Liberty Bank and Trust Co.’s executive offices are located at 21 Milk St. in Boston.
The Boston area is getting the attention of middle-market banks that see opportunity in the void left from the merger mania of the late 1990s.
General Bank, a wholly owned subsidiary of GBC Bancorp in Los Angeles, completed its acquisition of Liberty Bank and Trust Co. in Boston last Thursday.
Peter Wu, president and chief executive officer of the $2.3 billion-asset General, said Boston is an attractive market that presents opportunities for expansion in international trade financing, private banking, real estate and construction lending, the high-tech industry and other business-focused products, especially in regards to its core Asian-American customer base. Jay Dunham, president and chief executive officer of Liberty, said while it wasn’t actively seeking a buyer, the advantages that a merger with General provided were just too good to pass up. While the offer to shareholders was “excellent,” said Dunham, Hwachii Lien, chairman of Liberty, said the bank’s customers will benefit the most.
“Some of the customers started to say that we are too small to meet their needs, especially on the international [trade] side. We cannot do international financing; General Bank has been doing that on the West Coast and it’s very natural for them to come to this area and help our clients,” said Lien.
General Bank announced it would pay $11.9 million for all outstanding shares of Liberty, a $37.2 million-asset bank that was founded in 1965.
Both banks are focused on the Asian-American community but in recent years, having witnessed the rise of 30 Asian-American-focused banks in the California market, General has expanded its niche to all underserved ethnic minority communities in its 18 California branches, said Wu. It has also been looking for underserved areas of the country in which to expand.
“Right now in Boston you have either very small banks or very big banks. But for the middle market, I think there’s a lot of room for a bank like General Bank to expand here,” said Wu.
General Bank has recently added locations in New York and Kent, Wash. In addition to Boston, other areas General is eyeing for expansion include Houston and additional New York locations, said Linda A. Moulton, senior vice president and regional manager for the bank. Moulton will be working out of Liberty’s 21 Milk St. executive offices. Liberty also has a branch at 681 Washington St. in Chinatown.
“The bank has done very, very well in California. The loan-to-deposit ratio is quite low; it wants to lend. So it becomes appropriate to build a strategy by identifying where there are opportunities in the country to serve underserved markets,” said Moulton.
According to Moulton, the bank will reopen under the General Bank moniker with a “full complement” of Liberty staff. In fact, as General grows its market in Boston, they plan to add more staff. Dunham will remain through the transition, as will Lien. Lien, however, has been invited to serve as senior advisor and as an honorary member of the board in Boston.
‘Slightly Different’
The acquisition process first started about nine months ago, according to Wu, and the recession actually spurred the action. “I think [it is] the best time to expand … you can hire the best people, you can get the best price,” said Wu.
Another underserved market the bank plans to develop is the lower-end private banking customer. According to Moulton, not many private banks handle customers with investable assets of $500,000.
The ideal target customer for General is the student coming to this country from abroad. “Very likely he’s going to buy a place to live, he’s going to graduate from school, get a business. It’s a one-stop shopping approach in terms of this long-term relationship,” said Moulton.
In addition to serving the needs of the student, the bank is able to understand the culture the parents are coming from, as well as their concerns – often speaking to them in their own language.
“[It’s] quite important. And it’s quite a bit of money that’s going to exchange hands here. Maybe it’s buying the young person a place to live, a condo somewhere in Boston, tuition payment. There’s an awful lot that has to happen. Parents are going to be a lot more comfortable if they feel they’re dealing with somebody that understands those issues,” she said.
In keeping with the growing needs of clients, Moulton listed the experience General has in international trade finance. Many people think of FleetBoston Financial when it comes to trade, but General plans to show that it, too, can handle the market, adding, perhaps, a more high-touch approach, said Moulton. “The bank is very significant in international trade in California. It’s the second largest provider in terms of transaction volume of import credits,” she said. Much of the trade is through Asia. “It can be facilitated by people who know the country, probably know people there, can speak the appropriate language to get a transaction done in a clean way,” she said.
Moulton hopes the ability and experience of the bank will translate into growth on the East Coast. In the Boston market, many Asian-American international trade finance customers conduct transactions in New York. “So we’re creating an opportunity to not have to do that. That will be very accommodating to a number of these customers,” she said.
Business development in the Boston market will focus on the bank’s “slightly different” behavior, “… from the perspective that in this recessionary environment we feel that there are good customers, good relationships to get started now. We are prepared to, in an appropriate, conservative way, lend money into this segment – build a basic relationship,” she said.
Shortly after the agreement was signed in October, Lien said he sent out letters of explanation to his customers. The reaction has been positive, he said. Retaining Liberty’s customers is a high priority, said Moulton.
“General Bank is certainly going to have a challenge getting into the marketplace and growing the business here, but I think they’re up to that task,” said Dunham.
