Many banks have tried to raise capital in the down economy, but few have gone about it in as unusual a way as Pan American Bank.

Jesse Torres, chief executive of the small East L.A. bank, recently sent a mass e-mail to the community seeking feedback on a potential capital-raising strategy whereby Pan American would accept money from local organizations and, in turn, issue stock to area youths.

The idea, Torres wrote, is to recapitalize the institution while simultaneously empowering the largely unbanked Latino community “with tools that allow them to participate in not only asset building through savings but also to begin learning about other investments as a result of a nominal stock grant.” The plan is a follow-on to Pan American’s recent partnership with an area hospital to open free savings accounts for newborns.

While there is skepticism in the investment community about the potential effectiveness of the capital-raising strategy, Torres said in an interview that public feedback has been generally positive, though he admitted he has not yet consulted with legal counsel or investment bankers.

“Everyone is coming back and saying, ‘Gosh, I wish I had this type of program when I was growing up,’” Torres said. “It’s a crazy idea, but it’s one that we looked at and thought this may have legs.”

The bank hopes to raise about $6 million in new capital in the next year, he said, which would allow it to grow its assets from $43 million today to about $100 million.

Torres said he will explore more traditional options if the stock grant strategy is not possible.

Though its capital levels exceed minimum regulatory requirements, Pan American has been contending with rising levels of nonaccrual loans, particularly on multifamily residential properties.

Analysts said it can still be difficult for small community banks to find investors who are not looking to take control of the institution.

“It appears based on the level of nonperforming assets that they will need additional capital,” said Richard Levenson, president of Western Financial Corp., a San Diego firm that helps community banks raise capital. “It would be incumbent on them to raise additional capital fairly quickly, but the environment for them may still be difficult.”

Name Game

The merger recently announced between Nara Bancorp Inc. and Center Financial Corp. will create the nation’s largest Korean-American bank. But there’s still one significant unknown in the blockbuster deal: What will the new bank be called?

The Koreatown institutions said they will decide upon a new name before the deal closes late next year. In an interview, Center Chief Executive Jae Whan Yoo, who will serve as president of the new entity, said that he recently spoke with former Nara Chief Executive Min Kim about how to go about picking a name.

Kim, who in May took the reins of downtown L.A.’s First Standard Bank, recently led her bank through a name change of its own, becoming Open Bank in September.

After speaking with Kim, Yoo said that he realized it will not be easy to decide upon a name that reflects its mission and community – and is not cliché.

“She told me how difficult it is to pick out a new name,” he said. “A lot of the banks want to pick up the word ‘first’ or ‘best.’”

SBA Rise

Mirroring a rise in small-business lending overall, commercial real estate loans through the U.S. Small Business Administration are increasing in Los Angeles.

Nearly $63 million in SBA-504 loans were approved by the SBA in November, up from $57 million in October, according to data supplied by CDC Small Business Finance.

Unlike standard 7(a) loans, which are used to start and run small businesses, 504 loans are typically used to finance purchases of commercial real estate or large equipment.

Bank of America Corp. was the top local 504 lender, providing $19 million during the month.

C-Suite News

Pasadena savings and loan OneWest Bank announced that Grant Ahearn was named executive vice president and head of its specialized financial services group. … City National Corp., the downtown L.A. holding company for City National Bank, announced that Alison Davis has been elected to the boards of the company and bank. … Union Bank, the regional bank owned by San Francisco’s UnionBanCal Corp., announced that Bita Ardalan, an executive vice president in the L.A. office, was named head of the bank’s national specialized lending group.

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