Transcription:
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Penny Crosman (00:03):
Welcome to the American Banker Podcast. I’m Penny Crosman. Wildfires have destroyed thousands of acres of land and property in Los Angeles in recent weeks, and East West Bank has been in the thick of it. We’re here today with Dominic Ng, CEO of the bank, who is in Pasadena right next to the fire station headquarters, and he’s going to share what he and his company have been going through. Welcome Dominic. Thank you. Thanks for coming. So how long has East West Bank been in this area and how long have you been in this area?
Dominic Ng (00:39):
Well, I personally lived in Pasadena for over 21 years, and in fact, we moved our headquarters here exactly 20 years ago. So the bank has been headquartered in Pasadena for exactly 20 years.
Penny Crosman (00:58):
So where were you when the fire started?
Dominic Ng (01:01):
Right here in my office. In fact, in Pasadena, quite frankly, when I work, I don’t really pay attention to the environment unless it’s a major earthquake, then I’ll field it. But normally when things happen, I just don’t know much about it. What was really scary was I normally would leave the office around 7:30 or so, and when I got downstairs and then got in my car, the wind was just blowing in a way that I had never experienced that in my life. This felt like… I was born in Hong Kong, so we always had typhoons in the summer. This felt like one of those worst typhoons in Hong Kong, except in Hong Kong in a typhoon, it was raining down. Humidity is very high, and this one, there was no humidity, but it was howling wind at easily 70, 80 miles an hour.
(02:18):
And so it was one of these very, very scary moments at night and when we’re getting through the streets and tree branches were coming down and have to navigate it zigzag way to get back home. And once I got home, I couldn’t get in my driveway because my neighbors, all the tree branches and debris and all over my driveway took me several minutes to clear the driveway. So that night I knew things were bad, but now I’ll be honest with you, at that point I still didn’t know that there was fire going on both in Palisade and also in the North Hill of Pasadena. But once I got home, I sort of glued myself to the TV and watched what was happening and then start talking to my human resource director and also the business continuity plan executive to start putting together a plan about action plan about what was need to do that night and also in the morning and after.
Penny Crosman (03:38):
And what were some of the elements of that plan?
Dominic Ng (03:41):
Well, what we did was because let common sense dictate. When I drove back, it was such a scary way and I was driving back south to my home in Pasadena and the fire is burning the north. So the office in the middle between my house and the fire in the north, I just figured out that it will be difficult with this kind of wind for employees to get back to the office. And some of the branches may not have electricity or at that point I didn’t know, well, we didn’t have any branches in the northern part of Pasadena, neither do we have any branches in Palisades. So at least I knew that the branches were not in the vicinity of the fire zone. However, I expect there will be with that win that may be utilities got turned off and that the employees may not be able to commute to work.
(04:47):
So I pretty much told the human resource department that let’s make sure that we encourage employees if they feel that they would be having trouble to get out of the house or if they feel that they may be in danger driving, don’t, and just stay home and work at home. I mean, the only great thing about Covid was that we all learned how to work at home if needed. And so that was the message that we sent out early in the morning and then texting to all the employees to the cell phone. And that’s what we started actually, interesting enough, of course I went back to the office, but many of the employees were actually back to the office, so I was quite impressed. Now it was a smoke filled room because obviously with the fire that had been burning all night long and then in the morning and then so forth, a lot of the polluted air was coming down south to our office area.
(06:05):
But I guess our associates know that we’ve got to do our work, make sure that we take care of our clients. And so everybody’s still working in the office. And it was kind of interesting, I remember I was having meetings after meeting, Zoom meetings, basically trying to assess how many branches to open. It turned out about 5% or so of our branches were closed for only a day or two and then everything else back to normal. And we made an assessment of how many of our employees lost their homes. I think that initially we start with just two, but I think as of today we noticed that there are four employees that lost their home of their home severely damage. And that equates to less than probably 0.2% of our total population and of employees in Southern California.
(07:14):
But we do have about 50, 60 employees evacuated, and that’s still a very small percentage. I would say that that would be less than 2% of our Southern California population, which is really good, East West Bank’s fortunate that our associates are all safe and they were able to step back in the office to work. And the first day I didn’t even think much about it, so I didn’t bring my mask. I mean that air purifier was not turned on. So every five minutes of talking like what I’m doing now, then I would be coughing. And so at night I realized that no, I should be getting smarter. I need to put on a mask and then put on all these air purifiers. So the next several days, even though it was still a smoky sky, we were able to figure out how to work through that environment.
(08:17):
And what I was very impressed is that many of our associates, in addition to working in the office, went to the Pasadena Convention Center, which turned into an emergency relief center to help those folks who are evacuated, have no place to go and they need food and they need all these other support healthcare. And our associates went over there to help out. And in addition to that, we wanted to provide food supplies to first respondents. So we were out there helping the community pretty much starting day one. And the other thing that we we’ve always done, during Covid or any kind of mini crisis, East West Bank always has this, what I call “skip a pay” policy. When I say “skip a pay,” the policy is that if you just went through a major earthquake and you saw a lot of property damage or you yourself are trying to assess damage, or if you just had another one of these wildfires raging down the mountain and then you were trying to figure out whether you also your home been damaged or not, and you need to call the insurance carrier, you need to call the fire and call a lot of people.
(09:53):
You can talk to your friends and families and make sure they’re safe. This is not the time to worry about, well, am I going to go to pay my mortgage or not? So what East West Bank skip a pay policy is that if you are in the fire zone near the fire zone or feel like that you were hurt by the fire for whatever reason, just automatically on your own, skip a payment. You do not need to call East West Bank. You do not need to find a form to fill. You do not need to come to our branch to try to figure out what you need to do or can you get a relief or can you have East West to be kind to allow you to skip a payment. So this whole idea about skip a payment is that during the crisis, and in fact Penny, you yourself have done it, you wait a few days before you come back to us. You knew we were busy. Yeah, we were busy. So you knew that it was probably not appropriate to just get news to get the, it may be better for us to just go ahead and focus on what we need to do in a crisis mode. And so we felt the same way. No East West customer should be wasting their time on January 8th, 9, 10, 11, 12 to think about I need to fulfill my obligation for East West Bank.
(11:33):
Obviously if they’re on autopay, they say I’m paying anyway. I guess it didn’t matter, right? But if they actually are sending a check to make the payment and whatnot, and they walk into the branch to make the payment, they shouldn’t be bothered. They should focus on taking care of the family and friends and so forth and then go back to do their work if it’s still possible. That’s what we did. Now obviously since then in the last two weeks from Governor Newsom and then there were other organization have suggested a three months’ forbearance, and then of course we are fully endorsing this direction. In fact, for customers who wanted to have other relief beyond just that skip a pay and they want to come in and talk to us, we more than welcome them. So the whole idea is that for those who may not have a big issue and just a skip a pay and so that they don’t have to be distracted to make payments and neglect taking care of the children and the family, and that’s what I call the East West way of making sure we take care of the clients and for those who have more additional help needed and we’ll welcome them to have any discussion with us, not only three months if it need to be six months, whatever. Do we need to work with them to support them? We’re totally, we’re totally flexible. Our idea is to offer a very flexible solution to help these customer to get by.
Penny Crosman (13:14):
So you’ll extend that forbearance for several months if necessary.
Dominic Ng (13:18):
Yeah, absolutely. We did the same thing with Covid. There are customers that during that time weren’t able to make income because they were stuck at home and we understood it and we extended forbearance and whatever we needed to do to support these customers. We’ve done it many times in the past in different kind of crises and it’s something that we feel that is the right thing to do. I do want to point out one thing though is that this is a policy or philosophy that East West’s always had. But to be fair, frankly, we are fortunate at the bank because despite the fact that we’re the largest independent bank in Southern California and also have $14 billion of single family home mortgages in our portfolio, $14 billion, we only have less than 40 homes that we are aware of that in LA that owned by our customers that I think that in the fire zone they’re lost.
(14:38):
And obviously every one of these homes will have full insurance coverage. And our loan to value for these home average is about 50%, 51%. So from the standpoint of financial losses for the bank would be minimum. And that’s why we feel that it’s even more important, the banks need to all step up and then support these customers to the best we can because now many of these customers eventually will get the insurance coverage and whatnot. The reality is that right now there’s a lot of emotional toll that hit on them when they lost their belongings, the intangible stuff that hurt them most because most of these folks in southern California that went through this fire, most of them have insurance coverage. And I think they would have some level of support from various sources, whether the bank would give them we leave or federal government, state government to insurance carrier, by and large, we’ll be able to find a way to either get them a new home or rebuild a will, build a home from the existing lot.
(16:06):
But the reality is that what they lost is the intangible stuff, the photos from the family, very important gift from the grandma. So stuff like that. And that is painful. And I think that’s the reason why we feel that as much as the bank can do to help ease the pain and not giving them more additional headaches like what am I going to do with the mortgage and stuff like that, that’s the best thing we should do. And the other thing that we’ve done is that we help provide charitable support to nonprofits who specialize in how they can help support the victims. And so these things are still ongoing and every single day we are signing up with another one and making another gift and whatnot.
Penny Crosman (16:59):
That makes a lot of sense. It sounds like you have a number of customers in communities of artists that were particularly affected. What did you see there?
Dominic Ng (17:17):
Yeah, our bank actually has a strong group of artists, art galleries, museums that do banking with East West, because East West has always been very proud to say that we are a major supporter of our art communities because we believe that art fosters dialogue and understanding of different cultures. And unfortunately, many artists live in Altadena, where there was the Eaton fire and in Pasadena took place and took out 8,000 structures and homes. So many of them were victims of this fire. And it’s not just the artists by the way. We think about art instead in addition to the artist. They are the art installers. There are people who work as a curator in the museum, they’re curators in the galleries. There are people who work in the gallery in sales.
(18:35):
And then there are a lot of people in the storage companies that relate to art, it just happened that many of them live in Altadena because it’s a very strong art community there. So due to that reason, unfortunately for these artists or some of those folks that work in the art business, many of them have their inventory of art still in their homes. And those pieces of artworks were burned down. And frankly, many of the artists, I mean of course most of the artists work at home. They may have worked in the gallery, they also work at home, they also work at the studio. Many of them work at home. They have these art in progress work just about finished. They are hurrying up to trying to finish all the work for the exhibition only to see that those work all get burned down and talk about these emotional damage.
(19:43):
It was devastating. And in addition to emotional damage, now we talk about real dollar and cents because oftentimes most of these artworks, while they’re in progress, they’re not insured. So a lot of them would have some financial challenges because it’s going to take a while before they redo all the work. In addition to that, they may have to wait more than a year for the exhibition because usually the museum, all the galleries already line up the calendar for more than a year of time. So when you couldn’t do it, you might not be able to do it another two or three years from now. So all of that requires support. So we were one of the lead funders for a relief fund for artists and art workers. And this was in partnership with the Gettys, the Los Angeles County Museum of Art and the Museum of Contemporary Art and the Hammer Museums.
(20:49):
So we together put together this relief fund for artists and art workers. And this is not just only for temporary relief, and I think that we put out the press release over a week ago, we already raised over 12 million and I’m pretty sure by now it’s going to be a lot more. So I think we are going to have some meaningful amount of funds to not only support them temporarily for a lodging and so forth, but we are thinking about this will be able to help these artists and art workers maybe in a longer term. And so is very, I consider this as a very meaningful project to help the art community, which is a huge community in Los Angeles. And then by the way, it’s not just for the artists who does artwork, it does include artists that in the, let’s say music industry or artists in the film industry and whatnot, we are going to support all different kind of artists.
(21:59):
And that’s the plan in this relief fund. And meanwhile, we also, in addition to this relief fund, our head of private banking, Agnes Lew, is one of the organizers of Project Phoenix. What is Project Phoenix? It is an initiative that was started in conjunction with the Gallery Association of Los Angeles, an art dealer and also a curator. And Project Phoenix is working to provide artists and art workers with much needed information about insurance, taxes and other financial resources because oftentimes they are not even familiar. How do they file the claim and whatnot. We’re going to figure out a way to help them to ease their pain so that as soon as possible they can get back and to focus in their art. They don’t have to worry about all of these other miscellaneous stuff that they are not familiar with. So that’s what Project Phoenix would do.
(23:03):
So hopefully we’ll see more people seeing what we are doing and will also rally behind us and provide more funding. And in addition to that, I think it’s totally good to see other people sponsoring other events lately, the Annenberg Foundation, they are putting together a concert in they Intuit dome. And I know that all kinds of major artists are all coming in to perform and it’s another way to raise money. So as much as this fire has been devastating to Los Angeles, there were plenty of places that I see hope and an excitement about getting ready to help LA to rebuild stronger and better.
Penny Crosman (23:54):
That’s very encouraging. Do you expect most people who either had their home or their business or both destroyed by fire to rebuild on their existing plots, or do you think you’ll see more of a shift in selling land to developers that come in and build something new or different? What do you think this recovery might look like?
Dominic Ng (24:22):
I think it could be a combination. I would say that for now, there is some hesitation for some of the folks who just got their homes burned and they look at this devastating hundreds of acres of land or thousands of acres of land, and all they saw is these burned trees. Well, I mean the landscape looks horrifying today. It’s going to be very hard for some of the people saying that I’m going back. However, if you looked at the setting in Palade, I don’t know where we can find a spot that’s more beautiful like that on this earth and bearing this a few Santana wind than in fact, like I said, I live in LA for almost 30 some odd years. I never experienced wind like this. And I looked at it as that. There are a couple of things that people can do.
(25:32):
One, when we rebuild, we not only can rebuild better, we can rebuild smarter. And I do feel that unfortunately most of those homes were built. Some of them were built 90 years ago, a hundred years ago, and the setting was set 200 years ago. And then we just built new homes. We just built new homes. I mean within it surrounded and so forth. And just that the whole setting is not going to be possible to withstand this kind of dust and dry humidity and any kind of sparkle is going to cause potential wildfire. However, I do feel that there’s much smarter way to build these homes in the future and will require a new set of building material in certain part of the building. And in addition to that, the kind of vegetation that will be built need to be different. And the way that we set this home and in terms of density and all of those things need to be sort of reconsidered.
(26:50):
Our utilities, our poles should be underground instead up above. These are all the stuff that need to be sort of reevaluate, reassessed, and I think that people have time because no one’s going to go in there right now and start building and when the property is not even in good shape. And I would imagine that it’s going to require some true leadership both from the government, federal and state and local. In addition, business leaders need to step up. Business leaders, developers, home builders, they have great ideas. They’re going to be working with scientists from Caltech, UCLA, USC and then start looking into what is the right thing to do. Now I’m going to tell you though there even today with this raging fire in Pal Say, and Adina, there are a small percentage of the homes were saved. One could say it was a miracle or God’s will.
(28:13):
I looked at it as that. I think there was a bit more science into it. Some of the homes were saved, just happened to have roof that have some fire retardant. Some of them have metal vents. Think about it. A lot of homes that may have all the protection outside the house, everything, metal, steel or whatever that is. But then all you need is the vent open. And one amber just slipped in through the vent. There goes the house because the installation insulation is like newspaper, it can burn. So fired so so fast. Some of the homes, they said, wow, I think I got it all protected. What happened? How come the house burning like crazy? And it just burned down so crazy because one ember just blowing in the wind came right in, gone.
(29:21):
And those are the things that has to be mandatory going forward. People need to like the minute there’s this kind of fire going on, people need to have metal vent and then just get it covered. And then the metal mesh need to be, I mean, something that would not melt those along. Those things that need to be done is the attention to details that need to be looked into. So there are a lot of stuff need to be looked into. I do feel that both Altadena and Palisades, Malibu, of course, all these sites, that will be extremely attractive, but it’s going to require us to rebuild it smarter and for folks to just go right in and then just trying to replicate exactly what we had before and then just pray for luck. To me, that’s not wise, but it will take years. It will take years. But I’m pretty sure we’ll come back.
Penny Crosman (30:31):
Well, for your sake, I hope the recovery and rebuilding happens quickly and smoothly. Well, Dominic Ng, thank you so much for joining us today and to all of you, thank you for listening to the American Banker Podcast. I produced this episode with audio production by Adnan Khan. Special thanks this week to Dominic Ng at East West Bank. Rate us, review us and subscribe to our content at www.americanbanker.com/subscribe. For American Banker, I’m Penny Crosman and thanks for listening.
