Hanmi Financial Corporation (Nasdaq:HAFC) ("Hanmi"), the holding company for Hanmi Bank, announced today that it has entered into a definitive agreement to acquire Central Bancorp, Inc. ("CBI"), parent of Texas-based United Central Bank.
The combined company will have 51 banking offices and 2 loan production offices serving a broad range of ethnic communities in California, Texas, Illinois, New York, New Jersey, Virginia and Georgia.
As of September 30, 2013, CBI had approximately $1.6 billion in assets, $0.7 billion in gross loans and $1.4 billion in deposits, and 24 branches across six states (Texas, Illinois, New York, New Jersey, Virginia and Georgia).
Upon closing of the transaction, Hanmi will have approximately $4.3 billion in assets, $2.8 billion in gross loans, and $3.8 billion in deposits, and will be the second largest Korean-American bank with a #1 deposit market share ranking among Korean-American banks in Texas, Illinois and Virginia and a significant presence in other key markets. Key strategic benefits of the merger include:
Access to highly attractive markets with large Asian-American communities, creating business opportunities by leveraging Hanmi’s brand and business strategies.
Ability to realize significant cost savings and operational efficiencies for the combined company.
Opportunity to prudently deploy capital at an attractive return for our shareholders.
Under the terms of the agreement, the total merger consideration payable to CBI common stockholders is $50 million in cash, subject to potential purchase price adjustments, representing approximately 62% of CBI’s tangible book value as of September 30, 2013. The transaction is expected to close in the second half of 2014. Excluding one-time merger expenses, the transaction is expected to be immediately accretive to 2014 earnings and significantly accretive to 2015 earnings and beyond; and is expected to generate internal rate of return in excess of 20% for Hanmi shareholders.
"We believe the combined entity will be a significant competitive force in our markets and position the company for meaningful growth and earnings expansion," said C. G. Kum, President and CEO of Hanmi. "We are particularly pleased to have signed this agreement on the 31st anniversary of Hanmi Bank’s opening its doors as the first Korean-American bank in Los Angeles with the clear mission of helping immigrants to achieve their American dreams. We remain committed to community banking, and to further diversifying our customer base, both ethnically and geographically."
"For shareholders, the combination is an attractive use of Hanmi’s capital and is expected to be immediately accretive to earnings with minimal dilution to tangible book value per share, and will increase the earnings and growth profile of the combined entity," Kum continued. "For customers, the expanded footprint, increased product line and higher lending capacity should add convenience and enhanced service. And for employees, we will continue to invest in training, development and growth opportunities."
The boards of directors of both companies have unanimously approved the transaction. The transaction is subject to regulatory approval, the approval of the shareholders of CBI, and other closing conditions.
Hanmi Financial Corporation was advised by the investment banking firm of FBR Capital Markets and the law firm of Sullivan & Cromwell LLP. Central Bancorp, Inc. was advised by the investment banking firm of Sandler O’Neill + Partners, L.P., and the law firm of Bracewell & Giuliani, LLP.