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Hanmi Financial said it is planning to sell 87.5 million common stock shares at 80 cents a share, using a "substantial portion" of the funds to provide capital to its banking unit and to support growth.
November 15 -
Aiming to boost its sagging stock price, Hanmi Financial Corp. has completed a one-for-eight reverse stock split that will reduce its number of shares outstanding by 87%, to 31.5 million.
December 19 -
The California Department of Financial Institutions has lifted a memorandum of understanding against Hanmi Bank after the Los Angeles institution's condition improved.
November 2 -
BBCN execs took a difficult path to build the largest Korean-American bank, but a successful merger in L.A. and a deal in Seattle have put it on course to become a West Coast player — and maybe more.
December 26 -
Hanmi Financial Corp.'s on-again, off-again relationship with South Korean banking giant Woori Finance Holdings Co. is back on again.
June 27
For Hanmi Financial, a few years made a lot of difference.
The $2.8 billion-asset company that caters to Korean-Americans announced Wednesday that it had hired advisor DelMorgan & Co. to help it explore strategic alternatives. Hanmi (HAFC) is in "substantive discussions with certain strategic banks and bank holding companies regarding a possible business combination, merger-of-equals or sale transaction," it said.
It is the second time in nearly three years that the Los Angeles-based company has put out a for-sale sign. It hired Cappello Capital in 2010 to find a buyer, though ultimately it went another direction. This time is different: instead of seeking a savior, Hanmi is being opportunistic.
The turn of events underscores how Korean-American banks are in consolidation mode, following a pattern seen among other ethnic-niche players. Rivals may fight over Hanmi in an effort to join in or fight further consolidation, and that could spark a bidding war.
While Hanmi raised $120 million of capital at 62% of book value in 2010 to survive, analysts are expecting the company to go for a pretty healthy premium.
Timothy Coffey of FIG Partners said the company could fetch $18 per share, or 156% of tangible book value, while Scott Valentin, managing director for FBR Capital Markets & Co., said he is expecting $17 per share. Julianna Balicka, an analyst with KBW, said she is expecting $16 to $20 per share.
Alex Cappello, Hanmi's former advisor and a current shareholder, sees a bidding war brewing.
Coffey's estimate "sounds reasonable to me. I won't be surprised if they go for that premium or higher. It just takes two bidders to move the price up," Cappello says. "They are a gem of an asset and deserve a premium. In fact, I would be disappointed if it wasn't that high."
Cappello is not involved in the marketing this time. Hanmi declined to comment for this story.
Hanmi has been busy in recent months. It
Hanmi and its banking unit were
Valentin expected the company to use 2013 as a bit of a victory lap, perhaps returning capital to shareholders and buying back shares to get its stock price higher.
"I'm a little surprised by the timing," Valentin says. "I thought they would take some time to reap the rewards of all that they've done."
Korean-American banks have been busy on the M&A front. The $5.3 billion-asset BBCN (BBCN) formed last year from the merger of Nara Bancorp and the Center Financial. It agreed to buy Pacific National Bancorp for $8.2 million in October.
Late last month, Alvin Kang, president and chief executive of BBCN told American Banker
Wilshire (WIBC) Bancorp, at $2.6 billion in assets, could have a vested interest in Hanmi as a defensive move. Through a merger of equals, similar to the deal that created BBCN, Wilshire and Hanmi could keep BBCN from dominating the Korean-American market.
"Hanmi can join BBCN in making the dominant Korean-American bank or they could go with Wilshire and create a similarly sized competitor," Balicka said.
Other possible bidders include South Korea-based Woori Financial, which
The consolidation of the Korean-American banking market is following a similar path of the Chinese-American banking world, industry observers say. Before the economic downturn in 2008, that landscape was dominated by the Cathay General Bancorp (CATY), East West Bancorp (EWBC) and UCBH Holdings. UCBH failed and was acquired by East West, making that bank the dominant player.
BBCN is already considerably larger than both Wilshire and Hanmi, but Wilshire may jump at the chance to stop BBCN from gaining an even larger stake in the Korean-American segment.
"It is pretty much game over if BBCN buys it," Coffey says, meaning that BBCN would be the overwhelming leader.
Depending on the ultimate buyer of Hanmi, the Korean-American market could resemble the precrisis Chinese-American market, which had a few large players, or it could resemble the one today, which is dominated by one player.
Ethnic-focused banks often look to consolidate because of their branch overlaps, industry observers say. That consolidation leaves one or two large players to dominate the market, and over time smaller banks pop up again.
"There is always going to be a market for affinity banking. …," Cappello says. "They eventually merge or acquire each other to a point where there is one or two dominate players, though. Then slowly you see new, independent banks start up."
Similarly so, on Tuesday, the $626 million-asset Royal Business Bank, a 2008 startup bank serving the Chinese-American community, announced it would acquire the $192.1 million-asset Los Angeles National Bank.
