Los Angeles-based Hope Bancorp, Inc. has entered into a stock-for-stock transaction to acquire U & I Financial Corp. of Lynnwood, Wash., in a deal valued at approximately $48.8 million.
Terms of the merger stipulate that U & I Financial common shareholders will be entitled to receive Hope Bancorp common shares. The total aggregate value of the transaction is approximately $48.8 million or $9.50 per U & I Financial common share, subject to certain adjustments. The acquisition is expected to be immediately accretive to tangible book value and earnings.
The deal value is 127.1% of book and tangible book and 9.9x earnings, on a per-share basis. It is also 22.30% of deposits and 19.04% of assets and has a tangible book premium-to-core deposits ratio of 6.82%.
For comparison, SNL data shows that offers for bank and thrift targets in the West between Jan. 23, 2016, and Jan. 23, 2017, averaged 149.35% of book, 160.30% of tangible book and had a median of 27.36x last-12-month earnings, on an aggregate basis. On a per-share basis, they averaged 154.37% of book, 171.41% of tangible book and had a median of 27.94x LTM earnings.
The transaction is expected to make Bank of Hope the only Korean-American bank with operations in the Pacific Northwest. In Washington, Hope Bancorp will expand in King County by two branches, to be ranked No. 23 with a 0.17% share of approximately $76.43 billion in total market deposits. It will expand in Pierce County by one branch, to be ranked No. 13 with a 1.10% share of approximately $10.39 billion in total market deposits. And it will expand in Snohomish County by one branch, to be ranked No. 12 with a 2.36% share of approximately $10.83 billion in total market deposits.
The deal is set to close during the third quarter and has yet to receive approval from regulators and U & I Financial shareholders.
According to a Jan. 23 merger release, as of Sept. 30, 2016, U & I Financial had total assets of $255.0 million, total loans of $184.2 million and total deposits of $217.2 million. Subsidiary UniBank had $254.1 million in assets as of Sept. 30, 2016, as per SNL data.
In addition, as of Sept. 30, 2016, Hope Bancorp on a pro forma basis with U & I Financial would have total assets of $13.8 billion, total loans outstanding of $10.8 billion and total deposits of $10.9 billion. Based on SNL data, Hope Bancorp had $13.51 billion in assets as of Sept. 30, 2016.
Keefe Bruyette & Woods served as financial adviser to Hope Bancorp, with Morrison & Foerster LLP serving as legal counsel. Sandler O'Neill & Partners LP served as financial adviser to U & I Financial with Miller Nash Graham & Dunn LLP serving as legal counsel.