Newly freed from a regulatory order, MetroCorp Bancshares (MCBI) in Houston is eager to accelerate lending to Asian-American firms with overseas operations.

The $1.6 billion-asset company is particularly keen on jockeying for position among Chinese-American clients in the area of trade finance. First, the company plans to merge its two banks: Metro United Bank in San Diego and MetroBank in Houston.

MertroCorp plans to use deposits it has in Houston and Dallas to fund loans in Los Angeles, San Diego and San Francisco.

"We have excess liquidity and the funding costs out of Texas [are] cheaper than California," George Lee, MetroCorp's co-chairman, president and chief executive, said during an April conference call to discuss quarterly results.

MetroBank had $967 million in deposits at March 31, compared to $371 million at Metro United, according to the Federal Deposit Insurance Corp. But Metro United is doing a better job of balancing deposits and loans; its loan-to-deposit ratio was 90% at the end of the first quarter. (MetroBank's ratio was 81%.)

Combining the banks will also give MetroCorp "a higher lending limit, so they can go after the larger loans their clients want," says Frank Barkocy, research director at Mendon Capital Advisors. Mendon owned roughly 164,000 MetroCorp shares at March 31.

Trade finance makes up a small part of MetroCorp's loan book. It had about $12 million in trade finance commitments, including standby and commercial letters of credit, at Dec. 31. MetroCorp's management wants to make more loans with guarantees by the Export-Import Bank of the United States.

Before the financial crisis, MetroCorp opened representative offices in the Chinese cities of Xiamen and Chongqing to "cultivate business relationships with customers that have the potential of expanding their" U.S. business, according to its 2012 annual report. Lee regularly visits China to "help bring in business," adds Andrew Liesch, an analyst at Sandler O'Neill.

The Chinese offices have generated "relationships that we have cultivated for the last two or three years," while also producing commercial loans, Lee said during a conference call in January.

Lee did not return calls seeking additional comment.

U.S.-China trade has grown in recent years. The Export-Import Bank's total credit exposure to China hit $2.3 billion on Sept. 30, 2012, rising from $1.4 billion a year earlier. The Export-Import Bank's loan authorization approvals for China more than doubled over that time, to $1.2 billion.

MetroCorp has also been making short-term loans to foreign correspondent banks in China, an area that is also growing. The company's foreign loans grew to $43.4 million at Dec. 31, compared to $16.8 million a year earlier.

Foreign loans and trade finance should help MetroCorp reduce its exposure to commercial real estate. "They're mindful of their CRE concentration," says Liesch, adding that the company could look to buy a bank with less exposure to commercial real estate.

Other Asian-American banks have been making acquisitions to diversify lending and enter fast-growing markets. Earlier this year, Wilshire Bancorp (WIBC) in Los Angeles agreed to buy BankAsiana in Palisades Park, N.J., and BBCN Bancorp (BBCN) in Los Angeles announced plans to buy Foster Bankshares in Chicago.

On June 12, the Office of the Comptroller of the Currency ended a 2009 formal agreement that had required MetroBank to improve asset quality and strengthen oversight of loan administration and risk management. The bank emerged from the order by cleansing its loan book. Nonperforming assets made up 2.3% of MetroBank's assets at March 31, marking an improvement from 6.4% at the end of 2010.

Rather than cleaning house, MetroCorp's board kept Lee and other executives, who were then instructed to to oversee the turnaround, Liesch says.

"They've been successful in doing everything they said they were doing to do," Liesch says. "Ever since I've known them, they have been successful in coming through on their plans."

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