Amid the buzz in Koreatown's banking community over last month's failed acquisition of California Center Bank by Hanmi Financial Corp. Benjamin Hong's presence looms large.
The president and chief executive of Nara Bancorp with $649 million in assets the second-largest community bank in Koreatown behind Hanmi Hong has overseen a rapid expansion both here and on the East Coast. And as former Hanmi chief executive, Hong's reach into the half-dozen community banks serving the Korean-American community runs remarkably deep.
On June 3, a little more than a month after agreeing to be acquired by Hanmi for $103 million, California Center Bank terminated the deal, saying that the changes proposed by Hanmi were unsatisfactory.
Hanmi's spin, predictably, was different. Once executive said that CCB got cold feet and "abruptly got out of the negotiation process."
But shortly after that, rumors began circulating through Koreatown that Hong was flirting with the notion of acquiring CCB. In fact, sources close to the deal said that Hanmi's proposed acquisition of CCB was a direct response to a previous offer made by Nara.
Officials from Hanmi and Nara never confirmed the rumor. At the time of Hanmi's announcement, Hong characterized the acquisition as "defensive."
Regardless of intent, an acquisition by Hanmi would have further established it as the largest bank in Koreatown, with around $1.5 billion in assets. An acquisition by Nara would have made it slightly larger than Hanmi, with around $1.1 billion in assets.
L.A.'s Korean community banks are run by a tight-knit group of insiders, many of whom were been groomed by Hong before his departure from Hanmi in 1994. And the level of competition among banks chasing this insular market has increased.
Hanmi's chief executive, Chung Hoon Youk, was hired by Hong and served as a branch manager during Hong's reign there. Joohak Kim, who now heads up Saehan Bancorp, also was one of Hong's branch managers. CCB's chief executive, Seon Hong Kim, served as Hong's chief financial officer. Of the four major Korean community banks besides Nara, only one chief executive serving today didn't work under Hong.
"They all know my secrets," laughed Hong.
On the surface, it may seem as if more than friendly competition is involved. Hong said it's quite the contrary. "During my time I tried to train all of them," he said. "We don't have any bad blood."
Still, some sense of jealousy has been attached to Nara's growth. One analyst speculated that CCB executives deflected Nara overtures because they were embarrassed by the notion of being acquired by a bank of comparable size.
Nara reported net income of $3.3 million (57 cents per diluted share) for the second quarter ended June 30, 2001, up from $3 million (57 cents) in the like-year earlier quarter.
Hong isn't bashful about sharing his desire to grow inside the city limits, and he has been even more aggressive elsewhere.
Last year Nara acquired Korea First Bank of New York, a subsidiary of Seoul-based Korea First Bank. Two years before that it purchased a branch of Korean Exchange in Flushing, N.Y. Nara continues to maintain two branches in the Bay Area, as well as loan production offices in Chicago and Seattle.
Its chief rival, Hanmi, reported net income of $4.2 million (50 cents per diluted share) for the second quarter ended June 30, 2001, up from $3.8 million (40 cents a share) for the like-year earlier quarter. With the end of the Hanmi-CCB courtship, the future of the smaller bank remains in question.
Yong Hwa Kim, controller and senior vice president at CCB said the bank has "no intention of being acquired yet." She also said that CCB decided to remain independent "for the benefit of the shareholders."
But according to one insider, CCB's board has been under pressure from shareholders to sell the business.
The combination of eager shareholders and Nara's aggressive stance on expansion makes it easy to see where the rumors about its interest come from. Hong said that at present "there is nothing going on."
But that doesn't mean he isn't interested. "I'm always interested in making acquisitions, if CCB were willing to discuss, so would I," he said.
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