East West Bancorp, which became the nation's largest Chinese-American-owned banking company in September when it bought a smaller rival, would pull further ahead with a deal announced Wednesday.
The $7.9 billion-asset San Marino, Calif., company said it had agreed to pay $204 million in stock and cash for another small bank in the Los Angeles area, the $914 million-asset Standard Bank in Monterey Park, Calif.
Standard has six branches in Los Angeles County. Like East West, it mostly targets the region's vast Chinese-American population.
"Besides having another $1 billion in assets, this also expands our branch network capability in the Asian ethnic market in California," said Dominic Ng, East West's chairman and chief executive officer. "While we've been expanding more and more into the mainstream market, we're also staying true to our Chinese-immigrant population with our most recent mergers, so that we keep that East-West balance."
Chinese-American banking companies have long jockeyed for supremacy in their sector, and nowhere is competition fiercer than in California. The state is home to the $7.3 billion-asset UCBH Holdings Inc. of San Francisco and the $6 billion-asset Cathay General Bancorp of Los Angeles, both of which are also expanding through acquisitions.
In fact, UCBH and Cathay are battling for another Chinese-American bank, the $310 million-asset Great Eastern Bank in New York.
"They are all in a strong expansion mode, and they're keeping an eye out for what the others are doing," said Joseph Gladue, an analyst at Cohen Brothers & Co. in Philadelphia. "If one doesn't strike first and make an acquisition, one of the others may grab it, so it does lend some urgency to their expansions."
Because of heavier competition for Asian-American business in California - particularly from large, mainstream banks - East West has been courting non-Asian businesses in recent years. Today they account for about 60% of its commercial deposits.
East West bought the $948 million-asset United National Bank, also of San Marino, in September and is to buy Standard in the first quarter. The first deal raised its 2.17% share of Los Angeles County deposits to 2.49%; and the second would bring it to 2.85%. (The figures are based on Federal Deposit Insurance Corp. data for June 30.)
The deal price for Standard is about two times its book value. East West said the purchase should add about 2 cents a share to earnings next year.
It does not plan to close overlapping branches immediately but may close one or two after opening four next year, Mr. Ng said.
The merger would bring back John Lee, now Standard's chairman and president. Mr. Lee, who was East West Bank's first general manager, left in 1982 to start Standard. He is to become vice chairman at East West.
