In buying struggling Texas lender United Central Bank, Koreatown’s Hanmi Financial Corp. made a move its biggest competitors did years ago: It expanded outside of California.
Though Hanmi is the nation’s oldest Korean-American bank, it has lagged behind rivals Wilshire Bancorp Inc. and BBCN Bancorp Inc., which have branches in other states, including New York, New Jersey and Texas.
But with its acquisition of United Central, which closed Aug. 31, Hanmi now has branches in those states, as well as in Virginia and Illinois. C.G. Kum, Hanmi’s chief executive, said it will now have more deposits in Illinois, Virginia and Texas than any other Korean-American bank.
It’s a move Hanmi desperately needed to make, said Tim Coffey, a vice president at San Francisco brokerage FIG Partners who follows Hanmi and other Korean-American banks.
“Hanmi had to do something,” he said. “They were just so concentrated in Southern California. This transaction opens up the rest of the country to them.”
Koreatown’s big banks have long been pushing outside of California, either by opening branches or buying other banks, because competition in Los Angeles is so fierce. Along with Hanmi, Wilshire and BBCN, Los Angeles is home to Korean-American lenders Open Bank, Commonwealth Business Bank and Pacific City Bank. All that competition makes lending less lucrative in Los Angeles, and potentially more lucrative in markets where fewer Korean-American banks operate.
That’s why Kum said Hanmi will focus on continuing to build its presence in Virginia, Texas and Illinois – areas where United Central had a sizable customer base – rather than in New York and New Jersey, where United Central’s presence was overshadowed by BBCN and Wilshire.
“That market is fairly saturated,” Kum said. “Our priority is to expand in markets where we are No. 1. Investments in Texas, Virginia and Illinois will be our priority.”
Along with two in the New York area, Hanmi now has branches in Dallas, Houston, Chicago and the Virginia suburbs near Washington, D.C. Already, Kum said he believes Hanmi could open a third Virginia branch in the Washington suburb of Centreville, home to a burgeoning Korean-American community.
With the acquisition, Hanmi now has loans and other assets that total $4.4 billion, up from $3.1 billion, making it the second-biggest Korean-American bank.
Hanmi leapfrogged $3.7 billion-in-assets Wilshire for the No. 2 spot but is still far behind leader BBCN, which has assets of $6.9 billion.
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