Korean group opens L.A. thrift and loan.

Korean group opens L.A thrift and loan

Los Angeles Thrift & Loan opened its doors last week, becoming the second thrift and loan to start up in the county this year.

Stormy financial markets did not scare off the 25 Korean and Korean-American investors who contributed $3 million for the initial capitalization of the Los Angeles-based thrift.

"The financial climate should be advantageous to our type of lending," said Edward Hu, president of the institution. "Banks and S&Ls are tightening their credit while we have a lot of money to lend."

Thrift & loans are state-chartered, federally insured lenders who typically lend at a high interest rate to borrowers who banks and S&Ls refuse to.

The institutions lack checking accounts, instead offering accounts similar to certificates of deposit and passbook savings accounts.

Hu said that Los Angeles Thrift & Loan will offer real estate, car and business loans of between $5,000 and $500,000.

Hu, formerly a vice president of Woodland Hills-based Pacific Thrift & Loan and president and chief executive of Alhambra-based Golden Security Thrift & Loan, said that being a Korean-owned institution will help attract Korean and Korean-American deposits.

"This is the first Korean-owned thrift & loan in the state," he said.

But beyond that, numbers supported the thrift's creation, said a consultant to the company.

"We called 30 businesses in the area and asked whether they would use the services of a Korean thrift," said Barry Rubens, chief executive of Santa Monica-based California Research Corp. "Ninety-five percent of the people we talked to said `yes' there was a need for the thrift, and 90 percent said they would patronize such a service. Ethnic groups like to do business with their own."

And there are many potential Korean business borrowers. Since 1988, Korean-owned businesses in the four square miles of Koreatown have increased from 35,000 to 50,000, said Rubens, who founded Los Angeles-based Royal Thrift & Loan in 1987.

In August, Chinese and Chinese-American investors opened San Gabriel-based Asian Pacific Thrift & Loan. With the addition of Los Angeles Thrift there will be 15 thrift and loans in Los Angeles County.

Spearheading the drive for investors for the bank was Chairman and Chief Financial Officer Y.K. Cheung, a self-employed Koreantown certified public accountant with little thrift experience.

The thrift will initially have three employees, Hu said.

A state thrift regulator said that in recent years California thrifts have moved to challenge S&Ls and banks. "Traditionally a thrift and loan served a different segment of the market," said Douglas Kirkpatrick, special administrator for thrift and loans for the state Department of Corporations, which regulates the state's thrifts & loans. "In the last few years, there's been more competition. They've moved into areas the S&Ls got into. They're doing more long term real estate loans, lines of credit, commercial loans and leasing."

All thrift and loans were required to obtain FDIC insurance by July 1, 1990. Nine institutions of 56 throughout the state failed to meet the requirement and were forced out of business, Kirkpatrick said.