With one of the most diverse economies and populations in the world, L.A. has its share of unusual banks.
But one that caters to doctors? Or another that makes it loans according to Islamic codes? How about a bank that specializes in flawed real estate deals?
"The greatest majority of banks open with plans to serve small- and medium-sized business," said Ed Carpenter, president of Carpenter & Co., an Irvine-based investment bank. "Within that grouping, there are some interesting stories."
As the industry has consolidated in recent years, smaller banks have sprung up to take advantage of areas that have become overlooked, according to Carpenter, who says his firm has worked with most all the banks based in California.
Many specialty banks morph to reflect their customer base. Some might offer services in clients' first languages or stay open over the weekend or even make house calls if they're catering to doctors.
Here are several of L.A.'s more unusual banks:
- Bank of Whittier
Yahia A. Rahman bought the Bank of Whittier in 1982 and built what has become a United Nations of loan officers.
His staff speaks Filipino, Armenian, Russian, Chinese, Indonesian, Chinese (Mandarin and Cantonese), Arabic, Urdu and Spanish, among others. "We have designed the bank to try to meet as many underserved communities as possible," said Rahman. "People who work with us understand the mentality."
Five years after buying the bank, Rahman used a similar group of investors to found Pasadena-based American Finance House, which offers banking plans that comply with "Sharia," an Islamic code that forbids interest.
If a client comes to American Finance Bank seeking money to buy a home, the institution will perform a market study to determine how much rent the home could fetch. If the margins are acceptable, American Finance buys the property and the client makes a monthly payment equivalent to the rental amount until the sum is paid off. "Our model is that we do not rent money," Rahman said. "We act as your honest-to-goodness partner."
- Beach Business Bank
When Robert Franco gathered investors for Beach Business Bank, some doctors in the group complained that mainstream banks were too inflexible for those in the medical profession.
So Franco's new bank included a division that specializes in lending to doctors, dentists and other medical professionals. Today, the unit represents more than 25 percent of the bank's total business. "Doctors have serious time constraints and they desire a bank that makes a deal and sticks to it," said Franco, who graduated from dental school and practiced for a while before switching to banking.
Like the doctors he serves, Franco finds himself on call at all hours of the day. His office voice mail is sent to a pager so that he can return messages on weekends and after business hours.
He often brings loan documents to doctors' homes or practices.
"Other bankers want this business," he said. "But I don't think they understand that while this group may have money, these are people who work for a living. I'd say we get that."
- Merchants Bank of California
After founding a successful chain of check-cashing stores, Daniel Roberts realized that larger banks weren't able to provide all the services his industry requires. So in 1994, Roberts bought Merchants Bank of California and has built it into one of the only banks in the region that serves the check-cashing industry in Southern California.
Merchants charges a fixed-rate fee to its clients for every payroll check that's deposited. Most large banks got out of the check-cashing business because of tighter regulations enacted after the Sept. 11, 2001, terrorist attacks.
Merchants Bank will also give stores lines of credit of up to $1 million. The line of credit, typically secured by real estate, is used by check cashers for their weekend business, when most people want to cash payroll and government checks.
Nearly all loans are repaid early the following week. Still, only 20 percent of the bank's clients use the service since most mom and pop check-cashing operations don't own property. "We make our money on the deposit side of the service because of the fees we can charge," said Scott Peterson, the bank's executive vice president.
Peterson said there is a low instance of fraud because the bank only accepts payroll checks. Companies rarely bounce checks because state regulators act quickly when payroll taxes don't come in on time. "If a company bounces a check on Friday, the state will be knocking on their door Monday to tell them to make good or they'll be shut down," Peterson said. "So it's a pretty safe line of business."
- Commonwealth Business Bank
While there are many banks serving the Korean American business community, Commonwealth Business Bank is one of the first launched with the intent of working with the next generation.
Ethnic banks carved out a niche by catering to the first wave of the immigrant community, which felt more comfortable with bankers who spoke their language and knew their customs. But the second generation, with fewer language barriers and looser ties to ethnic banks, has relatively few inhibitions to working with a mainstream lender.
According to the bank's Web site, Commonwealth plans to serve this niche by reaching out to the new generation of Asian entrepreneurs while still providing competitive rates.
Commonwealth, which started with a capitalization of $23.1 million, received its state charter in March. Results from its operation won't available until next year.
- Pacific City Bank
As banks specializing in the Korean American business community have prospered and grown, smaller banks, like Pacific City, have sprung up to serve small clients left behind. The bank, which opened in 2003, specializes in working with Asian small-business owners and providing expanded services not found at larger banks.
Pacific City Bank keeps longer business hours on weekdays and weekends to make it easier for clients to make deposits and reach loan officers. The bank also provides short loan periods and a quick approval process.
The board is made up of Korean businessmen who bring in new clients. "They have a strong relationship in the Korean American business community," said Jung C. Chang, president and chief executive. "Our board of directors reflects a lot of industry experience in many fields of business. Each has strong ties with other businesses in the community and because of that, they bring businesses to the bank."
Though the major banks are hiring employees who speak Korean, Jung feels his bank still has an edge. "They cannot beat us in meeting the needs of this community," he said.
- First Credit Bank
First Credit Bank has carved out a niche in commercial real estate where traditional lenders won't tread. In fact, the bank prides itself on making loans on flawed real estate deals.
"There has to be something about it that major banks don't like," said Farhad Ghassemieh, First Credit's chief executive. "Maybe there's an underground storage tank, or asbestos or there's a dispute between partners. Usually, the deal is tainted in some way that a large bank wouldn't like."
First Credit Bank, founded in 1983, has thrived by making loans on mixed-use projects. Some larger banks have trouble with the concept because the retail and residential components don't fall into a single loan department. "It's a peg that doesn't fit any hole," said Ghassemieh. "The difference is we'll design a new hole to make sure the peg fits."
- United Commercial Bank
United Commercial Bank, a descendent of one of China's oldest banks, has been on a buying binge. In October, the company bought First Continental Bank and on Nov. 28 it closed on a deal to purchase Asian American Bank. United Commercial is also locked in a bidding war with competitor Cathay General Bancorp. over the purchase of Great Eastern Bank of New York.
Alan Thain, United Commercial's executive vice president, said many of the bank's customers are experienced Asian developers and builders who have trouble getting credit in the United States. "It's easy for us to approve them because of our many relationships in China, Taiwan and Hong Kong," he said.
An Indonesian investment group owned United Commercial until 1997, when the Asian financial crisis forced the investors to sell the bank. It was then purchased by management, which scrapped the savings business to become a commercial bank.
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