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Credit:  The Los Angeles Times

This creates by far the largest U.S. bank focused on the Chinese American market and the largest bank based in Southern California. United Commercial was the 120th bank to fail in the U.S. this year.

United Commercial Bank had branches in key Chinese American areas nationwide. It also has a banking license and offices in China. Above, a branch in downtown Los Angeles. (Francine Orr / Los Angeles Times / November 6, 2009)

Biggest banks in California

By E. Scott ReckardNovember 7, 2009

Toppled by loan losses and misstated financial reports, San Francisco’s United Commercial Bank was shut down by regulators Friday night and immediately sold to Pasadena’s East West Bancorp, creating by far the largest U.S. bank focused on the Chinese American market.The combination also will be the largest bank based in Southern California, surpassing City National Bancorp.

East West agreed to assume all of United Commercial’s deposits, so no depositors will lose money, the Federal Deposit Insurance Corp. said. The bank’s 63 U.S. branches, including 17 in Southern California, will reopen Saturday as branches of East West Bank.

United Commercial, a unit of UCBH Holdings Inc., was the fourth-largest bank to fail this year. That position was formerly occupied by California National Bank of Los Angeles, which failed last week and was acquired by U.S. Bancorp of Minneapolis.

Regulators also seized on Friday one bank each in Georgia, Michigan, Minnesota and Missouri, bringing to 120 the number of failures this year.

United Commercial’s collapse may cause a greater-than-usual stir because a year ago the federal government invested $299 million in bailout funds in the bank in exchange for preferred stock, which was made worthless by the failure.

In addition, the FDIC said the collapse would cost the federal deposit insurance fund an estimated $1.4 billion.

East West raised $500 million in new capital to support the takeover, most of it from mutual funds and other existing shareholders, said Dominic Ng, chairman of the Pasadena-based lender.

The privately placed stock sales will enable East West to proceed slowly as it integrates the two banks, then have plenty of capital later next year to consider additional expansion by adding branches or making more acquisitions.

The takeover will greatly expand the reach of East West, which has concentrated on Southern California and the San Francisco Bay Area. In addition to 69 California offices, East West has full-service branches in Houston and Hong Kong.

United Commercial not only has dozens of branches in California but also has locations in key Chinese American areas, including New York, Boston, Seattle, Atlanta and Houston.

What’s more, because of its 2007 acquisition of a Shanghai bank, United Commercial also has a banking license in China — a “rare and hard-to-come-by” asset that makes it easier to operate and expand in that country, , said RBC Capital Markets analyst Joe Morford. It has full-service offices in Shanghai, Hong Kong and Shantou, China.

United Commercial, East West and Cathay General Bancorp of Los Angeles have vied for years to become the largest of the banks focused on the Chinese American market.

East West, which had $12.5 billion in assets at last report, agreed to acquire $10.2 billion of United Commercial’s $11.2 billion in assets. That would put the combined bank, at almost $23 billion in assets, ahead of L.A.-based City National as the largest bank based in Southern California. At last report, City National had $18.4 billion in assets.

The FDIC agreed to absorb most of the expected losses on about $7.7 billion of the United Commercial assets acquired by East West.

Like its Chinese American rivals, United Commercial was burned by commercial lending losses, especially loans to developers and home builders during the housing boom. But it also was tainted by a financial scandal that resulted in a shake-up of its top management.

UCBH announced in September that its financial reports could not be trusted because of the “deliberate and improper actions and omissions of certain bank officers,” who had understated losses in “an apparent desire to downplay deteriorating financial conditions.”

The company’s longtime chief executive, Thomas S. Wu, resigned in September, along with its chief operating officer.

Ng said he believed his new customers would happily accept a takeover by another California-based Chinese American bank rather than an institution “from somewhere else — New York, or a foreign bank.”

Ng said he anticipated only a few branch closures. Some back-office employees will be let go, he said.

scott.reckard@latimes.com

Copyright © 2009, The Los Angeles Times

Credit:  http://www.car.org/newsstand/newsreleases/taxcreditextended/

The U.S. House of Representatives today passed a bill extending and expanding the Federal Tax Credit for First-time Home Buyers. The bill was passed in the U.S. Senate late yesterday and will now go to President Obama for his signature, where it is expected to be signed this week.

The tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to receive a tax credit of up to $8,000, while existing homeowners will receive a reduced credit of up to $6,500. Existing homeowners will be eligible for the $6,500 if they have lived in their current residences for at least five years. The bill also will increase the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers, to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000.

Under additional provisions in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The bill maintains the provision that home buyers do not have to repay the credit provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.

RISMEDIA, November 5, 2009—After two weeks of delay, the Senate cleared the way to pass a seven month extension and expansion of the tax credit for homebuyers. By an 85 to 2 roll call vote, the Senate voted to cut off debate on a package of measures that includes the homebuyer credit, making it virtually certain that the legislation will reach President Obama for his signature this week.

The homebuyer tax credit, due to expire at the end of November would be extended through April 30 of next year. First-time buyers who are in the process of making a purchase would not need to worry about qualifying for the $8,000 credit if they close after the November 30 deadline.

For the first time, the legislation that was recently cleared makes move-up buyers as well as first-time buyers eligible for a credit. The $8,000 maximum first-timer credit will continue and will now be available to couples with income up to $225,000, a nearly $55,000 increase above the level in existing law. A new $6,500 maximum credit would also be available to move-up homeowners who have lived in their current residence for five of the prior eight years.

For homebuyers across the country, the expanded tax credit would allow more people to qualify for the credit. While two-thirds of American families own their own home, and most earn less than the income limits that have been established within the extension, more buyers may be eligible. Move-up buyers don’t have to sell their current home to qualify for the new credit, but the money cannot be used to buy a vacation home. “It’s only for a primary residence,” said Regan Lachapelle, a spokeswoman for Sen. Harry Redi (D-Nev.), who helped engineer the deal. “In expanding the tax credit, we are helping first-time home buyers, as well as homeowners looking to move up to a new home, but we would exclude from the credit speculators who may have recently purchased a home intending to flip it for a fast profit,” said Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee.

The tax credit has fired-up the housing market, driving existing home sales to the highest level in over two years. The National Association Realtors reported sales jumped 9.4% to a seasonally adjusted annual rate of 5.57 million units in September and are 9.2% higher than the 5.10 million-unit pace in September 2008.

The legislation included provisions added to address complaints of fraud as well. The Internal Revenue Service is given greater authority to oversee the process to root out fraud, and provisions are added in response to past abuses of false sales or underage buyers. An investigation by the Treasury Department’s Inspector General for Tax Administration found that more than 580 children, some as young as four years old, had received $627,000 in first-time homebuyer credits. The IRS has identified 167 suspected criminal schemes and opened nearly 107,000 examinations of potential civil violations of the first-time homebuyer tax credit.

For more information, visit www.realestateeconomywatch.com and www.wsj.com.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.

For more information about the tax credit on RISMedia.com, don’t miss:
What Impact Will Homebuyer Tax Credit Extension Have on Housing Industry?
Breaking News: Senate Plans to Extend and Expand Tax Credit