South Korean-born Chong Guk Kum has been a banker for four decades, but he’d never worked for a Korean-American bank until he joined Hanmi Bank three years ago.
Chong Guk “C.G.” Kum, 61
Title: Chief Executive of Hanmi Financial and Hanmi Bank
Rank, Local Deposit Market Share*: 22, 0.57 percent
Family: Wife, Vikki, and children, Ryan, Courtney and Anni.
Activities: Running, golf.
Years in L.A. area: 16
*As of Oct. 30, 2015
Kum’s family immigrated to the United States in 1963 when he was 9 years old so that his father, a professor of medicine and biochemistry, could work at the University of Michigan.
At that time, there were not a lot of immigrants – let alone Asians – in the Midwest. Kum’s father forbade him from speaking Korean at home to help him assimilate into American culture as soon aws possible.
Kum attended UC Berkeley and then received an M.B.A. from Pepperdine University. He started his banking career in the Bay Area at Bank of California’s corporate lending program, which was later bought by MUFG Union Bank.
Kum left for Fort Collins, Colo., in 1984 to head up the credit administration department for United Banks of Colorado and then left for Colorado National Bank in 1987.
He returned to California in 1993 to join City Commerce Bank in Santa Barbara as chief credit officer. When it sold to Mid-State Bank & Trust (now part of Rabobank) in 1999, Kum said one of its large shareholders, who also had a significant stake in Camarillo Community Bank, convinced Kum to head the small institution. As chief executive, Kum said he grew Camarillo Community from about $98 million and two branches to about $2 billion in assets and more than 20 branches at its peak. Renamed First California Bank, it sold to Pacific Western Bank in 2013.
Kum said several Korean-American banks courted his services for senior level positions at the time but he ultimately chose to become chief executive of Hanmi.
Question: How have your upbringing and your dad’s decision not to allow you to speak Korean at home impacted your job?
Answer: I wish he wasn’t as strict about that, because I speak the language but at a very basic level. I’ve always been on the outside of the Korean-American society in the United States up until I came to Hanmi. It’s almost like coming home in some respects. Coming to Hanmi has been a tremendous situation for me not only professionally but personally.
How have your bank’s clients and their needs changed since the bank was founded 33 years ago?
I started here in June of 2013, and previous to that, Hanmi was primarily a Korean-American-centric ethnic institution with a small customer base in the Persian Jewish community, primarily tied to the garment industry. One of the goals of the board and myself since my arrival was to broaden the client base. The main reason for that is that the Korean-American community in its entirety is not a growing community. It’s a very affluent, highly educated community, but we don’t have a continued wave of immigrants coming from Korea anymore. Much of that is due to the improving economy in Korea and immigrating to this country is not as popular as it was in the late 1970s and early 1980s.
How does that affect your business strategy?
One of my goals is to get rid of that label as an ethnic bank because that’s very limiting. As we continue to execute on this strategy of diversification I want us to be known as just a good regional bank. The boundary between so-called mainstream and ethnic banks is getting blurred. The Asian immigrants or the people who are considered ethnic, many of them are banking at mainstream banks as we speak.
Are there any new business lines you’ve established in the last few years to serve the evolving needs of your clients?
The only things we’re doing differently is practicing relationship banking. Many ethnic banks are transactional, and that’s reflected in the type of loans they do
(commercial real estate) and the type of deposits that they have (mostly CD based). When you truly practice relationship banking, you get commercial real estate loans, but you get low-cost deposits with them. Here at Hanmi, every loan request that comes in, you have to defend it in terms of what kind of deposits are we going to get. And if there are no deposits, we may do it, but it’s going to have a higher interest rate.
How has your job changed since you first became chief executive of an L.A.-area bank in 1999?
Regulatory oversight of our industry has changed. Right now the biggest hot-button item for the regulators in our industry is (the Bank Secrecy Act and Anti-Money Laundering). The regulatory burden on our industry has ramped up significantly so that the cost of doing business has gone up significantly.
The second big difference is the low interest-rate environment. That’s creating challenges for many banks to make money. You’ve got compliance obligations on the one hand, and you can’t make as much money on the revenue side from your interest income because of the rate environment. These are some very difficult times for our industry.
What do you think is unique about your background compared to other bank leaders?
I’m not so sure I would describe myself as unique, but I have a fairly broad background in lending. I have experience in generating loans and working out problem loans. That’s been helpful in terms of growing First California and also Hanmi. At the end of the day, it’s the revenue side that pays the bills.
How does that influence your management style?
I know what a bad loan looks like and what it could do in terms of damage to an organization. So I think the perspective I bring is a focus on good risk management.
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