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Hanmi Financial (HAFC) to Acquire SWNB Bancorp for $76.7M

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Hanmi Financial Corporation HAFC has agreed to acquire SWNB Bancorp, Inc. The deal, which is expected to be completed by the end of third-quarter 2018, is anticipated to be accretive to Hanmi’s earnings per share (EPS) in 2019.

According to Hanmi’s closing price on May 18, the total deal value is $76.7 million.

Per the agreement, each shareholder of SWNB Bancorp can either choose to receive $5.74 in cash or 0.1961 Hanmi shares. However, this is possible only if 80% of SWNB Bancorp’s shares receive the stock consideration and remaining 20% receive cash.

The acquisition is beneficial for Hanmi as it is anticipated to expand the company’s operational scale and market share in high growth markets of Texas.

According to the company, the acquisition is likely to result in slight dilution of its tangible book value of 1.5%. Notably, the earn-back period of this dilution effect is projected to be nearly three years.

C. G. Kum, president and chief executive officer of Hanmi, said, “This transaction will bolster our footprint in attractive Texas banking markets. SWNB has a strong portfolio of assets with an excellent credit profile along with an attractive deposit base. In addition, with a loan-to-deposit ratio of 75%, SWNB brings over $100 million in excess liquidity that we plan to deploy into new loans as we grow and scale the Hanmi franchise.”

Excited about the deal, the chairman of SWNB Bancorp, C.K. Lee notified, “This transaction is extremely positive for current SWNB employees, along with our loyal customers. In addition, it provides a great opportunity for current SWNB shareholders to continue to build on the long-term success we have achieved at SWNB through their ownership of Hanmi common stock.”

As of Mar 31, 2018, SWNB Bancorp’s total assets were valued at $411 million, while its loan balances stood at $261 million. Also, the company had $347 million in deposits and six retail banking branches in Houston, Dallas and Austin, TX.

Once the acquisition is complete, Hanmi is expected to have nearly $5.7 billion in assets, $4.7 billion in loans and $4.7 billion in deposits.

While the deal has been approved by the boards of directors of the companies, its closing is subject to regulatory approval, as well as the approval of SWNB Bancorp’s shareholders.

Hanmi’s shares have lost 2.9% so far this year, against the industry’s growth of 13%.


 

Currently, Hanmi carries a Zacks Rank #4 (Sell).

A few better-ranked stocks from the same space are First Hawaiian, Inc. FHB, People's Utah Bancorp PUB and SVB Financial Group SIVB. All of these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

First Hawaiian’s Zacks Consensus Estimate for the current-year earnings has moved 1.5% upward over the past 60 days. The company’s shares have gained 1.7% over the past six months.

People's Utah Bancorp’s current-year earnings estimates have been revised 1.5% upward over the past 60 days. Its shares have gained 12% in the past six months.

Over the past 60 days, SVB Financial’s current-year earnings estimates have been revised 14.5% upward. Over the past six months, the company’s shares have surged 50.5%.

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