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SAN GABRIEL VALLEY / COVER STORY : Banking on the Family Name : The Rockefeller of the Chinese Community Faces a New Challenge With Universal Bank


The Taiwanese investor received three words of advice about how to turn around the ailing savings bank he had just bought: Hire Kellogg Chan.

In Chinese banking circles in Southern California, the Chan family has the same recognition as the Rockefellers. Back in the early 1960s, Chan's father, F. Chow Chan, had done battle with skeptical state regulators to obtain a charter for Cathay Bank, the first commercial bank in Chinatown. In 1973, F. Chow Chan co-founded East-West Federal Savings, the first federally chartered thrift in the Chinese community.

Since then, more than 30 banks and thrifts have sprung up in Southern California's Asian communities, many posting up to 25% annual growth by targeting hard-working Asian immigrants who rarely default on loans.

At the epicenter of this world stands Kellogg Chan, F. Chow Chan's tall, broad-shouldered, cigar-smoking, 55-year-old son who oversaw East-West's growth from an S & L with $200 million in assets to a regional concern with $1.3 billion in assets. Then, in 1992, feeling "burned out," he retired to play golf and ponder his next move.

For the Record
Los Angeles Times Thursday April 6, 1995 Home Edition San Gabriel Valley Part J Page 4 Zones Desk 2 inches; 38 words Type of Material: Correction
Bankers--An article about Universal Bank that appeared in the March 23 San Gabriel Section incorrectly stated that the two brothers who founded the bank had died. Although Domenic DiNoto is deceased, his brother, Frank J. DiNoto, is alive and retired in Newport Beach.


In late 1994, Taiwanese mogul J.S. Chang asked the San Marino banking scion to work his magic on Universal Bank, which was founded in Rosemead by two Italian brothers. The timing was right.

"I was bored," Chan confessed.

As chairman and chief executive officer at Universal, Chan's first task will be to make the bank, now based in Orange, turn a profit. Universal has six branches and $205 million in assets but operates in the red. Chan hopes to change that within the year. His strategy is to sell off bad debts incurred from apartment loans and to expand aggressively, especially in the eastern San Gabriel Valley, which he sees as an untapped market.

A man of intense privacy, Chan is hesitant to disclose his plans. Why, he asks, should he tip off his competitors?

But he does say this: "I don't think the Asian market for investment and service providers has peaked, and I think we will be a player. I don't want to lend in Palos Verdes or Torrance. I don't know those areas. My motto has always been: 'Do what you know best.' "

And that, for Chan, is the Asian market, especially Asian immigrants, a group that is better educated, more skilled and wealthier than any group of immigrants in the nation's history. Asians historically are also big savers and bring nest eggs of $50,000 or more when they come to this country. Some fleeing China's impending takeover of Hong Kong have brought millions of dollars with them.

But Chan knows that even those without much equity or collateral are good for their loans because when they give their word, honor requires that they keep it. So he practices what he calls "country-style" lending.

"The borrower's character is the most important component," Chan said. "When we lend in ethnic communities like the Chinese, they may not show much on their financial statements, but they will work three jobs to pay the loan back."


Chan added wryly that Asians are beginning to default on their loans as they grow more Americanized. Additionally, the go-go days of the 1980s, when millions of dollars flowed into Chinese-owned banks from Hong Kong and Taiwanese immigrants, are coming to an end. Now the money is flowing in from mainland China. And everyone agrees that the banks that capture the biggest share of that money will be those with the best cultural connections.

"In the Chinese community, a lot of things are based on trust," said Margaret To, president of the Downtown Merchants Assn. in Monterey Park. "There's no paperwork. You just shake hands, and that's totally different from an American banking institution."

This is where the name Chan translates into solid gold.

"Many of our young people understand the Western ways but have no appreciation of the old Chinese culture. Kellogg balances both," said Betty Tom Chu, who co-founded East-West, then left in 1981 to start up Trust Savings Bank based in Arcadia, which also has a large Chinese clientele.

Non-Asian banking experts also praise Chan's business acumen.

"To pull Kellogg Chan back from retirement is a real coup. He's a proven moneymaker with many contacts who has great rapport with the regulators and the industry," said Barry Rubens, president of California Research Corp., a Santa Monica-based bank consulting firm that has helped start up Asian financial institutions in the United States.

Ironically, Chan will be competing for customers with banks he helped build into household names among the immigrant Chinese, a community known for its loyalty to name and prestige brands. Now Chan's challenge will be luring their money to a smaller, lesser-known bank.


"The customer's perception is important," Chan said. "In the Far East, there's no deposit insurance. So they come here and they figure the bigger you are, the less likely you'll fail. But even if a person has a savings account, they'll probably still keep a lot of cash under the mattress. It's just their nature."

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