DALLAS - Despite no previous banking experience, Chan Patel opened the State Bank of Texas because he knew Indian motel and hotel owners needed a lending institution that would make the process of getting loans faster and easier.
Patel's foresight has paid off - since it was started in 1987 his Dallas-based bank has expanded to four branches and grown from $2 million in assets to over $160 million.
Prior to founding the bank, Patel was in the motel industry, a business he ventured into in 1976. At one point he owned 17 motels in Texas, he said.
The opening of Patel's bank coincided with Black Monday - the historic stock market crash of 1987. It was a tough patch for him too. At that time, he had just enough funds to hire one paid employee.
The idea to start a bank struck him when he saw that the Indian motel and hotel owners faced difficulties in securing a loan from American banks because of cultural differences.
"They had great ideas, but were not able to communicate them," he said.
"I was often asked by the president of a bank, the Trinity National Bank, which was on the same street as one of my motels in Dallas, to co-sign for other Indian motel owners," he added. "That struck me as an opportunity to help other Indians and I knew I would enjoy running a bank more than a motel."
But when Patel presented his idea to investors, he was turned away a number of times. He finally turned to his friends and relatives, who were also in the motel business.
"It was a very difficult time," he said. "At first they were very reluctant to invest."
"I did not know the ABCs of banking and all banks were closing down," he said. "I offered my investors $10 a share and promised them professional banking experience."
"I said to my investors that Patels are always known as 'Patel-Motel.' We should prove that we can do something else also," added Patel.
Patel started with a team of eight people in 1987, seven of whom were volunteers with no banking experience. He himself did not draw a salary for a long time, he said. He sent his new team for two-week bank teller courses, while many of the employees' wives were made to open checking accounts for practice.
Six months down the road, the bank was making enough money to hire professional banking employees. From then on, the bank saw nothing but success.
"We have not lost money except for a single month in 2001," said Patel.
As for Patel, he enjoys running a bank more than his motel business, he said.
Today, he owns 50 percent of the shares of the State Bank of Texas. The bank is a full-service commercial bank. A large portion of its revenues comes from motel loans, said Patel. It has over 35 employees across four branches in Dallas.
The bank grew by buying out other bank's facilities that were close to shutting down.
"It was easier for us to use those as the basic bank set up was already there," he said.
It started with buying a bankrupt bank in 1990. The bank's third branch opened in 1996.
Patel attributes the success to his Indian borrowers.
"Indians are very good borrowers," he said. "Since we started, out of 300 to 400 loans that we must have given to Indians, we have lost a maximum of about half a million dollars, which is a good number."
According to Patel, the advantages of having a community bank are the familiarity of the language with the clients and quick decision-making process.
"We have a quick turnaround time for loans," he added.
Patel came to the United States in 1965 to pursue graduate studies in industrial engineering and management sciences at Stanford University. He worked in various research and management positions before he ventured into the motel industry.
He taught business economics at an evening school alongside his first job, which was at Baltimore and Ohio Railroad Co.
He still owns four motels.
He plans to gradually hand over his share of the bank's ownership to his son.
But before doing so, he plans to try and increase the bank's assets to $300 million.
He also plans to wrap up his motel business in the next few years.
"I am nearing 60 now, I want to wind down my motel business in the next five years," he said.