Saehan Told to Strengthen Lending Practices, Management

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Saehan Bank, the Los Angeles-based subsidiary of Saehan Bancorp, has been ordered by federal regulators to shore up weaknesses in its operations.

In a regulatory filing this week, the Korean-American bank said it entered Nov. 6 into a memorandum of understanding with the California Department of Financial Institutions and the Federal Deposit Insurance Corp. directing Saehan to strengthen its lending practices and bolster management.

“Management has already prepared and begun implementing a comprehensive action plan which is responsive to the majority of the issues set forth in the memorandum of understanding,” the bank said in a statement.

Saehan, which has $888 million in assets, reported Monday a third quarter net loss of $765,000 compared to a profit of $1.8 million a year earlier. The company attributed the loss largely to a sharp increase in money set aside to cover bad loans. Saehan said the enforcement order is not expected to have a material impact on either operating results or the bank’s financial condition.

Saehan becomes the third local bank to enter into such an agreement in the past month, following similar announcements by Los Angeles-based Hanmi Financial Corp. and Culver City-based Alliance Bancshares California.

Meanwhile, regulators shut down another Los Angeles institution, Security Pacific Bank, on Nov. 7 and transferred its assets to Pacific Western Bank in San Diego. Security Pacific had received a more severe warning about its operations from the FDIC earlier this year.

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