Korean-American banks in Southern California are facing a growing crisis as non-performing loans (NPLs) exceed $200 million, signaling a red flag for loan management in the community banking sector.

Key Findings
Total NPLs for six major Korean-American banks reach $208.31 million in Q2 2023
Average NPL ratio hits 0.78%, with some banks exceeding the 1% threshold monitored by federal and state financial regulators
CBB Bank reports the highest NPL ratio at 1.48%, followed by US Metro Bank at 1.22%
Breaking Down the Numbers
According to quarterly Call Reports submitted to the Federal Deposit Insurance Corporation (FDIC), six Korean-American banks headquartered in Southern California—Bank of Hope, Hanmi Bank, PCB Bank, Open Bank, CBB Bank, and US Metro Bank—are experiencing a concerning uptick in troubled assets.

The $208.31 million in non-performing loans is categorized as follows:

Non-accrual loans: $152.09 million
Loans 30-89 days past due: $55.95 million
Loans 90+ days past due: $270,000
Additionally, these banks have written off $5.55 million in loans deemed uncollectible through Q2 2023.

Individual Bank Performance
NPL ratios for each bank:

CBB Bank: 1.48%
US Metro Bank: 1.22%
Open Bank: 0.86%
Bank of Hope: 0.84%
Hanmi Bank: 0.53%
PCB Bank: 0.40%
Bank of Hope and Hanmi Bank, the largest institutions in the group, reported the highest absolute NPL figures at $114.28 million and $33.09 million, respectively.