With its announcement this month that it would buy hometown rival California Center Bank, Hanmi Financial Corp. may have set into motion a much-anticipated consolidation of Los Angeles' Korean-American banks.

The parent of Hanmi Bank said on May 9 that it would acquire $480 million-asset California Center for $103 million. The deal would give Hanmi $1.5 billion of assets, making it nearly twice as big as the city's next-largest Korean-American bank.

And Hanmi, which bought a Korean-American thrift three years ago, does not plan to stop there, said Chung Hoon Youk, its president and chief executive officer.

"Our first priority is to acquire other Los Angeles financial institutions" that target Korean-Americans, Mr. Youk said in an interview last week, though he declined to say which institution it would court next.

Likewise, Benjamin Hong, president and CEO of neighboring Nara Bank, with $620 million of assets, said he is "looking for opportunities" to buy smaller Korean-American banks. Though he would not specify a target either, the candidates could include $442 million-asset Wilshire State Bank or $200 million-asset Saehan Bank.

The timing for consolidation could not be better, Mr. Hong said. Six banks now vie for the attention of the roughly 800,000 Korean-Americans living in and around Los Angeles. Four of them have their corporate headquarters in a three-block area of Koreatown, and according to Mr. Hong, now is the time for the larger ones to "create efficiencies" by gobbling up the "weaker" ones.

"Consolidation is the natural evolution to increase the competitiveness of larger banks," Mr. Hong said. "If there are any banks for sale, we would pursue them very aggressively."

Jane Kim, senior vice president of Wilshire, said that no one has approached it about a possible merger. And Joohak Kim, president and CEO at Saehan, said that, though "there is always the possibility" that the board of directors would entertain a bid, the bank is managing just fine on its own.

"Right now we are the smallest in size in Koreatown, but we can offer very fast and efficient service," Mr. Kim said. "Because of that we have a niche, and so we can grow further."

Nevertheless, David Kim, Hanmi senior vice president, said Korean-American banks would fare better against competition from others if they banded together. "We are not only competing with each other," he said. "Korean banks are facing competition from mainstream banks like Bank of America and Wells Fargo, as well as the Chinese banks."

Diane Kim, chief financial officer of $806 million-asset California Korea Bank, agreed that Korean banks should join forces, though her bank has had no merger talks with anyone.

She applauded Hanmi's deal for California Center. "With a size of more than $1.5 billion, Hanmi will bring more of a competitive edge" to the rivalry with Chinese-American institutions, Ms. Kim said. "Then investors will probably pay more attention to all of the Korean banks."

David Harvey, manager of several community bank hedge funds based in Gardnerville, Nev., said Hanmi, which groomed Nara's Mr. Hong as well as executives of other Korean-American bank rivals most probably will gobble up others in the Los Angeles market.

Mr. Youk said because of the fierce competition some banks are targeting other ethnic groups from Asia, such as Indonesians, and Africa, as well as the city's large Latino population.

The banks have also ventured outside Los Angeles in search of other Korean-American communities.

Hanmi has branches in Orange County and San Diego in Southern California, and it would pick up California Center's new Denver loan production office if their deal closes. Hanmi also says it is studying acquisition possibilities in New York.

California Korea has a San Francisco branch and a loan production office in Seattle. Wilshire has Small Business Administration loan offices in San Jose, Calif., Seattle, and Dallas, and Saehan is considering opening branches in Northern California and Seattle.

Nara, though, by far, has expanded the most outside Los Angeles. In 1998 it bought a branch of Korea Exchange in Flushing, N.Y., and last year it acquired Korea First Bank of New York, a subsidiary of Seoul-based Korea First Bank with two branches in New York and a loan production office in New Jersey.

The bank also has branches in Silicon Valley and San Francisco, and loan production offices in Chicago and Seattle. Mr. Hong said it is considering opening branches in those cities, as well as in Atlanta and Washington.

Paul K. Sloan, an analyst at Keefe, Bruyette & Woods Inc. in New York, said that though Hanmi may dominate the Los Angeles Korean-American market Nara is well-positioned to become the premier bank for the nation's other Korean-American communities.

"Nara has reorganized their holding company structure, which gives them more opportunities to do other lines of business," such as insurance, securities underwriting, and cash management, Mr. Sloan said. "This will really help them go into other Korean-American markets that don't have a community bank specifically for them that offers these kind of products."

And back in Los Angeles - though the competition may be ferocious - Korean-American bankers contend that there is still room for growth. In fact, Mr. Hong said two more de novos may soon pop up.

Indeed, Ed Carpenter, principal of Carpenter & Co., an investment banking firm in Irvine, Calif., played down the predictions of a Koreatown consolidation.

"Bottom line, these banks are pretty independent," he said. "In the Korean-American community, it's very prestigious to be a bank director, and most of the directors of these banks don't want to give that up."

Alan Kline contributed to this article.

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