Federal regulators criticized the Bank of Canton, San Francisco, for catering too exclusively to that city's Chinese population, a charge that has become increasingly levied at California's ethnic banks.

In March, Federal Deposit Insurance Corp. examiners gave Bank of Canton a "needs to improve" rating under the Community Reinvestment Act, or CRA. It is the second worst of four possible ratings. The vast majority of ratings are "satisfactory."

The report was only recently made public. It said that Bank of Canton's marketing strategy "appears to restrict those of other ethnic origins from becoming aware of possible desirable financial services."

Bank Is Among Healthiest

Bank of Canton is the largest Chinese-American bank in San Francisco, with about $800 million in assets. Founded in 1937, it was the first Chinese-founded bank in the Western Hemisphere. One of the healthiest and most profitable banks in California, it has staked out a niche as a bank for Chinese, Mandarin, and Cantonese emigres.

Bank of Canton officials would not comment for this article. Lucas Dang, executive vice president, said only: "Our bank would prefer not to be written about in an article."

However, in a letter sent to some San Francisco media, Bank of Canton officials said they were "disappointed" by the rating and are addressing the FDIC's concerns.

"One of the primary reasons our bank was established in 1937 was to serve a direct and identifiable section of our community that was being disadvantageously served by then-existing banks," the letter stated. "We feel that we have achieved a great deal in giving financial assistance to our community."

Previous Rating |Satisfactory'

Only 18 months ago, Bank of Canton had been given a "satisfactory" rating by the FDIC. The agency cited its 17% small-business portfolio, its active participation in a variety of civic and community organizations, and its $1 million commitment to funding below-market home loans to low-income borrowers.

But this time around, the FDIC, in words that it used to describe several other San Francisco Asian-oriented banks in the past year, said Bank of Canton was ignoring large segments of its community in its advertising.

"The bank's marketing, advertising, and business focus is centered on those of Chinese descent," the FDIC examiner said. "Little attempt is made to serve individuals of the other significant ethic groups which are generally understood to make up the population within the bank's local communities."

Like Los Angeles and San Diego, San Francisco in recent years has seen a huge increase in the number of Latino and Southeast Asian immigrants.

96% of Loans to Asians

Of the total home loan applications received by Bank of Canton in 1992, more than 95% were received from the Asian-American community, the FDIC said, and 96% of those loan originated were made to the same community.

FDIC documents indicate that at least four-Asia oriented banks in San Francisco, including one Japanese oriented bank, have been given "needs to improve" ratings in the last two years for catering too exclusively to the Asian community. The banks vary widely in size, from the $5.4 billion Sumitomo Bank to the $7 million Regent Thrift and Loan Co. in Chinatown.

Golden Coin Savings and Loan Association, CRA-rated in 1991 as "needs to improve" by the Office of Thrift Supervision, was recently upgraded to satisfactory after it begun running ads in Hispanic newspapers.Bank of CantonAt a GlanceHeadquarters San FranciscoChiefexecutive H.P. ChiaAssets $782 millionReturnon assets 1.18%Riskcapital 114%CRA Needs torating improveSource: Sheshunoff informations Services

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