A year of falling stock prices, skyrocketing foreclosure rates, failing banks and all-around upheaval has forever changed L.A.’s banking industry.
As a result, many of the top executives who helped lead the banking industry in the boom times now find themselves out of a job. Others have fled in search of safer environs.
It’s the flip side of the new leadership emerging in the industry.
“It’s kind of like the lifeboats on the Titanic,” said Wade Francis, president of bank consulting firm Unicon Financial Services Inc., based in Long Beach. “A lot of people want to jump ship early, but there are not enough lifeboats for everybody.”
Perhaps the most high-profile executive to escape from his Titanic is Angelo Mozilo.
The founder of Countrywide Financial Corp. who Time magazine recently named as one of the 25 People to Blame for the Financial Crisis built his Calabasas company into the nation’s top independent mortgage originator before selling it this past year to Bank of America Corp. at a fire-sale price.
Since the deal closed in July, Mozilo has kept out of the spotlight. Henry Cisneros, a one-time Countrywide director and former chairman of the U.S. Department of Housing and Urban Development, told the New York Times in October that Mozilo is “sick with stress the final chapter of his life is the infamy that’s been brought on him, or that he brought on himself.”
Like Countrywide, IndyMac Bancorp Inc. of Pasadena rode the housing market to great heights before falling flat. IndyMac, originally a subsidiary of Countrywide, became a major originator of Alt-A mortgages so-called liars’ loans because of the little documentation required but was taken over by federal regulators in July after being hit by a catastrophic run as losses mounted.
The bank, which was sold to a group of private equity investors, had long been run by Chief Executive Michael Perry. He, like Mozilo, has kept a low profile since last summer when his company failed. Perry is now contending with lawsuits from angry IndyMac shareholders and borrowers.
Other executives also have fallen, though not as spectacularly.
Curtis Reis had served as chief executive of Alliance Bank before the small Culver City bank failed this month. Reis finds himself out of work despite being chosen the 2008 California Banker of the Year by the California Bankers Association.
Brad Dinsmore, meanwhile, was ousted in December from his L.A.-based position as head of Bank of America’s West Coast consumer banking. Dinsmore was one of nearly two dozen top executives laid off at the time
The Charlotte, N.C., bank said it will eliminate as many as 35,000 positions in the next three years as a result of the weakened economy, and its costly acquisitions of Countrywide and Merrill Lynch & Co. Inc.
“There will be turnover any time you’ve got an institution facing an unknown future,” Francis said.
Other institutions have made changes out of obligation rather than choice.
Hanmi Financial Corp., which operates the largest ethnic Korean bank in Los Angeles, was ordered by regulators in October to make changes to its management and board in order to shore up its financial position, which had been weakened by a large number of bad loans.
The company has since announced the resignation of several board members, including Mark Mason, Ki Tae Hong and Chang Kyu Park.
Not every change is a result of poor performance, though.
Shelley Freeman, who had served as regional president for Los Angeles County community banking for Wells Fargo & Co., will now run the bank’s operations for all of Florida. Wells Fargo, the third largest bank in Los Angeles by market share, announced the promotion in December after the San Francisco bank’s acquisition of Wachovia Corp.
Some of the absences on the local banking scene are entirely unrelated to the financial crisis.
Francis Shanahan, chief executive of Community Bank in Pasadena, died in September of undisclosed causes. Shanahan, who had been affiliated with the bank since 1994, had served as chief executive of the small business bank since 2006.
