Li Yu has a background in accounting and finance, but he got into banking by chance.
Born in Shanghai and raised in Taiwan, Yu came to the United States in 1963 for graduate school. He eventually got his M.B.A. from UCLA in 1968 and joined accounting firm Touche Ross for several years before becoming chief financial officer of private oil company USA Petroleum Corp. (now owned by Tesoro Corp.) in 1973. Yu said the small company grew from $50 million in sales to about $1.5 billion by the time Yu left in 1982.
Title: Chairman and Chief Executive of Preferred Bank
Bank: Preferred Bank
Rank, Local Deposit Market Share*: 23, 0.51 percent
Residence: Bel Air Crest
Family: Wife, Grace.
Activities: Music, games, too old for sports.
Years in L.A. area: 51
*As of Oct. 30, 2015
In 1979, while he was still working for the oil firm, Yu said several acquaintances asked him to join them in starting a new venture: California Pacific National Bank in downtown Los Angeles. He became a board member and later its chairman in 1982 after leaving his job. He continued to lead the board until the bank was sold in 1986 to Security Pacific National Bank, which was later bought by Bank of America.
In 1989, Yu and some friends wanted to invest in another bank, but couldn’t find one they wanted to buy. So they decided to start a new one. In 1991, they raised $20 million, partly from investors and companies in Asia, hoping to benefit from international trade and get referrals from foreigners setting up businesses stateside. They launched Preferred Bank later that year and Yu became chief executive in 1993.
Question: When you first started the bank, was the intent to make inroads into the Chinese-American community?
Answer: When I first started, the strategy has to be that way because you have to get the deposits first. In banking, you have to make the deposits before you can grow loans and start to grow relationships. To be very honest, maybe because many of us are Chinese to start with, everybody has some referral. So maybe that’s easier. And then we start to diversify (over) the next 20-some years.
How have your bank’s clients’ and their needs changed since the bank was founded?
I’ve been doing the bidirectional type of business building in the Chinese-American business community and in other areas we started to diversify into: Torrance, Century City, Irvine, Tarzana, Pico Rivera, Anaheim. These are basically local mainstream types of businesses.
In the deposit area, we’re probably 70 percent mainstream diversified businesses and 30 percent in Asian community businesses at this point. Probably 90 percent of the loans are mainstream. Plus, when you talk about the so-called Chinese businesses, it’s kind of a fuzzy situation.
What do you mean by “fuzzy”?
These are basically companies where the business has been here almost as long as I have been here in the United States. And they have built up a very sizable operation whereby 90 percent or more of their customers are diversified. So why would you call it that? Because the founder, owner or this entrepreneur is Chinese? So what I emphasize is that we really are a Los Angeles business bank.
Are there any new business lines you’ve established in the last few years to serve the evolving needs of your clients?
When we first started, We concentrated ourselves to be this small business, investor and so-called wealthy people private bank-type concept.
Recently, we are really looking to adding products such as mortgage banking, simply because the current regulation calls for limitation in commercial real estate loans and so on. In order to grow, you need to diversify out.
How has your job changed since you first became chairman and CEO of Preferred in the early 1990s?
I personally ran the sales and marketing for about 20 years. But now I’m out of it, other than major relationships. Now all I’m dealing with is really investor relationships, shareholder management, board management, strategic planning, capital planning, regulatory affairs and all-important human resource management. As old as I am, I find new challenges almost on a weekly basis, things that I have to learn.
What do you think is unique about your background compared to other bank leaders?
When I started the bank, I took my friends’ money and my own money and we started a bank, and it’s always my feeling that it’s destination management. In other words, this is my destiny over here to finish, to see it through and I’m not going to switch jobs.
How does that influence management style?
I always feel that in my business, my own bank size is not the most important issue. It’s the total shareholder return.
