by Robert Barba
A pack of West Coast banks have banded together to save Pan American Bank in Los Angeles.
The $41 million-asset bank has been recapitalized after raising $6.3 million from 16 banks. Pan American was significantly undercapitalized at March 31, according to regulatory data.
Pan American was facing a potential failure after the collapse of a capital raise in May, said Timothy Chrisman, principal of executive search firm Chrisman & Co. in Los Angeles. Chrisman worked with John Eggemeyer, managing principal of Castle Creek Capital, a bank-focused hedge fund in Rancho Santa Fe, Calif., to connect Pan American with other banks.
“The last iteration fell apart at the 11th hour,” Chrisman said. “So a couple of us got together and began talking to various people to see if there was anything we could do to make sure it wasn’t taken over.”
Chrisman said the bank’s targeted raise was $5 million to $7 million. None of the banks will hold more than a 4.9% stake in Pan American, and the Hispanic-focused bank is expected to maintain its minority-owned status because its previous shareholders will continue to own at least 51% of its stock.
The capital also comes with new leadership. Pan American has named Robb Evans as interim chairman and chief executive. Evans has been a CEO of six different banks and his firm, Robb Evans & Associates, specializes in strategic matters like management, sales and liquidations.
Pan American was previously led by Jesse Torres, who left the bank earlier this year. Cesar Rosas, the bank’s vice president of finance, has overseen “the office of the president” since April.
Chrisman said the management change was necessary to improve the bank’s governance and to establish a business plan to make the institution sustainable.
Pan American joins several other community development banks saved by others in the industry. The largest banks in the United States banded together to try to save ShoreBank in Chicago in 2010 and later used the $140 million raised to capitalize a new bank formed to buy ShoreBank when regulators seized it. Carver Bancorp in New York received $55 million in capital from a handful of large financial services companies in 2011. In January, a few banks invested alongside private equity in the recapitalization of Broadway Financial in Los Angeles.
Pan American’s new investors are: Banc of California; BBCN Bank; Cathay General Bancorp; Commercial Bank of California; CTBC Bank; Grandpoint Bank; Hanmi Financial; Heritage Oaks Bancorp; HomeStreet; Mitsubishi UFJ Financial Group’s MUFG Union Bank; Pacific Premier Bancorp; PacWest Bancorp; Preferred Bank; Provident Financial Holdings; Western Alliance Bancorp.; and Wilshire Bancorp.
Chrisman, once chairman of Banc of California, was recently added to the board of HomeStreet. Eggemeyer is PacWest’s chairman.