Los Angeles-based Hanmi Financial Corp. agreed to acquire Houston-based SWNB Bancorp Inc. for about $76.7 million, based on Hanmi's May 18 closing stock price of $28.65 per share.
Under the terms of the deal, SWNB shareholders will elect to receive 0.1961 shares of Hanmi common stock or $5.74 in cash, subject to the overall requirement that 80% of SWNB common shares receive the stock consideration and the remainder receive cash.
On an aggregate basis, SNL calculates that the deal value is 158.0% of book and tangible book, and 26.1x earnings. It is 18.69% of assets, 22.09% of deposits and the tangible book premium-to-deposits ratio is 8.11%.
For reference, SNL valuations for bank and thrift targets in the Southwest region between May 18, 2017, and May 18, 2018, averaged 178.60% of book, 187.57% of tangible book and had a median of 19.26x last-12-months earnings, on an aggregate basis.
Hanmi, the parent company of Hanmi Bank, had approximately $5.31 billion in assets as of March 31, according to S&P Global Market Intelligence data. On the other hand, SWNB, the parent company of Southwestern National Bank, had approximately $411 million in total assets, $261 million in loans, $347 million in deposits and six retail banking branches.
Hanmi will have approximately $5.7 billion in assets, $4.7 billion in loans and $4.7 billion in deposits, upon closing of the transaction. The deal is expected to close late in the third quarter, subject to regulatory approvals as well as approval by SWNB shareholders.
Hanmi expects the acquisition to be accretive to earnings per share in 2019 and to generate a modest dilution to tangible book value of 1.5%, with an earn-back period of approximately three years. The internal rate of return is expected to be in excess of 20%.
Hanmi President and CEO Chong Guk Kum said that the SWNB acquisition will bolster the company's footprint in Texas and will bring over $100 million in excess liquidity that Hanmi plans to deploy into new loans.
SNL data shows that Hanmi Financial will expand in Texas by six branches to be ranked No. 94 with a 0.08% share of about $818.16 billion in total market deposits. It will expand in California by one branch to be ranked No. 33 with a 0.26% share of roughly $1.35 trillion in total market deposits.
D.A. Davidson & Co. is serving as financial adviser and Luse Gorman PC is serving as legal adviser to Hanmi. Sheshunoff & Co. is serving as financial adviser and Fennimore Kay Harrison & Ford LLP is serving as legal adviser to SWNB.