The Treasury Department’s plan to invest in banks includes taking a stake in a small Little Saigon bank but so far excludes the largest troubled lender based here, Newport Beach-based Downey Financial Corp.
Westminster-based Saigon National Bank said late last month that Treasury plans to buy shares in the bank worth $1.2 million.
Saigon National plans to use the proceeds to make more loans, according to the bank.
Started in 2005, Saigon National lends to businesses in the Vietnamese-American en-clave of Little Saigon, which covers parts of Westminster, Garden Grove, Santa Ana and Huntington Beach.
The bank is far from struggling. As of June 30, Saigon National had a 23% core capital ratio,a measure of financial health for banks.
Regulators require a core capital ratio of at least 5%.
Downey, which operates a savings and loan, could end up not getting a federal investment, Karen Dorway, president of Coral Gables, Fla.-based bank research firm BauerFinancial Inc., was quoted as saying in a recent Bloomberg story.
“Those struggling the most probably aren’t going to participate,” she said.
Downey is under a regulatory enforcement order to shore up its operations.
The government may be waiting to see how Downey progresses on its own. It was slated to submit a long-term plan to the Office of Thrift Supervision last month.
Government investment “amounts to a sort of ‘seal of approval’ from the Treasury,” CreditSights Inc. analysts led by David Hendler wrote, according to Bloomberg.
Downey’s core capital ratio was 7.48% at the end of the third quarter, down from 7.5% at the end of June.
Meanwhile, real estate sources say a sale of Downey’s Newport Beach headquarters is off.
The buildings overlooking Newport Beach’s Back Bay were put up for sale in September as part of Downey’s plan to raise cash.
Several bids for the 320,000-square-foot property were said to have been made, although the prices being offered were said to be below the $115 million price Downey had been seeking.
A Downey spokeswoman said the building being pulled from the market was a matter of “timing” amid the credit crunch. She didn’t offer more details.
,Michael Lyster, Mark Mueller
