Golden Gate Bank to be bought by client who'll pump in capital.

Golden Gate Bank, a San Francisco-based private bank, has signed an agreement to be acquired by one of its longtime banking clients.

In agreeing early this week to purchase the $72 million-asset bank, Leo K. W. Lum, a San Francisco investor and former banker, agreed to infuse Golden Gate with badly needed capital.

The bank will be acquired by Pacific Rim Bancorp, a bank holding company established by Mr. Lum to complete the transaction.

Suffering from Downturn

Golden Gate is the healthiest of a troika of banks specializing in private banking in San Francisco that has suffered from the severe economic downturn affecting the Golden State. The other two are Pacific Bank and Bank of San Francisco.

"The state's economic problems have kind of hit us like a virus out here," said James R. Woolwine, Golden Gate's president and chief executive.

Golden Gate, though it posted a loss a loss of $2.3 million in 1992, earned $178,000 in the first half of 1992. The bank's return on average assets was about 0.5% for the first half of the year.

By contrast, Bank of San Francisco posted a $4 million loss for the second quarter. The $312 million-asset bank ousted its second chief executive in two years, and its chief investor has pumped $32 million of capital into the ailing institution.

Pacific Bank, with $505 million of assets, lost $4.3 million in the second quarter. The bank brought in a turnaround specialist as chief executive, and has engaged an investment banking firm to raise $25 million of capital.

Boost Required

Golden Gate - acting under an administrative order from the Federal Deposit Insurance Corp. and state banking authorities - needed to raise capital.

Though terms of the deal were not disclosed, Mr. Lum agreed to put double the amount of capital required by regulators, Mr. Woolwine said. Mr. Lum will replace Sharon M. Croom as chairman of the bank. Along with her husband, George, Ms. Croom was the bank's majority stockholder.

Mr. Lum, a client of Golden Gate since 1985, was chief executive of Global Union Bank, New York, and Summa International Finance Co., Hong Kong. He also held senior positions in the domestic and international offices of Mellon Bank Corp. and First National Bank of Boston.

Mr. Lum plans to continue Golden Gate's private banking strategy, said Mr. Woolwine. "With the additional capital, he plans to grow the bank and make sure the problems are behind us," Mr. Woolwine said.

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