Small-Business Loans Have Little Impact in L.A.

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The government gave out the final round of funds under its highly touted small-business loan program that closed last week, but don’t expect much of an impact in Los Angeles.

Just $61 million was given to L.A.-area financial institutions out of more than $4 billion that was distributed nationwide under the Treasury Department’s Small Business Lending Fund program. Promerica Bank in downtown Los Angeles was one of the last institutions to receive funds when it got $3.8 million last week.

Created by Congress last September, the SBLF was designed to provide as much as $30 billion to the nation’s community banks. However, only a fraction of that amount was given out before the program ended. The Treasury said many of the applicant banks failed to meet qualifications.

Wade Francis, president of bank consulting firm Unicon Financial Services Inc. in Long Beach, said he is not surprised the program fell so far short of expectations. Many banks already have sufficient liquidity to make loans, he noted, so the issue is more about finding qualified borrowers than about getting money to lend.

Francis added that government programs tend to get lukewarm responses from the banking industry because of the fine print that often excludes those most in need.

“To actually get the money, there are a lot of restrictions, a lot of qualifications that go on,” he said. “If the banks qualified then they wouldn’t need this program to begin with. The bottom line is a government program is not going to impact overall lending unless it is something tremendously unique.”

Just six Los Angeles County financial institutions were accepted into the program, including 1st Enterprise Bank, which got $16.4 million; Private Bank of California, $10 million; and Valley

Economic Development Center Inc., $661,000.

Statewide, 30 institutions received $275 million in SBLF funds.

Giving Back

Oaktree Capital Management LP, the downtown L.A. distressed debt firm headed by billionaire Howard Marks, is known to refund clients’ money when it can’t find sufficiently good investments. The federal government now has firsthand experience with that.

Oaktree recently returned more than $2 million in fees to the Treasury that had been paid as part of the Public-Private Investment Program, a $29.4 billion plan to encourage money managers to buy banks’ bad assets.

Under the program, which was originally announced in early 2009, eight firms, including New York’s BlackRock Inc., received equity and loans from the government to invest in mortgage-backed securities and other troubled assets. The Treasury will receive half of the funds’ profits.

As of July, Oaktree had invested just 16 percent of the money in its fund, according to a report by Bloomberg News, while every other firm had invested more than two-thirds of its capital. Still, Oaktree’s fund had a 19 percent internal rate of return.

Earlier this year, Oaktree returned $3 billion of a $10 billion distressed-debt fund after failing to find enticing investment opportunities for the full amount.

Order Lifted

Center Financial Corp., Koreatown parent of Center Bank, announced that regulators have terminated an enforcement action that had been in place for nearly two years.

In late 2009, the Korean-American bank signed a memorandum of understanding with the Federal Deposit Insurance Corp. and state regulators requiring Center to boost capital levels and reduce troubled assets.

“The lifting of the MOU underscores the steady, consistent and sustainable improvements in the overall condition of Center Bank,” Chief Executive Richard Cupp said in a statement.

The institution is in the process of merging with rival Nara Bank. The two recently announced that they received shareholder approval for the merger, which is expected to close before the end of the year.

C-Suite News

First California Bank, owned by First California Financial Group Inc. in Westlake Village, announced that John Harris was hired as senior vice president and regional manager for the bank’s South Bay operations. … The board of Center Financial Corp. has appointed Kevin Kim chairman of both the holding company and its bank subsidiary. … Opus Bank, headquartered in Redondo Beach, announced that it hired Michael Allison as chief credit officer.

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

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