FDIC takes over First Vietnamese American Bank (FVAB)

On Friday, November 5, 2010, First Vietnamese American Bank, Westminster, CA was closed by the California Department of Financial Institutions, and the Federal Deposit Insurance Corporation (FDIC) was named Receiver. No advance notice is given to the public when a financial institution is closed.

Read more at:  http://fdic.gov/news/news/press/2010/pr10245.html

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $9.6 million

Could FDIC be delaying its take over of First Vietnamese American Bank (FVAB) in Westminster, California due to the local Vietnamese candidate running for congress?

In the last few years FDIC has taken over many banks with stronger balance sheets than First Vietnamese American Bank (FVAB) in Westminster, California. FVAB reported a loss of $1.951 million in the quarter ending 09/30/2010. This left the bank with $611K in Tier 1 capital; a 1.15% Tier 1 leverage ratio and a 1.57% Tier 1 risk-based capital ratio.

The race in the 47th district in California which includes Westminster, where the bank is located, is super heated. The Republican candidate is Van Tran, a Vietnamese conservative backed by the Tea Party serving in the California state assembly. The Democrat is Loretta Sanchez, Incumbent Democratic Congresswoman for California's 47th District.

According to Southern California Public Radio, the demographics of the heavily Hispanic district are changing rapidly with a growing 15% of voters identifying as Vietnamese – a fact that Tran hopes to turn to his advantage. With no clear partisan voting record this district could go either way in next week’s election.

Could FDIC be delaying its take over of First Vietnamese American Bank (FVAB) in Westminster, California due to the local Vietnamese candidate running for congress?

First Vietnamese American Bank in Westminster set new loss record!

According to FDIC https://cdr.ffiec.gov/Public/ViewFacsimileDirect.aspx?ds=call&idType=fdiccert&id=57885&date=09302010  First Vietnamese American Bank (FVAB) in Westminster, California lost a record $1.951 million. This left FVAB with $611K in Tier 1 capital; a 1.15% Tier 1 leverage ratio and a 1.57% Tier 1 risk-based capital ratio.

FDIC declares First Vietnamese American Bank (FVAB) "critically undercapitalized" and ordered to sell shares or agree to a buyout

According to the Orange County Register the Federal Deposit Insurance Corp. has declared Westminster-based First Vietnamese American Bank "critically undercapitalized."

The FDIC ordered the bank to sell shares or agree to a buyout by another bank. The order, dated Sept. 28, was disclosed by the FDIC.

The FDIC order also directed the bank not to accept or renew any "brokered deposits" -- typically large deposits that move to whatever bank pays the highest interest -- and to pay no bonuses or raises to officers and directors without the government's permission. You can read the order http://www.fdic.gov/bank/individual/enforcement/2010-09-69.pdf

First Vietnamese American Bank in Westminster set to be sold to Philippines company

According to a report in the Orange County Business Journal on August 12, 2010 by Chris Casacchia ...
First Vietnamese American Bank in Westminster, which has been struggling with bad loans and regulatory scrutiny, is on the verge of being acquired by a large Philippines company.

The California Department of Financial Institutions late last month approved the sale of First Vietnamese to Charles and Michael Lhuillier, brothers who run one of the largest pawn shop and jewelry operations in the Philippines.

The brothers head MLhuillier Inc., a group of financial services, retail and real estate businesses throughout the Philippines.

The Federal Deposit Insurance Corp. still needs to approve the acquisition, First Vietnamese chief executive Benjamin P. Palma-Gil wrote in e-mail to the Business Journal from Asia. He had no further comment on the deal or the bank’s status.

The application is pending, according to FDIC sources with knowledge of the situation. The agency asks for many documents and supporting materials before making a decision.

The case manager received some of that information today, sources said.

An analysis of second-quarter data First Vietnamese submitted to the FDIC sheds light on the community bank’s problems.

First Vietnamese was one of only six homegrown banks and thrifts in the county that decreased their ratio of capital to credit-risk assets, a key metric for regulators. Banks considered well capitalized have a Tier 1 risk-based ratio of 6% or higher.

First Vietnamese was the only bank of the county’s 27 to fall below the 6% benchmark with a ratio just more than 3%.

First Vietnamese opened with fanfare in 2005 as the first bank to specifically target Vietnamese-Americans and their businesses in Little Saigon, which spans Westminster, Fountain Valley, Huntington Beach, Garden Grove and Santa Ana. The area is home to an estimated 200,000 Vietnamese.

First Vietnamese lost $1.1 million in the second quarter and hasn’t posted a profit since it opened. In May, it was issued a cease and desist order from the FDIC to improve compliance and fair lending practices.

First Vietnamese was among 13 banks and thrifts out of 27 based in the county that lost money in the second quarter.

The bank also scored poorly in a test of its bad loans and real estate verse cash reserves, according to an analysis for the Business Journal by Anaheim-based Findley Reports Inc.

First Vietnamese scored 317% on what’s known as the Texas ratio, a measurement of bank health that compares bad loans to how much shareholders would be owed if the bank failed.

The lower the score, the better.

Any rating more than 100% is considered teetering on failure. Any score at or above the 50% mark is when regulators take notice.

First Vietnamese had the highest Texas ratio in the county. A year earlier it was 47%, but that shot up to 234% at the beginning of this year.

First Vietnamese American Bank suffers another setback at the hands of the FDIC

First Vietnamese American Bank suffers another setback at the hands of the FDIC when the case it had brought against First Data, STAR, Innovative Bank, Amerinet, OPUS, Masih Madani, David Kerlin and others back in 2008 was stayed till January 2011. The stay is as a result of the failure of Innovative Bank on April 16, 2010 naming the FDIC as receiver.


With First Vietnamese American Banks recent reporting losses of more than $1.1 million in the first half of 2010, only $1.4 million in Tier 1 capital left, and an anticipated loss of at least $1 million in the 2nd half of 2010 the bank will run out of cash by the end of 2010.

First Vietnamese American Bank lost over $1.1 million in the first half of 2010, according to FDIC

Go to http://www.fdic.gov/ click on “Bank Find” on the lower right menu. Click on “Institution Directory Home” on the top right of the page. Click on “Fall All Institutions” in the menu. You will be presented with a form. Enter “First Vietnamese American Bank” and click “Find”. You will see First Vietnamese American Bank listed. Select “All Summary Information” from the ID Report Selections drop down menu and “click generate report”.


What you will find is amazing. The bank opened for business in early 2005 to great fanfare. It is typical for a new bank to loose money in its first few years, but nothing like this. Here are its losses so far.

2005 $2.587 million
2006 $2.263 million
2007 $1.533 million
2008 $3.432 million
2009 $2.874 million
2010 $1.112 million in the first 6 months alone

As of June 30, 2010, First Vietnamese American Bank had less than $1.47 million in capital left. At the current loss rate of over half a million dollars per quarter, the bank will run out of capital before the end of this year.

As of March 31, 2010, 16.2% of First Vietnamese American Bank loans were not current. Its net interest margin (the difference between what it collects on loans and what it pays on interest) was down to 2.26%. Its equity capital to asset ratio was down to 3.77%.

As of June 30, 2010, First Vietnamese American Bank Tier 1 leverage ratio was down to 2.48%

According to http://en.wikipedia.org/wiki/Capital_requirement Depository institutions are subject to risk-based capital guidelines issued by the Board of Governors of the Federal Reserve System (FRB). These guidelines are used to evaluate capital adequacy based primarily on the perceived credit risk associated with balance sheet assets, as well as certain off-balance sheet exposures such as unfunded loan commitments, letters of credit, and derivatives and foreign exchange contracts. The risk-based capital guidelines are supplemented by a leverage ratio requirement. To be adequately capitalized under federal bank regulatory agency definitions, a bank holding company must have a Tier 1 capital ratio of at least 4%, a combined Tier 1 and Tier 2 capital ratio of at least 8%, and a leverage ratio of at least 4%, and not be subject to a directive, order, or written agreement to meet and maintain specific capital levels. To be well-capitalized under federal bank regulatory agency definitions, a bank holding company must have a Tier 1 capital ratio of at least 6%, a combined Tier 1 and Tier 2 capital ratio of at least 10%, and a leverage ratio of at least 5%, and not be subject to a directive, order, or written agreement to meet and maintain specific capital levels. These capital ratios are reported quarterly on the Call Report or Thrift Financial Report. The report is usually available about one month after the close of each quarter.
With an equity capital to asset ratio of 2.48% as of June 30, 2010 and a Tier 1 capital ratio of 3.08% as of down from 5.72% on December 31, 2009, it seems only a matter of a few more months before the bank will fail?

First Vietnamese American Bank (FVAB) stock trading at pennies.

First Vietnamese American Bank (FVAB) stock trading at pennies. The last trade was at 20 cents on July 29, 2010. With bids at the 2-3 cent range, and the bank with 1.5125 million shares outstanding, it seems that investors are valuing First Vietnamese American Bank at about $30,000 or the price of a 4 door car.

With losses mounting, senior management of First Vietnamese American Bank begin to leave

With losses mounting and the second quarter report of the banks performance only days away from being published, the names of some senior management have disappeared from the First Vietnamese American Banks website. The latest name to disappear was the CFO.

3rd time: FDIC Order to CEASE and DESIST in the matter of First Vietnamese American Bank Docket FDIC-10-248b

The FDIC Enforcement Decisions and Orders (ED&O) contains the full text of the formal enforcement actions against financial institutions that are regulated by the FDIC or against their affiliated parties. The ED&O is updated on a monthly basis.

The third order to Cease and Desist issued by the FDIC to First Vietnamese American Bank was issued on 05/13/2010 (8 pages long) in addition to the second order just 15 months earlier. The second order to Cease and Desist (15 pages long) issued by the FDIC to First Vietnamese American Bank was issued on 01/29/2009 just 25 months after the first Cease and Desist issued by the FDIC to First Vietnamese American Bank on 12/22/2006. The Bank, by and through its duly elected and acting Board of Directors (“Board”), has executed a Stipulation to the Issuance of a Consent Order (“Stipulation”), dated May 13, 2010, that is accepted by the FDIC. With the Stipulation, the Bank has consented, without admitting or denying any charges of unsafe or unsound banking, to the issuance of this Consent Order (“Order”) by the FDIC pursuant to Section 8(b)(1) of the FDI Act. The FDIC ordered that http://www.fdic.gov/bank/individual/enforcement/2010-05-05.pdf

Rise in Bad Loans Raises Questions for Two Little Saigon Banks (First Vietnamese American Bank and Saigon National Bank) by Murray Coleman, Orange County Business Journal

A commonly used measure to gauge the health of banks shows that two that were started to serve the county’s Vietnamese hub are operating at highly distressed levels.


First Vietnamese American Bank and Saigon National Bank, both of Westminster, scored poorly in a test of their bad loans and real estate versus their cash reserves, according to a report for the Business Journal by Irvine-based bank investor and consultant Carpenter & Co.

At the start of the year, First Vietnamese scored 234% on what’s known as a Texas ratio, a measurement of bank health where the lower the score the better and anything higher than 100% is considered a sign of teetering.

Saigon National had a Texas ratio of 117%.

“The Texas ratio can’t be applied as an absolute, but it’s certainly a good way to identify problem banks,” said Grace Wickersham, senior vice president at Carpenter & Co.

The Texas ratio compares a bank’s bad loans to how much its shareholders would be owed if it failed. Indebted real estate controlled by banks is part of the equation.

Analysts at Royal Bank of Canada’s RBC Capital Markets came up with the ratio in the 1980s while looking at banks in Texas.


The majority of banks and thrifts based in the county score well on Texas ratios. Entering 2010, 23 of 27 homegrown banks and savings and loans were operating at levels considered safe by analysts.

As a group, the average ratio was 32%, below the county’s long-term average of 35%, according to a separate review of Texas ratio data by Rancho Santa Margarita-based bank consultant Timmons Co.

“Those who’ve survived the savings and loan crisis in the ’80s and subsequent downturns are still doing relatively well compared to what we’re seeing nationally,” Timmons said.

First Vietnamese Bank’s Texas ratio has been steadily increasing in the past year, according to Carpenter & Co.’s survey.

The bank’s chief executive, Benjamin Palma-Gil, was unavailable for comment last week. Toni Umphreyville, First Vietnamese’s chief financial officer, declined to comment.

At the end of 2008, First Vietnamese’s Texas ratio was 31.5%. It took a noticeable leap between the second and third quarters of last year when it went from 47.8% to 157%.

The bank is said to be looking to raise money, according to Gary Findley, an Anaheim-based banking analyst and consultant.

First Vietnamese opened with fanfare in 2005 as the first bank to specifically target Vietnamese-Americans and their businesses in Little Saigon, which spans Westminster, Fountain Valley, Garden Grove and Santa Ana.

The area is home to an estimated 200,000 Vietnamese.

Former chief executive Hieu Nguyen started the bank with investments from local business owners, bankers and international investors.

Saigon National opened a few months after First Vietnamese in 2005, also targeting Little Saigon.

The bank has been working to pump up its reserves, according to Roy Painter, chief financial officer. At the end of January, Saigon National raised about $2.5 million in a private placement, he said.

“It certainly gives us greater operational capabilities,” Painter said. “In terms of the Texas ratio, it will put us well underneath 100%—the level everyone looks at.”

Saigon National Bank is in the process of raising another $2.8 million through a second private placement, according to Painter.

The bank also has a new chief executive, Bill Lu, and chief credit officer, Patrick Siu.

“During the economic downturn, a handful of our loans had difficulty,” Painter said. “Our focus is on resolving those issues.”

You can read more at:  http://www.ocbj.com/news/2010/mar/07/rise-bad-loans-raises-questions-two-little-saigon-/

Problem banks in Sothern California (from LA Biz Observed, Mark Lacter, hear him on KPCC 89.3FM)

The FDIC says it was watching 702 of them in the fourth quarter of 2009, up from 252 for the same period a year earlier. "Problem" banks are those receiving closer scrutiny by the feds, usually because they have weak capital cushions to prevent against failure. Keep in mind that not all problem banks will fail, but being on the list is not a great sign. The feds don't release the actual names, but Calculated Risk keeps a running unofficial tally, based on regulator press releases or public news sources it's come across. At last check, CR identified 617 problem banks; I've pulled down the list of the locals. As you can see, most of them are small and little known (one notable exception being Hanmi Bank, which has gotten killed by commercial real estate loans).


--American Continental Bank City of Industry
--Bay Cities National Bank Redondo Beach
--Coast National Bank San Luis Obispo
--Excel National Bank Beverly Hills
--First Standard Bank Los Angeles
--First Vietnamese American Bank Westminster
--Gateway Business Bank Cerritos
--Golden Coast Bank Long Beach
--Golden Security Bank Rosemead
--Golden State Bank Upland
--Hanmi Bank Los Angeles
--Independence Bank Newport Beach
--International City Bank, National Association Long Beach
--Merchants Bank of California, National Association Carson
--Mission Oaks National Bank Temecula
--National Bank of California Los Angeles
--Pan American Bank Los Angeles
--Plaza Bank Irvine
--Saehan Bank Los Angeles
--San Luis Trust Bank, FSB San Luis Obispo
--Uniti Bank Buena Park
--Ventura County Business Bank Oxnard
--Western Commercial Bank Woodland Hills