When Ash Patel worked for Bank of Orange County in the 1990s, he was besieged with loan requests from owners of small hotels who shared his last name. "I was the only Patel that was a banker," he said.
And so a niche was born: loans to motel-owning families named Patel with roots in the state of Gujarat in India.
Patel is now president of Premier Commercial Bank in Anaheim, but he retains his roster of hotel clients. That specialized focus, he said, helped his small bank establish a foothold against a crowded field of competitors.
To the casual observer, the California banking scene may seem like a gallery of ghosts. Old-line institutions such as Crocker National, Security Pacific and First Interstate disappeared years ago. Mighty Bank of America Corp. was uprooted from San Francisco in a 1998 takeover and moved cross-country to Charlotte, N.C.
Although many of the big names have fallen, scores of smaller banks have quietly risen. Instead of trying to handle every financial need, the start-ups often carve out specialties to serve small-business owners or professionals.
And their recent profitability -- no California commercial bank founded from 1988 on has failed, according to the Federal Deposit Insurance Corp. -- has attracted flocks of investors.
New institutions are being formed so fast that the number of banks in California rose to 274 last year from 253 in 2004, marking the first increase since 1990, said Edward Carpenter, whose Irvine-based investment bank produces an annual report on the state's banking industry with the California Bankers Assn.
Nationally, the number of community banks also has edged up after two decades of decline. The total of FDIC-insured banks and thrifts with less than $1 billion each in assets bottomed out in 2004 at 7,186, then rose to 7,337 at last count, the agency says.
In California, the small-bank boom is being abetted by the state's vibrant ethnic communities. Institutions such as East West Bancorp Inc., Cathay General Bancorp, Hanmi Financial Corp. and Nara Bancorp Inc. began in L.A..'s Chinatown and Koreatown and became multibillion-dollar institutions.
Their success has bred imitators: More than 20 Asian American banks are now based in Southern California, including two formed last year to serve Orange County's large Vietnamese community. A planned bank in Long Beach would be the first in the U.S. to focus on Cambodian immigrants, and banks targeting Latino businesses opened last week in Glendale and downtown Los Angeles.
