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.
To use SNL's branch analytics tools to compare market overlap, click here. To use SNL Maps to create custom maps, click here. SNL is an offering of S&P Global Market Intelligence.
