East West Bancorp Announces the Acquisition of Prime Bank; Strategic Acquisition Solidifies East West Bank's Position as Leading Commercial Bank in California Market
SAN MARINO, Calif.--(BUSINESS WIRE)--Nov. 2, 2000--
Transaction Provides Enhanced Regional Coverage
and Expertise in New Niche Markets
East West Bancorp (Nasdaq:EWBC) today announced that its subsidiary East West Bank has signed a definitive agreement to acquire Prime Bank, a commercial bank located in the Century City area of Los Angeles, for a combination of shares and cash valued at approximately $14.5 million.
The transaction will further solidify East West's position as one of the most dynamic and responsive commercial banking franchises in California through the addition of new niche market expertise and a physical presence in the key West Los Angeles region.
(The Prime acquisition adds strong market presence in specialty depository services to the entertainment and real estate services industries, commercial lending for middle market enterprises in West Los Angeles and niche real estate lending and will also create one of the deepest and most seasoned staff of senior bankers among California banks. The transaction furthers the Bank's strategy of focusing on niche markets that enable East West to translate its ability to deliver value-added services and relationships into substantial returns with minimal potential losses for the Bank. East West will also have a strengthened presence among the region's mainstream enterprises, which represent an important growth driver for the Bank's commercial lending operations and which enables East West to further leverage on its Pacific Rim connections.
Under the terms of the definitive agreement, Prime shareholders will receive 51.15 shares of East West stock and approximately $420 in cash for each share of Prime Bank. Based upon the closing price of East West Bancorp's stock price as of November 1, 2000, the transaction values Prime Bank at approximately $14.46 million, or 1.62 times Prime's estimated year end book value. The transaction has been approved by the Boards of Directors of both banks, and is anticipated to close by the end of January, 2001. East West estimates that the acquisition will be slightly accretive to earnings per share in 2001 and approximately $0.05 to $0.07 per share accretive in 2002.
Dominic Ng, Chairman, President and CEO of East West, commented on the acquisition, "A key component of the development of our commercial banking franchise is the expansion of the scope of the services and capabilities resident at the Bank. We believe that the acquisition of Prime Bank is a fitting start to this second phase of our corporate development at East West, bringing new segment expertise and market presence from a management team that shares a corporate culture very similar to ours. Specifically, we are very excited to add Prime's proven expertise in a number of niche markets, such as specialty commercial deposit and cash management services, that complement our current product and lending platform. In addition, the senior management team of Prime has developed a strong and proven market reputation for fast, responsive and creative business financing solutions over the past 20 years and bring to East West an extensive number of lasting and deep business relationships. The senior management has built a solid business banking franchise both at Prime Bank and at Metrobank, which the team founded and built over 15 years to reach asset size of $1.1 billion before selling to Comerica in 1996. We have successfully completed the acquisition and integration of two other banks in the last two years and we now look forward to integrating Prime as a vital component in our commercial banking operation."
David Buell, Chairman and CEO of Prime Bank, said, "The entire team at Prime Bank is excited at the opportunity to participate in the successful expansion at East West. We believe that our existing and future customer relationships will greatly benefit from the lending capabilities, extensive product and service offering and commitment to customer service provided by East West. In addition, our ability to grow a number of specialty products, such as entertainment and real estate industry deposit services, will be enhanced as part of East West and will make significant contributions to the combined operation's profitability."
Prime Bank's operations will be integrated as part of East West's commercial banking platform. The current employee base of Prime will remain in the Bank's Century City location, focusing on expanding the Bank's pipeline of business in the West Los Angeles area and among Prime's specialty markets. In making their assumptions on the accretion resulting from the acquisition, East West has not projected any cost savings or expense elimination from combining their operations. Rather, the banks have estimated that Prime's existing relationships and personnel, together with the lending and service portfolio and capital base of East West, will produce meaningful revenue growth from the Prime platfo m. East West anticipates completing the acquisition in the first quarter of 2001. |
