California International Bank sits atop an unenviable list.
Formerly Saigon National, the $52 million-asset institution is the only bank to withhold 30 dividend payments owed to the government through the Troubled Asset Relief Program. The bank, which serves a Vietnamese-American community near Los Angeles, has steadfastly refused to add Treasury Department representatives to its board, even though it was required to do so after skipping its sixth dividend payment.
Those issues pale in comparison to the hit the company's reputation sustained in December, when a former president and chief executive was indicted in a money laundering scheme. Bill Lu, who ran Saigon National for more than five years until his January 2015 departure, is accused of trying to arrange the bank's sale to Mexico's murderous Sinola drug cartel.
Despite such a troubled backstory, an unlikely white knight has emerged. Do Quang Hien, a prominent Vietnamese investor, took control of the bank last fall after injecting $4.5 million in capital, according to press and regulatory filings. The bank rebranded in October; it is also looking to move its headquarters from Westminster to Rosemead.
California International, which is operating under a 2010 written agreement tied to risky lending and weak management oversight that bars it from paying dividends without regulatory approval, has reported an annual profit once in its 10-year history. In addition, the bank still owes the Treasury nearly $2.4 million tied to Tarp, including unpaid dividends.
Efforts to reach Benjamin Lin, the bank's chief executive, were unsuccessful, though the bank has in the past noted that the Office of the Comptroller of the Currency, its primary regulator, will not allow it to pay Tarp dividends. An OCC spokesman declined to comment.
California International has likely benefited from the OCC's reluctance to come down too hard on community banks, said Kevin Jacques, a finance professor at Baldwin Wallace University who once served as a senior economist at the OCC and the Treasury. The OCC "understands the value of small banks, particularly in certain communities," he said.
"Tarp is difficult," Jacques added. "There have been other banks that have missed dividend payments and I've not heard of any situations where the ... Treasury has gone in and exercised direct control of an institution."
California International has received a request to let the Treasury observe board meetings, a move that is designed to help the agency "better understand an institution's challenges," a spokesman said in a statement. The bank, however, "has not granted observation rights to date."
The bank does have some positive momentum. Its core capital ratio at March 31 was 20.47%, more than double the industry average. The bank's ratio of nonperforming loans to total loans was 0.91% at March 31, down from 2.28% in mid-2015.
Moving to Rosemead would give the bank a beachhead in a neighborhood with a growing population of wealthy Vietnamese entrepreneurs. The bank plans to keep a branch in Westminster, which is in the heart of Orange County's Little Saigon, a district teeming with Vietnamese-owned small businesses.
It is unclear what other plans Do, who runs an investment firm in Vietnam, has for his investment in California International. His firm, T&T Group, is the biggest investor in one of Vietnam's largest banks, Saigon Hanoi Commercial Joint Stock Bank, where Do is chairman.
Do's lawyer, Gary Steven Findley, referred a request for comment to the bank.
As frustrating as the bank's stance with the Treasury may seem, Tarp repayment is not high on the OCC's agenda, Jacques said.
"Regulators are most concerned with safety and soundness, capital and the risk in the portfolio; that's what they're going to be interested in," Jacques added. "If you're thinking about what might cause the OCC to jump in and intervene, Tarp is probably pretty far down on the list."