Asian bank takes it slow and easy

By Nicole Lucht

Friday, March 20, 2009 | 2 a.m.

For almost two years now, First Asian Bank has been intent on capitalizing on the Asian business community defined by its presence on Spring Mountain Road.

When the bank started in June 2007, the recession was just a few months from starting. And since then, the bank has grown slowly, conservatively, keeping in mind the traditional Asian business values those in the community are said to have, while serving a demographic largely underserved by the banking industry.

“What we find (is) the Asian market continues to grow,” said Victor Berbano, the bank’s chief financial officer, and a first generation American whose father immigrated from the Philippines. “Las Vegas is a big magnet for Pacific Rim companies. A lot of the economics have changed, a lot of the people who come over have money from over there, and they have investment money. So a lot of them come over and they set up businesses that really cater to the Asian market.”

Businessman Jay-Son Low, a first generation American Chinese born in Malaysia, said he’s noticed that the Asian community in Las Vegas is underserved by banks, but there may be a reason for that.

“We don’t think of borrowing (bank) money to start a business,” Low said. “(Instead) we pull money from our families. Asian businesses that tend to survive in lean times don’t have business loans.”

Businesses in the Asian community operate more conservatively than perhaps others, Low said.

“We have less of a corporate mentality,” Low said. There’s less of a desire to borrow “other people’s money,” and business owners in areas such as Spring Mountain are motivated by the blood and sweat equity they’ve invested into their shops, he said.

“Whether we’re successful or not, we’re committed to the process,” he said.

And saving face is important to Asian families, he said.

“Defaulting (on loans) is not something we want to do.”

But the down economy is affecting everybody, Low said. The businesses that were established several years ago are faring better than those that opened more recently, he said.

As a real estate agent and owner of Satay Malaysian Grille, Low said he has seen his restaurant business drop 40 percent as fewer tourists and locals visit the Asian community.

He’s also noticed rents being reduced, a lot more commercial vacancies and businesses being put on the market.

“We’re no different from other businesses,” he said. “It’s hard to be optimistic, but at least Chinatown has a niche market that is still growing to some degree.”

As can be expected, since the bank opened near the start of the recession and the collapse of the credit markets, it has virtually no problem loans on its books (less than 1 percent), according to its Dec. 31 filing with the Federal Deposit Insurance Corp.

“One of the beauties from when we opened up is that we were able to avert from a lot of the problem loans that the banks in their natural course of business ended up lending to,” Berbano said. “Lending is done on today’s valuations, so none of the loans is underwater. We have a very clean loan portfolio. We lend locally, and decisions are made locally.”

Larry Hoftiezer, the bank’s chief credit officer, said First Asian carries a broad mix of loans, including small family businesses, restaurants, dry cleaners, as well as larger businesses with commercial buildings.

“These people have a lot of money, they have a lot of liquidity themselves, but they’re looking to finance to get stabilized, expand, set up another branch,” he said. “We’ve pretty much tapped into that, just by our name, by our staff. Just about everybody on our staff is bilingual.”

There isn’t much difference with loans to the Asian community and those made in general, except that they may be smaller in size, Hoftiezer said.

“There’s a lot of common sense behind it,” he said. “When they’re first starting out, they’re not going out opening five locations at once, or building (something) that’s half empty and they’re hoping to lease out the rest of the space.

“It is very much more conservative and they’re all hands on. The borrowers ... work in the business, the building, whatever we finance. They manage it, run it, call the shots, do the payroll. They’re literally more hands on than I think other populace in our portfolio.”

Despite that, the bank is also looking to expand its presence, and half of its clients are not of Asian descent.

“If we just rely on the business we can pull from Jones (Boulevard) to the Strip on both sides of Spring Mountain Road, we’d dry that up in two years,” Hoftiezer said. “Just because we’re there, with our name, draws in most of that business. We work those areas, too, but we also realize, not that they weren’t smart when they set up these two locations, we’re far more talented, more experienced, and have more products and service, than just hiring two tellers who (speak Chinese and Korean). That’s only one portion of the city. We’re reaching out. We don’t care what you speak. We can service any population.”

The bank hit a snag, however, in May when the Nevada Financial Institutions Division ordered a cease-and-desist after the bank abruptly fired its chief executive.

Under state law, banks in their first three years may not make abrupt changes to management without regulatory approval. The chief executive, William Chu, was reinstated and continues in that capacity.

“It had nothing to do with the loans, the staff, management, the location, articles or bylaws, that is all sound,” Hoftiezer said. “As a new bank and starting off, there were some organizational issues” that have been addressed.

When investors initially funded First Asian, it started with $13 million in capital, and with the $26 million in deposits, the bank has had the capacity to make $33 million in loans.

“In terms of overall strategy and the economic conditions we’re in, to grow slowly and carefully, I think is the best and most prudent thing to do in banking,” Berbano said. “Everybody knows what’s happening to banks now, we’re not shrinking to zero, so ... we turned down about as many loans as we approved, and we’re very, very careful in this environment.”

Another Asian-oriented bank, Nevada Pacific Bank, is also hoping to capitalize on Las Vegas’ Asian community, although the bank is still seeking investors to infuse the startup with capital to open.

Bank officials would not comment for this story.

Berbano, however, said he welcomes the potential newcomer.

“There’s plenty of Asian population to support several banks, and rather than a competitor, I would look at them as a partner,” he said.