Competition is fierce among Asian-American banking companies in California, so a number of them are stepping up expansion efforts in other markets with sizable Asian-American communities.
Just this week, UCBH Holdings Inc. in San Francisco and Wilshire Bancorp Inc. in Los Angeles’ Koreatown announced deals for banks in Boston and New York, respectively.
Executives at both California companies said they are on the lookout for more deals, and an analyst covering the sector said that others in the crowded California ethnic markets are on the prowl as well.
On Wednesday the $7 billion-asset UCBH, which owns United Commercial Bank, announced its second deal this year for an out-of-state bank. It said it had agreed to buy Asian American Bank and Trust Co. in Boston for $34.3 million in cash and stock. The deal is expected to close in the first quarter.
“This really fits into our strategy to continue to expand our franchise into different markets where there are high concentrations of Chinese-Americans,” said Thomas S. Wu, UCBH’s president and chief executive. “We’re working on a couple of other deals right now,” he said, but he would not name the banks he is scouting or their cities.
On Monday the $1.46 billion-asset Wilshire said it would buy the $58.7 million-asset Liberty Bank of New York for $15.7 million in cash and stock.
Joanne Kim, an executive vice president at Wilshire and its chief lending officer, said competition in Los Angeles drove its decision to buy Liberty.
“There are about 12 banks competing in the Korean-American community here, and to continue our growth, we need to explore other markets,” Ms. Kim said. “There’s a very strong Korean-American market in New York, and we’ll also have an opportunity to expand into other underserved ethnic communities in the area.”
In June, Wilshire also opened a branch in Dallas.
Joseph Gladue, an analyst at Cohen Bros. Securities LLC in Philadelphia, said it is wise for Asian-American banking companies to target ethnic communities in other U.S. cities. They rely heavily on commercial real estate lending, he said, but growth in that business has slowed in California for a number of them.
For example, Wilshire’s second-quarter loan originations of $218.3 million were up 15% from a year earlier, but most of the growth came from new loan production offices in Atlanta, Houston, Denver, and New York, as well as from the new branch in Dallas.
Asian-American banks’ growth “is still pretty strong in California,” Mr. Gladue said. “But nobody can grow forever,” he said. “It’s better to have other opportunities” for when growth sags.
Korean-American banking companies have also been affected by a decelerating Korean economy, which has caused many Koreans to reduce their investment in California commercial real estate through U.S. banking companies.
UCBH has been in New York since 2002, when it bought a Brooklyn branch, and has $12 million in deposits from Broadway National Bank. In May it opened a second New York branch, in Manhattan, and announced an agreement to buy the $164.3 million-asset Pacifica Bancorp Inc. in Bellevue, Wash.
Other Asian-American companies expanded to the East Coast earlier. The $1.6 billion-asset Nara Bancorp, based in Los Angeles’ Koreatown, has made four branch or whole-bank acquisitions in New York since 1998. The $6 billion-asset Cathay General Bancorp of Los Angeles now has four branches in the New York City area and one in Boston.
