Rescuing California's oldest Latino bank, 16 larger community and regional banks have chipped in $6.3 million to help keep 50-year-old Pan American Bank in East Los Angeles open.
The deal is expected to bring change to the board of directors and management at tiny Pan American, which has just $41 million in assets and 22 employees. Its last profitable year was in 2005.
Robb Evans, a veteran banker and turnaround expert, has been installed as interim chief executive, replacing Jesse Torres, who left earlier this year.
Evans said the bank's capital had dwindled to the point where it was no longer in a position to make loans and was spending "every minute of the day" dealing with pressure from regulators.
"The immediate objective is to get the bank operating efficiently, so it's in a position to provide services to local merchants," Evans said Wednesday. "We'll have to retool the bank to do that."
Pan American was founded in 1964 by Romana Acosta Bañuelos, who later served as U.S. treasurer during the Nixon presidency.
It had been ordered by regulators to raise new capital and install new leaders -- or shut down its single branch on East First Street.
Minority banks in Southern California have operated with mixed results, with many Asian American institutions expanding beyond their roots in L.A.'s Chinatown and Koreatown to open and acquire branches across the state and even the nation.
But for generations, Southern California Latinos have had few homegrown financial institutions. Industry analysts and Latino entrepreneurs cite several reasons, including the small size of many Latino businesses and widespread distrust of banks by immigrants from Mexico and Central America.
Puerto Rico's Banco Popular recently agreed to sell its 20 Southern California offices, most of them in Latino neighborhoods, to Irvine's Banc of California. Some advocacy groups are urging regulators to delay the takeover until Banc of California provides more details about how it will serve Spanish-speaking customers.
Regulators and bankers involved in the Pan American fundraising effort said the bank's long history and commitment to its neighborhood and financial education made it a special case.
Pan American is a community development financial institution, chartered with a specific mission to help lower-income individuals and businesses, said Jan Lynn Owen, commissioner for the California Department of Business Oversight, Pan American's state regulator.
"This new capital will allow the bank to continue to meet the needs of an important constituent base and expand the good work," Owen said.
The deal was engineered by some of California's most respected bankers, led by PacWest Bancorp Chairman John Eggemeyer. It was designed so that voting control of the bank will remain with Latino shareholders, with the greatest stake owned by a Bañuelos family trust.
The 16 banks contributing funds to recapitalize Pan American will each become lesser shareholders.
They include Cathay Bank, based in L.A.'s Chinatown; several banks in Koreatown; and expanding mainstream banks such as Banc of California, Pacific Western in Century City and Grandpoint in downtown Los Angeles.