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On Wednesday, East West Bancorp, Inc. (EWBC - Snapshot Report) and Metrocorp Bancshares Inc. signed a definite agreement, which authorizes the former to acquire the latter by first-quarter 2014. The consolidated value, including cash and stock, of the deal is $273 million.

As per the terms, East West Bancorp will acquire approximately $18.7 million outstanding shares of Metrocorp. Once the acquisition is completed, shareholders of the acquired company will receive two thirds of their existing stock holdings as East West Bancorp’s shares and the remainder in cash.

However, the number of stocks that the shareholders are entitled to receive for two thirds of their holdings depend on the average closing price of East West Bancorp‘s stock over the 60 trading days ending 5 days before the deal’s closure.

Metrocorp currently has 18 branches spread across Houston, Dallas, Los Angeles, San Francisco and San Diego. It has assets worth $1.6 billion, total loans of $1.2 billion and total deposits of $1.3 billion, all of which will come under East West Bancorp’s domain following the completion of the merger.

The deal is expected to benefit East West Bancorp, as it will strengthen its existing foothold and enable it to venture into new markets. Capitalizing on Metrocorp’s wide retail and commercial customer base, East West Bancorp intends to provide enhanced services to customers through better product offerings and a larger branch network.

The latest deal is the first acquisition by East West Bancorp in the last six years. Earlier in Aug 2007, the company acquired Desert Community Bank for $148.2 million.

While East West Bancorp carries a Zacks Rank #2 (Buy), Metrocorp has a Zacks Rank #3 (Hold). Better-performing banks include Prosperity Bancshares Inc. (PB - Analyst Report) and Southside Bancshares Inc. (SBSI - Snapshot Report). Both these stocks carry a Zacks Rank #1 (Strong Buy).

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