BBCN Bancorp Inc. and Wilshire Bancorp Inc. are combining forces to form the only regional Korean-American bank in the country. In a stock deal estimated to be worth around $1 billion, the new entity will have $12.3 billion in total assets, $10 billion in deposits and $9.6 billion in gross loans as of the end of September. As a result, the historic merger will combine the top Korean-American lenders while creating the first super regional Korean-American franchise, making it the seventh largest publicly traded bank with headquarters in California.
A Strengthening Bank
Under the terms of the deal that has been reached between BBCN and Wilshire, shareholders will receiving a fixed exchange ratio of 0.7034 of a share of BBCN common stock exchange for each share of Wilshire. This amounts to $13 per share of Wilshire common stock based on the December 4th closing price. Ultimately, Wilshire shareholders will own 41 percent of the new company, while BBCN shareholders will own 59 percent.
Under the new merger, the combined company will have the number one deposit market share position of all Korean-American banks in the state as well as in Alabama, New Jersey, New York and Washington. It will also have the second largest deposit share position in Illinois and Texas. The combined force of the two banks will result in a banking organization with a national platform that is capable of providing full banking services to all of the major geographic markets in the United States boasting a sizable Korean-American demographic.
By combining their forces, the two banks hope to more effectively compete with the ever-increasingly more challenging regulatory and economic environment. The merger will also result in a cost savings of about $42 million a year, which is approximately 16 percent of the combined operating expenses of the two banks.
The Future of the New Bank
The new bank, which has yet to be named, will be led by board members and a team of executive management representing both banks. Wilshire Chairman Steven Koh will serve as the chairman of the new company, while BBCN’s chairman will serve as the president and CEO and the Wilshire president and CEP will assist with the integration efforts as a consultant. In all, the new board will consist of seven directors from Wilshire and nine directors from BBCN representing a mix of asset management, banking and risk management professionals.
According to reports, Hanmi Financial Corp. had also been working toward a merger with BBCN. The bank reports that its deal would have been worth $1.6 billion. The banks proposal also offered to complete an all-stock transaction with an implied purchase price of $19.98 per BBCN share.
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