East West Bank’s acquisition of a failed Seattle-area competitor three weeks ago cemented the Pasadena institution’s new standing as Southern California’s largest commercial bank.
Yet East West would not be where it is today if not for a critical turn two years ago.
Dominic Ng, who took the helm of the bank in 1992 amid the savings and loan crisis, had an uneasy feeling about the weakening housing market in spring 2008.
“I saw enough signs out there in the market that this crisis can potentially match what happened in the early ’90s – and it turned out to be much worse, right?” recalled Ng, 51, during a recent interview in his office overlooking downtown Pasadena. “I said, ‘You know, we better get serious,’ and that’s what we did.”
So before its peers faced up to the severity of the looming troubles, East West decided to tackle its problems head-on. The bank wrote down tens of millions of dollars in loans and raised hundreds of millions of dollars in capital. That move roughed up its earnings but fortified the bank’s balance sheet for the coming storm.
As a result, while other banks are still working through their troubled portfolios today, East West is able to pick up failed competitors and grow at an unprecedented rate.
Since November, the 37-year-old institution has nearly doubled its assets to $21 billion through a pair of acquisitions, becoming the largest commercial bank in Southern California and the largest Chinese-American bank in the country. The moves put it ahead of longtime regional powerhouse City National Bank, which has also completed several failed-bank acquisitions to push its assets to more than $20 billion.
According to industry research firm SNL Financial, East West Bancorp Inc., the institution’s holding company, is the 27th largest in the country. The bank now has 140 locations, far more than the 71 of a year ago. In the process, East West is rapidly outgrowing its community bank label.
Late in 2009, the bank acquired United Commercial Bank, a San Francisco institution with more than $11 billion in assets – East West’s largest acquisition ever – ending City National’s seven-year reign as the largest local bank. The June purchase of Washington First International Bank, a $521 million-asset institution, was East West’s first out-of-state acquisition, bolstering a branch network that now spans the United States and includes several overseas locations.
“It is a milestone,” Ng said. “We’ve always been California driven. Now, suddenly we have branches in Seattle, Boston, New York, Atlanta, Houston.”
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