Teller Manager Ly Bun processes a customer’s transaction at Royal Asian Bank in Upper Darby, Pa.AP PHOTO
UPPER DARBY — When customers step inside the cheery, bright interior of Royal Asian Bank, they are greeted with a respectful bow and a greeting in Korean.
At the Korean bank’s branch in Upper Darby, a middle-class suburb of Philadelphia, employees speak not only Korean, but Mandarin, Cantonese, Cambodian and of course, English.
Wearing a windbreaker and jeans, Korean pastor Young Hyun Jeon opened an account one rainy afternoon at the bank as his wife, clad in an orange track suit, sat demurely beside him.
“They are familiar with my culture and language,” the 59-year-old Rosemont resident said about choosing the bank. “While I can speak English, I feel more comfortable speaking Korean.”
Royal Asian Bank, a unit of Royal Bank America in Narberth, is one of a growing number of banks targeting the growing Asian community in Pennsylvania. Many of these banks are sprouting up in areas outside of known Asian strongholds in California and New York City as the population branches out. In the fiercely competitive world of banking, their cultural and linguistic ties give them an edge.
Asians make up the second-fastest growing ethnic group in the U.S. after Hispanics, rising by 3 percent from July 2004 to July 2005 to 14.4 million, according to the U.S. Census Bureau. Census figures released in August show that Asian households have a 2005 median income of over $61,000 a year, the highest of all groups — including whites not of Hispanic descent, who came in second at nearly $51,000.
There were 77 Asian banks nationwide as of June 30, voluntarily listing with the Federal Deposit Insurance Corp. in Washington, D.C. That’s up 24 percent from 62 Asian banks at the end of 2000. In contrast, the number of banks and thrifts as a whole shrank by 11 percent to 8,778 this year.
In the Philadelphia area, Asian banks with a presence include Royal Asian Bank, MoreBank, Asian Bank and Woori America Bank. HSBC, a unit of London-based HSBC Holdings Plc whose roots are Asian, has a branch in Chinatown and downtown Philadelphia.
The number of Asian businesses grew by 24 percent to 1.1 million between 1997 and 2002, about double the national average, according to the U.S. Census Bureau’s report released in May. Revenue topped $326 billion in 2002, up 8 percent from the prior five years.
Serving this community, known for its relatively low lending losses, has been lucrative.
Asian banks have been “highly successful in producing great returns for years,” said Jeff Davis, director of research for financial institutions at FTN Midwest Securities Corp. in Cleveland.
This year, FTN sees Asian banks posting a 10 percent earnings growth compared with 4 percent for small banks overall. Last year, profits rose 36 percent vs. 15 percent for small banks.
In the Asian community, “the work ethics, income levels and educational levels are higher than average,” Davis said. “They have low loss rates in lending.”
Edward Shin, president and chief executive of Royal Asian Bank, said he’s only had one lending loss — $20,000 — during the bank’s two years of operation. Even then, it was more of fraud, he said.
The bank, a unit of Royal Bancshares of Pennsylvania Inc. in Narberth, has accumulated $65 million of assets in four branches. It plans to open another branch, in New Jersey.
The close-knit nature of the community minimizes defaults, Shin said. Since many people know each other, word will quickly spread about someone who doesn’t pay back a loan.
Targeting Asians also goes beyond speaking the language. Shin said that since many immigrants are newly arrived, the bank tries to be flexible in asking for credit information.
“I find a way to finance their businesses because they’re newly immigrated and they work hard,” he said. “In other banks, they just say, ’No, we can’t do it.”
The bank will consider accounts from banks in Asia with a standby letter of credit as guarantee. Since bank employees are familiar with South Korea, they will know reputable banks there. Royal Asian Bank also would ask the customer whether family members are willing to back a loan.
Royal Asian Bank also offers a savings plan adapted from a popular Korean system that acts like a fundraising club called “kye,” pronounced “keh.” In this system, each member of the group gives money every month to a pool. Eventually, each member gets a turn to take the whole pot.
Shin’s version, called “Club Savings,” is designed to conform to banking laws. Customers deposit a set amount per month and collect the “pot” at the end of the term. For a $40.49 monthly deposit over 24 months, the customer gets $1,000 in two years. That comes out to a 3 percent interest rate.
But coming from the same country also has its challenges.
Shin said in South Korea, customers were able to pay utility bills at the bank. He has had to explain that it’s different in America — diplomatically, so as not to offend his customers.
“Our community demands from us a lot, but we have rules and regulations,” Shin said, quipping, “my customer gives me a straight punch and my company gives me the hook.”