Boston Asian American Bank Founder Reflects on Past, Future

By Adam Smith, Sampan

BOSTON - Feb. 17, 2006 - These days, Vivian Wenhuey Chen Huang spends much of her time at her Andover home writing poetry and painting. Calm and soft-spoken, she hardly looks like the pioneering businesswoman she once was. But it was only about 15 years ago that Huang succeeded in what others tried to do but failed: start a Chinatown-based bank in Boston catering to the needs of Chinese immigrants.

At a time when the local banking business was hurting, and banks were closing instead of opening, Huang managed to pull together enough investors to raise the $7.5 million needed to get a state charter to open the Asian American Bank. And by many measures, the bank thrived in its beginning years under the leadership of Huang, a lawyer by training and practice, who worked daily at the bank until 10 or 11 p.m. In 1997, four years after Asian American Bank opened its doors, an article in the Boston Herald said the bank had "beat the odds" by serving a niche market of local Asian Americans, a group that grew rapidly in Massachusetts over the 1990s. The bank grew swiftly, and in 2001, it reached what Huang called the "critical point" of $100 million in assets.

It was at about that time that she was "pushed out" -- as she puts it -- as president and CEO, and reduced to one of about 16 directors of the bank. She remained on the board of directors, along with her husband, from 2001 until the bank was purchased late last year by a California-based bank holding company.

Huang had previously declined to discuss in depth with the media her removal as head of the bank she founded and the bank's subsequent sale. Last week, however, she discussed both in a 70-minute interview with the Sampan.

Huang, a slim woman who even in retirement exudes an air of crisp professionalism in both dress and attitude, described her departure as president and CEO as premature and based more on unfair personal squabbles and jealousy than on her performance as a leader. She said that in many ways, the sale of the bank was the best long-term option for the bank.

Huang said that many on the board, including herself, were largely inexperienced in banking -- though perhaps successful in other careers as medical doctors and engineers.

Huang, a trained lawyer, also alleged that some directors envied the attention she received as president and CEO of the bank, and that they were hungry for control. "They wanted their hands in every piece of pie," she said. "It was like their own private club." Other directors contested these accusations.

Though she turned the bank into a $100 million operation within the first eight years, she said, several board members did not see this as a success and thought the growth was too slow. The bank needed the community's trust to succeed, she said, and a shakeup at the top could compromise that trust.

Huang indicated she felt the bank's success suffered after her dismissal as president and CEO in 2001. Yet looking at the bank's balance sheet shows a mixed picture. From December 31, 2001 to June 30, 2005, the annual return on average assets fell from .74% to .37%. But in the years after her leadership, the bank's assets did grow -- by nearly $30 million to about $130 million -- and so did its total deposits.

According to Raymond Tung, who was president and CEO of the bank from around 2002, several "house cleaning" measures were needed when he came on board. He said he had to close some 200 accounts that he didn't "feel comfortable with" -- for example accounts with strange names from faraway states -- and upgrade the level of professionalism at the bank. In addition, he closed two branches that were not profitable. The measures, he said, might have affected costs in the short run, but led to long-term stability and health.

The economy in 2001 took many hits. The dot-com business had just gone bust and terrorist attacks shocked the U.S. In the past several years, other Chinese American banks such as Cathay General Bancorp have grown, while mainstream banks such as Citizens and Bank of America have hired more bilingual staff and offered more bilingual ATM machines. In addition, in reaction to the September 11 terrorist attacks, the federal government has been tightening the regulations on banks.

The Other Side of the Story

While two former employees -- one an assistant manager and another a lending and mortgage officer -- called Huang "hardworking" and a "good businesswoman," a former manager who worked at the bank in the mid-1990s said that when she heard Huang was voted down, she "was so happy, that's all I can say, everybody was happy." Several directors maintained that the reason Huang was voted out as president was because the board wanted someone with more banking experience, such as Raymond Tung, who had more than 30 years of banking experience, including work for J.P. Morgan Chase, before joining Asian American Bank.

"We were not trying to get rid of her, we were trying to get somebody with banking experience," said longtime director Harold Kwok. "We thought that someone with banking experience would take the bank to the next level," he said, adding that Huang had done an "amazing" job running the bank for someone without prior banking experience. Kwok's recollection of the vote was supported by several other directors, who also said they felt the bank simply needed a leader who was more experienced in banking.

"It was a very difficult time, nobody wanted to play a role in removing a president and CEO," said former longtime director Cecilia Sze.

"Did it put the bank in a better position? Yes it did."

Kwok and others said that Huang probably felt hurt after she was replaced as president and CEO, but that the directors were only looking out for the good of the bank.

Edward Chiang, another longtime director, said that Huang did a good job leading the bank and agreed with Huang's description of a board that was often squabbling and "difficult to work with." But he attributed much of that to the size of the 16-person board. And while he -- as well as several other directors -- disagreed that the board was "jealous" of Huang's attention as president, he did say that some directors may have disliked Huang more for her interpersonal skills than for her performance as a leader.

"Well, let's face it. In the Chinese community, the personality difficulties are always there. It doesn't matter which organization," he said.

When asked if he felt, in retrospect, that Huang was voted off as president unfairly, Chiang said: "Looking back, I cannot say it's unfair. As a (leader), you have to be able to manage the personality conflicts."

The Beginnings

A native of Taiwan, Huang studied law in Taipei and later at Indiana University. She began a legal career at Ropes & Gray in 1973 after moving to Massachusetts with her husband, and worked there until January of 1990 when she decided to start the Asian American Bank.

A major reason she wanted to open the bank, she said, was because other mainstream banks were not adequately serving the area's Chinese community.

The banks, she said, would take money from the Chinese who trusted them enough to open accounts, and then invest the money outside the community, deciding against loaning money to Chinatown businesses or organizations.

She felt that, at the time, tellers at mainstream banks treated Chinese immigrants "very rudely" and didn't understand, trust or care about their Chinese clientele. When Asian American Bank opened, it provided services and products that targeted the Chinese American community - including bilingual staff and materials as well as late and weekend hours. "We were the first ones to open late and to open on weekends" -- and the moment it was legal -- "we opened on Sundays," she said.

But starting the bank in the early 1990s was a gamble. In 1991, Huang and other investors failed to raise enough money for a national bank charter.

When they did get a state charter in 1993, the odds for success were against them: from about 1988 to 1994, nearly 40 banks failed in Massachusetts, according to Joseph A. Leonard Jr., deputy commissioner of banks and general counsel at the Massachusetts Division of Banks.

"It was a difficult time to be in the banking business," said Leonard.

Between about 1992 and 1996, Asian American Bank was the only bank to receive a state charter.

But the risk paid off.

The bank grew over the years and by the time it was sold in late November of 2005, it had three branches and around $130 million in total assets.

California Takeover

Huang said she has mixed feelings about seeing the bank she founded -- but had very little control over after 2001 -- get purchased by a bank from out of state.

From her perspective, she felt that Asian American Bank was not as successful as it should have been after she was replaced in 2001 -- "long and short, the bank was not doing well." Huang felt the sale of the bank was best in the long-run interests. (Several other directors felt that bank was, in fact, run better after Huang's dismissal as president.)

She also feared that other directors -- she refused to name them - wanted to turn the bank into a "family bank" -- though other directors did not agree with this. "The only person I heard espouse that idea was Vivian," said Jerry Boos, a director and co-founder of the bank.

Tung declined to speculate on the possibility.

Longtime director Chiang, who spoke highly of Huang's performance as a former leader and founder of the bank, suggested Huang herself might have become too close to the bank.

"Most founding fathers of an organization make the mistake of treating the organization as his or her own baby," he said.

But Huang was willing to let her "baby" go when the bank was sold to UCBH Holdings, a San Francisco-based bank holding company, that also serves the Chinese American community, purchased Asian American Bank for about $34.3 million.

Though the bank's official version of the sale is that UCBH approached Asian American Bank, Huang indicated she played a role in the sale, saying that "I was delighted that I was able to help arrange this sale."

While regretting that Asian American Bank never became a larger operation like UCBH -- "why could they do it," she asked, "and we couldn't?" -- she did feel the merger was best for the bank.

The purchase, she said, was beneficial to customers and shareholders of Asian American Bank and employees, as most have been retained by UCBH.

"UCBH, I think, is the right buyer," said Huang. "Because they are a Chinese American bank, they will understand our customer base and can continue to serve our customers."