PASADENA, Calif. - East West Bancorp, Inc., parent company of East West Bank, one of the nation's premier community banks, and Desert Community Bank announced today that they have signed a definitive agreement for the merger of DCB with East West Bank. DCB is a commercial bank headquartered in Victorville, California that operates nine branches in the High Desert area of San Bernardino County.
"We believe that the merger will generate long-term value and earnings per share growth for our shareholders," stated Dominic Ng, Chairman, President and CEO of East West Bank. "Desert Community Bank is the only bank headquartered in the High Desert and has the largest market share in this region. The High Desert is a high growth area of Southern California with an increasing focus on international trade. This attractive market is thriving with small to middle market businesses - the same types of businesses that are a focus for East West. Additionally, Desert Community Bank is an institution that shares the same fundamental values as East West - a strong commitment to our customers, employees, shareholders and the community."
Ronald L. Wilson, Chairman, President and CEO of Desert Community Bank, commented, "We are excited to partner with East West and believe that our customers and community will benefit from the resources of East West. The combined companies will allow High Desert residents and businesses to benefit from an expanded array of deposit and loan products and services."
"Ron Wilson has done an outstanding job serving the High Desert community and businesses," added Ng. "The Desert Community Bank name will be maintained and Ron Wilson will continue to lead the DCB branches, which will operate as a division of East West."
Under the terms of the definitive agreement, East West will acquire the outstanding shares of DCB for $24 per share, or an aggregate of approximately $142.6 million based on the 5,943,844 shares currently outstanding. The shareholders of DCB will receive 55% of the merger consideration in shares of East West common stock and the remainder in cash. The exchange ratio for determining the number of shares of East West common stock deliverable to shareholders of Desert Community will be based on the weighted average closing prices of East West's common stock over a 60 trading day measuring period ending five days prior to the closing.
As of December 31, 2006, DCB had $532 million in total assets, $383 million in loans, $462 million in deposits, and $56 million in shareholders' equity. DCB's strength as a commercial bank is evidenced by core deposits of $395 million or 86% of total deposits and noninterest-bearing demand deposits of $156 million or 34% of total deposits at December 31, 2006. For the full year 2006, DCB's net interest margin was 5.73%, average yield on loans was 8.49% and average cost of deposits was 1.55%.
The transaction has been approved by the boards of directors of both banks. The transaction is subject to customary conditions, will require the approval of banking regulators and DCB's shareholders, and is expected to be completed by the third quarter of 2007. The acquisition is estimated to be accretive to East West's earnings by about $0.01 during 2007 and $0.03 to $0.04 during 2008.
