Magazine article American Banker

Bank for Chinese Has Good IPO

Magazine article American Banker

Bank for Chinese Has Good IPO

Article excerpt

A Los Angeles bank targeting Chinese-Americans had a successful public offering this week, providing fresh evidence of investors' bullishness on this community banking sector.

The $907 million-asset Preferred Bank raised $80.56 million, selling 2.12 million shares Monday at $38 each. The stock rose 10.5% Tuesday to close at $42. It was trading at $41 a share Thursday afternoon.

Analysts say Asian-American banks have been consistently profitable.

"These banks seem to have a very loyal customer base, mainly because they speak their language," said James Abbott, an analyst at Friedman, Billings, Ramsey & Co. Inc. in Arlington, Va.

Asian-Americans tend to work hard and save money, and many new to the country open their own businesses. These things bode well for the banks that win their business.

"Asian-American banks are also some of the most -- if not the most -- asset-sensitive banks in the country," Mr. Abbott said. "Their loans are based on prime and reprice daily, while most of their deposits are retail deposits, which are very cheap."

Asset-sensitive banks are expected to do particularly well as the Federal Reserve Board continues to raise interest rates and the banks' margins further expand, Mr. Abbott said.

Li Yu, Preferred's president and chief executive, said in an interview Tuesday that the bank intends to use the proceeds of its initial public offering to open 10 more branches over the next several years in Los Angeles and Orange counties, where it currently has nine branches. …

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