Even casual observers of the banking industry are familiar with major Asian-American institutions such as Cathay Bank, East West Bank and GBC Bancorp.

But far off the radar screen of most analysts and investors, dozens of smaller financial institutions in Los Angeles are competing for a larger share of the burgeoning Chinese-American market.

A common thread of these institutions is a familiarity with and sensitivity to Chinese cultures that most of the larger banks Asian or otherwise are unwilling or unable to match. Nevertheless, Los Angeles' smaller Chinese-American banks are anything but uniform, with different institutions employing a variety of strategies to find a profitable niche in the highly competitive Southern California banking environment.

"This is one of the fastest growing segments within California, and that's expected to continue for the next 10 years," said Derek Derman, a research analyst with Wedbush Morgan Securities. "It's a favorable demographic for the banking industry because, percentage-wise, (Chinese) are more educated than other immigrant groups and more likely to start their own business."

But marketing banking services primarily to Chinese Americans is not a winning strategy, according to several industry executives, who say broadening their customer base to encompass a more diverse cross-section of American society is their best bet for long-term profitability.

"We welcome business from all types of industries and clients; we are quite diversified," said Joseph Jao, vice president and general manager of Los Angeles-based United World Chinese Commercial Bank. Opened in 1993, United World is affiliated with Taiwan Bank and concentrates on providing commercial loans to manufacturers, construction firms and other businesses.

Jao estimated that about 30 to 40 percent of the bank's customers are Asian-run businesses.

"The competition is always there, and we chase a similar market (as non-Asian banks). You have to be ready to compete," Jao said.

Of the 36 local banks that are members of the National Association of Chinese-American Banks, only a handful has assets in excess of $1 billion. Most of the rest have assets between $100 million and $500 million and fall in two general categories, said Li Yu, president and CEO of Los Angeles-based Preferred Bank.

"You have agency banks, which are offshoots of larger banks from Asia, and then you have locally chartered banks, which cater to people who live in the neighborhood and the local business community," Yu said.

The dozen or so Chinese agency banks in Los Angeles are affiliated with large financial institutions in Asia. More often than not, the parent banks are in Taiwan or Hong Kong.


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