to his erratic behavior, Gundlach has denied the charges.
In a separate announcement, TCW said last week that it will launch a mutual fund targeting emerging markets.
O.C. Expansion
Beach Business Bank in Manhattan Beach last week announced plans to expand into Orange County.
The bank said it has acquired a portfolio of performing loans from First Financial Bank, a Hamilton, Ohio, institution that announced intentions to leave the Western U.S. market. As part of the transaction, Beach has applied to take over the Costa Mesa branch currently occupied by First Financial.
Beach said it plans to hire Caroline Harkins, the market president for First Financial’s Costa Mesa office, and expects to retain most of the branch employees.
C-Suite News
Private Bank of California, a commercial bank in Century City, announced that David Misch has been named chief executive and Todd Neilson was appointed nonexecutive chairman. Steven Broidy, former chairman and interim chief executive, has retired. … CVB Financial Corp., the Ontario holding company for Citizens Business Bank, announced that David Harvey was appointed chief operations officer.
Staff reporter Richard Clough can be reached at [email protected] or at (323) 549-5225, ext. 251.
