Hanmi Financial Corp.’s announcement last week that it is seeking a buyer is a sign of new competitive pressures among Korean-American banks – and could result in further consolidation in that industry, analysts said.
The Koreatown holding company that owns Hanmi Bank, the second largest Korean-American bank with assets of $2.8 billion, issued a press release that it has been in talks with other banks regarding a possible sale or merger.
Analysts said that Hanmi’s hunt for a buyer is a reflection of the fact that it and Wilshire State Bank, the third largest Koreatown bank, have struggled to keep up with BBCN Bank, the largest Korean-American bank with assets of $5.3 billion. BBCN was formed in late 2011 through a merger of Center Bank and Nara Bank. Its scale has given it a leg up in the current low-interest rate environment, with its pretax, preprovisional earnings far outpacing its two closest rivals.
“With BBCN having done well in the past year, I feel like that’s given a good example to the other Korean-American banks about the benefits of being bigger,” said Julianna Balicka, an analyst at Keefe Bruyette & Woods Inc. in San Francisco. “Scale definitely helps in the current environment.”
BBCN and Wilshire are thus likely buyers, followed by South Korean banks Woori Bank and Hana Bank, which have been looking to expand in the United States, analysts said. One also named Pasadena’s East West Bank, which caters to Chinese-American clients, as a potential buyer.
In recent years, Hanmi has pulled itself back from the brink of failure. One of the most troubled local banks during the downturn, it has cleaned up bad assets, raised capital and returned to profitability. Late last year, the Federal Reserve Bank of San Francisco and the California Department of Financial Institutions lifted enforcement actions against Hanmi that had been in place since 2009.
“If they were wanting to look for a partner, there’s no better time now that regulators have given the OK,” said Timothy Coffey, an analyst at FIG Partners in San Francisco.
Analysts estimated the company could sell for between $16 and $20 a share, or between $500 million and $630 million. Shares were up 6.3 percent to $15.26 for the week ended Jan. 9.
Representatives at Hanmi, BBCN, Wilshire, Woori and East West declined comment. Hana Bank representatives could not be reached.
Hanmi has retained Santa Monica investment bank DelMorgan & Co. as financial adviser. Chairman Rob Delgado, whose firm has an office in Korea, declined to comment.
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