Hanmi Financial Corp. Agrees to Acquire Pacific Union Bank for $295
Million Creates Leading Korean-American Community Bank LOS ANGELES,
Dec. 22 /PRNewswire-FirstCall/ -- Hanmi Financial Corp. and Pacific
Union Bank today announced that they have entered into a definitive
agreement whereby Hanmi Financial Corp. will acquire Pacific Union
Bank. The combined banks, with assets of close to $2.8 billion,
will form the leading Korean-American community bank. "This
combination is about investing in the Korean-American community for
the long run," said Jae Whan Yoo, president and chief executive
officer of Hanmi Financial Corp. "With greater scale and clear
market leadership, we will be even better able to provide high
levels of customer service to our growing and attractive markets.
We believe this combination will enable us to offer larger lending
limits and a wider range of products and services - including trade
finance, cash management, correspondent banking and varied consumer
and commercial products." The two banks will have the leading
market share among the publicly traded Korean-American community
banks in California. They serve a community that has traditionally
forged loyal and long-lasting banking relationships and that has
highly attractive demographic trends. The company will continue to
be headquartered in Los Angeles, home to roughly one third of
Korean-Americans -- the community's largest concentration in the
U.S. In addition, Hanmi Bank, the banking subsidiary of Hanmi
Financial Corp., will continue its successful efforts to extend
service to other neighboring ethnic communities as well. "Our two
banks have similar cultures, serve similar markets with similar
products and services, and boast a similar caliber of employees. We
believe these similarities will significantly aid our ability to
smoothly integrate these two financially strong and
community-oriented banks," said Mr. Yoo. "Pacific Union is the
oldest-established Korean-American bank and has not only helped
protect and grow the assets of many families, but also nurtured
many banking professionals in the community. Over the years, our
Board and employees have gained a deep respect for its people and
we look forward to working with them." To help ensure a smooth
transition and a successful integration, Hanmi Financial is working
diligently to develop a detailed post-merger integration team and
plan. This team will include an outside consultant, Dan Davis of
CBC Consulting, who has significant post-merger integration
experience, having been involved in more than 50 banking mergers
and acquisitions. The integration plan will build on the best of
both banks -- including the best people, business practices and
operations -- so the new company can serve its customers to even
higher standards. "The requirement that our parent company, Korea
Exchange Bank, reduce its ownership interest in Pacific Union has
unexpectedly created the opportunity to combine two outstanding
businesses," said David B. Warner, Jr., president and chief
executive officer of Pacific Union Bank. "I believe this is a great
opportunity for everyone involved. Joining with Hanmi Bank will
create a tremendous organization with the heritage, size and reach
that takes banking in the Korean-American community to new
heights." "A key to our success is our people," said Mr. Yoo. "Our
management team has developed tremendous respect for the employees
of both banks, and we believe their continued dedication to our
customers and our communities will help tremendously during the
transition and into the future. Our employees should be assured
that Hanmi is committed to retaining the best employees of both
banks. We believe that employees of the combined bank will stand to
benefit from increased career opportunities as a part of a larger,
stronger organization." Transaction consideration, payable under
the merger agreement between Hanmi Financial and Pacific Union and
a separate agreement between Hanmi Financial and the Trust
established to hold the shares of Pacific Union formerly owned by
Korea Exchange Bank, will consist of 6.12 million shares of Hanmi
Financial common stock and $164.6 million in cash, subject to
certain adjustments. The agreements call for Hanmi Financial to use
the cash to acquire most of the Pacific Union shares that are owned
by Korea Exchange Bank, which holds approximately 62 percent of the
Pacific Union shares outstanding. All of the other outstanding
Pacific Union shares, including those held by the public, will be
exchanged for Hanmi Financial shares in a tax-free transaction. As
of the close of market on Dec. 22, 2003, the transaction was valued
at approximately $295 million, or approximately $27.63 per Pacific
Union share. The agreement contains an adjustment provision to
ensure that all Pacific Union shares shall receive equal value in
the transaction, whether paid in cash or shares of Hanmi Financial
stock, and regardless of any change in the market price of Hanmi
Financial's stock. In addition, the agreement provides that if
Hanmi Financial's stock price at closing is below $19 per share
(but is not less than $17.50) or above $25 (but not above $26.50),
the number of Hanmi Financial shares issued will float so that
Pacific Union shareholders receive Hanmi Financial shares with a
market value of $26.28 or $29.72, as applicable. Hanmi Financial
expects the combination to be marginally dilutive to earnings per
share in 2004, but accretive in 2005. The company expects to
achieve cost savings of $10.9 million, representing a reduction of
approximately 17 percent of the combined company's expense base, to
be phased in over 18 months. The majority of the expected savings
will come from non- branch consolidations of back office support,
as well as scale efficiencies. Although Hanmi Financial has
identified potential immediate opportunities for revenue
enhancement, these are not reflected in its pro forma earnings per
share projections. Hanmi Financial anticipates a one-time pre-tax
restructuring charge of approximately $20 million, to be recognized
at the time of closing. Completion of the transaction is subject to
receiving shareholder and regulatory approvals, and other customary
conditions. The parties anticipate completion in the second quarter
of 2004. After the transaction is completed, Hanmi Financial will
expand its 11- member board to include one current member of
Pacific Union's board of directors and a representative from Castle
Creek Financial, which managed the equity financing for Hanmi
Financial in the transaction. Prior to the signing of the
agreement, Hanmi Financial obtained commitments for $135 million in
new capital to fund the acquisition. This amount consists of $75
million in common equity raised in a fully committed private
placement offering from 15 investors, including several Hanmi
Financial directors, arranged by Castle Creek Financial at an offer
price of $19.00 per share, and $60 million of trust preferred
financing to be provided by Financial Stocks, Inc. and its
affiliate, Trapeza Funding V LLC. Financial Stocks also agreed to
invest in the private placement of common equity. As part of the
transaction, the trustee that holds KEB's Pacific Union shares
(representing approximately 62 percent of the outstanding shares)
has agreed to vote those shares in favor of the merger. Hanmi
Financial's directors, who own approximately 32 percent of Hanmi
Financial's stock, have also agreed to vote their shares in favor
of the transaction. Credit Suisse First Boston LLC acted as
financial advisor to Hanmi Financial Corp. Simpson Thacher &
Bartlett LLP was Hanmi Financial's legal advisor in the
transaction. Friedman, Billings, Ramsey & Co. was financial
advisor to the special committee of the Pacific Union Bank board
and Merrill Lynch advised the Trustee of Pacific Union Bank.
Manatt, Phelps & Phillips, LLP acted as legal advisor to the
special committee of Pacific Union Bank and Skadden, Arps, Slate,
Meagher & Flom LLP and Sullivan & Cromwell LLP advised the
Trustee. Transaction At A Glance ($ in millions) Hanmi Pacific
Union Hanmi pro forma Market Capitalization * $302 $263 $520 Total
Assets ** 1,735 1,058 2,793 Total Deposits ** 1,502 838 2,340 Total
Loans ** 1,194 831 2,025 * Based on closing stock prices, Dec. 22,
2003 ** Based on quarter ended Sept. 30, 2003 Conference Call for
Investors Hanmi Financial Corp. and Pacific Union Bank invite
analysts and investors to participate in a conference call on Dec.
23, 2003 at 10:00 a.m. Eastern Time (7:00 a.m. Pacific Time).
Analysts and investors may dial into the call at (800) 299-7635,
and enter 61943301 when asked for a participant passcode.
International callers may dial (617) 786-2901 and enter 61943301 as
the passcode. A listen-only live broadcast of the call also will be
available on Hanmi Financial Corp.'s website at
http://www.hanmi.com/. Also on the website is a copy of this news
release. A replay of the call will be archived and available on the
above links shortly after the call. About Hanmi Financial Corp.
Headquartered in Los Angeles, Hanmi Bank, a wholly owned subsidiary
of Hanmi Financial Corp., is one of the leading banks providing
services to the multi-ethnic communities of California, with 15
full-service offices in Los Angeles, Orange, San Diego and Santa
Clara counties. Hanmi Bank specializes in commercial, SBA, trade
finance and consumer lending, and is a recognized community leader.
The Bank's mission is to provide varied quality products and
premier services to its customers and to maximize shareholder
value. About Pacific Union Bank Pacific Union Bank is a California
state chartered commercial bank headquartered in Los Angeles, which
commenced operations in September 1974. The Bank's primary market
includes the greater Los Angeles metropolitan area, Orange County,
Santa Clara County and the San Francisco metropolitan area. Through
its network of 12 full-service branch offices, and a loan
production office in Seattle, the Bank provides a wide range of
commercial and consumer banking services to the Korean-American
communities. The Bank's primary focus is on its core customer base
of small and medium sized Korean-American businesses, professionals
and other individuals. The Bank places a particular emphasis on the
growth of its low cost core-deposit base and the origination of
commercial and residential real estate loans. About Castle Creek
Financial LLC Castle Creek Financial LLC is a registered
broker/dealer that provides merger and acquisition and corporate
finance advisory services exclusively to financial services
companies. Castle Creek Financial has provided these services to
both buyers and sellers, raising nearly $1 billion in capital and
completing over $3 billion in merger and acquisition transactions.
Castle Creek Financial was founded in 1991 and is located in Rancho
Santa Fe, California. About Financial Stocks, Inc. Financial Stocks
is a registered investment advisor that manages investments in
financial services companies, including banks and thrifts,
insurance companies, commercial and consumer finance, leasing,
brokerage, and financial technology businesses. Investing in both
publicly-traded and privately held securities, FSI delivers value
to its investors and its portfolio companies through its broad and
deep industry experience, expertise in corporate finance and
structure, and experience with complex financial institution
regulation. FSI was founded in 1995. About Trapeza Trapeza provides
trust preferred and debt capital to banks and thrifts and is a
joint venture between Financial Stocks and Resource America, Inc.
(NASDAQ:REXI), a proprietary asset management company, each with
extensive experience in the small and mid-cap bank, thrift,
insurance, and specialty finance sectors. Forward-Looking
Statements: Words such as "expect," "feel," "believe," "will,"
"may," "anticipate," "plan," "estimate," "intend," "should," and
similar expressions are intended to identify forward-looking
statements. These statements include, but are not limited to,
financial projections and estimates and their underlying
assumptions; statements regarding plans, objectives and
expectations with respect to future operations, products and
services; and statements regarding future performance. Such
statements are subject to certain risks and uncertainties, many of
which are difficult to predict and generally beyond the control of
Hanmi Financial Corp., Hanmi Bank and Pacific Union Bank, that
could cause actual results to differ materially from those
expressed in, or implied or projected by, the forward-looking
information and statements. The following factors, among others,
could cause actual results to differ materially from the
anticipated results or other expectations expressed in the
forward-looking statements: (1) the businesses of Hanmi Bank and
Pacific Union Bank may not be combined successfully, or such
combination may take longer to accomplish than expected; (2) the
growth opportunities and cost savings from the merger may not be
fully realized or may take longer to realize than expected; (3)
operating costs and business disruption following the merger,
including adverse effects on relationships with employees, may be
greater than expected; (4) governmental approvals of the merger may
not be obtained, or adverse regulatory conditions may be imposed in
connection with governmental approvals of the merger; (5) the
stockholders of Hanmi Financial Corp. may fail to approve the
issuance of shares pursuant to the merger and the related equity
financing; (6) competitive factors which could affect net interest
income and non-interest income, general economic conditions which
could affect the volume of loan originations, deposit flows and
real estate values; and (7) the levels of non-interest income and
the amount of loan losses as well as other factors discussed in the
documents filed by Hanmi Financial Corp. and Pacific Union with the
Securities and Exchange Commission or FDIC, as the case may be,
from time to time. None of Hanmi Financial Corp., Hanmi Bank or
Pacific Union Bank undertakes any obligation to update these
forward-looking statements to reflect events or circumstances that
occur after the date on which such statements were made. This
filing may be deemed to be solicitation material in respect of the
proposed merger of Hanmi Bank and Pacific Union Bank and issuance
of shares of common stock by Hanmi Financial Corp. in the merger
and the financing transactions related to the merger. In connection
with the proposed transactions, a registration statement on Form
S-4 will be filed with the SEC and a merger proxy statement will be
filed with the FDIC. STOCKHOLDERS OF HANMI FINANCIAL CORP. AND OF
PACIFIC UNION BANK ARE ENCOURAGED TO READ THE REGISTRATION
STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC AND
THE FDIC, INCLUDING THE JOINT PROXY STATEMENT/PROSPECTUS THAT WILL
BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. The final joint
proxy statement/prospectus will be mailed to stockholders of Hanmi
Financial Corp. and stockholders of Pacific Union Bank. Investors
and security holders will be able to obtain the documents free of
charge at the SEC's website, http://www.sec.gov/, from the FDIC's
Public Reference Section at the FDIC, 550 17th Street, N.W.,
Accounting and Securities Disclosure Section, Room F6043,
Washington D.C. 20429, from Hanmi Financial Corporation, 3660
Wilshire Boulevard, Suite PH-A, Los Angeles, California 90010,
Attention: Stephanie Yoon, or from Pacific Union Bank, 3530
Wilshire Boulevard, Suite 1800, Los Angeles, California 90010,
Attention: Diane Kim. Hanmi Financial Corp., Pacific Union Bank and
their respective directors and executive officers and other members
of management and employees may be deemed to participate in the
solicitation of proxies in respect of the proposed transactions.
Information regarding Hanmi Financial Corp.'s directors and
executive officers is available in Hanmi Financial Corp.'s proxy
statement for its 2003 annual meeting of stockholders, which was
filed with the SEC on April 21, 2003, and information regarding
Pacific Union Bank's directors and executive officers is available
in Pacific Union's proxy statement for its 2003 annual meeting of
stockholders, which was filed with the FDIC on May 7, 2003.
Additional information regarding the interests of such potential
participants (including the addition of one of the members of the
Pacific Union Bank's board of directors, who has yet to be
identified, to the board of directors of Hanmi Financial Corp.
following the merger) will be included in the joint proxy
statement/prospectus and the other relevant documents filed with
the SEC and the FDIC when they become available. DATASOURCE: Hanmi
Financial Corp. CONTACT: Stephanie J. Yoon of Hanmi Financial
Corp., +1-213-427-5631, or ; or Media, James Lucas of Abernathy
MacGregor Group, +1-213-630-6550, for Hanmi Financial Corp.; or
Media, Ted Mills, +1-310-407-6530, or Anni Cho, +1-818-903-7052, or
Investors, Dianne Kim, +1-213-351-9260, or , all of Pacific Union
Bank Web site: http://www.hanmi.com/
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