Chinese and Korean immigrants have plenty of ethnic banks in the Southland to trust with their business.
Vietnamese-Americans are about to get one of their own.
Construction is under way on the first ethnic Vietnamese bank set for Orange County’s Little Saigon. First Vietnamese American Bank is expected to open in February. Last month it earned general approval to operate from the Federal Deposit Insurance Corp., though some regulatory hurdles remain.
“Asian banks are not going to turn away a Vietnamese customer,” said Ed Carpenter, founder and chief executive of Irvine bank advisory firm Carpenter & Co. But “the Vietnamese community has remained largely separate from Asian banks. And younger generation Vietnamese rely mainly on domestic mainstream banks like Wells Fargo.”
There still are a few roadblocks to clear before First Vietnamese opens.
First, the bank must get the OK from the state Department of Financial Institutions to begin raising its initial funding of $10 million or more. Approval is expected any day, said First Vietnamese founder and Chief Executive Hieu Nguyen.
The commercial bank also must line up insurance for its savings and checking accounts from the Federal Deposit Insurance Corp.
The bank’s headquarters and first branch is set to occupy a three-story new building slated for completion next month. It’s on the corner of Westminster Boulevard and Magnolia Street in Westminster.
“We can open the bank after the building is completed, and after we purchase equipment and software and complete all the other regulatory requirements,” Nguyen said.
The bank will occupy the first and third floors, more than 6,000 square feet in all, Nguyen said. Vietnamese law firm Charlie Mahn & Associates is slated to take the second floor. Charlie Mahn owns the building.
First Vietnamese will join other ethnic banks in the area, though it is set to be the first one to solely focus on OC’s large Vietnamese community. Uniti Bank Corp. of Buena Park, for one, is geared toward Korean-Americans. It has $103 million in deposits at recent check, nearly double last year.
Nguyen, formerly a Beverly Hill-based vice president of Israel Discount Bank Ltd., said it’s time the Vietnamese-American community got its own bank.
“The community has been growing and prospered to become an economic force in the area,” Nguyen said.
Little Saigon is home to more than 200,000 Vietnamese and their offspring and covers parts of Fountain Valley, Garden Grove, Westminster and Santa Ana. The area is home to the largest number of ethnic Vietnamese outside Vietnam.
“It’s normal in our state’s history that ethnic groups would form banks as the second generations comes of age,” Carpenter said. “There are a lot of barriers to entry,licensing a bank is complicated and takes time.”
Banks that target ethnic Chinese and Koreans are prevalent in the Southland, but that’s because those groups have been here longer, Carpenter said.
Relative Newcomers
Vietnamese immigrants first began arriving in the U.S. in 1975,the final year of the Vietnam war. A later wave arrived in the late 1970s and early 1980s.
Nguyen, himself an immigrant, carved a more unusual path to the U.S. He left Vietnam in the 1960s to study business administration and banking at the University of Munich in Germany, where he eventually earned a doctorate.
In 1979, Nguyen emigrated to California to join his family, who had fled Saigon in 1975.
Language barriers keep the older generation of Vietnamese away from banks, Carpenter said. Plus there is a general mistrust of banks among many immigrants, he said.
“Immigrants often come from countries where there was a devaluation of the local currency that left people with worthless bank accounts,” Carpenter said. “While immigrants feel the system here is safer, they would feel most comfortable with a bank that understands their culture. Chinese and Korean banks are very profitable because they are good at understanding the specific needs of their customers.”
Nguyen said the fear of banks in Little Saigon has had some negative effects on the community.
“We have very many cash transactions in Little Saigon, which leads to an increase in robberies and other crime,” he said. “We feel that it’s a big problem to have such a large number of people who don’t use banks. They have no access to financial services because they don’t want it or they feel they don’t need it. They may feel intimidated.”
Nguyen said First Vietnamese has held information classes.
“We are trying to educate people that it’s not safe to keep large amounts cash at home,” he said.
The program, “Money Smart,” finished its first cycle of 10 classes from June through August. Sponsored by the Federal Deposit Insurance Corp., the program is free. Classes were held at the Vietnamese Community of Southern California’s facilities in Westminster.
The bank also features Money Smart classes on a Little Saigon radio talk show on Wednesdays.
“We talk about checking accounts and savings accounts, and how to use credit cards and borrow money from banks,” Nguyen said. “We also advise people on buying or renting a home.”
Another as yet untapped niche, according to Carpenter: helping older generation business owners pass on companies to children.
“The Vietnamese community here has some interesting and dynamic characteristics, one is that there is a very high percentage of small business owners,” Carpenter said.
Those owners need to feel comfortable working with banks and bringing their kids,who are more likely to have assimilated into American culture,into the business, he said.
Nguyen said he has no immediate plans to open additional branches.
North County, with scores of smaller manufacturers, auto shops and retailers, is ripe for banks targeting businesses overlooked by big banks, sources say. That’s allowed upstart banks to do well in OC.
Startup banks had a big run raising money in 2003. Commercial Bank of California, which opened in the former Imperial Bank office in Costa Mesa, closed a $27 million offering,the largest ever for a new California bank, according to Carpenter.
Carpenter said he is working on the launch of a Hispanic bank in the Southland, which will be the first Hispanic bank to open here in more than 20 years, he said.
Other banks looking to start up include Irvine’s MetroPacific Bank, which is looking to raise $12 million to $14 million in initial startup funding. The bank recently received approval from the California Department of Financial Institutions to start organizing.
