Banking companies with assets ranging between $1.12 billion and $2 billion — the first 100 largest community banks — are on the cusp between mid-sized banks and community institutions.

The first-ranked Los Angeles-based GBC Bancorp is typical of many well-run community banks. A commercial bank, it focuses sharply on a niche and plays it for all it’s worth. The result is a consistent track record of high returns on equity and healthy increases in per-share earnings.

The second-ranked AmeriCredit Corp. of Fort Worth, TX, is a special-

ty lender, and is about the small-

est such a company can be to do well in the subprime lending business. Such lending generally requires a very big investment in software and technology to keep any credit losses from overwhelming the bottom line.

GBC’s niche is serving the ethnic Asian market, which is growing in size and wealth throughout the United States, and especially in California.

The bank was founded in 1980 by a number of investors from Taiwan. The current CEO is 52-year-old Peter Wu, who came to the United States in 1971 and helped found the company. Wu says about half of General Bank’s customers are ethnic Chinese.

There are two main parts of General Bank’s business. About 40% is real estate construction loans, and another 35% is financing trade between the U.S. and Pacific Rim countries. Lending to high-technology companies accounts for another 10% of the business mix, and the remaining 5% is loans to other small businesses and consumers, says Wu.

Most of the real estate lending is to contractors. "There’s great demand for new homes in southern California," Wu says. And he adds that the bank is "very careful" in lending to high-tech companies, and that it lends to them only on accounts receivable.

Wu says among the reasons for General Bank’s high returns on equity is that it keeps a close watch on expenses. In 2000, he says, GBC’s expense ratio was only 37%.

The comany’s average customer has a high level of deposits, but Wu wouldn’t say how much that was. The bank is liquid, with a loan/deposit ratio of 61%. It has $1.68 billion in deposits and $1.05 billion in loans.

"We are cautious about the economy," Wu says. Although he sees the economic outlook as uncertain, "we don’t see a recession yet. We are watching the energy situation, but fortunately, we don’t have any manufacturing customers, most of our customers are in the import-export business and they don’t use much electricity."

AmeriCredit, which had assets of almost $1.9 billion at yearend 2000, has performed consistently well in financing purchases by subprime consumers of used and new automobiles through dealerships. In addition to placing second on U.S. Banker’s one-year profitability ranking, it takes first place on the three-year and second place on the five-year ranking.

"We have lots of data on how consumers perform, on predicting their ability to pay and on how they pay bills," says Daniel Berce, vice chairman and CFO. "We look at a large number of variables that say a lot about the ability of a borrower to pay. This is something the competition generally doesn’t have."

The company’s goal is "to increase loan originations," Berce says.

The target is to increase originations by 25% to 30% a year, with half expected to come through geographic expansion and the other half from more business from existing dealership customers. "We have never made an acquisition," Berce says.

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