In the world of banking today almost all the news is bad. After years of shady lending practices and mega-budget takeovers, banks everywhere are facing a day of reckoning that some believe could see the collapse of thousands of institutions.
And yet, amid such dire predictions, Roma Financial Corp., headquartered on Route 33 in Robbinsville, is doing just fine. Having stayed small and independent, and having avoided overextending its assets, the company that owns Roma Bank has sidestepped most of the misfortunes now plaguing America’s top financial institutions.
According to Roma’s latest SEC report, filed on August 7 and accounting for activity from January 1 through June 30, total assets increased by $48 million to $955.1 million and total liabilities increased by $46.7 million to $735 million. Net equity increased $89,000 to $218.4 million. The report cites the opening of three branches in 2008 as a major reason for its increased assets.
Such news gives Roma Financial a lot of confidence. So much so, in fact, that the company chose perhaps the worst business week of the year — the one leading up to the 4th of July — to launch the most unique banking project in the state.
On June 30 Roma Financial opened the first of several planned branches of RomAsia Bank at 4287 Route 1 in South Brunswick. What makes RomAsia unique is that it caters to the region’s substantial (and growing) Asian population. Unlike banks that zero in on one particular ethnic group, which Roma itself did with Italian immigrants in the 1920s, RomAsia is positioning itself to serve the panorama of Asian cultures stretching from the Middle East to the Orient. “We believe the banking and financial needs of the Asian-American community have been largely overlooked,” says RomAsia president William Heath.
Middlesex County’s Asian population makes up a full 18 percent of county residents, second only to Caucasians and more than all remaining ethnic groups combined, according to 2006 numbers from the United States Census. The 2000 Census counted 104,000 Asians in Middlesex County. Six years later, there were 142,000.
And the Asian population here is not only substantial, it is diverse. The majority is comprised of Chinese, Indian, Korean, and Japanese, but there are dozens of other cultures represented — Thai, Vietnamese, Nepali, Filipino, and Pakistani are but a few.
But while this population creates enormous opportunity, it also creates enormous challenges. The very diversity RomAsia seeks to embrace means that the bank must be careful with the messages it sends. Consider, for example, RomAsia’s early idea to line the branch’s front lawn with Asian flags. The intent, Heath says, was to be all-inclusive. But with 37 nations and hundreds of regional subcultures to keep track of, a small oversight could inadvertently offend any number of people.
Such seemingly harmless oversights are easier to make than you might think, and even Heath is not immune. Heath, who is white and of Irish decent, had been speaking with an Indian man named Ram. The trouble was that whenever Heath addressed him, he said Ram’s name like an English speaker would — as if it rhymes with “ham.” It actually rhymes with “mom.” Saying it with a flat A means “dog.”
Fortunately, Heath says, Ram was not really offended — he understood that it was just a matter of language differences. But the incident provided a lesson in cultural sensitivity. Though he noticed, Ram never corrected Heath, who was informed of the mispronunciation by someone else. Heath also learned that many other Asian people, for various cultural reasons, would not have corrected him either. The implication, of course, is that a potential customer might never come in (or an existing one might leave) and no one in the bank would know why.
It is exactly this type of thing that Heath says all RomAsia’s officers and staff must understand in order to be the type of neighbor the bank is seeking to be. Asia has a bevy of distinct cultural identities — India alone has 14 languages and two major religions — and different cultures react differently to any given thing, from the style of art to the meaning of colors.
Located in what was the headquarters of Grand Bank, RomAsia’s headquarters branch is decorated to show that its officers have indeed been paying attention. Bamboo plants grow beneath muted paintings of Chinese landscapes, while Muslim art and Hindu figurines decorate executive offices. The red wood of the furniture is neatly complimented with maroon overtones. This is significant because of what red means to most Asian cultures — good luck. Heath says Roma Financial shied away from its traditional green because though dark greens represent peace to many Asians, certain shades of green are insulting to others.
Careful attention was paid to the design of RomAsia’s logo as well. With its enlarged A and sweeping crossline, the logo was purposely crafted to evoke the image of a bridge, another positive symbol in Asian cultures.
RomAsia has paid equal attention to its people. If you were to walk into the branch when fully staffed you would be able to start a conversation in one of 10 languages, counting English, of course. Chinese, Urdu, Indonesian, Hindi, Gujarati, and Spanish are the predominant tongues. The branch houses two Chinese speakers in part because Chinese customers already make up the bank’s largest nationality.
“The staff was recruited to mirror the market we’re trying to serve,” Heath says. Most have master’s degrees, are business-savvy, and know the Asian financial markets.
Heath says Roma Financial originally searched for an Asian president, but contacted him largely because of his long banking resume. Working in Heath’s favor is his background in Air Force intelligence in the Middle East.
Heath joined the Air Force directly from high school in 1962 to preempt being drafted. He chose the branch because he dreamed of being a pilot as a boy growing up in a poor family in Jersey City, where both his parents earned a living in the manufacturing industry. Unable to take pilot training, he ended up in the security and intelligence service operated under the National Security Agency.
During his four-year hitch, Heath was stationed in Europe and then in Peshawar — in the Khyber Pass, which links Pakistan to Afghanistan — for a year. “It’s where Osama bin Laden is hiding out,” he says. “Osama’s probably in my cave.” His first day in Pakistan was the day the India-Pakistan conflict broke out, and his yearlong stay among some of that nation’s poorest residents was dotted with its fair share of tense moments, including having to stand guard while 100 Indian paratroopers, unaware that they were about to engage Americans, surrounded his group.
In 1966 it was almost a given that if you worked in intelligence you had a job waiting for you at the State Department after your enlistment was up. Heath had such a job waiting too. But getting to it required six months of processing. Not willing to be unemployed, Heath took a friend up on a job offer at First Jersey National Bank. Six months later the bank promoted him and he decided to stay — partly because he’d met a girl.
His wife-to-be did not want the nomadic life of a State Department worker and Heath decided that if he was to stay in banking, he wanted to be president of one some day. He earned his associate’s and bachelor’s degrees in business administration from Rutgers by going to night school for more than five years. He graduated in 1976 and then earned a master’s from Rutgers in 1981.
Over the years Heath has managed several banks, most of which are now Bank of America. He served at Sovereign, from 1997 to 2005. He retired but went back to work as president of First State Bank for about a year. Then he retired again.
When the management recruitment company representing Roma Financial called, Heath was supremely uninterested. But the president and CEO of Roma Financial is Peter Inverso, a former state senator. “I thought, ‘It’s a state senator’s office, I should return his call,” Heath says. Besides, he had been out of work for a month and was already climbing the walls. Soon he was not just sold on RomAsia, he sold his house in northern New Jersey and moved with his wife and cat (he also has two grown children) to Jackson.
Heath says being in banking for 40 years got him his current position, but he admits that having lived in northern Pakistan has helped. When he interviewed for the job he found that one of his potential bosses was born near Peshawar and remembered his father warning him about danger in the north. “Don’t ever go up that mountain,” the boy’s father told him. “There are bad people there.” Heath knew the bad people well. “That was us,” he says.
Heath’s time in the Middle East, he says, has allowed him to see how parts of many cultures live. It also has given him some street cred among many Asians from the region. “They look at me a little differently when I tell them I lived there,” Heath says. “A little more favorably.”
That acceptance carries much weight among RomAsia’s board, which itself is a veritable salad of the region’s most successful Asian businesspeople: Harcharan Gill of PARS Environmental in Robbinsville and chairman of the Central Jersey Sikh Association, Richard Wong of the Princeton Eye Group on North Harrison Street, Princeton restaurateur Elsie Pang, owner of Thai Village on Nassau and Olden streets, and Peter Yi, an oncologist at the University Medical Center at Princeton. The board, says Inverso, who also is a member, was culled from its original group of investors, a customary banking practice. Roma Financial is the holding company for RomAsia and currently owns 90 percent of the bank. RomAsia was founded with $15 million, most of which came from Roma Financial because delays in getting the bank going hampered the corporation’s efforts to raise more initial investment from outside investors, Inverso says. Investors are still being considered, he says, and, according to Tom O’Donnell, Roma Financial expects to eventually hold 60 percent.
Yi serves not as a financial advisor (“I went to medical school, I have no business background”) but as liaison to the Korean-American community. “My role is as more of a cultural bridge,” Yi says. It is an important role, he says, because it personalizes the bank.
“A lot of people are intimidated by the larger banks,” Yi says. “You call an 800 number and you talk to someone in Houston.” Already obstructed by language barriers, Asian immigrants simply do not feel comfortable on the phone with a faceless banker. “They like to see you person-to-person. Look you in the eye,” Yi says.
This is especially true when customers are trying to figure out the best options for their money. Having a local banker who knows you raises the comfort level, he says. And having bankers who speak your language and understand your culture goes a long way.
RomAsia, Yi says, is trying to dispel the intimidating image of the traditional banker — tight suits, immense desks, penetrating scowls. Many Asians, unfortunately, have experienced exactly this in other banks. “It’s like going to the police. Let me tell you, a lot of Asian people are not comfortable having to go in front of the police,” he says.
Comfort is an important piece of RomAsia’s plans. The main reason the bank came into existence, Inverso says, is to provide a place in which Asian-Americans, many of whom have trouble adjusting to the rhythms of American life, would feel as if they belong.
Just making the effort seems to paying off. Yi, who in addition to his practice serves on the executive committee of the Korean Community Center of Princeton, says he was approached to serve on RomAsia’s board about 18 months ago. Almost immediately, he says, the Korean community responded to news of the coming bank with, “It’s about time.”
“There are a lot of people who are ready to move to the next level,” Yi says. “It shows there’s a need that hasn’t been met yet.”
Though Asians have the same general banking needs as anyone else — savings accounts, loans, checks, investments — one of the community’s defining characteristics is that its people want to stay in touch with their roots. Simply put, Yi says, people want to send money home.
Heath says RomAsia is hoping to establish business connections between Asian-Americans and Asian companies and set up wire transfers to accounts there. RomAsia is in talks with a major Asian bank that has branches in almost every country on that continent, but Heath cannot mention the name yet. The plan, however, is to connect with a broad-reaching bank so that transfers could be done without having to establish individual ties (and filing mountains of paperwork) in order to do business with each nation in Asia.
Banks focusing on ethnic groups are not a new concept. In 1997 several enterprising bankers realized the efficacy of catering to specific populations and built loyal customer bases, says Tim Doherty of NJBankers in Trenton. Two successful ones are HSBC, a northern New Jersey bank aimed primarily at Hispanics, and Indus American, a central New Jersey bank focused on the Indian population. Tom O’Donnell, RomAsia’s CFO, previously worked at Indus.
Roma itself predates the trend toward ethnically focused banks by almost 80 years. Roma Bank opened its first branch in Trenton in 1920 specifically to assist Italian immigrants. The bank built a loyal customer base that took advantage of its efforts to acclimate Italians to a new society. Customers borrowed money for small homes and businesses and the bank has been widely credited with stimulating a poor, immigrant-heavy economy in the capital city.
But though RomAsia is an entirely separate bank, it is making no secret of its efforts to mimic its forerunner’s success. The key difference, however — and one that RomAsia is keen to exploit — is that unlike the Italian immigrants of the 1920s, Asians are not coming to America poor.
Many Asians are already coming to America with advanced degrees and are already established doctors, engineers, scientists, and business people, Heath says. And these residents are spread across much of Middlesex and Mercer counties, which is why RomAsia intends to open a bank a year for the next several years, primarily in Middlesex County. A second branch is expected to open in the county before the end of the fiscal year, in June.
If the early returns are any indication of RomAsia’s chances of succeeding with this plan, things should work out fine. In its first six weeks, the bank opened nearly 600 accounts and already holds more than $15 million in deposits. Cash deposits turn into assets for banks, which use them for loans and investments. This effectively gives RomAsia $30 million in assets before it’s even two month old. While he is happy with these numbers, Heath says RomAsia’s executives are genuinely stunned. “Banks just don’t do that well,” he says.
Mostly, Heath attributes RomAsia’s early success to its low introductory rates, particularly on home equity loans that start out at 3.49 percent and skip to 3.99 percent after six months. Prime is 5 percent. Another factor is the bank’s aggressive ad campaign in mainstream and smaller ethnic publications, sometimes in Asian languages. The bank recently released a mailer to 60,000 homes in Middlesex County as well.
In the first two weeks, Heath says, RomAsia’s customers were split evenly between Asians and non-Asian. Two months later, the balance is 60-40, in favor of the Asian community. Predominantly, he says, the Asian base is made of Chinese and Indian customers. Younger, professional Asians are making up most of the new customers, and it is this clientele the bank most craves.
RomAsia is taking steps to include as much of the community as possible. One of its more ambitious plans is to court the oft-overlooked Muslim community — a sizable population that requires special banking needs.
Though not limited to Asian descent, Islam is practiced across most of the continent and is the religion of a large number of immigrants who have settled in New Jersey. But Muslims, according to Sharia law, are allowed to neither charge nor to accrue interest. Banks in the United States earn money by tacking an extra 6 to 15 percent onto the amount of money customers borrow from them. So if you’re a bank, how do you make money from customers who are unable to pay or profit from usury?
“It’s tricky,” says Inverso. Muslim lending carries a slew of regulations on how to structure payments, calculate loans, and figure mortgages. Even to Inverso, a CPA and former board member of the Bank of Mid-Jersey who has an accounting degree from Rider, and who served many of his 16 years in the legislature as part of the Commerce Committee, it is a delicate situation.
The potential, however, is staggering. According to the state chapter of the Council on American-Islamic Relations (CAIR), an advocacy group seeking to promote understanding and peace between Muslims and non-Muslims, and which had an office at 475 Wall Street until August 1, roughly a half-million Muslims live in New Jersey. Roughly 500 Muslim families are active members of the Islamic Society of Central New Jersey, which literally is right up the road from RomAsia, in Monmouth Junction. Most Muslims in the state live between Middlesex and Essex counties.
Muslims in New Jersey do have accounts with general banks, but given that they are not allowed to gain interest, they tend to keep their money in non-interest-bearing checking accounts, says Jim Sues, executive director of CAIR’s New Jersey chapter, now in South Plainfield. Where it can get tricky is with investments or loans that come with a payment book.
Payments are structured differently in the Muslim world, Sues says. His own mortgage — financed through the popular and Islam-friendly Guidance Financial — is set up as a limited partnership. Standard mortgages mean that the bank owns your house until you pay it off; Islamic lending creates a business partnership in which you and the bank co-own the property. “At the end of the day, when I get my bill, it looks very much like a mortgage payment,” says Sues, who was raised Episcopalian and converted to Islam 12 years ago.
The difference — and a chief factor that Sues speculates keeps most banks from trying to attract Muslims — is that if a borrower defaults on a loan, the lender has few remedies. Sharia law simply does not allow lenders to go after distressed borrowers the same way most other banks can. This means that American banks would need to be far more cautious than normal about who they lend money to.
But how does a Sharia-compliant lender profit? Well, while Islamic lenders cannot charge interest, Sharia law does allow lenders to factor in a profit margin — in essence loaning slightly more money than was asked for, Sues says. The difference is subtle, but important. Still, even if RomAsia can settle on its Islamic policies, Sues says the ultimate decision about whether Muslims will come to the bank will rest on advice from an Imam who will want to know who is on the bank’s Sharia board. Heath says RomAsia is still working on this.
Other than simply being Sharia compliant, Sues says, RomAsia would score major points with area Muslims if the bank simply made them feel as if they belong. “Muslims in America today don’t always feel welcome,” he says. “A bank that opens its arms to Muslims would be really well received.” Accounts with special names, checks with subtle Islamic imagery, E-mail reminder greetings, or statements wishing Muslim customers Ramadan greetings would make them feel as if they were part of the larger community.
Sues relates his suggestions to a U.S. postal stamp that commemorates Ramadan, in Arabic, that can only be bought online. “Every mosque I know uses that stamp on its mailings,” he says. “If a bank sent out a statement that did that, I know Muslims who would cry.”