East West Bancorp Acquires Competitor; Shares Soar

PASADENA, Calif. (AP) — Shares of East West Bancorp Inc. shot upward Monday after it acquired a San Francisco-based competitor in a deal analysts said will improve earnings and expand market share.

East West Bancorp, based in Pasadena, Calif., acquired $10.4 billion in assets and $9.2 billion in liabilities from United Commercial Bank on Friday. The deal was arranged by the Federal Deposit Insurance Corp., which will share any losses on $7.7 billion worth of loans acquired.

The acquisition came as government regulators pressured United Commercial Bank to improve capital by as much as $600 million, which BMO Capital Markets analyst Lana Chan said was unlikely because of credit quality and other financial issues. UCB became the first commercial bank to receive federal TARP money to fail, Chan said. It had received $298.7 million from the government.

East West Bancorp shares rose $4.30, or 50 percent, to $12.95 in midday trading. Shares have traded between $3.24 and $16.64 in the past year.

With the acquisition, East West Bancorp expands its business into the Chinese market in both the United States and China since UCB was one of the three largest bank in the Chinese-American niche, Chan said.