David Lee, the largest landlord in Los Angeles County, has become the biggest owner of a business bank that opened its doors last week.
Premier Business Bank, located on the seventh floor of the MCI Center downtown far from any walk-in foot traffic raised $20 million from 60 local investors. Lee owns an 18 percent stake and is a director but did not take the title of chairman.
Like other bank start-ups, Premier Business boasts a star-studded board and novel approach to attracting customers.
Lee tapped longtime California banker David Warner as president and chief executive. Warner, an intense, soft-spoken banker, spent a busy year in 2003 as president and chief executive of Pacific Union Bank, the oldest Korean-American bank in Los Angeles.
At the time, Lee was one of Pacific Union’s customers as well as the bank’s landlord. So when Pacific Union was sold in 2004 to Hanmi Financial Corp., now the largest Korean bank in L.A., Lee and Warner both saw an untapped market.
Many banks serve ethnic communities but have trouble retaining the second generation of customers.
“We see an opportunity to go into different communities in Los Angeles to serve the second generation of immigrants who speak English,” said Warner, 58, who is also a director of the bank.
Warner’s mandate is to lure business customers by tapping his 30 years of contacts as a banker in Hong Kong, China, Taiwan and South Korea. He has already sent several of the bank’s staff to train at the Export-Import Bank of the U.S., which assists in financing exported U.S. goods to international markets.
The bank’s board includes Donald Meyer, a former state Commissioner of Financial Institutions, Rayburn Dezember, a former director of the Federal Reserve Bank of San Francisco, and Sabrina Kay, chairman and chief executive of Fremont Private Investments, a local venture capital firm.
Real estate roots
Though Lee is a doctor trained in internal medicine, he spends his day-to-day work life managing a real estate portfolio worth $3 billion. His Jamison Properties Inc., which owns more than 70 office buildings in the city, makes tax-deferred investments for roughly 100 investors, nearly all of them Korean or Korean Americans.
Last year, Jamison Properties paid $160 million for the MCI Center, a 678,000-square-foot office building on Flower St. that includes the Macy’s Plaza retail center and a 3,000-space parking lot. The new bank is located in its office building.
Lee has no intention of tapping the small bank to fund any of his real estate portfolio.
“This is just a smart investment,” said Warner, adding with a laugh that Lee is “everybody’s landlord,” referring to the large number of commercial properties he owns on Wilshire Boulevard, between downtown Los Angeles and the Miracle Mile. “This bank is a form of diversification in an industry that doesn’t get drawn into cycles.”
Warner thinks many banks are holding anywhere from 50 percent to 90 percent of their loan portfolios in real estate ratios that banking regulators are watching closely because some believe the real estate cycle is turning south.
Because of the current market, Premier Business expects to focus not on real estate but on foreign trade finance and commercial and industrial loans.
Chris Chan, the bank’s chief financial officer, said he jumped at the opportunity to get in on the ground floor of a new bank with a roster of bankers with international experience. Chan trained under Li Yu, chairman and chief executive of Preferred Bank of Los Angeles, which came public last year at $22 a share and now trades at $57.
“I’ve seen how little banks starting out can grow dramatically,” he said.
In the past year, about 20 banks have opened in Los Angeles County, most of them targeting small and middle-market business customers and ethnic markets. Several of the start-ups, including California Business Bank and First Standard Bank, are within walking distance of Premier Business and are targeting local Korean, Chinese and Vietnamese business customers as well.
California is considered an “underbanked” state with just one bank serving every 135,000 people compared to the national average of one per 38,000.
“Every year there are more banks sold than there are banks started,” said Ed Carpenter, founder of Irvine-based investment bank firm Carpenter & Co., the largest underwriter of banks in California.
The rise in bank start-ups follows a decade-long drought. Last year was the first in which the number of new banks exceeded the number that were sold.
