The Hill: Double down on community banks and PPP loans
|By Noor Menai , Opinion Contributor
November 30, 2020 (View Original Article)
With the general election behind us and Congress seemingly at a standstill on economic relief measures, the United States must unite around helping small businesses brave a long winter with rising COVID-19 caseloads. The best way to do this would be through a new version of the Paycheck Protection Program.
Since the onset of the novel coronavirus, Americans and U.S. business owners have demonstrated incredible resilience. The quickly-enacted Paycheck Protection Program played a crucial role in saving millions of jobs as it provided for nearly 4.9 million loans. While some decried the PPP as a handout to big banks and corporations, in fact 86 percent of the $521 billion in loans made under the program were for less than $150,000, and 82 percent of the lenders participating in the program were community banks having less than $1 billion in assets.
Clearly the collaboration between community banks and small business was key to the survival of countless businesses and jobs. Small firms employ over half of the private sector workforce in the U.S. and created nearly two-thirds of the nation’s net new jobs over the past decade.
However, the successful PPP program expired in August, leaving businesses without this vital financial support, at a time when infection rates are now running at more than 150,000 new cases a day. Under these conditions, economic recovery will remain elusive, particularly for the already decimated hospitality industry — restaurants, bars, entertainment venues, hotels, travel — which employ millions of Americans.
President-elect Biden has indicated he will rely on proven tactics — masks, social distancing, contact tracing — to counter the virus when he takes office. That discipline, coupled with the efforts to develop a vaccine and therapies, should have a positive impact on the economy.
But it will take time, likely well into 2021 even with the new vaccines. Small businesses and the millions of people they employ cannot wait that long.
Biden must quickly find a way to break congressional gridlock and enact a new round of stimulus that includes robust business assistance and loan programs. While a new legislative package has stalled, there is significant consensus on both sides of the aisle on the need, giving hope that a way forward can be hammered out.
As we saw, the success of the first PPP relied heavily on the effectiveness of banks, particularly community banks, in partnership with regulators in the early months of the pandemic. In stark contrast to the 2008 financial crisis — when banks were the focus of a strong backlash — today, banks have earned back the public’s trust. Research conducted by FTI Consulting found that 47 percent of the U.S. population views financial service companies more favorably than before the pandemic as a result of their strong, positive actions amid the crisis.
Key to the successful performance by financial institutions was regulators working seamlessly with banks to provide the guidance that allowed them to quickly provide fresh capital to businesses. Additionally, in recognition of the critical financial condition of small businesses, regulators altered some lending/borrowing regulations and permitted banks to give forbearances and favorable terms on small business loans made independently of the PPP program.
The need for a new stimulus and businesses assistance loan program is obvious.
America’s nearly 5,000 community banks are under stress. In the past two decades the number of banks with assets of less than $500 million declined by about 70 percent. Consolidation, regulatory issues and compliance costs have played a role, but their value, across the country, particularly in underserved areas, small towns and rural regions, cannot be underestimated. Community banks are an essential component of America’s financial success given their unique community knowledge and relationships that allow programs like PPP to succeed.
Only a few years ago many experts said community banks were “the walking dead,” obsolete and too small to survive. This pandemic has proven how wrong those pronouncements were.
A relief package must come quickly, and with an evolved and improved PPP program. Community banks have proven invaluable in this time of crisis, and it is now time to ensure they are supported and healthy for the long term.
Los Angeles Business Journal: LA500 Special Issue: The Most Influential People in L.A.
|By Scott Robson
May 25, 2020 (View Original Article)
This may seem like an odd time to stage a celebration.
Yet as the Business Journal unveils its fifth annual LA500 list, honoring the most influential leaders and executives in Los Angeles actually seems like just the kind of thing we can all use at this point in time.
Sure, this year’s collection of the leading figures from the city’s business community highlights the work that took place and the progress that was made in the months before Covid-19 arrived.
But it also serves as a reminder that L.A. is peopled by some of the smartest, most innovative and staunchly resilient business talent anywhere in the world.
In that context, this year’s LA500 shines a light on many of the figures who not only can help us navigate the crisis today but stand to help us find our way through to the other side of this situation.
That includes people like Patrick Soon-Shiong, who has marshaled his considerable medical experience as well as his biotech companies to tackle Covid-19 head on, embarking on a quest to provide treatment at his recently acquired St. Vincent Medical Center and to uncover a possible vaccine.
Then there are executives like Cedars-Sinai Health System Chief Executive Thomas Priselac, Kaiser Permanente Southern California President Julie Miller-Phipps and UCLA Health Chief Executive John Mazziotta who are leading organizations on the front line of the fight.
And don’t forget philanthropists like Michael Milken, who saw the pandemic coming early and repositioned the Milken Institute to offer leadership and support for the experts and companies working to combat the virus.
Of course, the civic leaders who made this year’s list are among the most significant players in the Covid-19 drama, leading the local response and attracting national headlines. That includes Mayor Eric Garcetti, Port of Los Angeles Executive Director Gene Seroka and Port of Long Beach Executive Director Mario Cordero.
On the pragmatic side of the pandemic, L.A.’s banks are rising to the occasion. With deep reserves and executives who were battle- tested by the Great Recession, some believe this sector will play a key role in pulling the local economy through this crisis. They’re also helping to efficiently and quickly disburse funds to small and midsized businesses through the Paycheck Protection Program.
That is why people like City National Bank Chief Executive Kelly Coffey, CTBC Bank Corp. President and Chief Executive Noor Menai and East West Bancorp Chief Executive Dominic Ng figure so prominently on this year’s LA500.
Then there are executives and businesses that are making the crisis a bit more bearable for everybody playing by the safer-at-home rules — and remaking some of the world’s most watched industries in the process.
Topping that category are streaming leaders like Netflix Inc. Chief Content Officer Ted Sarandos; Amazon Studios Head Jennifer Salke; and Hollywood heavyweight and Walt Disney Co. Executive Chairman Bob Iger, who showed that an old studio can learn new tricks with the hugely successful launch of Disney Plus.
And let’s play it forward for gaming executives such as Activision Blizzard Inc. Chief Executive Bobby Kotick and Riot Games Inc. Chief Executive Nicolo Laurent, whose companies have enjoyed explosive growth since mid-March as players everywhere seek the kind of connection and escape that only video games can offer.
Now, no LA500 rundown is complete without a deep dive into the region’s real estate power players. The industry drives much of the local economy, and it makes up the largest category on this year’s list.
While business may have slowed, it hasn’t stopped. People still need places to live. Cargo still has to be stored and distributed. Properties still need to be developed.
This year’s list, as always, represents the full range of the real estate industry, with high-flying residential brokers like Compass agent Chris Cortazzo, developers like Rick Caruso and and Rexford Industrial Co-Chief Executives Howard Schwimmer and Michael Frankel.
And while this edition of the LA500 contains the full complement of 500 names — including nearly 100 new members — the list still feels short by two names.
The first would be the recently departed developer Jerome “Jerry” Snyder, who held a revered place on the list during its first four years. The other name, of course, is Kobe Bryant, who inspired much of the planet as an athlete and a businessman before leaving us far too soon earlier this year.
But just as the city rallied following the tragic loss of Bryant, it’s likely it will do the same in the coming months as businesses figure out how to work through the coronavirus.
Because as L.A. has shown, as well as any major city during this crisis, there’s substantial strength in our community and remarkable power in our solidarity.
See the full LA500 list and features in the 2020 LA500 Special Edition.
Business Insider: 'We're all fintech firms now': The head of $180 billion CTBC Bank's US operations explains why it is weighing a bigger digital budget to hire from tech giants like Amazon
By Joe Williams
May 12, 2020 (View Original Article)
The financial services is industry is poised for a permanent upheaval as a result of the coronavirus pandemic, according to CTBC Bank's US CEO Noor Menai.
"We're all fintech firms now," he told Business Insider. "It's a profound change, but it turns out it wasn't that hard. It just took an emergency … to focus the mind."
For a company like CTBC Bank that operates more like a community lender in the US, the pivot to digital means more than just creating new applications.
The firm is weighing an increased budget to hire top talent from corporations like Amazon to help market the new products to customers, according to Menai.
The coronavirus pandemic upended nearly every US company and it remains to be seen what industries will be able to return to business as usual once the outbreak subsides.
But one sector that is poised for a permanent disruption is financial services, according to CTBC Bank's US CEO Noor Menai.
"We're all fintech firms now," he told Business Insider. "It's a profound change, but it turns out it wasn't that hard. It just took an emergency … to focus the mind."
Unlike traditional banks that still rely on brick-and-mortar locations, fintech startups like NuBank, Revolution, and Chime have used mobile-first strategies to attract millions of customers.
While industry behemoths like JPMorgan Chase and Citigroup employ many of the same digital tools, the legacy aspect of its business remain a key investment area.
But as the coronavirus leads to rapid changes in consumer behaviors — namely a reduction of in-person interactions — Menai argued that old-school financial institutions will no longer look at "fintech as something curious, something that other people were doing."
Now, "we're all seeing those models around convenience and delivery and doing things not necessarily involving humans is not just doable, but desirable," he said.
And the pivot to the digital world will have even more ramifications for the smaller banks.
While Taiwan-based CTBC Bank globally manages $180 billion in assets, its US business operates more akin to a community lender. Its 13 physical locations are segmented to California, New Jersey, and New York.
And the hyperlocal tendencies of regional players like CTBC were obliterated by the pandemic, forcing many to pivot to a technology-first model, according to Menai.
No longer will smaller banks be limited to specific zip codes or be forced to open physical branches if they wish to expand to new locations, he added.
"For community banks, we were always geographically bound," said Menai. "The more traditional type of bankers may want to go back to that model and may be pining for it, but I don't think customers will want that anymore."
'We're not talking about hardware, software'
But such a shift is more complicated than just investing in new digital tools, like a consumer-facing application that would allow clients to deposit checks or access accounts entirely virtually.
Fintech firms were able to achieve immense scale in a short period of time by offering their products for free and eliminating requirements that legacy institutions rely on, like minimum balances, according to Menai.
"Long-term, that's a crazy model. We just cannot do it, which is why you don't see even high-tech adopters or innovators like Citigroup or JPMorgan giving away their products for free," he said.
So as CTBC pivots to adopt more of the fintech operating model, it has to begin embracing some of the marketing strategies that have divided the new entrants from the incumbents.
"The labels might be the same as if you were doing a traditional product, but the steps involved are completely digital. And the science around data management and the targeting of those are very different," he said.
To help in that transition, CTBC is considering increasing its digital budget to hire the right skill set from top tech firms like Amazon.
"We're not talking about hardware, software. We're not talking about capital expenditures. We are talking about making the key hires," he said. "We need to bring in the pools of talent who can help us map out the pathways to being digitally native."
In the past, top Silicon Valley talent may have looked to industry heavyweights like Goldman Sachs or Chase.
But Menai said those firms "may have enough of those guys and the next place for these experts is where the other mass of people actually bank" — like community and regional lenders.
The change also means that CTBC can pivot more employees to the remote setting, a dramatic shift for a company that pre-coronavirus largely eschewed the concept of work-from-home.
"The core of getting a job done will get done without the physical cues, without the emotional strengthening of like-minded people being together in a physical location," said Menai.
Los Angeles Business Journal: Pacific Rim Perspective
By James Cutchin
March 16, 2020 (View Original Article)
Menai and CTBC have a unique view of the region’s challenges and opportunities
As the U.S. head of one of Taiwan’s largest banks, Menai has unique insight into the local economic impact of major events like the trade war and the coronavirus outbreak. The chief executive of downtown-based CTBC Bank Corp. (USA), Menai was born and raised in Pakistan. He spent his career traveling the world before arriving in Los Angeles just under eight years ago.
Menai got his start working in IT at a bank that was later acquired by JPMorgan Chase & Co. He went on to hold a range of positions, including CEO of Charles Schwab Corp.’s San Francisco-based bank, and managing director of a Middle Eastern sovereign wealth fund. Since taking the reins as chief executive at CTBC USA in 2012, Menai has more than doubled its assets, from $1.49 billion in 2012 to $3.74 billion this year, according to the bank. He also increased its annual pre-tax income fivefold, from $9.1 million in 2012 to $50 million in 2019.
Menai’s business, steeped in international investment and commerce, exists in a space deeply affected by recent U.S.-China tensions. Despite the circumstances, the CEO is sanguine about prospects for Los Angeles businesses and opportunities in an increasingly turbulent global environment.
Drinking from the firehose
At its peak, Chinese investment helped transform Los Angeles’ skyline and fund major projects like the Metropolis Los Angeles and Oceanwide Plaza complexes — both $1 billion projects with luxury condos, shopping centers and hotels.
Chinese direct investment in the United States peaked in 2016 at $46 billion. Since then, it has fallen sharply. In 2018, the most recent year with data available, Chinese direct investment totaled $4.8 billion, down 90% from its 2016 high, according to independent researcher Rhodium Group.
Menai says, however, that these numbers can be misleading. “There was a peak,” he said, “but because that was like drinking from a firehose, it is still a very substantial inflow.”
According to Menai, large “vanity projects” like massive hotel and condominium developments in markets like Los Angeles helped inflate the value of Chinese direct investment leading up to 2016. Deals like Beijing-based property developer Wanda Group’s purchase of AMC Entertainment Holdings Inc. seemed poised to reshape entire sectors of the U.S. economy.
Then, in 2017, a Chinese government crackdown on these megaprojects choked off a huge swath of investment funds. Chinese conglomerates like Wanda were pressured to divest a range of overseas investments — especially those with little relation to their historical lines of business.
“There was a proper response from the Chinese government to say, ‘Guys, pick a lane,’” Menai said.
While some high-profile projects were deeply impacted by the new policies — such as Wanda’s $420 million sell-off of a flagship Beverly Hills property in 2018 — Menai says large portions of the U.S.-China investment space were unaffected.
“We actually haven’t seen much let-up in demand for investment in the residential (real estate) side,” he said.
Individual Chinese citizens, according to Menai, have still found ways to keep up purchases in the Los Angeles property space, despite the crackdown on capital outflows from Beijing.
“Chinese investment in residential is like water,” Menai said. “It will find a way.”
The majority of U.S.-China business was also unaffected by Beijing’s investment policies, according to Menai.
“If you cross out those big hotel projects which were distorting the total investment numbers, and you just look at the middle-market,” he said, “the bread and butter of supply chains was largely untouched.”
Menai raised the example of Gardena-based Tireco Inc. “If they are getting tires manufactured in Asia, it’s a substantial business, but it’s not in the Fortune 10, they’re not General Motors,” he said. “Those things worked unabated.”
It took two phenomena, one systemic and one political, to finally shake these long-standing supply chains.
Trade war opportunities
In the years leading up to the U.S.-China trade war, American manufacturers were already looking to diversify supply chains away from China.
“It was more of a macroeconomic consideration,” Menai said, “The cost of production in China is going up, so where is the next China?”
Companies had been exploring alternatives, such as Vietnam, for some time, according to Menai, when the trade war hit.
“Then companies were thinking, ‘Well, now if it’s politically unpopular for me to be manufacturing in that part of the world, what are my alternatives?’” he asked.
Rather than presenting a threat, Menai said these shifts in global supply chains offered unique opportunities for his bank.
“We own the entire Pacific Rim,” he said. “We’re in Malaysia, we’re in Hong Kong, we’re in Japan, we’re in Taiwan, we’re in China and we’re in North America.
“We can look and say, ‘Tariffs are going to hit. They are gonna hit this sector and here’s the trickle-down effect on you.”
According to Menai, CTBC’s on-the-ground understanding of both North American and Asia Pacific markets leaves the bank well positioned to help companies redesign their supply chains.
“We could go from factoring your loads and your inventory in any one of these countries,” he said, “all the way to being your partner as you strategically shift some of your manufacturing from country A to country B.”
“It’s not just China that’s the world’s factory,” Menai added. “It’s the Pacific Rim that’s the world’s factory.”
Best laid plans
Yet, even an optimist like Menai is watching some news with a wary eye.
Panic over Covid-19, the disease caused by the coronavirus, has roiled global markets. All three major U.S. stock market indexes plunged into bear market territory on March 12 as investors reeled over President Trump’s announcement of a coronavirus-driven, 30-day ban on most travel from Europe. It was the Dow Jones Industrial Average’s worst day since the 1987 Black Monday crash.
Menai said banks like his were relatively well equipped to face the spread of the virus.
“We have pandemic policies and procedures that we stress test regularly,” he said. “We know how to keep our business operational. We know how to keep our employees and our customers safe.”
These policies, part of a bank’s standard business continuity planning, are mandated by regulators to ensure that the country’s economic infrastructure doesn’t collapse in the event of a crisis.
“We’re the guys who are double-knotting our shoelaces, and wearing belts and suspenders because our job is to be conservative,” he said.
The CEO conceded, however, that all this planning could only go so far in the event of a pandemic.
“We’re not insulated from what happens to the U.S. economy,” he said. “We have a diversified business model, but things still tend to go down when the economy goes down.”
CFO Tech Outlook: The Digitally Enhanced Future
By Richard Kung, Chief Financial Officer, CTBC Bank (USA)
July, 2019 (View Original Article)
1. In light of your experience what are the trends and challenges you’ve witnessed happening with respect to the Revenue Management landscape?
Challenges include unpredictable yield curves with prolonged high short-term rates and extremely flat long-term rates directly and indirectly impacted by the current evolution of digital banks, trade conflicts, geo-political concerns and other uncertainties. Consumers are showing sensitivity to deposit pricing with even more challenges on loan pricing. Mega-banks have the resources to deploy both sophisticated digital banking with big data capabilities to grow or maintain their share of low-cost deposits, while community banks solely relying on interest income will likely to suffer net interest margin (NIM) compression.
"Providing tailored experiences for defined customers, however, would differentiate us from competitive peers"
2. Could you talk about your approach to identifying the right partnership providers from the lot?
There are limited resources, so community banks have to prioritize their strategic options from focusing on specialized segmented banking to high tech based banking. At CTBC Bank USA, we continually monitor the ever evolving financial industry and its various technology disruptors. There are numerous potential fintech partnership potentials within payment technology, robo advisory, banking automations, AI, etc., which we, like other community banks, continue to explore for viable options and a future right to play.
3. Could you elaborate on some interesting and impactful projects/initiatives you’re currently overseeing?
Enhancing the online banking platform to improve customer experience is a major ongoing project. Along with our community peers, we continuously explore areas of priority for both consumer and business on-line banking platforms. Given the scarcity of resources and our strategic position within a community bank, CTBC always carefully evaluates the right “qualifiers” to stay in the game.
4. What are some points of discussion that go on in your leadership panel? What are the strategic points you go by to steer the company forward?
Opportunities to drive growth are often discussed, though they are seen as a challenge for community banks. Providing tailored experiences for defined customers, however, would differentiate us from competitive peers. CTBC’s global presence means we are able to provide one-stop solutions for business customers while prudently selecting products and services for our current customer segment. The challenge is getting on board generation Z, which adopts and relies on fast-changing technologies.
5. Can you draw an analogy between your personality traits, hobbies and how they reflect on your leadership strategy?
Self-awareness is probably one of the most important personality traits a leader can possess, in order to balance oneself with others of complementary skills. I have immense curiosity, I’m constantly exploring and experimenting with new technologies, reading between the lines of financial reports for a feel of our competitors’ strategy, etc.
6. How do you see the evolution of the Revenue Management industry a few years from now with regard to some of its potential disruptions and transformations?
The ubiquity of digital and the development/deployment of 5G means all products, services and delivery of contents will be “on-demand”. For instance, tradition TV viewing is disappearing with Netflix, Hulu and YouTube TV. Similar concepts apply to the banking space where deposits and withdraws happen in real-time over an on-line platform. The disruption in payment technology may potentially place the credit card industry in jeopardy, while AI may provide instant, next best product and services in the blink of an eye.
Los Angeles Business Journal: CTBC Bank CEO Joins FDIC Panel on Supervision Modernization
By Pat Maio
March 7, 2019 (View Original Article)
Noor Menai, president and chief executive officer of downtown-based lender CTBC Bank Corp. (USA), was named by the Federal Deposit Insurance Corp. to a community banking advisory panel looking at ways to adopt better technology and data sources used in safety and soundness examinations in the banking system.
Menai is working with other banking and technology executives on the panel – called the FDIC’s Subcommittee on Supervision Modernization – in support of the regulatory agency that insures deposits for the nation’s 5,400 bank and thrift institutions.
Menai was invited to be part of the panel by FDIC Chairman Jelena McWilliams. The initial two-day meeting of the panel ended March 6, in Washington, D.C.
Menai oversees CTBC’s U.S. operations, a $3.45 billion-in-asset company, which includes the bank’s commercial, industrial, and commercial real estate lending groups. He also oversees North American operations for the parent bank, based in Taiwan. Prior to CTBC, Menai spent three years in private equity as founder and managing director of Fajr Capital. Earlier, he served as chief executive of Charles Schwab Bank and in several senior roles at Citigroup. He began his career at JPMorgan Chase.
Bloomberg: How U.S. Trade Tension Impacts China's Financial Services
February 21, 2019
Noor Menai, chief executive officer at CTBC Bank USA, discusses the impact of U.S.-China trade on financial services, concerns about Huawei and China's economy, and the potential for Chinese bank consolidation. He speaks on "Bloomberg Markets."