Indonesians Sell S.F. Bank Serving Chinese-Americans

The management of United Commercial Bank, San Francisco, has led a buyout of the bank's owner, an Indonesian investment group.

The group, which had bought the 23-year-old bank in 1986, decided in February to sell it. The economic crisis in Asia has created a lot of good business opportunities there, and the owners wanted cash on hand to make deals at home, said Tommy S. Wu, president and chief executive officer of $1.6 billion-asset United Commercial.

To fund the buyout, United Commercial, which caters to the large Chinese-American community in California, raised $170 million by selling stock and trust-preferred securities. The bank's management bought $3 million worth.

After paying $120 million to the sellers and about $12 million in expenses, the bank was left with almost $40 million of operating capital from the offering. The deal closed April 22.

"We feel there is an opportunity here for our bank, and we want to be the ones to take advantage of that," Mr. Wu said.

Tom Killian, a principal with Sandler O'Neill & Partners, New York, who advised on the transaction, said the sellers were motivated, in part, by the fact that a deal could be assembled quickly. Because no single shareholder bought more than 9.9% of United's stock, the sale did not need regulatory approval, he said. Therefore, the deal was completed in about 30 days.

"This was an attractive alternative to a merger or acquisition," Mr. Killian said.

United Commercial, like many California community banks, stumbled through the real estate recession earlier this decade but has since turned the corner, analysts said. And with its 25 branches spread throughout the state's largest ethnic Chinese areas, the bank is well- positioned to grow.

"They are targeting a strong ethnic market, and they have some outstanding people running the bank," said Robert J. Gallivan, a partner with Bank Compensation Strategies Group in San Diego.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER