I have followed United Commercial Bank for some time now. Watching it plummet over 70% from a high of >20 to a current low of about 5.75. This Bank is in major US Cities were there are concentrations of Chinese (San Francisco, Atlanta, New York, etc.) The bank has Chinese speakers in key positions, notably the CEO , tommy Wu. Recently they opened a branch in China and they have a Chinese partner bank which will furnish capital to their operation in china. Their recent conference call was on April 24, which you should listen to if interested. The bank has been under a cloud because of changes in the CFO position. First Jon Downing was CFO, then the spot went to another Wu (don't know if he is related to Tommy). However this made some sense to me as CFO Wu is a Chinese speaker and a specialist in international business operations, and the change came at the time that UCBH was negotiating on the China deal. After that deal, CFO Wu left to go back to private consulting and Downing returned to the CFO position. A few days ago Downing dropped dead! The deputy CFO has been assigned interim CFO. Basically the CFO situation seems to be a mess and the stock has been punished especially as of late. (sinking like a rock!) This stock is very attractive to me at present, and i am loading the boat. Reasons: 1.Heavy recent insider buying, 2. a favorable 1st quarter report from my viewpoint at least. They should make for the year somewhere between 50 and 70 cents down from $1.20 a year previously, but earning are, according to the CEO going to rebound some in the second half of this year. (Contrast UCBH earnings with C, for example). 3. They seem to have plenty of capitol and no subprime exposure. 4. Costs associated with opening branches in China are largely behind them. 5. Who better to operate a US bank in China than a bunch of Chinamen? 6. Their main writedowns have been bad commercial loans made in California, and the CEO claims they have been conservative in their writedowns, and they do not anticipate much in the way of additional writedowns. 7. They are paying an over 2% dividend at the current price. This is i think, assuming the CEO is not lying, a great turnaround opportunity in banking and i expect to double my money in the next 2-3 years. (This holding is in a long-term portfolio.) I find UCBH to be a very attractive buy under $6 and expect it to go down to near $5. The technicals do not indicate a bottom so you may prefer to wait and watch, but i am buying now based on company fundamentals and my anticipation of a sudden and untelegraphed, rise back to the $7.00 area later this year. There is no harm in waiting however. And that may indeed prove to be the prudent course. If you have an interest in UCBH, be sure and listen to the April 24 conference call. Note: the options are thinly traded and not attractively priced from my point of view. And with the stock <6 i see no point in them. (Full disclosure: I presently own 3000 shares, at an average price of a little over $8.00, and am acquiring more shares at $6.00 or under.)
The following was copied from Yahoo Finance. INSIDER TRANSACTIONS REPORTED - LAST TWO YEARS Date Insider Shares Type Transaction Value* 19-May-08 WU THOMAS S Officer 10,000 Direct Purchase at $6.01 - $6.02 per share. $60,0002 19-May-08 LEE DENNIS A Officer 6,803 Indirect Purchase at $5.88 per share. $40,001 16-May-08 KO LI-LIN Director 2,000 Direct Purchase at $5.98 per share. $11,960 15-May-08 ON CRAIG S Officer 1,000 Direct Purchase at $6.17 per share. $6,170 2-May-08 CHAU PIN PIN Director 5,000 Direct Purchase at $7.50 per share. $37,500 1-May-08 WU DENNIS Director 5,834 Indirect Purchase at $7.77 per share. $45,330 28-Mar-08 WU THOMAS S Officer 200,000 Direct Option Exercise at $1.88 per share. $376,000 26-Mar-08 WU THOMAS S Officer 100,000 Direct Option Exercise at $1.88 per share. $188,000 17-Mar-08 DOWNING JONATHAN H Officer 1,200 Indirect Purchase at $8.03 - $8.04 per share. $9,6422 14-Mar-08 KWOK JAMES Director 10,000 Direct Purchase at $8.31 - $8.35 per share. $83,0002 13-Mar-08 LOH SYLVIA Officer 47,754 Direct Option Exercise at $1.88 per share. $89,777 13-Mar-08 DOWNING JONATHAN H Officer 1,200 Indirect Purchase at $8.64 per share. $10,368 10-Mar-08 DOWNING JONATHAN H Officer 11,000 Direct Purchase at $9 - $9.03 per share. $99,0002 7-Mar-08 JOU JOSEPH J Director 5,000 Indirect Purchase at $8.63 per share. $43,150 7-Mar-08 WU THOMAS S Officer 150,000 Direct Option Exercise at $1.88 per share. $282,000 7-Mar-08 WANG RICHARD LI-CHUNG Director 12,000 Direct Purchase at $8.77 - $8.8 per share. $105,0002 6-Mar-08 NG DAVID S Director 10,000 Direct Purchase at $8.99 - $9 per share. $90,0002 6-Mar-08 KO LI-LIN Director 2,000 Direct Purchase at $8.84 - $8.96 per share. $18,0002 5-Mar-08 WONG GODWIN Director 30,000 Direct Option Exercise at $1.88 per share. $56,400 3-Mar-08 WONG GODWIN Director 40,000 Direct Option Exercise at $1.88 per share. $75,200 15-Jan-08 CINDEREY JOHN M. Officer N/A Direct Statement of Ownership N/A 11-Dec-07 WONG GODWIN Director 10,000 Direct Option Exercise at $1.88 per share. $18,800 11-Dec-07 WONG GODWIN Director 10,000 Direct Automatic Sale at $16.87 per share. $168,700 30-Nov-07 LOH SYLVIA Officer 22,250 Direct Option Exercise at $1.88 - $1.88 per share. $42,0002 30-Nov-07 LOH SYLVIA Officer 22,250 Direct Automatic Sale at $16.38 per share. $364,455 5-Nov-07 WU THOMAS S Officer 10,000 Direct Purchase at $14.97 per share. $149,700 5-Nov-07 DOWNING JONATHAN H Officer 4,900 Indirect Purchase at $15.26 - $15.26 per share. $75,0002 5-Nov-07 DOWNING JONATHAN H Officer 6,600 Direct Purchase at $14.97 per share. $98,802 5-Nov-07 DOWNING JONATHAN H Officer 1,520 Indirect Purchase at $15.21 per share. $23,119 8-Oct-07 LEE DENNIS A Officer 12,708 Direct Option Exercise at $6.15 - $6.15 per share. $78,0002 8-Oct-07 LEE DENNIS A Officer 12,708 Direct Automatic Sale at $19.68 - $19.68 per share. $250,0002 8-Oct-07 LOH SYLVIA Officer 280,006 Direct Option Exercise at $1.88 - $6.15 per share. N/A 8-Oct-07 LOH SYLVIA Officer 310,006 Direct Automatic Sale at $19.68 - $19.68 per share. $6,101,0002 5-Oct-07 LEE DENNIS A Officer 7,292 Direct Option Exercise at $6.15 - $6.15 per share. $45,0002 5-Oct-07 LEE DENNIS A Officer 7,292 Direct Automatic Sale at $18.50 - $18.5 per share. $135,0002 27-Sep-07 LOH SYLVIA Officer 300 Direct Automatic Sale at $17.42 - $17.42 per share. $5,2262 27-Sep-07 LOH SYLVIA Officer 34,702 Direct Automatic Sale at $17.08 - $17.41 per share. $598,0002 27-Sep-07 LOH SYLVIA Officer 35,002 Direct Option Exercise at $1.88 - $1.88 per share. $66,0002 30-Aug-07 LOH SYLVIA Officer 35,002 Direct Option Exercise at $1.88 - $1.88 per share. $66,0002 30-Aug-07 LOH SYLVIA Officer 35,002 Direct Automatic Sale at $16.58 - $16.73 per share. $583,0002 17-Aug-07 LEE DENNIS A Officer 9,301 Direct Option Exercise at $6.15 - $6.15 per share. $57,0002 17-Aug-07 LEE DENNIS A Officer 9,301 Direct Automatic Sale at $18.50 - $18.5 per share. $172,0002 17-Aug-07 LARAIA WILLIAM J Officer 1,556 Indirect Purchase at $18.31 - $18.31 per share. $28,0002 10-Aug-07 LEE DENNIS A Officer 699 Direct Option Exercise at $6.15 - $6.15 per share. $4,2982 10-Aug-07 LEE DENNIS A Officer 699 Direct Automatic Sale at $18.50 - $18.5 per share. $13,0002 30-Jul-07 LOH SYLVIA Officer 35,002 Direct Option Exercise at $1.88 - $1.88 per share. $66,0002 30-Jul-07 LOH SYLVIA Officer 9,000 Direct Automatic Sale at $16.69 - $16.8 per share. $151,0002 30-Jul-07 LOH SYLVIA Officer 26,002 Direct Automatic Sale at $16.38 - $16.68 per share. $430,0002 26-Jul-07 LUCERO VIOLA R. Officer N/A Direct Statement of Ownership N/A 2-Jul-07 LEE DENNIS A Officer 10,000 Direct Option Exercise at $6.15 - $6.15 per share. $62,0002 2-Jul-07 LEE DENNIS A Officer 10,000 Direct Automatic Sale at $18.50 - $18.5 per share. $185,0002 28-Jun-07 LOH SYLVIA Officer 35,002 Direct Option Exercise at $1.88 - $1.88 per share. $66,0002 28-Jun-07 LOH SYLVIA Officer 35,002 Direct Automatic Sale at $17.83 - $17.93 per share. $626,0002 28-Jun-07 LEE DENNIS A Officer 13,332 Direct Option Exercise at $1.88 - $1.88 per share. $25,0002 28-Jun-07 LEE DENNIS A Officer 13,332 Direct Automatic Sale at $18 - $18 per share. $240,0002 11-Jun-07 MILLER JONAS Officer 12,000 Direct Option Exercise at $6.15 - $6.15 per share. $74,0002 11-Jun-07 MILLER JONAS Officer 12,000 Direct Automatic Sale at $18.60 - $18.68 per share. $224,0002 30-May-07 LOH SYLVIA Officer 35,002 Direct Option Exercise at $1.88 - $1.88 per share. $66,0002 30-May-07 LOH SYLVIA Officer 35,002 Direct Automatic Sale at $18.42 - $18.53 per share. $647,0002 17-May-07 CHAU PIN PIN Director 62,693 Direct Statement of Ownership N/A 7-May-07 DOWNING JONATHAN H Officer 8,986 Indirect Purchase at $18.72 - $18.72 per share. $168,0002 2-May-07 WU THOMAS S Officer 10,458 Indirect Purchase at $18.29 - $18.29 per share. $191,0002 26-Feb-07 MILLER JONAS Officer 12,000 Direct Option Exercise at $6.15 - $6.15 per share. $74,0002 26-Feb-07 MILLER JONAS Officer 12,000 Direct Automatic Sale at $19.80 - $20.14 per share. $240,0002 25-Jan-07 YU DAVID Officer 123,502 Direct Statement of Ownership N/A 13-Nov-06 MILLER JONAS Officer 12,000 Direct Option Exercise at $3.44 - $3.44 per share. $41,0002 13-Nov-06 MILLER JONAS Officer 11,000 Direct Automatic Sale at $16.99 - $17.11 per share. $188,0002 18-Sep-06 MILLER JONAS Officer 10,000 Direct Automatic Sale at $17.91 - $18.17 per share. $180,0002 18-Sep-06 MILLER JONAS Officer 12,000 Direct Option Exercise at $2.47 - $2.47 per share. $30,0002 8-Aug-06 WU THOMAS S Officer 1,042 Indirect Purchase at $16.69 - $16.69 per share. $17,0002 Data provided by EDGAR Online
All banks are being hammered today, the sound as well as the unsound. UCBH is no different, and being a bank headquartered in California is certainly not going to escape. Today, Wed 28 May 2008 UCBH dropped under $5 (it is 4.97) as I write this. I Sold Sep 5 Puts at .80 . This will allow me to add to my present position at around 4.20. A price i am quite happy with, as by my calculations they are fairly valued at 5, given current earnings, which I expect to increase sharply next year if not in the second half of this year. The total commitment for anyone getting in at the present price is low even if the price drops to zero by Sep, which i think is highly unlikely. UCBH has positive earnings, are expanding, and are paying a dividend. In any case by Sep we should know if this is a go or no go, and as I say, the risk at the present price is pretty small Please listen to the April 24 conference call if interested and be prepared for a little wait.
Take a look at the UCBH chart. Pretty ugly, but has the appearance of stalling around $3.00. Insiders are buying with both fists on the open market. Fed reserve has them as well capitalized (highest category) as of Dec 2007. I expect they may drop one notch (out of 5) by this coming Dec. This is categorized as a regional and in most minds it is a regional California bank, hence being slammed, and it does have significant commercial loans in California that will be underwater if not already. They have no subprime exposure. (They already have taken significant write-downs, but I am expecting still more.) But this is far from a typical regional. The Principles speak Chinese. Their branches in China are now fully licensed and they have a partnership with a mainstream Chinese bank that can supply capitol. (Their Chinese partner will taking at least a 7% stake in the US operation by accumulating stock.) They operate their own subsidiary for securitizing loans, and in my opinion they are positioning themselves to be a top player in financing American business expansion into China. Besides California, they have branches in Chinese markets in Atlanta, New York, Boston, Seattle, Hong Cong, Shanghai, and Shantou and offices in Shenzhen, Beijing, Guangzhou and in Taipei. They have been on an acquisition rampage. This Bank is definitely nis-characterized as a "regional". They are very aggressive in going after business, to say the least. Take a look at their Website, listen to their latest conference call, go over their last Annual report with a fine tooth comb, as i have, and decide for yourself. Next technical buy point iis a breakout above $3.45, a buystop above $3.75 should be fairly safe. But if you go in, be prepared for a wait. Next April's report should tell us whether this is going to be a go or a bust. The conservative approach would be to wait until then. Cheers, Piezoe.