Asia may be in the midst of its worst financial crisis in decades, but L.A.-based Chinese-American banks are thriving.
The three largest local Chinese-American Banks East West Bank, Cathay Bancorp Inc. and GBC Bancorp each had strong earnings gains for the quarter ended Sept. 30, and each has posted double-digit growth since the start of the year.
"The Chinese-American banks cater to Los Angeles, not foreign nations," said Steve Didion, an analyst at Hoefer & Arnett. "Their stocks may have been battered by events in Asia, but their performance has not."
San Marino-based East West Bank, which has 23 branches, has shown the fastest growth reporting third-quarter net income of $4.7 million, compared with $3.1 million for the like period a year earlier. In the first three quarters of the year, the bank's net income increased 42 percent over the like period a year earlier.
"East West Bank's consistently strong results reflect our ongoing strategy to grow our niche high-margin business," said Dominic Ng, East West's chairman, president and CEO, in a statement when the results were released.
Ng was unable to comment on the bank's recent performance because East West is in the midst of a "quiet period" as it prepares to be listed on Nasdaq. Ng led a management buyout last summer, issuing stock to a pool of investors at that time that will soon be listed.
East West's key niches are commercial mortgage lending and trade financing, specifically imports.
GBC Bancorp, meanwhile, reported net income of $7.9 million, compared with $5.8 million in the like period a year ago. Cathay Bancorp, the holding company of Cathay Bank, posted net income of $6.3 million, up from $5.4 million a year earlier.
Despite the strong earnings, stock prices have reflected the volatility overseas.
GBC fell steadily from April, when it traded as high as $33, to September, when it was under $19. Last week it stood near $24. Cathay plunged from $48 in June to as low as $19 in September. Since then, it has rebounded to around $37.
One reason Chinese-American banks are doing so well is that they often steer clear of Asia.
East West Bank, for example, counts only one exporter among its loan recipients. And with the devaluation of many Asian currencies, the strong focus on local importers has paid off.
"Our customers benefit from Asia's disaster," said Li-Pei Wu, chairman and chief executive of GBC Bancorp. Importers account for about 90 percent of the bank's trade finance business, he said.
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