A group of West Coast banks have banded together to save Pan American Bank in Los Angeles.

The $41 million-asset bank recapitalized after raising $6.3 million from 16 banks. Pan American was significantly undercapitalized at March 31, according to regulatory data.

The bank was facing potential failure after a capital raise fell through in May, said Timothy Chrisman, principal of executive the search firm Chrisman & Co. in Los Angeles. Chrisman worked with John Eggemeyer, managing principal at Castle Creek Capital, a bank-focused hedge fund in Rancho Santa Fe, Calif., to connect Pan American with other banks.

"The last iteration fell apart at the 11th hour," Chrisman said. "So a couple of us got together and began talking to various people to see if there was anything we could do."

Pacific Premier Bancorp, a $1.8 billion-asset company in Irvine, Calif., was among the banks interested in the raise that failed. Steve Gardner, Pacific's chief executive, said he was pleased when Chrisman and Eggemeyer revived the effort. Pacific agreed to invest at an undisclosed level.

"We'd seen the book during the initial round and thought given the history of the organization and the community it serves, it made a lot of sense," Gardner said. "So when we heard from Tim and John we said we were absolutely interested in investing — their role reinforced our initial impression."

Chrisman said Pan American's target was $5 million to $7 million. None of the banks will have more than a 4.9% stake in Pan American, and the Hispanic-focused bank should maintain its minority-owned status since the Bañuelos Family Trust, its previous shareholder, will still own at least 51% of its stock. Romana Bañuelos founded the bank in 1964 following success with her Ramona's Mexican Food business.

PacWest Bancorp was the lead investor. Matt Wagner, its chief executive, approached Eggemeyer, PacWest's chairman, with the idea of saving the bank.

"I got a call … about the bank's need for capital and thought we really ought to do this," Eggemeyer said. "It is the right thing to do to get this Latino bank back on track."

Pan American, based in the heavily Latino area of East Los Angeles, said in a press release that the capital boosted its leverage ratio to 15.2%.

The funds also come with new leadership. The bank named Robb Evans interim chairman and chief executive. He has been CEO of six different banks and his firm, Robb Evans & Associates, specializes in strategic matters like management, sales and liquidations.

Pan American was previously led by Jesse Torres, who left earlier this year. Cesar Rosas, vice president of finance, had overseen "the office of the president" since April. Rosas said his role going forward will be chief operating officer.

"We were a few days away from being shut down," Rosas said. "We are excited about being able to go out and start lending again."

The bank hasn't been profitable on a core operating basis since 2006, Rosas said. Losses were initially minor and reflected a bank without the proper "human capital" to make money. Problems, amplified by the economic downturn, have continued to weigh on the bank. The Bañuelos Trust injected $4 million in 2012.

Chrisman said a management change was needed to improve governance and establish a plan to make the bank sustainable.

Pan American joins several other community development banks saved by others in the industry. The largest U.S. banks tried to save ShoreBank in Chicago in 2010 and later used the $140 million raised to capitalize a new bank formed to buy ShoreBank when it was seized by regulators. Carver Bancorp in New York received $55 million from a handful of large financial services companies in 2011. In January, a few banks invested alongside private equity to recapitalization Broadway Financial in Los Angeles.

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