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Asian Banks....again...

We have been tracking Asian Banks for some time. See: Bullish on Asian Banks Originally posted on the Street Insight section of thestreet.com 2/28/2006 4:35 PM EST and Still Bullish on Asian Banks

Recently, there has been renewed interest in this sector. We commented for an article by S&P analysts Kelsey Bartlett and Carolyn Duren posted Monday, 02 July 2018 11:52 AM ET, some of which is reproduced below:

Deals are heating up among Asian-American designated banks, with two of the nation’s prominent institutions announcing deals since April.

In its second deal since 2013, Hanmi Financial Corp. is acquiring Houston-based SWNB Bancorp Inc. Meanwhile, RBB Bancorp is making a play for Brooklyn, N.Y.-based First American International Corp. — its third deal since 2013. The two Los Angeles-based banks remain interested in diving into new markets with high populations of Asian Americans, management said.

Hanmi expects the combined entity to have $5.7 billion in total assets, while RBB anticipates it will have $2.6 billion in total assets after closing.


On a May 21 call to discuss the deal, Hanmi President and CEO C.G. Kum said the transaction advances the bank's long-term objective of expanding its existing footprint outside of Southern California. The bank will continue to search for "strategic entry points" in attractive markets, he said.
RBB Bancorp President and CEO Alan Thian shared similar sentiments, and said on an April 23 call its First American International acquisition will provide "improved scale, efficiencies and profitability."

(We noted some time ago that Asian-American banks merge with other Asian-American banks).


In 2014, Kum told S&P Global Market Intelligence that Hanmi, a traditionally Korean bank, hoped to diversify its customer base to include more Chinese-Americans, south Asians and customers without any Asian background. Kum will retire in 2019, but Tenner does not expect his departure to vastly change the bank's business model.

William Michael Cunningham, an economist, impact-investing specialist, and an adjunct faculty member at Georgetown University, said Asian-American banks could grow by expanding their footprints in the broader American market, but doing so could "potentially" cause a bank to lose its status with the Federal Deposit Insurance Corp. as a minority depository institution, or MDI, he said.

"You've got to be a big bank these days in order to survive," Cunningham said in an interview. "... But it is something you have to think about, and you have to plan in order to be successful at." 

In an emailed statement, an FDIC spokesman said whether a bank loses its designation "all depends on the ultimate structure" of the resulting merger.

One of the goals of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 is to preserve minority character in cases of merger or acquisition. The FDIC provides technical assistance, training and educational assistance to the banks. The number of banks and thrifts with an MDI designation has dwindled in recent years.


More than 51% of an MDI's voting stock must be owned by one or more "socially and economically disadvantaged individuals," or the majority of the board and the community the institution serves must be predominantly minority, according to FDIC's definition.

Cunningham said there is a "varying degree of value" to being an MDI, noting that regulators have at times tended to "over-help minority banks."

"They're kind of all up in their business," he said. "That reduces management's flexibility. It's a regulatory burden that other banks don't have."

Cunningham also pointed to financial technology and large banks as challenges for MDIs, noting banks like Wells Fargo & Co. are free to conduct business in other languages.

"The big banks have sharpened their skills in the marketplace that MDIs frequent," he added. "That's one of the additional competitive pressures that these institutions face."

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