Garden Grove-based US Metro Bank, once under regulatory consent orders, has raised $21 million in capital to help finance expansion of branches and lending.
“It’s absolutely a sign of confidence by investors,” Chief Financial Officer Ralph Wiita said. “We had about $35 million in subscriptions and had to pare that back.”
Early Problems
The bank, which began in 2006 by catering to Korean-Americans, ran into problems during the 2008 financial crisis and borrowed $2.8 million from the Treasury Department’s Troubled Asset Relief Program.
In 2013, the Federal Deposit Insurance Corp. and the California Department of Financial Institutions issued consent orders to force the bank to reduce shaky loans and fix management weaknesses.
Later that year, the bank named Dong Il Kim chief executive and a director. Kim was previously the bank’s founding CEO and an original member of the board. He spent the prior three years at Saehan Bank, where he helped it emerge from a regulatory order, selling it in 2013 for $105 million to Wilshire Bancorp.
Turn for Better
After Kim’s return, US Metro Bank was able to get the consent orders lifted in 2015 and paid back the TARP loan last year.
The bank reported $25.1 million in bank equity capital and $194.6 million in assets as of Dec. 31, according to the FDIC. It had net income last year of $2.6 million for a 1.56% return on assets. Its total 2016 deposits rose 27% to $168.9 million over 2015.
The bank is listed on the over-the-counter pink marketplace at a price of $2.50 and at average daily volume under 500 shares. Its market cap is $40 million, said Wiita, who joined US Metro in January and was previously at Pacific Valley Bank in Salinas.
Future Plans
If the company can increase its assets to $500 million, it might consider moving onto an exchange, Wiita said.
The bank specializes in small-business loans, generating an estimated $45 million last year, and has a goal of $70 million this year, Kim said. It also specializes in loans to franchisees, he said.
The bank opened a branch in Anaheim in September and plans to open a branch on Wilshire Boulevard in Los Angeles’ Koreatown this coming month. It may also open a fourth branch in Fullerton this year, Kim said.
The bank will have about 50 employees after the Wilshire branch is open, he said.
“We have a lot of plans to expand, so that is why we need new capital,” Kim said. “This is a good opportunity for US Metro Bank to grow quickly.”
FIG Partners LLC acted as the lead placement agent in the transaction, and PGP Capital Advisors LLC acted as the co-placement agent.
