East West Bancorp's takeover of the failed United Commercial Bank not only catapulted the struggling firm to new prominence, but it also sets up a showdown in California between the two biggest Chinese-American lenders.

The deal made the Pasadena company the largest player in the Chinese-American sector with $19 billion of assets, far surpassing its nearest competitor, the $11.7 billion-asset Cathay General Bancorp in Los Angeles. East West obtained United Commercial's domestic banking operations, a branch in Hong Kong and its bank subsidiary in Shanghai.

East West's chairman and chief executive, Dominic Ng, said in an interview Monday that the deal advances the company's strategic plan at least five years — to a dominant market share in California's Chinese-American communities, nearly two dozen branches in other U.S. cities with similar communities and a larger presence in China.

"We were planning on doing that one step at a time," but with the help of a transaction assisted by the Federal Deposit Insurance Corp., "we immediately got to that point overnight," Ng said.

East West's massive asset boost should be most evident in California, where most Chinese-Americans live and most of East West's branches are located, analysts said. However, Cathay is still slightly larger in the New York City area, the second-largest population center for the sector, and both companies have similarly sized operations in about a half dozen other U.S. cities.

And Cathay is definitely not planning on letting East West have too much of a leg up in California, where Cathay started out as the first Chinese-American bank 48 years ago, said its CEO, Dunson Cheng.

"If size were the only determining factor to success, we wouldn't have so many community banks in the country that are doing well," Cheng said in an interview Monday.

Aaron Deer, an analyst at Sandler O'Neill & Partners LP, earlier had questioned whether the FDIC would award East West or Cathay the deal for United Commercial, a unit of UCBH Holdings Inc. in San Francisco. East West and Cathay have had credit-quality troubles and needed more capital, he said. In the third quarter, East West had a net loss of $68.5 million, primarily driven by a $159.2 million provision for loan losses and a $24.2 million loss on investment securities.

However, along with the deal Friday, East West also announced the completion of a $500 million capital raise through a private placement and the issuance of mandatory convertible preferred stock.

"Undoubtedly, a big part of East West's win stems from its ability to coordinate a sizable stock offering in conjunction with the purchase," Deer said.

Though the offering is dilutive and there will be "hefty challenges" from the United Commercial deal, the additional earnings and broader reach should dramatically improve the company's outlook, he said.

East West added 63 branches from the deal for a total of 112 in California — compared with Cathay's 31 in the state. Moreover, East West is now the second-largest independent banking company headquartered in California, behind Wells Fargo & Co.

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