Hope Bancorp Inc. executives said their deal to buy a competitor in the Seattle area was an important step that makes it the only Korean-American bank in the Pacific Northwest and offers it a "tremendous" chance to gain deposits.
Hope on Jan. 23 announced that it has agreed to acquire Lynwood, Wash.-based U & I Financial Corp. in a deal valued at about $48.8 million in a stock transaction. Hope President and CEO Kevin Kim told analysts and investors during a Jan. 24 earnings conference call that the deal is a takeout of Hope's lone Korean-American banking competitor in the Pacific Northwest, an area with a growing Asian population, and said most Korean-Americans in the area are currently customers of mainstream banks.
"That means that there are tremendous opportunities for us to gain deposit market share," Kim said, adding that the deal also helps it establish "a formidable competitive barrier that will be a considerable challenge for any of our niche peers who may want to enter this market."
Hope Bancorp bills itself as the nation's only Korean-American superregional bank, and was formed from the merger of two Los Angeles-based Korean-American-focused banks, BBCN Bancorp and Wilshire Bancorp, in a deal that completed last July.
Kim also said during the call that the Pacific Northwest is a "very ripe" Small Business Administration lending market. He told analysts and investors that the company expects the deal to be immediately accretive to tangible book value and earnings, and that the deal will add about 1 cent per share to its 2017 earnings.
Executive Vice President and CFO Douglas Goddard estimated during the call that Hope would take a 5% credit mark on the acquired portfolio, though he cautioned that the deal is in the "preliminary stages" of closing and integration.