East West Bancorp, Inc. (NasdaqGS:EWBC) signed a non binding letter of intent to acquire Metrocorp Bancshares Inc. (NasdaqGS:MCBI) on August 19, 2013. East West Bancorp, Inc. (NasdaqGS:EWBC) signed a definitive agreement to acquire Metrocorp Bancshares Inc. (NasdaqGS:MCBI) for approximately $280 million in cash and stock on September 18, 2013. Under the terms of the definitive agreement, East West will acquire the outstanding shares of MetroCorp for the lesser of $14.6 per share and 1.72 times the per share tangible equity, as adjusted, for an aggregate purchase price of $273 million based on the 18.7 million shares currently outstanding. The shareholders of MetroCorp will receive two thirds of the merger consideration in shares of East West common stock and the remainder in cash. The exchange ratio for determining the number of shares of East West common stock deliverable to shareholders of MetroCorp will be based on the weighted average closing price of East West's common stock over a 60 trading day measurement period ending five days prior to the closing, provided, however, if the average closing price is less than $28, then the number of East West common shares issuable shall be derived by dividing two-thirds of the per share merger consideration by $28 and if the average closing price is greater than $32, then the number of East West common shares issuable shall be derived by dividing two-thirds of the per share merger consideration by $32. In addition, immediately after the effective time, all unexercised MetroCorp options will terminate and East West will pay to the holder of each such MetroCorp options the amount needed to cash out. Also each restricted stock award, whether or not then vested or exercisable, shall be cancelled and converted into the right to receive the merger consideration from East West.

Upon the completion of this transaction, MetroCorp shall merge with and into East West and the separate corporate existence of MetroCorp shall cease. East West shall be the surviving corporation in the merger. Immediately following the merger, MetroBank, National Association and Metro United Bank, wholly owned subsidiaries of MetroCorp will merge with and into East West Bank, a wholly owned subsidiary of East West, with East West Bank as the surviving bank. In case of the termination of the agreement, MetroCorp shall pay to East West an amount equal to 3% of the merger consideration plus all expenses incurred by East West in connection with the proposed transaction, provided that the aggregate amount of all such expenses shall not exceed $0.25 million. Following the deal with East West, George M. Lee, the Co-Chairman, President and Chief Executive Officer of MetroCorp will join the East West as a senior adviser and Chairman of its newly formed Texas Strategic Markets Advisory Council.

The transaction is subject to customary closing conditions, including the approval of the merger by MetroCorp shareholders, consents, approvals, waivers and other assurances from all non-governmental third parties, all required regulatory approvals, dissenters rights limited to 5%, the Registration Statement covering the East West common shares to be issued in the merger shall have become effective under the Securities Act, the East West common shares to be delivered to the stockholders of MetroCorp pursuant to this agreement shall have been authorized for listing on the NASDAQ. The transaction, which has been unanimously approved by the East West and MetroCorp Boards of Directors, is expected to be completed during the first quarter of 2014. As of December 10, 2013, the transaction was approved by State of California Department of Business Oversight. In addition, the Federal Reserve Bank of San Francisco has indicated that it does not object to the consummation of the transaction.

The deal is expected to be 4% accretive to East West's 2014 full-year earnings, excluding any one-time merger and restructuring charges. Gordon Bava and T. J. (Mick) Grasmick of Manatt, Phelps & Phillips, LLP acted as a legal advisors to East West Bancorp, Inc. William T. Luedke IV of Bracewell & Giuliani LLP acted as legal advisor to MetroCorp Bancshares, Inc. Sandler O'Neill + Partners, L.P. acted as a fairness opinion provider to the Boards of Directors of MetroCorp for a fee of $0.4 million. RBC Capital Markets acted as a fairness opinion provider to the Boards of Directors of East West.

East West Bancorp, Inc. (NasdaqGS:EWBC) completed the acquisition of Metrocorp Bancshares Inc. (NasdaqGS:MCBI) on January 17, 2014.