For almost 30 years, East-West Bank has bridged the gap between the American banking system and the Asian immigrant communities of Southern California.
With almost no one else able to speak their language or willing to help, new immigrants turned to the ethnic community bank to finance their needs.
But as its traditional customer base becomes assimilated and competition heats up within its primary niche, its core market is no longer guaranteed.
Now, president and chief executive Dominic Ng wants the Chinese-American bank to become a true bridge between East and West - and not just for immigrants.
Through the bank's extensive Asian contacts, he wants to help capital- rich Asian investors find capital-starved American businesses.
"California is the hub of the Pacific Rim and East-West prides itself on being the financial bridge between East and West," Mr. Ng said. "This is the philosophy of East-West."
The transformation of East-West comes as the $1.5 billion-asset bank and more than half a dozen other ethnic community banks in the Los Angeles area face significant changes in their traditional markets, prompting them to seek new sources of business to survive.
Founded during the past 30 years to provide basic banking services to immigrants unfamiliar and uncomfortable with American banking, these ethnically focused banks and thrifts are seeking new directions at a time when their increasingly assimilated customer base no longer needs them.
That's a sharp change for banks that were once the only place that many new Asian immigrants could turn to for financial help.
"It was very difficult in the '50s and '60s for Asians to obtain credit from mainstream banks in the United States," said Mr. Ng, who worked with Chinese-American banks as an accountant at Deloitte & Touche before taking the reins of East-West - then a thrift - in 1992. "Many couldn't speak English and couldn't articulate themselves."
"It was almost impossible to get a loan," agreed George T.M. Ching, founder and first president of $1.5 billion-asset Cathay Bank, the first Chinese-American bank in Southern California. "The communication between the Chinese merchants and the American bankers at that time was not good. They didn't understand each other."
Mr. Ng should know. When he came to the United States from Hong Kong after high school in 1977 to study accounting, he was barely able to speak broken English. After several years with Deloitte & Touche, he was brought in to run East-West after it was bought in 1991 by Sjamsul Nursalim, head of the powerful Indonesian conglomerate Gadjah Tunggal Group.
The 37-year-old banker said the large mainstream banks didn't feel comfortable working with the foreigners either, leaving the immigrants virtually isolated from the nation's financial services.
As a result, said current Cathay Bank president Dunson K. Cheng, "everything was done in cash. If you wanted to start a business, you had to go to your friends and relatives to borrow money."
Asian business and community leaders established Cathay in 1962 to meet the business banking needs of the community. A few years later, in 1973, East-West was founded as a thrift to help immigrants obtain financing for new homes.
"When no one cared about these customers and we had an exclusive niche, it was a very profitable niche," Mr. Ng said.
The success of Cathay and East-West prompted the founding of several other Chinese-American banks in the 1980s and 1990s as the Asian population swelled with new immigrant waves. And the large American banks, as well as foreign banks from Japan, Taiwan, and Indonesia, entered the fray. All told, there are more than 30 banks competing for business in Los Angeles' Chinese-American community.
"There are too many of us," Mr. Cheng agreed. "The growth in our entire market segment is not as rapid as in the 1980s. There's not enough business to go around for everybody."
While competition is tightening, the ethnic banks must also respond to the changing desires of their customers. Second- and third-generation Chinese-Americans, many of whom don't even speak the language of their parents and grandparents, are less likely to turn to ethnic banks.
"They don't need to bank with an ethnic bank," Mr. Ng said. "They'd like to, but it's not like in the '60s and '70s, where they had a language barrier and they had no choice."
Mr. Ng said the key for East-West's future is to focus on trade finance rather than compete with mainstream banks in serving Asian-Americans. The trade finance market has become significant, he said, especially with investors from Hong Kong, Taiwan, and mainland China looking for places to deploy some cash.
Although most of the ethnic banks are primarily serving the immigrants, some are taking steps similar to East-West's. Los Angeles-based General Bank, for example, has been exploring high-tech lending in Silicon Valley, and is trying to expand its relations with mainstream businesses through a new multicultural division.
And Cathay is trying to develop mainstream banking products and services to offer its existing ethnic customers, while also broadening its customer base and board of directors to include non-Asians.
"We are losing them," admitted Mr. Cheng, referring to the second- and third-generation Asian Americans. "We have to evolve with our customers. We feel that that's the only way to do it."
