In a blockbuster deal for Koreatown’s fiercely competitive banking industry, Nara Bancorp Inc. and Center Financial Corp. announced Thursday that they will merge, creating the nation’s largest Korean-American bank.

The combined institution, which will operate under a yet-to-be-determined name, will have pro-forma assets of $5.3 billion and deposits of $4 billion, as well as more than 40 branches located primarily in California.

Under the terms of the deal, Center shareholders will receive 0.7804 shares of Nara stock for each of their Center shares, valuing the transaction at $286 million based on the Dec. 8 closing prices. Current Nara shareholders will own 55 percent of the new company, while Center shareholders will own the remaining 45 percent.

The deal, which requires approval by regulators and shareholders of both institutions, is expected to close in the second half of next year. Alvin Kang, chief executive of Nara, will head the new institution. Center Chief Executive Jae Whan Yoo will be president.

“This transaction is expected to provide significant benefits to all of the key stakeholders of both companies,” Kang said in a statement. “The shareholders should benefit from the increased earnings power of the combined company and our improved ability to generate profitable growth and higher returns going forward. The customers should benefit from the convenience of additional branches and the increased investment we can make in our products and services capabilities.”

As of Sept. 30, Nara and Center – headquartered just blocks apart on Wilshire Boulevard – were the second and fourth largest Korean-American banks in the country, respectively. Koreatown’s Wilshire State Bank, with $3.2 billion in assets, was the largest, while Hanmi Bank had $3 billion in assets, making it the third largest.

The Korean-American banking sector has experienced a shakeout of late as many of the institutions contended with recession-related losses in their construction, business and commercial real estate loan portfolios. Mirae Bank in Koreatown and Innovative Bank in Oakland were among the institutions closed by the Federal Deposit Insurance Corp.

Hanmi, also headquartered in Koreatown, is awaiting regulatory approval to sell a majority stake to South Korean financial conglomerate Woori Finance Holdings Co.

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