With their loan portfolios deteriorating amid the ongoing financial crisis, several L.A. County bank holding companies, including the parents of Cathay and Hanmi banks, reported generally weak third quarter financials.
Cathay General Bancorp this week reported earnings of $6.9 million (14 cents per share), down 80 percent from the same period last year. With deteriorating credit quality resulting from souring construction loans, L.A.-based Cathay increased its provision for credit losses sixfold to $15.8 million.
Cathay Chief Executive Dunson Cheng said the company has taken steps to bolster its credit quality by limiting new loan growth, likely will try to participate in the Treasury Department's program to take capital stakes in financial institutions.
Like Cathay, Hanmi Financial Corp. has taken hits to its credit quality as a result of the financial crisis. The Los Angeles bank said its earnings fell 61 percent to $4.3 million (9 cents).
Hanmi announced earlier this month that it has been working with regulators since March to shore up its capital levels and strengthen management. Among the steps taken, the company reduced its headcount by 10 percent.
As of Sept. 30, Hanmi had assets of $3.77 billion, a 2 percent decline from the previous quarter resulting largely from a 5 percent decline in total deposits.
Los Angeles' Preferred Bank reported a net loss of $3.4 million (-35 cents), compared with net income of $7.2 million a year ago. The company said earnings were negatively impacted by charges related to losses in its holdings of Freddie Mac preferred stock, as well as an increase in its loan loss provision to $3.7 million.
Center Financial Corp. reported a net loss of $3.2 million (-19 cents), compared with net income of $5.7 million a year ago. The Los Angeles holding company for Center Bank took losses on settlement agreements and impairments on corporate trust preferred securities.
California United Bank was a rare bright spot in the quarter. The small Encino-based institution reported net income earnings of $2.5 million (50 cents), compared with a slight loss last year. The bank also saw a 44 percent increase in its asset base to $352 million, growing total deposits 28 percent to $226 million.
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