EH NATIONAL BANK

Beverly Hills

FOUNDED: 2005 (as Excel National Bank)

CEO: Peter Aharonyan

FOCUS: Armenian and Lebanese communities

L.A. COUNTY BRANCHES: 1

Beverly Hills’ Excel National Bank was one of the top local Small Business Administration lenders, but after running into credit problems, it did something unusual: it overhauled its whole business model to become an ethnic bank.

A year ago, it changed its name to EH National Bank, hired an Armenian-American banker as chief executive and began a bid to win business in the local Armenian and Lebanese communities.

But progress has been slow and the overhang of soured real estate loans still haunts the bank. While the ratio of problem loans has dropped to 18 percent from a dangerously high 23 percent a year ago, it’s still twice the level considered safe, according to Dennis Santiago, chief executive of Institutional Risk Analytics, a bank consulting and analysis firm in Torrance.

“It takes time to carry out a recovery strategy,” Santiago said. “You just can’t move a bank that fast, especially with all those bad loans out there.”

In the former Excel National Bank’s case, the bad loan problem was especially acute. Roughly 99 percent of the bank’s loans were in real estate; even those loans under the SBA program were mostly for business owners to purchase their own buildings.

Faced with some drastic choices, Excel’s board opted to convert into an ethnic business bank that would try to penetrate two underserved communities: Armenian and Lebanese business owners. The board changed the bank’s name to EH National Bank and hired Armenian-American banker Peter Aharonyan as chief executive.

The bank now counts prominent Lebanese-American community leaders among its ranks: Marketing Director Amira Matar, for example, is a board member of the House of Lebanon, a Studio City-based organization promoting Lebanese culture. The Lebanese business community had been particularly hard hit by the sale of Cedars Bank in 2006.

Last year, Aharonyan told the Business Journal the bank was looking “to focus on a few key underserved markets in our community.” Aharonyan declined to be interviewed for this article.

One prominent Armenian-American business leader said he was heartened to hear about EH National Bank’s push into the Armenian-American community.

“This community is underserved and underfunded,” said Sam Kabushyan, who used to head the Little Armenia Chamber of Commerce in East Hollywood. That chamber has since been folded into the East Hollywood Chamber of Commerce; Kabushyan is its executive director.

“The big banks, like Bank of America and Citibank, have been tight with their lending,” said Kabushyan, who is a candidate for the Hollywood district on the Los Angeles City Council. “They may have a few tellers who speak Armenian, but that doesn’t do a whole lot of good if the banks aren’t lending. That’s why we need an EH National Bank.”

— Howard Fine