More than a dozen West Coast banks, including eight in Los Angeles County, pumped $6 million of new capital into East L.A. lender Pan American Bank, which was on the verge of being shut down by regulators.

The bank, which hasn’t been profitable since 2005, had been working on a capital raise since last year, but the deal fell apart in May and Pan American was set to be shut down and auctioned off by the Federal Deposit Insurance Corp. this month, said Timothy Chrisman, who helped broker the capital raise. Chrisman is the founder of downtown L.A. executive search firm Chrisman & Co.

Commercial banks typically aren’t allowed to make equity investments in other companies, much less other banks, but are allowed to in this case because Pan American is a so-called community development financial institution – a bank that lends in low-income and minority communities. It is L.A.’s smallest bank, with $41 million in assets.

In the case of community development institutions, other banks are not only able to invest, but the investments give them credit toward meeting requirements of the Community Reinvestment Act, or CRA, which pushes banks to lend in underserved areas.

Investors in Pan American’s recap include Koreatown lenders BBCN Bancorp Inc., Wilshire Bancorp and Hanmi Financial Corp.; downtown lenders CTBC Bank, Preferred Bank and Grandpoint Bank; Cathay General Bancorp of Pasadena; and PacWest Bancorp of Century City. The recapitalization was first reported Tuesday by American Banker on its website.

John Eggemeyer, a San Diego area bank investor and chairman of PacWest’s board, worked with Chrisman to broker the deal.

BBCN and Cathay are also investors in another local community development bank, Mid Wilshire thrift Broadway Financial Corp.

Pan American was founded in 1964 by Romana Acosta Bañuelos, who later served as U.S. Treasurer during the Nixon administration. Chrisman said it’s an institution local banks didn’t want to see fail.

“It’s got a history,” he said. “It wasn’t just your normal bank.”

The capital raise closed Tuesday. Robb Evans of Sun Valley turnaround consultancy Robb Evans & Associates took over as interim chief executive Monday. Jesse Torres, Pan American’s former chief executive, left earlier this year.