LOS ANGELES - California Center Bank announced late Friday that it had scuttled its pending merger with its neighbor, $1.07 billion-asset Hanmi Financial Corp.
On May 9, Hanmi said that it would buy $500 million-asset California Center for $103 million. In Friday's announcement, California Center said that it had terminated the deal because Hanmi "materially modified the proposal set forth in the letter of intent."
Y.H. Kim, senior vice president and controller of California Center, said Hanmi ultimately "offered much less than what they had promised." She would not discuss the details of the offer or speculate on whether California Center would reenter merger negotiations with Hanmi.
Chung Hoon Youk, Hanmi's president and chief executive officer, confirmed that California Center "was not satisfied with the financial terms of our proposal, among other terms of the proposal." He added: "I hope we can restart negotiations soon."
California Center, like Hanmi, caters to Korean-Americans. The merger deal would have given Hanmi about $1.5 billion of assets, roughly three times as much as its next-largest competitor in the Koreatown section of Los Angeles.
David Harvey, a manager of community bank hedge funds and a former director at California Center, said shareholders were surprised to hear that the deal had been terminated. "It is impossible to speculate" why California Center scrapped the merger plan, he said.
However, Mr. Harvey said he expects another suitor to emerge. He said several may be in the wings, including neighboring Nara Bancorp, a $620 million-asset company that also targets Korean-Americans.