CHINESE BANKS United Commercial Bank
199 S. Los Robles Ave., Suite 780, Pasadena
Founded: 1974
Assets: $2.4 billion

United Commercial Bank hasn't opened a new retail branch office in Southern California since 1996, but make no mistake about it, the San Francisco-based bank has its sights set on Los Angeles.

In addition to its nine branches in the area, UCB has opened a regional office in Pasadena and is planning for half of its new business to originate from Southern California in two years.

"The market in Southern California is growing. We have to be in both markets," said Thomas S. Wu, president and CEO of UCBH Holdings Inc., the bank's parent company. "L.A. is a major entry port. We have a lot of opportunity in terms of imports and exports."

In 1998, in a story similar to that of San Marino-based East West Bank, the company's management bought out its Asian ownership, converted to a commercial bank and went public.

With its focus on construction lending, commercial real estate, SBA lending and other business services, including international trade finance, the company is avoiding the risky venture investments that some banks have dabbled in.

But that doesn't mean it hasn't experienced big growth.

With 27 branch offices statewide, UCB posted net income of $6.2 million in the third quarter, a 22.4 percent increase over the $5.1 million reported for the same period last year.

Net income for 1999 was $19.1 million, almost double the 10.9 million of a year earlier. As of Sept. 30, the bank's non-performing loan ratio had dwindled to 0.13 percent, down from 0.28 a year earlier.

Those kinds of numbers have caused analysts to rate the company's stock as a "buy," and investors have been doing that. As of last week, the stock was trading slightly above $38 a share, much closer to its 52-week high of $40.50 than to its 52-week low of $18 a share.

"There's a lot of very positive fundamentals that these banks are all enjoying now," said Derek Derman, an analyst with Wedbush Morgan Securities in Los Angeles, who tracks both UCB and East West. "They cater to an (Asian) demographic that is the fast growing segment of the population in California. The household income of Chinese Americans is higher than ever. Education is higher than average. Their propensity to owning a business is very high."

Unlike East West, however, UCB is not branching out into mainstream banking, but wants to continue focusing on a Chinese-American population.

"We have a very good understanding of ethnic Chinese culture," Wu said. "The demographics will definitely support a growth market. We want to be the leading institution in our ethnic group, rather than one player in the mainstream."

Laurence Darmiento

East West Bank
415 Huntington Drive, San Marino
Founded: 1973
Assets: $2.3 billion

There are not many times when hardship is truly a blessing in disguise, but for East West Bank, the Asian financial crisis of the late 1990s could be considered nothing less.

Since its organization in Chinatown as the first federally chartered thrift catering to Chinese immigrants, East West has grown to become the region's largest locally owned Asian bank.

One doesn't have to look too far back to begin tracing that growth.

After years of moderate expansion serving the region's Chinese-American residents, the company restructured itself in 1995 as a full-service commercial bank that also sought mainstream customers.

Then, two years ago, the Nursalim family of Jakarta, Indonesia, which bought the company in 1991, decided to sell out in the midst of the Asian crisis.

High-profile Chief Executive Dominic Ng raised $238 million for a management buyout, took the company public and since May 1999 has been on a buying spree, purchasing two banks and an insurance company since then. The acquisition of a fourth bank is scheduled to be completed in January.

The company's mission is to become the dominant acquirer of Chinese-American banks in the West all the while maintaining conservative banking practices and continuing to serve mainstream business customers, Ng said.

"Nobody can come close to our earnings growth in the last five years, but we don't do it with risk," said Ng, who holds the titles of chairman, president and CEO. "It's everyday bread and butter, sweat money, one customer at a time."

The bank's consumer banking operations still primarily serve Chinese-Americans, but more than 50 percent of its commercial operations serve mainstream companies seeking assistance in doing Asian business. The bank also solicits business from Asian companies wanting to expand into the United States.

"We are the bridge between the East and the West," Ng said.

That formula seems to be working, with the company's stock hitting a new 52-week high of $23.13 a share last week. For the third quarter ended Sept. 30, the company reported net income of $8.8 million, up 25 percent from a year earlier.

"They have made the successful transition from a thrift to a commercial bank," said Derek Derman, an analyst with Wedbush Morgan Securities in Los Angeles.

East West also reported that its percent of non-performing loans to total assets dropped to 0.34 percent from 0.42 percent.

East West, which moved its headquarters to San Marino in 1984, is now the fourth largest commercial bank headquartered in Southern California, boasting 29 branches in Los Angeles, Orange, San Francisco and Santa Clara counties.

Cathay Bank
777 N. Broadway, Los Angeles
Founded: 1962
Assets: $2.2 billion

If Chinese-American financial service firms like East West Bank are the hare in the race for growth, then Cathay Bank is the tortoise and would not be insulted by the comparison.

Cathay has a stock that rarely changes hands. It hasn't radically restructured its business focus. And though it has made a few acquisitions in recent years, its certainly hasn't embarked on any buying frenzy.

Instead, the first Chinese-American community bank in California has spent the last 38 years quietly and slowly growing to become the fourth-largest bank in Los Angeles County.

Now, it has its sights set on the rest of the country, focusing on serving small and mid-size businesses, though not at the expense of its traditional customer base.

"We like to be a Chinese-American bank that will be doing business in most of the metropolitan areas of this country," said Anthony Tang, senior executive vice president and chief lending officer. "(But) we are very much a conventional, basic hands-on bank, very conservative."

The bank, which now has 20 full-service branches, began in Chinatown and has grown along with the Chinese American community that it serves.

It was organized to help Chinatown residents and business people get loans and mortgages, and opened its first branch office in 1979 in Monterey Park, serving the growing Chinese population that was moving out to the San Gabriel Valley.

As the Asian economy expanded in the late 1980s, it offered services for import/export and other international businesses, opening up an office in Hong Kong and a subsidiary in Taiwan to assist overseas customers' investment in California.

Then, after acquiring a couple of Southern California banks in the latter half of the 1990s, the company made a move to the East Coast last year, acquiring Golden City Commercial Bank, a two-branch operation in New York City. It also opened a loan production office in Houston.

Along the way it has never shifted its focus from its Chinese-American customer base, and with good results.

Net income for the third quarter ended Sept. 30 rose to $11.4 million, up 44 percent from 1999. Assets also grew from $1.9 billion to $2.2 billion in the past year, as did the bank's return on assets, which rose from 1.57 percent to 1.84 percent. Its percent of non-performing loans to total assets dropped from 0.87 percent to 0.59 percent.

Meanwhile, its stock price has risen from about $40 a share a year ago to $55 as of last week.

Laurence Darmiento

General Bank
800 W. Sixth St., Los Angeles
Founded: 1980
Assets: $2.1 billion

It's been quite a journey for General Bank, the third-largest Chinese-American financial institution based in Los Angeles.

Formed 20 years ago to serve an expected surge of Taiwanese immigrants after a liberalization of U.S. law, the bank has dived head-first into high-tech venture financing while continuing to provide its core clientele of small and medium-sized businesses with traditional services.

The result was record earnings last year, and an unprecedented growth in assets to over $2 billion as of Sept. 30. The bank's stock as of last week was trading above $36 a share, close to its 52-week high of about $40. But that's still not enough respect from Wall Street, as far as the bank's officials are concerned.

"We are not treated fairly," complains Li-Pei Wu, chairman and chief executive of parent GBC Bancorp, who just last month made a pilgrimage to Wall Street to talk up his company. "(Securities analysts) really don't know us that well. We have to do a better job of investor relations."

So it goes for a regional bank that has managed to navigate the rough waters of Silicon Valley, providing, through a subsidiary, direct investments in start-up companies and in various venture capital funds.

The bank opened the first of what are now four offices in Silicon Valley six years ago and just a few months ago opened a Southern California technology division, hoping to generate similar big profits here.

But while Wu has had a sure hand at the helm of the growing financial institution, at least one analyst said the company's direction is not a selling point to some investors, despite its profits.

"The venture capitalist business is something that causes investors to shy away," said Campbell Chaney, an analyst with Sutro & Co.

The bank is not deterred, as net income grew to $10.1 million in the third quarter ended Sept. 30, up from $7.5 million in the year-earlier quarter. Net income for 1999 was $30 million vs. $28.1 million the year before.

General Bank recently applied to become a financial holding company under U.S. bank liberalization laws passed last year by Congress. That will allow it to enter into the merchant banking field, alongside such heavyweights as Wells Fargo & Co.

General Bank otherwise focuses on international banking and trade financing, construction lending, and it offers a variety of retail deposit accounts.

The bank has a total of 18 branches in California and Washington state, a loan production office in New York City, and an investment and consulting office in Taipei.

Chinatrust Bank
22939 Hawthorne Blvd., Torrance
Founded: 1989
Assets: $1.5 billion

Among the big Chinese-American banks headquartered in Los Angeles, Chinatrust Bank stands out among its peers, which often find themselves looking over their shoulders at their stock prices.

Though it reported record profits in 1999, and is posting big numbers again this year, the bank isn't out to impress Wall Street. Rather, it's more interested in pleasing its owner, Chinatrust Commercial Bank of Taiwan, one of the largest conglomerates in Taiwan.

The bank, which was established in New York City, moved to Southern California in 1995 after acquiring Trans National Bank. It also adopted its current name at that time, while keeping its four New York branches.

Since then, it has expanded operations locally and in the Northeast, serving both retail and commercial customers in communities with significant Chinese populations.

"We consider ourselves a niche market player," said president and CEO Henry Peng.

The bank offers services such as lines of credit, construction loans, commercial mortgages, as well as various deposit services for retail customers.

The bank's net income rose to $16.6 million in 1999, up sharply from $10.5 million in 1998. And in the first nine months of 2000, the bank posted net income of $16 million, almost matching its full-year 1999 amount. While, its percent of non-performing loans to total assets rose slightly to 0.85 percent as of Sept. 30, from 0.24 percent in the year-earlier period, the current level remains quite low by industry standards.

The bank is seeking to maintain its profitability over the next three years while continuing to grow through increased commercial and trade finance lending. Meanwhile, it plans to reduce its exposure to commercial real estate and construction loans.

It is not seeking, however, to jump on the high-tech bandwagon, only offering lines of credit to well-established tech companies. It has concluded that without expertise in that area, high-tech financing is a game better played by others.

"It's high-risk and expensive, and it's difficult to hire qualified officers," Peng said.

Instead, the company's growth plans are focused on expanding its operations throughout the country, where it can serve medium-sized Taiwanese companies.

It opened a loan production office in Seattle in 1999, as well as a full-service branch in Rockville, Md., giving it a total of 17 full-service branches, including 10 in the Los Angeles area. Possible new locations include Atlanta and Florida.

Laurence Darmiento

3660 Wilshire Blvd., Los Angeles
Founded: 1982
Assets: $987 million

Hanmi Bank was founded by a dozen Korean-American businessmen who felt that their community and other immigrant communities were being ignored by major banking institutions.

The bank opened its doors at 3737 W. Olympic Blvd. in 1982 with $6 million in assets and a small staff. Since then, it has grown to become the largest Korean-American community bank in Los Angeles, with nine branches in Los Angeles and Orange counties and 280 employees. This month, it plans to open its 10th branch in Gardena.

"One stark change we have seen over the years is that we are no longer a small bank. We are now a medium-size bank," said Jack Choi, senior vice president and chief lending officer at Hanmi Bank.

Hanmi's net income for 1999 was $12 million, up from $9.2 million in 1998. Return on assets was 1.87 percent, while the percent of non-performing loans to total assets is 0.3 percent.

For the past 10 years, Hanmi Bank's stock has traded over-the-counter, but the bank currently is applying to be listed on the Nasdaq.

While Hanmi Bank has grown over the years, its officials insist it is still dedicated to serving the small-business community. Year after year, it has been one of the top L.A.-area issuers of loans backed by the U.S. Small Business Administration, ranking No. 3 on this year's Business Journal's list of top SBA lenders, behind Bank of America and U.S. Bank.

One of the biggest challenges Hanmi Bank has had to face so far was the Los Angeles riots, when Koreatown and many of its businesses were damaged or destroyed by fire and looting. At the time, about 20 percent of the bank's total assets were devoted to small-business loans. To protect the assets, the bank made an aggressive effort to extend more loans to these small businesses, so they could stay afloat.

While 70 percent of the bank's clientele are Korean-Americans, Hanmi Bank has made an aggressive effort to reach out to other ethnic communities, including Latinos, Iranians and African Americans.

Deborah Belgum

Pacific Union Bank
3530 Wilshire Blvd., Los Angeles
Founded: 1974
Assets: $682 million

I t's been an eventful year for Pacific Union Bank.

In July, the company changed its name and went public to finance an out-of-state expansion, 26 years after opening its doors in downtown L.A. as California Korea Bank.

Back in 1974, it had $3 million in assets and 20 employees. Since then it has grown to 255 employees and $682 million in assets.

In its expansion, Pacific Union, whose stock trades on the Nasdaq, is first moving into the New York City suburbs of Queens, where a large Korean-American community lives.

Started by the Korea Exchange Bank, a major banking institution in South Korea, to service small and medium-sized Korean-American businesses in Southern California, Pacific Union still lists about 90 percent of its clientele as Korean-American.

Until the bank went public, Korea Exchange Bank owned 100 percent of the bank's assets. Now the Korea-based bank owns a 62.5 percent interest.

Pacific Union's stock last week was trading at about $8.50 a share, off its 52-week high of $9.75.

The bank's principal focus has been on commercial real estate loans, which make up 80 percent of its total loan portfolio. Many of the institution's customers own mini-malls and strip malls, said Dianne Kim, the bank's chief financial officer. About 11 percent of the portfolio is comprised of home mortgages.

As for Pacific Union's base of deposits, it is heavy with individual checking accounts.

"Our biggest strength is our non-interest-bearing deposits, which make up 30 percent of our deposits," Kim said, noting that total deposits totaled $595 million as of Sept. 30.

The bank has 11 branches in California, with its newest branch opening last month in Torrance, where a large Korean-American community resides. Other branches are in Koreatown, Van Nuys, Cerritos, Garden Grove and the Korean section of San Francisco.

For 1999, the bank's net income was $8.4 million, up sharply from $5.2 million in 1998. Its non-performing asset ratio was a mere 0.10 percent of total assets as of Sept. 30.

Nara Bank
3701 Wilshire Blvd., Suite 220, Los Angeles
Founded: 1988
Assets: $528.7 million

When United Citizens National Bank nearly ran out of capital in the mid-1990s, a new management team changed the name of the institution to Nara Bank and rebuilt it into Los Angeles' most successful Korean financial institution.

Nara, which means "country" in Korean, reported net income of $3.97 million for 1999 and had assets of $528.7 million as of Nov. 20.

Through the third quarter ended Sept. 30, the bank showed a return on assets of 2.4 percent, with less than 1 percent of loans classified as non-performing.

Bank officials said they are proceeding with an aggressive lending strategy with an eye on expansion.

"Whenever there's opportunity to expand market share where we don't have a presence, we are interested," said Min Kim, executive vice president and chief credit officer.

Nara Bank has branched out by opening full-service banks in Korean-American communities in the Bay Area and New York City. And, based on its success in the Korean communities it serves, Kim said, Nara Bank is reaching out to other minority groups. She said the bank has established branches in the largely Latino Jackson Heights area of New York City, and in Oakland to serve Latino and black customers.

Nara Bank caters to small- and medium-sized businesses, with about 50 percent of loans going to retail ventures. The bank has succeeded, in part, because it is more willing than larger, American counterparts, to grant loans to businesses that might not meet the highest loan standards.

Jimmy Bang, Nara Bank's senior vice president and manager of the unit that handles loans backed by the U.S. Small Business Administration, said being small has inherent advantages.

"Our philosophy is personal service," said Bang. "It's face-to-face. There isn't much bureaucracy once the decision is made to grant a loan."

On the deposit side of Nara Bank, Kim said, 30 percent of business involves consumer banking, 40 percent comes from retail outfits and the remaining business comes from other commercial interests.

Kim said Nara Bank plans to keep growing, both through expanding its current business and acquiring other banks. In February, Nara spent $8.7 million to buy all the shares of Korea First Bank of New York, which was wholly owned by the Korea Deposit Insurance Corp.

As for Nara's predecessor, the United Citizens National Bank, Kim said its troubles in the early '90s were due to poor management and internal conflict. She said the new management team, led by Benjamin Hong, scraped up $6.5 million from 800 members of the Korean community that summer. What was a one-branch operation when Hong took over now has 12 branches and loan production offices in Chicago and Seattle.

Kim expects Hong to position Nara Bank as an aggressive acquirer as the consolidation of ethnically controlled banks takes hold.

"We still expect to grow in terms of capital," she said. "We are traded on the Nasdaq, so have the capacity to increase our capital in the market."

Christopher Keough

Wilshire State Bank
3200 Wilshire Blvd., Los Angeles
Founded: 1980
Assets: $403 million

Wilshire State Bank has taken a multi-ethnic approach to growth over the years.

The financial institution was founded in Koreatown in 1980 with the help of several Jewish businessmen who provided about 60 percent of the bank's initial $3.5 million in capital. The rest came from the Korean community and at the time Wilshire State was the only community bank in Koreatown that was backed by local residents.

Many of the original founders, including Mel Elliott and Forrest Stichman, still sit on the board of directors.

Since its founding, the bank has grown to seven branches in Los Angeles County. One of the first branches outside Koreatown was in Reseda, devoted to serving the multi-ethnic community in that San Fernando Valley town. The bank also opened a branch last year in Huntington Park to reach out primarily to the Latino community.

"We see a growing community in the Hispanic area and we recognize the importance of the Hispanic community," said Joanne Kim, the bank's chief lending officer, who was one of the bank's original employees. "We are one of the most active community banks targeting the non-Korean community."

With that in mind, the bank, which has been an aggressive issuer of loans backed by the U.S. Small Business Administration, is opening another branch in Hacienda Heights in February to serve the Chinese-American and Korean-American communities there.

The bank is on an aggressive growth campaign. Its assets have nearly doubled from $204 million in 1999 to $403 million currently. Its annual return on equity is 21.5 percent, return on assets is 1.51 percent, and its non-performing loans represent only 1.21 percent of total assets.

The growth campaign is being engineered by the bank's new president, Soo Bong Min, who came to Wilshire State Bank last year after serving as Hanmi Bank's president for five years.

"We would like to maintain our customer base in the Korean community, but we would like to expand the bank into the non-Korean community too," Kim said. "The competition in the Korean community is very tough and getting tougher."

Deborah Belgum

Saehan Bank
3731 Wilshire Blvd., Suite 940, Los Angeles
Founded: 1991
Assets: $171 million

When you're one of the newest and smallest of six Korean-owned banks in Los Angeles, you have to take steps to stay alive in an age of mergers and acquisitions.

Through the establishment of mini-branches and attractive employee incentives, Saehan Bank is doing just that.

Albert Sang, Saehan's executive vice president and chief operating officer, said that staffing the bank's facilities poses a unique challenge. "It's hard to solicit the office-level employees who need to be bilingual," Sang said.

Educated, bilingual Korean Americans tend to end up in high-tech jobs or working in the securities industry, Sang said. So to attract employees away from those ostensibly lucrative pursuits, Saehan Bank offers stock options and profit sharing. Because those incentives have been in place just a year, Sang said it's too early to tell whether they will prove effective.

Saehan Bank reported net income of $1.4 million in 1999, up from $900,000 in 1998. For the first three quarters of 2000, its net income was $2.1 million. In another indication of strength, Saehan reported that as of Sept. 30 it had no non-performing loans.

Sang said the bank's small asset base requires it to expand a little bit at a time. The mini-branches two of which opened in September and another two slated to open soon offer customers only domestic transactions. At the bank's three full-service locations, Saehan provides retail and business banking, business and construction loans, SBA loans and international trade transactions.

While physical expansion might have to take place on a small scale, Sang said there's no small-mindedness when it comes to creativity within the bank's brain trust. As evidence, he pointed out that Saehan was one of the first Korean-owned banks in Los Angeles to computerize customer service and offer Internet banking.

"We're pretty much the same as other Korean banks, but we have good marketing officers," Sang said.

Another route that Saehan is taking to expand its business is through its affiliation with lending institution Prime Business Credit Inc. The company lends money to Korean business owners who might not otherwise be able to qualify for financing.

Sang said Prime Business works with "less creditworthy" clients who don't have a ton of capital but have a history of paying their bills on time. Prime Business finances such things as purchase orders and allows the business to pay the money back as a loan. The service sets Saehan apart from its larger American competitors.

"In that area, (American banks) don't have the expertise," Sang said. "We know how to assess the risk better than American banks."

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