San Francisco's United Commercial Bank, which has long been the leader among banks whose main focus is Chinese-Americans in Northern California, is making a name for itself in the more competitive Los Angeles market.

The $2.75 billion-asset subsidiary of UCBH Holdings Inc. has done some business in Southern California since the mid-1980s, but much more since it converted from a savings and loan to a commercial bank in July 1998. In those three years, United has reached its goal of generating half of its new commercial business from the Los Angeles region and has posted double-digit earnings growth in every quarter. And most of its $600 million of loans in the pipeline originate in its 10 L.A.-area branches.

"There are a lot more opportunities in Southern California for us as a bank to go after commercial business, particularly international trade business, than in Northern California," said Thomas S. Wu, United Commercial's president and chief executive officer.

He pointed out that the area is the 11th-largest economy in the world and that it has the country's two largest ports: Long Beach and Los Angeles. And the Los Angeles area is home to thousands of Chinese-American businesses with contacts in the Pacific Rim.

"We want to grow more aggressively in Southern California, particularly in international trade," said Mr. Wu, who noted that the Long Beach port is 10 times the size of Oakland's.

Though United is dominant in Northern California's Chinese-American communities, it is competing more in the Los Angeles region with home-grown banks, including $2.6 billion-asset East West Bank, $2.3 billion-asset Cathay Bank, and $2 billion-asset General Bank, all of which have been courting the Chinese-American market there. Also in the mix are giants such as Wells Fargo Bank and Bank of America.

Mr. Wu. said United's service reputation will help it grow in L.A. despite this heavy traffic.

"Our top management always goes out and meets with customers," he said. "We - including myself - spend a lot of time with them to really understand the customer's business model and needs, and the character of the principal. After this due diligence, customers feel that we are serious and committed."

John Kline, a managing director at Sandler O'Neill & Partners in New York, said some of United's rivals may be spreading themselves too thin.

"Banks like East West want to become more mainstream, and while there's potential to garner more business from non-Asian customers, perhaps it dilutes what they are trying to do with their Chinese-American niche," Mr. Kline said.

Steve Didion, the director of bank research at Hoefer & Arnett in San Francisco, said United should not underestimate East West or any of its other competitors. He said he does not expect United to dominate in the Los Angeles market anytime soon.

Campbell Chaney, an analyst at Sutro & Co. in San Francisco, noted that there are more than a million Chinese-Americans in Southern California alone. "The banks that cater to this market are still relatively small, so they can each run at their capacity and not bump into each other," he said. "It's not as if you've got a finite market and they are really slugging it out. … The market is big."

Nevertheless, Mr. Didion said, United is managing to compete effectively. Its rivals are also especially attentive to their clientele, but "it's fair to say that United is more aggressive and zealous about customer interaction than any of the other banks I've seen."

United, whose expansion to Los Angeles was its first outside Northern California, plans to enter Seattle, Houston, and New York by yearend.

"There is a large concentration of Chinese-Americans in these cities," Mr. Wu said.

Bryce Rowe, an analyst with Anderson & Strudwick in Richmond, Va., said he expects United to do well in those markets. "I think they can do anything they want to - they are one of the best-run banks in the country."

United's second-quarter earnings rose 26.6%, to $7.4 million, or 37 cents a share. Its return on equity as of Mar. 31 was 19.09%; the national average ROE for banks its size is 15.10%, according to the Federal Deposit Insurance Corp.

United, which was established in 1974, can achieve these results because it has remained loyal to its core audience, Mr. Wu said.

And well it should. According to the U.S. Bureau of the Census, Chinese-Americans are the nation's best-educated and best-paid ethnic group, tend to save more money than others, and are more apt to own their own homes and start their own businesses. Mr. Wu said United has taken advantage of this by offering a variety of retail products.

That has helped its deposit base steadily rise: Core deposits grew 38% in 2000, to $174.2 million. Loan volume is also strong - it increased from $1.57 billion to $1.80 billion last year - and includes a good amount of mortgage and small-business loans, Mr. Wu said.

Examples of United's go-the-extra-yard service include its hours (it is open Sundays) and the features of its automated teller machines and Web site, both of which are in Mandarin and Cantonese as well as English. The site also offers news from the Pacific Rim and a calendar of events scheduled in the Chinese-American communities in United's service areas. United plans to start offering all its international trade banking services, including letters of credit, through the site by yearend.

One way the bank gets new customers is by offering unique products to immigrants from Hong Kong, mainland China, and Taiwan after helping them secure a Social Security number and driver's license, Mr. Wu said. And while many mainstream banks are reluctant to lend to new Pacific Rim immigrants with little or no credit history, United offers them consumer and business loans after checking with their former employers overseas.

Mr. Rowe of Anderson & Strudwick said United has not lowered its stringent underwriting standards. Last quarter its nonperforming assets to total assets was 0.06%, even though California's economy has been faltering, he added. United also posted net recoveries of $58,000 from loans it had written off.

United has been able to make a decent profit by concentrating on traditional banking services at a time when many of its peers are getting into insurance and securities, Mr. Rowe said. "They just perform - they perform better than anybody I've seen."


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