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.