Cathay Bank's recent venture into New York City illustrates the rising interest of California's ethnic banks in the Big Apple's Chinese and Korean communities.
Los Angeles-based Cathay, one of the country's largest Chinese-American banks, with $1.8 billion of assets, last week became the second California bank to enter New York when it bought the failed Golden City Commercial Bank.
And there is talk that UCBH Holdings Inc. of San Francisco may test the waters in New York, which is home to about 1.8 million Chinese-Americans.
Nara Bank of Los Angeles kicked off the trend in November when it announced plans to buy Korea First Bank of New York. The $335 million-asset Nara, which caters to Korean-Americans, also bought the Flushing, N.Y., branch of Korea Exchange Bank last year.
Dunson Cheng, chairman and chief executive officer of Cathay, which operates 17 branches in California, Hong Kong, and Taiwan, said the bank had been eyeing the New York market all year as a way to better serve clients who had opened offices and warehouses in and around the city.
"We thought about opening a loan production office," Mr. Cheng said. "But this deal was too good to resist."
Steve Didion, a bank analyst at Hoefer & Arnett in San Francisco, agreed, saying that Cathay's transaction was an inexpensive way to enter a new market. Cathay paid $2.7 million for Golden City's $82 million of deposits.
Cathay intends to turn Golden City's pair of retail-oriented branches, in Manhattan and Flushing, in the borough of Queens, into full-service offices by pushing letters of credit, trade finance, and commercial real estate loans.
Tommy Wu, UCBH's president and CEO, said his $2.3 billion-asset company is exploring the New York market because there is no dominant player serving Chinese small businesses. Its Chinese-American market is similar to that of San Francisco, he said.
However, Mr. Wu said, UCBH will continue its push into Southern California before looking for potential deals in New York.
John Kline, an analyst at Sandler O'Neill & Partners in New York, said it would make sense for UCBH to enter New York but warned that investors recently have punished the stocks of dealmakers.
"UCBH doesn't want to bite off more than it can chew now and aggravate its shareholders," Mr. Kline said. "There is a lot of opportunity in the company's own backyard right now."
