RBB Bancorp is L.A.’s newest public company.
But the 9-year-old downtown-based bank is backed by some veteran members of the region’s Chinese-American banking community.
RBB Chief Executive Alan Thian leads a group of nine families who owned more than two-thirds of RBB’s stock before it went public, raising $86 million in an initial public offering last week. The various backers still combine to own more than half of the outstanding shares, according to Securities and Exchange Commission filings.
The group of families along with others started the bank in 2008 with $70 million in funds and have grown it into a business with a market capitalization near $350 million, about $1.5 billion in assets and $1.2 billion in deposits. RBB had net income of $19.1 million last year compared with $13 million in 2015 – a roughly 47 percent spike.
The bank priced its offering at $23, with 3.75 million shares put on the Nasdaq exchange. The stock was up 1.5 percent at the close of trading on July 26, to $23.35.
The performance of RBB, which does business as Royal Business Bank, is indicative of the overall health of the ethnic banking market in Los Angeles, according to Wade Francis, president of Long Beach bank consulting firm Unicon Financial Services Inc.
“Asian banks have built a customer base here because people feel more comfortable with people who speak their language,” Francis said. “There’s lots of competition between these ethnic banks, but their customer base is very loyal. Good old-fashioned customer service has gone a long way toward making them profitable.”
There are three other publicly traded banking outfits that cater to the Chinese-American population headquartered in Los Angeles County – Pasadena-based East West Bancorp Inc., Cathay General Bancorp in Chinatown and downtown-based Preferred Bank. All three have seen their stock price increase dramatically in the past year. East West shares are up 66 percent over the last 12 months, closing at $57.38 on July 26, with Cathay up 25 percent to $38.03 and Preferred rising 76 percent to $56.97 over the same period.
Francis said there hasn’t been any new development driving the banks’ performance, only that overall economic conditions and quality of business loans have been strong at each of the institutions, combining to generate sizable profits.
“I wish I could tell you something more interesting, but it’s the same core business,” he said. “There are no crises out there that (these banks) have to deal with and most borrowers have the ability to pay back loans. Things are good.”
Francis said RBB’s ties to the Asian-American community in Los Angeles – as well as connections to business and financial institutions in places such as Taiwan, Singapore and mainland China – would be crucial to the bank’s success going forward, as well as for its competitors.
“A lot of Asian banks do maintain very strong ties to their home countries and believe in maintaining contacts,” he said. “They can get a lot of good referrals that way.”
But RBB has also been growing through more aggressive means. The bank has acquired several other financial institutions in the last several years, including the February 2016 purchase of TFC Holding Co., parent company of TomatoBank, for about $83.1 million. That transaction added some $470 million in assets and $405 million in deposits to RBB’s books.
Family ties
Executives at RBB did not respond to requests for comment, but a picture of the bank’s leadership and nine controlling families can be pieced together through SEC filings and news clippings.
Thian, who also serves as chairman, was born in Singapore and emigrated in 1976 to help his parents operate a restaurant in Los Angeles and attend USC, where he received an MBA in 1982, according to a May 2014 article in the Asian Journal. The RBB chief executive has served twice on the Federal Deposit Insurance Corp.’s community banking advisory committee and sits on the Consumer Financial Protection Bureau’s community banking advisory committee.
Thian’s first foray into the banking business came in 1982 when he became a director at General Bank, also known as GBC Bancorp Inc., where he served until 1997. He also served as chief executive of First Continental Bank from 2000 until it was acquired in 2003 by United Commercial Bank of San Francisco, where he then served as the regional director for Southern California until 2007, according to SEC filings.
Thian appears to have left United Commercial before things went south due to loan losses and faulty financial reports. The financial institution went belly-up in 2009 and was taken over by the FDIC, which sold the bank’s $10.9 billion in assets to East West.
United Commercial was the ninth-largest bank to fail during the Great Recession, according to a release by the U.S. Department of Justice. Several of the bank’s executives, including Chief Financial Officer Craig On and Chief Credit Officer Ebrahim Shabudin, pleaded guilty to securities fraud charges related to the bank’s failure.
RBB has 11 board members in addition to Thian, many of whom are tied to the families that capitalized the bank in 2008. Several of the directors also have business ties with Thian that go back decades, including Christopher Lin and Ko-Yen Lin, who worked with RBB’s chief executive at General Bank in the 1980s through 2003 when Cathay acquired the bank for $431 million in cash and stock.
Other RBB directors include Thian’s sister, Catherine Thian, and brothers James and Ruey-Chyr Kao. The Kaos, who are not related to Thian, together own the largest block of shares – a 11.9 percent stake, assuming all options were exercised.
The Thians, including Alan; his wife, Fen Fen; and sister Catherine, are close behind with 11.7 percent. Alan Thian is the largest individual shareholder with about 6.1 percent of the company under his control after the initial offering, assuming he exercised all of his options.
RBB’s board members and several other early investors cashed in on last week’s IPO, selling nearly 900,000 shares worth more than $20 million. Thian sold 100,000 of his 1.1 million shares netting him north of $2 million.
