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Despite CRE-heavy deal, Hanmi still focused on diversifying loan mix

Los Angeles-based Hanmi Financial Corp. is returning to Texas with a deal executives hope will bolster its presence in large Asian-American communities.

The bank, with $5.3 billion in total assets, is buying Houston-based SWNB Bancorp Inc. in a deal valued at about $76.7 million. The combined bank will have about $5.7 billion in total assets.

On a May 21 call, D.A. Davidson analyst Gary Tenner asked how the deal will impact Hanmi's attempts to diversify its loan portfolio.

On the bank's recent first-quarter 2018 earnings call, President and CEO Chong Kum said the bank is continuing to bulk up its commercial and industrial lending efforts, and expects Hanmi's CRE concentration to continue declining in 2018. But on a pro forma basis, Hanmi anticipates that SWNB Bancorp's loan portfolio — 90% of which consists of CRE loans — will raise Hanmi's loan book concentration from 69% to 71% CRE.

In response to Tenner's question, Kum said he views the deal as a stepping stone into attractive markets. While SWNB does not have significant C&I loan-originating capabilities, he said Hanmi's scale will allow it to diversify its loan mix by hiring other bankers and potentially completing other acquisitions.

According to Hanmi's investor presentation, SWNB's six Texas branches are in metro markets with a strong Asian-American focus. The bank expects to have the largest deposit market share among Asian-American banks in Dallas and Austin metro areas, and the second-largest in the Houston metro area on a pro forma basis.

Hanmi entered Texas in 2014 with its acquisition of Garland-based Central Bancorp Inc. Kum said the SWNB acquisition complements Hanmi's presence in high-growth Texas markets, and is in line with its long-term goal of expanding outside of Southern California.

Kum said the bank is working to deploy excess capital and may consider a stock buyback since the deal only makes a "small dent" in its capital levels. Pro forma, the combined bank anticipates having a tangible common equity ratio of 10.2%. The banks is striving to lower the ratio to between 9% and 9.5%, Kum said.

Kum said additional M&A will likely take place outside of Texas.

"We're still looking for strategic entry points in those attractive markets where the Asians are," Kum said.