Pacific Global Bank always has served mainly Chinese immigrants, but now, like other narrowly directed banks, it is broadening its scope to accelerate growth.
The 10-year-old bank, whose only branch is in Chicago's Chinatown, plans to open one in the McKinley Park neighborhood, which is more diverse and has less competition, said Betty Chow, its president and chief executive officer.
"If we want to grow further, then we have to look somewhere else," Ms. Chow said.
Chinatown now has 10 bank branches, more than twice as many as in 1995, and the banks range from others that focus on ethnic Asians to mainstream regionals, she said.
Pacific Global considered other pockets of Asian-American immigrants and looked at suburbs with high concentrations of Asian-Americans, Ms. Chow said, but it decided that approach was too limiting. McKinley Park is 50% Caucasian, 35% Hispanic, and less than 10% Asian, she said.
"We thought about the other Asian areas in Chicago, but to be successful you cannot focus on just one nationality," Ms. Chow said.
Industry experts say all banks should think about how to enter and serve new markets, because changing demographics in their old ones and the need to grow could force them to do so.
Edward Carpenter, the chairman and CEO of Carpenter & Co., an Irvine, Calif., investment bank that specializes in financial institutions, said a number of Asian-American banks in the fiercely competitive Los Angeles area are targeting more mainstream customers.
"All of the niche banks that are finding that they now have significant levels of competition within their niche … tend to begin looking outside of that basic community if they feel there are other markets with opportunities," Mr. Carpenter said.
James Ballentine, the American Bankers Association's director of grassroots and community outreach said banks sometimes need to adapt to changes in their markets.
One that has done so, he said, is the $70.5 million-asset Mitchell Bank of Milwaukee. Hispanics have poured into its neighborhood, once largely German and Polish, Mr. Ballentine said. Mitchell succeed by studying the community and offering products tailored to the newcomers, he said.
Rockwell Clancy, a director of planning and development at Alex Sheshunoff Management Services Inc. of Austin pointed out another problem for immigrant-focused banks such as Pacific Global. Such banks cannot count on having their customers' children as customers, he said; if they grow up speaking English in school, they may not be interested in a bank that speaks their parents' language.
As Pacific Global noticed such changes, its growth slowed. Assets grew more than 20% each year from 1999 to 2003 but only 17.4% in 2004 - and this March 31 they were only 2.5% higher than on Dec. 31.
The bank hopes to reverse the trend with the new branch, scheduled to open in early 2006, and is taking other steps.
To attract current customers' children, it plans to add online banking, Ms. Chow said. It has also hired a marketing consultant to research the Hispanic market, is hiring Spanish-speaking bankers, and hopes to team up with a school in its new neighborhood to teach financial-literacy classes, she said.
