Korean American lender Hanmi proposes $1.6-billion merger with rival BBCN

A passerby walks near the Hanmi bank building in L.A.'s Koreatown. The bank has withdrawn its proposed merger with rival Korean American lender BBCN.

A passerby walks near the Hanmi bank building in L.A.'s Koreatown. The bank has withdrawn its proposed merger with rival Korean American lender BBCN.

(Cheryl A. Guerrero / Los Angeles Times)

The third-biggest Korean American bank has proposed a $1.6-billion merger with the nation’s largest in an attempt to block a rival lender from doing the same.

Hanmi Financial Corp., parent of Hanmi Bank, disclosed Monday that it wants to combine with BBCN Bancorp in an all-stock deal that would value the combined company at roughly $2.4 billion.

The offer, made in a letter to BBCN’s board late last week, was aimed at preventing BBCN from pairing with Wilshire Bancorp, the second-largest Korean American bank.

All three banks are headquartered within blocks of each other in L.A.'s Koreatown.


In a letter sent to BBCN’s board Friday, Hanmi Chairman Joseph K. Rho said he was “dismayed” to read in a Korean-language newspaper that BBCN was in advanced merger discussions with Wilshire Bancorp and was disappointed that Hanmi had not had the opportunity to discuss a merger.

C.G. Kum, Hanmi’s chief executive, told The Times that Hanmi had been approached this summer by members of BBCN’s board who were interested in combining the two banks -- and in having Kum and other Hanmi executives run the combined company.

But Kum said BBCN’s board as a whole has rebuffed his attempts to discuss a deal and that Kevin Kim, BBCN’s chairman and chief executive, was against the idea.

“There’s a segment of BBCN’s board that believes Hanmi and its management team is better suited to run a combined organization -- obviously the group that was interested in exploring a combination with us was not in the majority,” he said.

Hanmi went public with its offer because Kum believes BBCN shareholders should be clued in to Hanmi’s interest in a deal.

“We were concerned BBCN shareholders and all board members were not given all of the facts,” he said.

A BBCN spokeswoman said in an email that the bank’s board and management were reviewing Hanmi’s proposal and could not comment before evaluating the deal.

A Wilshire bank executive also declined comment.

The deal proposed by Hanmi would be an all-stock transaction that would ultimately give BBCN shareholders a 65% stake in a combined entity. BBCN shareholders would get about three-quarters of a share of Hanmi stock for each BBCN share.

That would value BBCN shares, based on Hanmi’s closing price Monday, at $19.81 -- an 8.5% premium over BBCN shares’ Monday close of $18.25.

Hanmi disclosed its offer publicly after markets closed Monday.

Hanmi shares closed Monday at $27.02, down less than 1%. BBCN shares were up half a percent on the day.

A combined BBCN and Hanmi would have about $12 billion in assets. That would make it by far the largest Korean American bank, more than twice as large as Wilshire Bancorp., which would remain in the No. 2 spot.

It would be one of just six Los Angeles-based banks with more than $10 billion in assets.

A merger between BBCN and Wilshire would create an even larger lender, one that would dwarf Hanmi. Kum said fear of a potential BBCN-Wilshire combination is not part of the motivation for its merger proposal.

There’s been talk for years of a merger among two of the three big Koreatown banks, but the lenders lately have focused more on expanding outside of California, buying smaller Korean American banks in other markets.

Hanmi last year bought United Central Bank, a Garland, Texas, lender that also had operations in Illinois, Virginia, New York and New Jersey. BBCN has acquired banks in Chicago and Seattle over the last few years, while Wilshire bought a New Jersey bank in 2013.

Koreatown’s banks have looked to expand outside of Los Angeles and California in part because the market here is so saturated. Six of the nation’s seven-largest Korean American banks are based here, leading to fierce competition for customers.

The banks have also sought to grow by combining with or swallowing up local competitors. BBCN itself was created by the 2011 merger of former rivals Nara Bancorp and Center Financial. And in 2013, Wilshire Bank acquired Koreatown’s Saehan Bank.

Twitter: @jrkoren