East West Bancorp Inc. said Monday that it would buy Pacific Business Bank for $25 million in cash, the latest in a series of acquisitions of small-business lenders by the San Marino-based parent of East West Bank.
Pacific Business, a four-branch, privately held bank based in Santa Fe Springs, is a lender to small manufacturing, service and distribution companies in Southern California. It has $165 million in assets and its retail clients, like those at East West, are mainly ethnic Chinese.
The boards of both banks have approved the acquisition, expected to close in March.
East West Chief Executive Dominic Ng said Monday that his bank has generated most of its growth internally as its assets swelled from $2 billion five years ago to more than $3.2 billion as of Sept. 30. As East West has become able to take on larger commercial clients, acquiring smaller banks is a way to reinforce its traditional core business of small-business lending, he said.
Since 1999, East West has acquired First Central Bank, American International Bank and Prime Bank, all Southern California-based institutions focused on small-business lending and with $100 million to $200 million in assets.
"We're always out looking for deals that make sense," he said, adding that it's less likely East West would purchase a bank its own size because such "mergers of equals" generally result in clashes in business cultures.
Ng said he expected the Pacific Business deal, like his previous acquisitions, to increase East West's per-share earnings. Analysts surveyed by Thomson First Call expect East West to report on Jan. 23 earnings of $2 a share for 2002. They predict earnings of $2.27 a share for 2003. East West said the Pacific Business acquisition should add 3 or 4 cents a share in 2003.
East West shares rose 9 cents Monday to close at $36.22 on Nasdaq.