East West Bancorp (EWBC) in Pasadena, Calif., has agreed to pay $273 million in stock and cash for MetroCorp Bancshares (MCBI) in Houston.
The agreement, which ranks eleventh in price among bank deals this year, would expand East West's presence in Houston and Dallas.
The $1.6 billion-asset MetroCorp operates 9 branches in Houston and four in the Dallas area. It is also operates a total of six offices in San Francisco, Los Angeles and San Diego. MetroCorp was founded in 1987 and is the holding company for MetroBank.
Currently the $23.3 billion-asset East West's only toehold in Texas is a branch in Houston.
"This is a strategic merger that will significantly increase East West's presence in Houston and allow entry into the Dallas market," East West's chairman and chief executive, Dominic Ng, said Wednesday in a press release announcing the deal. "The merger further strengthens East West's branch network in California and expands our footprint to San Diego."
MetroCorp reported a profit of $5.8 million for the first six months of 2013, but it has struggled with asset quality issues. The company has seen a steady improvement since 2011, but its ratio of nonperforming assets to total assets still hovers near 2%.
George Lee, MetroCorp's president and chief executive, has agreed to stay on following the completion of the merger as a senior advisor and chairman of East West's newly formed Texas Strategic Markets Advisory Council.
The deal is expected to close in the first quarter. The $273 million price tag works out to $14.60 per MetroCorp share and 1.72 times the per-share tangible equity. Its stock closed Wednesday at $10.85 but was up 25% in after-hours trading.
East West's shares closed Wednesday at $30.14, down 1.1%. They were holding relatively steady in after-hours action.
