Finance Factors complies with FDIC
Finance Factors announced yesterday that it is taking steps to improve its capital and liquidity positions under a consent order with the Federal Deposit Insurance Corp.
Steven Teruya, Finance Factors president, said the local financial institution had entered into a consent order with the FDIC based on findings in a joint examination conducted last September. Details of the consent order were not available, but Teruya said Finance Factors already has exceeded the key capital ratios required in the order.
"We implemented several initiatives over a year ago to improve the company's capital and liquidity positions," Teruya said in a statement. "We continue to work with the regulators and are confident in our ability to achieve total compliance with the order."
Teruya blamed the company's poor performance on the economic downturn and decline in the real estate market that he said negatively impacted borrowers and resulted in loan defaults. He assured customers that the consent order will have "little if any" impact on them and that their deposits remain insured by limits set by the FDIC.
This is the second time that the FDIC has come down on Finance Factors because of poor financial performance and lax lending practices.
In 2000, the FDIC issued a cease-and-desist order against the financial institution and directed the company to retain qualified management, add at least two directors to its board, increase capital, and reduce poor-quality loans to at least $40 million within 90 days.
The FDIC lifted the order in 2001 after the company's financial performance improved.
Finance Factors was founded in 1952 by a group of prominent Chinese-Americans that included the late U.S. Sen. Hiram Fong. Over the years, the company has been embroiled in financial, as well as civil disorder, as a slew of lawsuits was filed three years ago that pitted members of the founding families against each other.