Two Korean-American banking companies in Los Angeles reported third-quarter earnings declines as a result of decisions to stop selling Small Business Administration loans on the secondary market.
The $2 billion-asset Center Financial Corp. said net income fell 10% from a year earlier, to $5.7 million, because of lower gains on sales of SBA loans. Noninterest income fell 31%, to $3.4 million.
Center said that even though its decision not to sell its loans also would dampen its fourth-quarter and full-year earnings, over the long run keeping the loans on its books would increase profits.
The $2.1 billion-asset Wilshire Bancorp Inc. said that net income fell 25%, to $6.6 million. Its gain on the sale of SBA loans fell 54%, to $1.6 million. It also attributed the earnings drop to a 46% increase in its loan-loss provision, to $4.1 million. Net chargeoffs more than tripled, to $2.4 million. Nonperforming assets rose 22%, to $8.9 million, or 0.43% of total assets.
