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East West Bancorp, Inc. Message Board

  • lasvegas78214 lasvegas78214 Dec 24, 2009 2:51 PM Flag

    UCB's Failures v.s East West's Successes

    One of the reasons why UCB failed was that the bank used to keep and hire a lot of weak employees in the branch division. They either belong to the old generations of savings and loan or cannot survive in other commercial banks. They can only count on promotions and promotions to grow their deposits. You could see the facts by comparing the bank's average cost of funds with the peers' and observing their promotional and marketing activities. On the liability side, they are lack of commercial knowledge and skills, so all they can generate are either home loans or apartment loans. What would that mean between 2003 and 2008(5 year period)? The bank's interest margin would be the worst among the peers with a higher cost of funds and lower yields. In order to continue growing and making enough profits, the bank had to do a lot of extra productions in other areas to make up the deficiency of the retail division. This meant that the bank was forced to grow their construction and commercial portfolio more aggressively during that period. Eventually, when the economy turned to the other way, it was too late to realize the drawback of carrying the burden.

    East West was well-known to be more cruel in terms of getting rid of their incapable officers and managers. This willingness in fact put the bank in a better position in the competition.

    Now, UCB is a part of East West. What should East West do to turn around the situation? What I heard so far was that a lot of good commercial employees already left UCB. Unfortunately, East West had no choice but to keep a lot of UCB's senior management to run the existing branches. These senior managers were either the veterans of United Savings Bank or those who were lack of business senses and could not adapt to the competitive markets.

    Hopefully, East West will be able to observe and fully evaluate the remaining managers and officers of UCB. Otherwise, the situation will.............!!!!!

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