East West Bank Acquires the Banking Operations of San Francisco, California Based United Commercial Bank
November 06 2009 - 9:50PM
Business Wire
East West Bancorp, Inc. (Nasdaq: EWBC), parent company of East
West Bank, announced today that it has acquired the banking
operations of San Francisco, California based United Commercial
Bank (UCB) in a Federal Deposit Insurance Corporation (FDIC)
assisted transaction. Under the terms of the transaction,
East West will receive $10.4 billion in assets, including $7.7
billion in loans, and assume $9.2 billion in liabilities, including
$6.5 billion in deposits of UCB. The FDIC and East West have
entered into a loss sharing agreement covering substantially all
acquired loans.
This strategically compelling and financially attractive
transaction creates the second largest independent bank
headquartered in California and the largest bank in the nation
focused on serving the Asian American community. East West Bank,
now over $19 billion in assets, operates 137 branches worldwide,
including 112 branches in California and 21 branches in key markets
across the country, including New York, Atlanta, Boston, Houston,
and Seattle. East West operates four full-service branches in
Greater China, including two branches in Hong Kong, and branches in
Shanghai and Shantou. The bank also has representative offices in
Beijing, Guangzhou, Shanghai and Shenzhen, China, and Taipei,
Taiwan. The Shanghai, China, subsidiary of United Commercial
(UCB-China), was also part of today’s transaction. The agreement
between the FDIC and East West Bank will not affect the normal
business operation of UCB-China. East West Bank will extend support
to UCB-China where necessary.
“This is a transformational event for both institutions and
represents an exciting growth opportunity for East West,” said
Dominic Ng, Chairman, President and Chief Executive Officer of East
West. “East West and UCB share a rich cultural heritage. For East
West, the transaction strengthens our presence in key markets
throughout the U.S. and Asia and is another important milestone in
realizing our vision to be recognized as the premier bridge between
East and West,” continued Ng.
East West also announced the completion of a $500 million
capital raise through the private placement of 18.2 million shares
of common stock, priced at $9.04 per share, equivalent to $165
million and the issuance of 335,047 shares of Mandatory Convertible
Cumulative Non-Voting Perpetual Preferred Stock, Series C (Series C
Preferred Stock) totaling $335 million. The new capital came
predominantly from existing shareholders of the company. No
individual investor has total ownership of the Company that exceeds
9.9%.
The Common Stock was issued at $9.04 per share, the 30 day
average closing price as of Oct 30, 2009. The Series C Preferred
Stock will convert into shares of the Company’s common stock at the
conversion price of $9.04 per share after the Company has received
stockholder approval to permit such conversion. The Company intends
to seek such approval before year-end 2009.
“With the acquisition of the operations of UCB through an FDIC
assisted transaction, East West has substantially increased its
asset size from $12.5 billion to approximately $19 billion with
minimal credit risk on the acquired loan portfolio as a result of
the loss sharing agreement. The $500 million in capital raised
along with the FDIC loss sharing protection on the acquired loan
portfolio positions East West with industry leading, fortress-like
capital that further cements the safety and security of East West
for all our customers. This capital will also serve our
shareholders very well as it will accelerate the timing of our
return to substantial profitability in 2010 and will support the
Bank’s continued growth into the future,” said Ng.
All UCB branches will reopen as branches of East West Bank under
normal business hours – on Saturday for branches that operate on
the weekend, and on Monday for branches that operate Monday through
Friday. Depositors can continue to access their money by writing
checks or using ATM or debit cards. All outstanding checks will be
processed as usual, and customers can continue using their UCB
checks. Loan customers should continue to make their payments as
they always have.
“We welcome UCB’s customers and employees to the East West Bank
family,” said Ng. “All customers can rest assured that all of their
deposits are safe and accessible, continue to be covered under the
FDIC insurance program, and are now backed by the security and
strength of East West Bank. For our new UCB customers, it’s
business as usual and there will be no interruption in service. In
the months ahead, we look forward to offering all of our customers
a wider array of financial products and services, and an expanded
branch and ATM network,” Ng concluded.
About East West
East West Bancorp (Nasdaq: EWBC) is a publicly owned company
with over $19 billion in assets. The Company’s wholly owned
subsidiary, FDIC-insured East West Bank, is the second largest bank
headquartered in California and the largest bank in the nation
focused on serving the Asian American community. East West Bank has
137 branches, including 112 branches in California, nine branches
in New York, five branches in metropolitan Atlanta, three branches
in Massachusetts, two branches in Houston, and two branches in
Seattle. East West Bank has four full-service branches in Greater
China, including two branches in Hong Kong, one branch in Shanghai,
and one branch in Shantou. The Bank also has representative offices
in Beijing, Guangzhou, Shanghai and Shenzhen, China, and Taipei,
Taiwan. For more information on East West Bancorp and East West
Bank, visit the Company's website at www.eastwestbank.com.
Deutsche Bank Securities served as Financial Advisor and
Placement Agent to East West on the transaction, Simpson Thacher
& Bartlett and Manatt Phelps & Phillips acted as legal
advisors. The Secura Group of LECG acted as merger and due
diligence advisor.
Forward-Looking Statements
This release may contain forward-looking statements, which are
included in accordance with the “safe harbor” provisions of the
Private Securities Litigation Reform Act of 1995 and accordingly,
the cautionary statements contained in East West Bancorp’s Annual
Report on Form 10-K for the year ended Dec. 31, 2008 (See Item I --
Business, and Item 7 -- Management’s Discussion and Analysis of
Consolidated Financial Condition and Results of Operations), and
other filings with the Securities and Exchange Commission are
incorporated herein by reference. These factors include, but are
not limited to: the effect of interest rate and currency exchange
fluctuations; competition in the financial services market for both
deposits and loans; EWBC’s ability to efficiently incorporate
acquisitions into its operations; the ability of borrowers to
perform as required under the terms of their loans; effect of
additional provisions for loan losses; effect of any goodwill
impairment, the ability of EWBC and its subsidiaries to increase
its customer base; the effect of regulatory and legislative action,
including California tax legislation and an announcement by the
state’s Franchise Tax Board regarding the taxation of Registered
Investment Companies; risks inherent in possible acquisitions and
FDIC-assisted transactions; and regional and general economic
conditions. Actual results and performance in future periods may be
materially different from any future results or performance
suggested by the forward-looking statements in this release. Such
forward-looking statements speak only as of the date of this
release. East West expressly disclaims any obligation to update or
revise any forward-looking statements found herein to reflect any
changes in the Bank’s expectations of results or any change in
event.
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