As filed with the Securities and Exchange Commission on July 11, 2018

Registration No. 333-225818

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

PRE-EFFECTIVE

AMENDMENT NO. 1

TO THE

FORM S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

HANMI FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		6022		95-4788120
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

3660 Wilshire Boulevard, Penthouse Suite A

Los Angeles, California 90010

(213) 382-2200

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

 

 

C. G. Kum

Chief Executive Officer

3660 Wilshire Boulevard, Penthouse Suite A

Los Angeles, California 90010

(213) 382-2200

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

 

 

Copies to:

 

Lawrence M.F. Spaccasi, Esq.		Vivian I. Kim, Esq.		Robert Flowers, Esq.
Scott A. Brown, Esq.		Senior Vice President, General Counsel		Lowell W. Harrison, Esq.
Gregory Sobczak, Esq.		and Corporate Secretary		Fenimore, Kay, Harrison & Ford LLP
Luse Gorman, PC		Hanmi Financial Corporation		5307 E. Mockingbird Lane, Suite 950
5335 Wisconsin Avenue, N.W., Suite 780		3660 Wilshire Boulevard, Penthouse Suite A		Dallas, Texas 75206
Washington, D.C. 20015		Los Angeles, California 90010		Phone: (214) 926-7195
Phone: (202) 274-2000		Phone: (213) 382-2200

 

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this registration statement becomes effective and upon completion of the merger.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box:  ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer		☒		Accelerated filer		☐
Non-accelerated filer		☐  (Do not check if a smaller reporting company)		Smaller reporting company		☐
				Emerging growth company		☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)   ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)   ☐

 

 

CALCULATION OF REGISTRATION FEE

 

Title of each class of securities to be registered		Amount to be registered		Proposed maximum offering price per share		Proposed maximum aggregate offering price		Amount of registration fee
Common Stock, $0.001 par value per share		2,159,371 shares(1)		N/A		$39,641,703(2)		$4,936(3)

(1)

Represents the estimated maximum number of shares of the Registrant’s common stock estimated to be issued in connection with the merger described herein based upon the number of shares of SWNB Bancorp, Inc. common stock, par value $0.01 per share, outstanding as of June, 18, 2018 (including shares reserved for issuance under SWNB Bancorp, Inc.’s equity plans).

(2)

Based on the aggregate book value of the shares of SWNB Bancorp, Inc. equity securities to be cancelled in the merger described herein as of May 31, 2018, the last practicable date prior to the date of the filing of this registration statement, reduced by estimated cash to be paid per Rule 457(f)(3). SWNB Bancorp, Inc. is a private company and no market exists for its equity securities.

(3)	Registration fee was previously paid.

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

Information contained in this proxy statement/prospectus is subject to completion or amendment. A registration statement relating to the shares of Hanmi Financial Corporation common stock to be issued in the merger has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This proxy statement/prospectus shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale is not permitted or would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

 

PRELIMINARY PROXY STATEMENT/PROSPECTUS,

SUBJECT TO COMPLETION, DATED JULY 11, 2018

 

 

SWNB Bancorp, Inc.

MERGER PROPOSAL—YOUR VOTE IS VERY IMPORTANT

Dear Stockholder:

On May 18, 2018, Hanmi Financial Corporation (which we refer to as “Hanmi”) and SWNB Bancorp, Inc. (which we refer to as “SWNB”) entered into an Agreement and Plan of Merger (which we refer to as the “merger agreement”) pursuant to which SWNB will merge with and into Hanmi, with Hanmi as the surviving entity (which we refer to as the “merger”). Immediately following the merger, Southwestern National Bank, the wholly-owned subsidiary of SWNB, will merge with and into Hanmi Bank, the wholly-owned subsidiary of Hanmi, with Hanmi Bank as the surviving entity (which we refer to as the “bank merger”). Before we can complete the merger, the stockholders of SWNB must vote to approve the merger agreement.

If the merger is completed, SWNB stockholders will be entitled to elect to receive for each share of SWNB common stock that they own: (1) $5.74 in cash or (2) 0.1961 shares of Hanmi common stock. SWNB stockholders may receive cash and/or Hanmi common stock for their shares of SWNB common stock. However, individual elections will be limited by the requirement that 80% of the shares of SWNB common stock must be exchanged for Hanmi common stock and 20% must be exchanged for cash. Therefore, the amount of Hanmi common stock and/or cash that each SWNB stockholder receives will depend on the elections made by other SWNB stockholders. Based upon the 13,535,036 shares of SWNB common stock outstanding as of July 9, 2018, Hanmi expects to pay approximately $15.5 million in cash and issue approximately 2,123,376 shares of Hanmi common stock upon completion of the merger.

The merger agreement establishes a minimum requirement for SWNB’s capital ($48,563,000) prior to the closing of the merger. If SWNB’s closing capital, as adjusted in accordance with the terms of the merger agreement, is in excess of the minimum required, SWNB may pay a special dividend to its stockholders in the amount of such excess. For purposes of illustration only, as of March 31, 2018, SWNB’s closing capital would have been approximately $48,430,786. This would not have resulted in the payment of any special dividend to SWNB’s stockholders.

The federal income tax consequences of the merger to SWNB stockholders will depend on whether they receive cash, Hanmi common stock or a combination of cash and Hanmi common stock in exchange for their shares of SWNB common stock. The merger has been structured to be tax-free for federal income tax purposes to SWNB stockholders with respect to any shares of Hanmi common stock that they receive in exchange for their shares of SWNB common stock.

Hanmi’s common stock trades on the Nasdaq Stock Market under the symbol “HAFC.” The closing price of Hanmi common stock on May 18, 2018, the trading day before the merger was publicly announced, was $28.65, which, based on the 0.1961 exchange ratio, represented a value of $5.62 per share of SWNB common stock. The closing price of Hanmi common stock on July 9, 2018, the most recent practicable trading date before the date of this document, was $29.50 per share, which represented a value of $5.78 per share of SWNB common stock based on the exchange ratio. The market price for Hanmi common stock will fluctuate before the merger. We urge you to obtain current market quotations for Hanmi common stock.

The merger cannot be completed unless holders of at least two-thirds of the issued and outstanding shares of common stock of SWNB approve the merger agreement. SWNB stockholders will vote to approve the merger agreement and on the other matters described in this proxy statement/prospectus at a special meeting of stockholders to be held at 2:00 p.m., local time, on August 16, 2018 at the main office of Southwestern National Bank at 6901 Corporate Drive, Houston, Texas 77036.

SWNB’s board of directors unanimously recommends that SWNB stockholders vote “FOR” the approval of the merger agreement and “FOR” the other matters to be considered at the SWNB special meeting.

This document contains information that you should consider in evaluating the proposed merger. In particular, you should carefully read the section captioned “Risk Factors” beginning on page 13 for a discussion of certain risk factors relating to the merger. You may also obtain additional information about Hanmi and SWNB as described under the section entitled “Where You Can Find More Information.”

Voting procedures are described in this proxy statement/prospectus. Your vote is important and I urge you to cast it promptly.

 

		C. K. Lee
		Chairman of SWNB Bancorp, Inc.

The shares of Hanmi common stock to be issued in the merger are not deposits or savings accounts or other obligations of any bank subsidiary of Hanmi or of SWNB, and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the merger described in this document or the Hanmi common stock to be issued in the merger, or passed upon the adequacy or accuracy of this document. Any representation to the contrary is a criminal offense.

The date of this proxy statement/prospectus is [●], 2018, and it is first being mailed or otherwise delivered to stockholders of SWNB on or about [●], 2018.

ABOUT THIS DOCUMENT

This proxy statement/prospectus, which we refer to as “this document,” forms part of a registration statement on Form S-4 filed with the Securities and Exchange Commission (which we refer to as the “SEC”) by Hanmi and constitutes a prospectus of Hanmi under the Securities Act of 1933, as amended (which we refer to as the “Securities Act”) with respect to the shares of Hanmi common stock to be issued to SWNB stockholders pursuant to the merger agreement. This document also constitutes a proxy statement and a notice of meeting with respect to the special meeting of stockholders of SWNB.

You should rely only on the information contained in this document. Neither Hanmi nor SWNB has authorized anyone to give any information or make any representation about the merger or the companies that is different from, or in addition to, that contained in this proxy statement/prospectus or in any of the materials that have been incorporated in this proxy statement/prospectus by reference. Therefore, if anyone gives you different information, you should not rely on it. This document is dated [●], 2018. You should not assume that the information contained in this document is accurate as of any other date. Neither the mailing of this document to SWNB stockholders nor the issuance by Hanmi of its common stock in connection with the merger will create any implication to the contrary.

This document does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, to or from any person in any jurisdiction where it is unlawful to make any such offer or solicitation. Information contained in this document regarding Hanmi has been provided by Hanmi and information contained in this document regarding SWNB has been provided by SWNB.

REFERENCES TO ADDITIONAL INFORMATION

This document incorporates important business and financial information about Hanmi from documents filed with the SEC that have not been included in or delivered with this document. You may read and copy these documents at the SEC’s public reference room located at 100 F Street, NE, Washington, DC 20549. Copies of these documents also can be obtained at prescribed rates by writing to the Public Reference Section of the SEC, at 100 F Street, NE, Washington, DC 20549 or by calling 1-800-SEC-0330 for additional information on the operation of the public reference facilities. This information is also available at the Internet site the SEC maintains at http://www.sec.gov. See “Where You Can Find More Information” on page 83.

You also may request orally or in writing copies of these documents at no cost by contacting Hanmi at the following address:

Hanmi Financial Corporation

3660 Wilshire Boulevard, Penthouse Suite A

Los Angeles, California 90010

Attention: Vivian I. Kim, Corporate Secretary

(213) 382-2200

You will not be charged for any of these documents that you request. SWNB stockholders requesting documents should do so by August 9, 2018, in order to receive them before the special meeting.

In addition, if you have questions about the merger or the SWNB special meeting, need additional copies of this document or need to obtain proxy cards or other information related to the proxy solicitation, you may contact Michael Hong at the following address and telephone number:

SWNB Bancorp, Inc.

6901 Corporate Drive

Houston, Texas 77036

Attention: Michael Hong

(713) 771-9700

Information on the website of Hanmi or SWNB, or any subsidiary of Hanmi or SWNB, is not part of this document. You should not rely on that information in deciding how to vote.

SWNB Bancorp, Inc.

6901 Corporate Drive

Houston, Texas 77036

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

A special meeting of stockholders of SWNB Bancorp, Inc. will be held at the main office of Southwestern National Bank at 6901 Corporate Drive, Houston, Texas 77036, at 2:00 p.m., local time, on Thursday, August 16, 2018.

At the special meeting, you will be asked to consider and vote on:

 

1.

a proposal to approve the Agreement and Plan of Merger, dated as of May 18, 2018, by and between Hanmi Financial Corporation and SWNB Bancorp, Inc.; and

 

2.

a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the special meeting to approve the merger agreement (which we refer to as the “Adjournment Proposal”).

A copy of the Agreement and Plan of Merger (which we refer to as the “merger agreement”) is included as Appendix A to this document. This document describes the merger agreement and the proposed merger in detail. We urge you to read it carefully. The enclosed document forms a part of this notice.

The board of directors of SWNB Bancorp, Inc. unanimously recommends that SWNB stockholders vote “FOR” the proposal to approve the merger agreement and “FOR” the Adjournment Proposal.

SWNB’s board of directors has fixed the close of business on July 9, 2018 as the record date for determining the stockholders entitled to notice of, and to vote at, the special meeting and any adjournments or postponements of the special meeting.

SWNB stockholders have the right to dissent from the merger and obtain payment of the cash appraisal fair value of their SWNB shares under applicable provisions of Texas law. A copy of the provisions regarding dissenters’ rights is attached as Appendix B to the accompanying proxy statement/prospectus. For details of your dissenter’s rights and how to exercise them, please see the discussion under “Dissenters’ Rights of SWNB Stockholders.”

Your vote is very important. Your proxy is being solicited by SWNB’s board of directors. In order to complete the proposed merger, the proposal to approve the merger agreement must be approved by at least two-thirds of the issued and outstanding shares of common stock of SWNB. Whether or not you plan to attend the special meeting in person, we urge you to vote in advance of the meeting by mail. You should follow the instructions on the proxy card that accompanies this proxy statement/prospectus or the voting instruction card that you receive from your bank or broker. You may revoke your proxy at any time before the special meeting. If you attend the special meeting and vote in person, your proxy vote will not be used.

 

				By Order of the Board of Directors
				Doris Chen
				Corporate Secretary

Houston, Texas

[●], 2018

TABLE OF CONTENTS

 

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING			1
SUMMARY			6
RISK FACTORS			13
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			17
SELECTED HISTORICAL FINANCIAL INFORMATION			20
Selected Historical Consolidated Financial Data of Hanmi			20
Selected Historical Consolidated Financial Data of SWNB			23
COMPARATIVE PRO FORMA PER SHARE DATA			25
MARKET PRICE AND DIVIDEND INFORMATION			26
SPECIAL MEETING OF SWNB STOCKHOLDERS			27
Date, Place and Time of the Meeting			27
Matters to be Considered			27
Who Can Vote at the Meeting			27
Quorum; Vote Required			27
Shares Held by SWNB’s Officers and Directors			27
Voting and Revocability of Proxies			28
Solicitation of Proxies			28
PROPOSAL NO. 1—MERGER PROPOSAL			29
PROPOSAL NO. 2—ADJOURNMENT PROPOSAL			29
DISSENTERS’ RIGHTS OF SWNB STOCKHOLDERS			30
DESCRIPTION OF THE MERGER			33
General			33
Background of the Merger			33
SWNB’s Reasons for the Merger; Recommendation of SWNB’s Board of Directors			35
Opinion of SWNB’s Financial Advisor in Connection with the Merger			38
Hanmi’s Reasons for the Merger			46
Unaudited Prospective Financial Information			46
Consideration to be Received in the Merger			48
Cash, Stock or Mixed Election			49
Election Procedures; Surrender of Stock Certificates			50
Management and Board of Directors of Hanmi After the Merger			51
Accounting Treatment			51
Material U.S. Federal Income Tax Consequences of the Merger			51
Regulatory Matters Relating to the Merger			55
Interests of Certain Persons in the Merger that are Different from Yours			56
Employee Matters			57
Operations of Southwestern National Bank after the Merger			57
Restrictions on Resale of Shares of Hanmi Common Stock			57
Time of Completion of the Merger			57
Conditions to Completing the Merger			57
Conduct of Business Before the Merger			59
Covenants of SWNB and Hanmi in the Merger Agreement			64
Representations and Warranties Made by Hanmi and SWNB in the Merger Agreement			67
Terminating the Merger Agreement			69
Termination Fee			69
Expenses			70
Changing the Terms of the Merger Agreement			70
DESCRIPTION OF HANMI CAPITAL STOCK			71
COMPARISON OF RIGHTS OF STOCKHOLDERS			74
INFORMATION ABOUT HANMI			81

 

i

INFORMATION ABOUT SWNB			81
STOCK OWNERSHIP OF SWNB			82
LEGAL MATTERS			82
EXPERTS			83
WHERE YOU CAN FIND MORE INFORMATION			83
Appendix A     Agreement and Plan of Merger			A-1
Appendix B     Dissenters’ Rights Under the Texas Business Organizations Code			B-1
Appendix C     Opinion of Sheshunoff &  Co. Investment Banking, L.P.			C-1

 

ii

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

General Questions about the Merger

 

Q:	What am I being asked to vote on? What is the proposed transaction?

 

A:

On May 18, 2018, Hanmi Financial Corporation (which we refer to as “Hanmi”) entered into an Agreement and Plan of Merger (which we refer to as the “merger agreement”) with SWNB Bancorp, Inc. (which we refer to as “SWNB”). The merger agreement provides for the merger of SWNB with and into Hanmi, with Hanmi as the surviving corporation (which we refer to as the “merger”). A copy of the merger agreement is attached to this document as Appendix A. In order to complete the merger, SWNB stockholders are being asked to vote to approve the merger agreement and the transactions contemplated thereby. SWNB will hold a special meeting of stockholders to obtain the required stockholder approval to complete the merger. This document contains important information about the merger agreement, the merger, the SWNB stockholder meeting, and other related matters, and you should read it carefully. SWNB stockholders are also being asked to vote on a proposal to adjourn the special meeting, if necessary, in order to permit further solicitation of proxies in favor of the merger agreement and the transactions contemplated thereby (which we refer to as the “Adjournment Proposal”).

 

Q:	What will SWNB stockholders receive in the merger?

 

A:

Under the merger agreement, each SWNB stockholder will have the right to elect to receive for each share of SWNB common stock that they own: (1) $5.74 in cash or (2) 0.1961 shares of Hanmi common stock. However, individual elections will be limited by the requirement that 80% of the shares of SWNB common stock is exchanged for Hanmi common stock and 20% is exchanged for cash. Hanmi will not issue fractional shares in the merger; instead, SWNB stockholders will receive a cash payment, without interest, for the value of any fraction of a share of Hanmi common stock that they would otherwise be entitled to receive.

Additionally, if the SWNB Closing Capital, as defined in the merger agreement and as further described in this document, exceeds $48,563,000, subject to certain adjustments, SWNB may, upon written notice to Hanmi, declare and pay a special dividend to its stockholders in the amount of such excess. For purposes of illustration only, as of March 31, 2018, SWNB’s closing capital would have been approximately $48,430,786. This would not have resulted in the payment of any special dividend to SWNB’s stockholders.

See the sections of this document entitled “Description of the Merger—Consideration to be Received in the Merger” and “Description of Hanmi Capital Stock” for more information.

 

Q:	What will happen to SWNB as a result of the merger?

 

A:

If the merger is completed, SWNB will merge with and into Hanmi, and SWNB will cease to exist. Following the consummation of the merger, Southwestern National Bank, a national banking association and wholly-owned subsidiary of SWNB, will merge with and into Hanmi Bank, a California chartered bank and wholly-owned subsidiary of Hanmi, with Hanmi Bank continuing as the surviving entity.

 

Q:	What dividends will SWNB stockholders receive after the merger?

 

A:

After the merger, former SWNB stockholders will be entitled to receive dividends declared on the shares of Hanmi common stock that they receive in the merger. Currently, Hanmi pays a quarterly dividend of $0.24 per share. However, there is no guarantee that Hanmi will continue to pay dividends at this level or at all. All dividends on Hanmi common stock are declared at the discretion of the Hanmi board of directors. See the sections of this document entitled “Comparative Pro Forma Per Share Data” and “Market Price and Dividend Information” for more information.

 

1

Q:	Is completion of the merger subject to any conditions besides SWNB stockholder approval?

 

A:

Yes. To complete the merger: (1) the merger must receive the required regulatory approvals, (2) on the third business day immediately preceding the closing date, Southwestern National Bank must have total month-to-date average core deposits of not less than $190,000,000, (3) as of the closing date, SWNB’s closing capital must be equal or greater than $48,563,000, (4) on the third business day immediately preceding the closing date, Southwestern National Bank’s allowance for loan losses must not be less than $4,231,000, (5) SWNB must have received a favorable private letter ruling from the Internal Revenue Service (which we refer to as the “IRS”), and (6) other customary closing conditions must be satisfied. To review the conditions to completing the merger in more detail, see “Description of the Merger—Conditions to Completing the Merger.”

 

Q:	When is the merger expected to be completed?

 

A:

Hanmi and SWNB will try to complete the merger as soon as possible. Before this happens, the merger agreement must be approved by SWNB’s stockholders, and Hanmi and SWNB must obtain the necessary regulatory approvals. Assuming Hanmi and SWNB obtain all necessary stockholder and regulatory approvals in a timely fashion, we expect to complete the merger in the third quarter of 2018.

 

Q:	Will the shares of Hanmi common stock received by SWNB stockholders in the merger be listed on the Nasdaq Global Select Market upon the completion of the merger?

 

A:	Yes. The shares of Hanmi common stock to be issued in connection with the merger have been registered under the Securities Act, and will be listed on the Nasdaq Global Select Market under the symbol “HAFC.”

 

Q:	What equity stake will SWNB stockholders hold in Hanmi immediately following the merger?

 

A:	Immediately following completion of the merger, SWNB stockholders will own approximately 6.0% of the outstanding shares of Hanmi common stock.

 

Q:	Am I entitled to dissenters’ rights?

 

A:	Yes. SWNB stockholders are entitled to dissenters’ rights. For further information, see “Dissenters’ Rights” and Appendix B to this document.

 

Q:	What are the U.S. federal income tax consequences of the merger to SWNB stockholders?

 

A:

If you exchange your shares of SWNB common stock solely for Hanmi common stock, you should not recognize any gain or loss except with respect to the cash you receive instead of any fractional share of Hanmi common stock. If you exchange your shares of SWNB common stock solely for cash, you generally will recognize gain or loss on the exchange equal to the difference between the amount of cash received and the adjusted tax basis in your shares of SWNB common stock exchanged in the merger. If you exchange your shares of SWNB common stock for a combination of Hanmi common stock and cash, you generally will not recognize any loss but will recognize gain, if any, equal to the lesser of (1) the excess, if any, of the sum of the cash received and the fair market value of the Hanmi common stock you receive pursuant to the merger over your adjusted tax basis in your shares of SWNB common stock surrendered, and (2) the amount of cash consideration you receive pursuant to the merger. Because the allocations of cash and Hanmi common stock that you receive will depend on the elections made by other SWNB stockholders, you will not know the actual federal income tax consequences of the merger to you until the allocations are completed. For further information see the section of this document entitled “Material U.S. Federal Income Tax Consequences of the Merger.” This tax treatment may not apply to all SWNB stockholders. SWNB’s counsel is not able to provide an opinion regarding whether this tax treatment will apply to any individual stockholder. Determining the actual tax consequences of the merger to SWNB stockholders can be

 

2

complicated. SWNB stockholders should consult their own tax advisor for a full understanding of the merger’s tax consequences that are particular to each stockholder.

 

Q:	How do I elect to receive cash or Hanmi common stock in exchange for my SWNB common stock?

 

A:

An election form will be sent to you separately on or about the date this document is mailed. For your election to be effective, your properly completed election form, along with your SWNB stock certificates or an appropriate guarantee of delivery, must be sent to and received by the exchange agent for the merger, Computershare Trust Company, N.A., on or before 5:00 p.m., Central time, on August 31, 2018. Do not send your election form or stock certificates with your proxy card. Instead, use the separate envelope specifically provided for the election form and your stock certificates. If you own shares of SWNB common stock in “street name” through a bank, broker or other nominee and you wish to make an election, you should seek instructions from the bank, broker or other nominee holding your shares. If you do not make a timely or proper election, you will be allocated Hanmi common stock and/or cash depending on the elections made by other stockholders. See the section of this document entitled “Description of the Merger—Allocation Procedures” for more information.

 

Q:	How will I exchange my SWNB stock certificates for Hanmi common stock?

 

A:

If you make an election, you must return your SWNB stock certificates or an appropriate guarantee of delivery with your election form. Shortly before the completion of the merger, the exchange agent will allocate cash and Hanmi common stock among SWNB stockholders, consistent with their elections and the allocation and proration procedures in the merger agreement. If you do not submit an election form, the exchange agent will send you instructions on how and where to surrender your SWNB stock certificates after the merger is completed. Do not send your election form or SWNB stock certificates with your proxy card.

 

Q:	What happens if the merger is not completed?

 

A:

If the merger is not completed, SWNB stockholders will not receive any consideration for their shares of common stock in connection with the merger. Instead, SWNB will remain an independent company. Under specified circumstances, SWNB may be required to pay to Hanmi a fee with respect to the termination of the merger agreement. For more information, please review the sections entitled “Description of the Merger—Terminating the Merger Agreement” and “—Termination Fee” beginning on page 69.

Questions Regarding the SWNB Stockholder Meeting

 

Q:	When and where is the SWNB special meeting?

 

A:	The special meeting of SWNB stockholders is scheduled to take place at the main office of Southwestern National Bank at 6901 Corporate Drive, Houston, Texas 77036 at 2:00 p.m., local time, on Thursday, August 16, 2018.

 

Q:	Who is entitled to vote at the SWNB special meeting?

 

A:	Holders of shares of SWNB common stock at the close of business on July 9, 2018, which is the record date, are entitled to vote at the special meeting. As of the record date, 13,535,036 shares of SWNB common stock were outstanding and entitled to vote.

 

Q:	What is the quorum requirement for the special meeting?

 

A:

The presence at the SWNB special meeting, in person or by proxy, of stockholders representing a majority of the outstanding shares of SWNB common stock will constitute a quorum. Abstentions and broker non-votes, if any, will be included in the number of shares present at the meeting for determining the presence of a quorum.

 

3

Q:	What vote is required to approve the merger agreement?

 

A:

Approval of the merger agreement requires the affirmative vote by at least two-thirds of the issued and outstanding shares of common stock of SWNB. As of July 9, 2018, directors and executive officers of SWNB beneficially owned 6,711,286 shares of SWNB common stock, representing 48.79% of the issued and outstanding shares of SWNB common stock. SWNB’s directors have entered into voting agreements with Hanmi to vote 6,491,842 shares of SWNB common stock over which they have the power to vote or the power to direct the vote, representing 47.96% of the issued and outstanding shares of SWNB common stock, in favor of the merger agreement at the special meeting.

 

Q:	What vote does SWNB’s Board of Directors recommend?

 

A:

SWNB’s board of directors has determined that the proposed merger is in the best interests of SWNB stockholders, has unanimously approved the merger agreement and unanimously recommends that SWNB stockholders vote “FOR” the approval of the merger agreement and “FOR” the Adjournment Proposal. See the section entitled “Description of the Merger—SWNB’s Reasons for the Merger; Recommendation of SWNB’s Board of Directors” beginning on page 35 of this document.

 

Q:	If I plan to attend the SWNB special meeting in person, should I still return my proxy card?

 

A:	Yes. Whether or not you plan to attend the SWNB special meeting in person, you should complete and return the enclosed proxy card.

 

Q:	What do I need to do now to vote my shares of SWNB common stock?

 

A:

After you have carefully read and considered the information contained in this document, please complete, sign, date and mail your proxy card in the enclosed return envelope as soon as possible. This will enable your shares to be represented at the special meeting. You may also vote in person at the SWNB special meeting. If you sign, date and send in your proxy card, but you do not indicate how you want to vote, your proxy will be voted in favor of approval of the merger agreement.

 

Q:	If my shares are held in “street name” by my broker, will my broker automatically vote my shares for me?

 

A:

No. Your broker is not able to vote your shares of common stock on the proposal to approve the merger agreement unless you provide instructions on how to vote. You should instruct your broker how to vote your shares by following the directions that your broker provides. If you do not provide instructions to your broker, your shares will not be voted. You should check the voting form used by your broker to see if your broker allows you to vote by telephone or via the Internet.

 

Q:	May a SWNB stockholder change or revoke his or her vote after submitting a proxy?

 

A:	Yes. If you have not voted through your broker, you can change your vote by:

 

•

providing written notice of revocation to the Corporate Secretary of SWNB, which must be provided before the special meeting;

 

•

submitting a new proxy card; or

 

•

attending the special meeting and voting in person. However, simply attending the special meeting without voting will not revoke your proxy.

If you have instructed a broker to vote your shares, you must follow your broker’s directions to change your vote.

 

Q:	Are there risks that I should consider in deciding whether to vote to approve the merger agreement?

 

A:	Yes. You should consider the risk factors set forth in the section entitled “Risk Factors” beginning on page 13 of this document.

 

4

Q:	Who can answer my other questions?

 

A:	If you have any questions about the merger or the special meeting, or if you need additional copies of this document or the enclosed proxy card, you should contact Michael Hong at the following address and telephone number:

SWNB Bancorp, Inc.

6901 Corporate Drive

Houston, Texas 77036

Attention: Michael Hong

(713) 771-9700

 

5

 

6

 

7

 

8

 

9

 

10

 

11

 

12

RISK FACTORS

In addition to the other information included in this document, you should consider carefully the risk factors described below in deciding how to vote. You should keep these risk factors in mind when you read forward-looking statements in this document. Please refer to the section of this document titled “Cautionary Note Regarding Forward-Looking Statements.”

Risks Related to the Merger

Because the market price of Hanmi common stock will fluctuate, SWNB stockholders cannot be certain of the market value of the merger consideration they will receive.

Upon completion of the merger, each share of SWNB common stock will be converted into either 0.1961 shares of Hanmi common stock or $5.74 in cash. The market value of the stock consideration may vary from the value on the date Hanmi announced the merger, on the date that this document is mailed to SWNB stockholders, on the date of the special meeting of SWNB stockholders, on the date the merger is completed and thereafter. Any change in the market price of Hanmi common stock prior to the completion of the merger will affect the market value of the merger consideration that SWNB stockholders will receive upon completion of the merger, and there will be no adjustment to the merger consideration for changes in the market price of either shares of Hanmi common stock or shares of SWNB common stock. Stock price changes may result from a variety of factors that are beyond the control of Hanmi and SWNB, including, but not limited to, general market and economic conditions, changes in Hanmi’s business, operations and prospects and regulatory considerations. Therefore, at the time of the SWNB special meeting you will not know the precise market value of the consideration you will receive at the effective time of the merger. You should obtain current market quotations for shares of Hanmi common stock. See “Market Price and Dividend Information” on page 26 for ranges of historic market prices of Hanmi common stock.

The price of Hanmi common stock might decrease after the merger.

Following the merger, many holders of SWNB common stock will become stockholders of Hanmi. Hanmi common stock could decline in value before or after the merger. For example, during the twelve-month period ended July 9, 2018 (the most recent practicable date before the printing of this document), the closing price of Hanmi common stock varied from a low of $25.90 to a high of $32.55 and ended that period at $29.50. The market value of Hanmi common stock fluctuates based upon general market economic conditions, Hanmi’s business and prospects, and other factors, many of which Hanmi cannot control.

SWNB stockholders may receive a form of consideration different from what they elect.

The merger consideration to be received by SWNB stockholders is subject to the requirement that 80% of the shares of SWNB common stock be exchanged for Hanmi common stock and 20% be exchanged for cash. The merger agreement contains proration and allocation procedures to achieve this desired result. If you elect all cash and the available cash is oversubscribed, then you will receive a portion of the merger consideration in Hanmi common stock. If you elect all stock and the available stock is oversubscribed, then you will receive a portion of the merger consideration in cash.

Hanmi may be unable to successfully integrate SWNB’s operations and retain SWNB’s employees.

The merger involves the integration of two companies that have previously operated independently. The difficulties of combining the operations of the two companies include integrating personnel with diverse business backgrounds, combining different corporate cultures, and retaining key employees. The process of integrating operations could interrupt the momentum of the business and operations of Hanmi and SWNB, and could lead to the loss of key personnel. The diversion of management’s attention and any delays or difficulties encountered in

 

13

connection with the merger and the integration of the two companies’ operations could have an adverse effect on the business and results of operations of Hanmi following the merger.

Additionally, Hanmi may not be able to successfully achieve the level of cost savings, revenue enhancements, and other synergies that it expects, and may not be able to capitalize upon the existing customer relationships of SWNB to the extent anticipated, or it may take longer, or be more difficult or expensive than expected, to achieve these goals. This could have an adverse effect on Hanmi’s business, results of operations and stock price.

The termination fee and the restrictions on solicitation contained in the merger agreement may discourage other companies from trying to acquire SWNB.

Until the completion of the merger, SWNB is prohibited from soliciting, initiating, encouraging or taking any other action to facilitate any inquiries, discussions or the making of any proposals that may lead to an acquisition proposal, such as a merger or other business combination transaction, with any person other than Hanmi. In addition, SWNB has agreed to pay a termination fee to Hanmi in specified circumstances. These provisions could discourage other companies from trying to acquire SWNB even though those other companies may be willing to offer greater value to SWNB’s stockholders than what Hanmi has offered in the merger. The payment of the termination fee also could have a material adverse effect on SWNB’s financial condition and results of operations.

Certain of SWNB’s officers and directors have interests that are different from, or in addition to, interests of SWNB’s stockholders generally.

The directors and officers of SWNB have interests in the merger that are different from, or in addition to, the interests of SWNB stockholders generally. These include: (1) provisions in the merger agreement relating to indemnification of directors and officers and insurance for directors and officers of SWNB for events occurring before the merger; (2) the termination of all outstanding SWNB stock options, whether or not vested, with a cash payment to the stock option holder equal to the number of shares provided for in each such stock option, multiplied by the positive difference between $5.74 and the exercise price of the relevant stock option, less applicable tax withholdings; and (3) the continued employment of Marianne Plant, Senior Vice President and Chief Credit Officer of SWNB, and Mohammed Younus, Dallas Regional President of SWNB, on mutually agreeable terms. For a more detailed discussion of these interests, see “Description of the Merger—Interests of Certain Persons in the Merger That Are Different from Yours.”

SWNB and Hanmi will be subject to business uncertainties and contractual restrictions while the merger is pending.

Uncertainty about the effect of the merger on employees and customers may have an adverse effect on SWNB or Hanmi. These uncertainties may impair SWNB’s or Hanmi’s ability to attract, retain and motivate key personnel until the merger is completed, and could cause customers and others that deal with SWNB and Hanmi to change their existing business relationships. Retention of certain employees by SWNB or Hanmi may be challenging while the merger is pending, as certain employees may experience uncertainty about their future roles with SWNB or Hanmi. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with SWNB or Hanmi, SWNB’s business or Hanmi’s business could be harmed. In addition, subject to certain exceptions, SWNB has agreed to operate its business in the ordinary course pending the closing of the merger. See “Description of the Merger—Covenants of SWNB and Hanmi in the Merger Agreement” for a description of the restrictive covenants applicable to SWNB and Hanmi.

 

14

Failure to complete the merger could negatively impact the stock prices and future businesses and financial results of Hanmi and SWNB.

If the merger is not completed, the ongoing businesses of Hanmi and SWNB may be adversely affected and Hanmi and SWNB will be subject to several risks, including the following:

 

•

Hanmi and SWNB will be required to pay certain costs relating to the merger, whether or not the merger is completed, such as legal, accounting, financial advisor and printing fees;

 

•

under the merger agreement, SWNB is subject to certain restrictions on the conduct of its business pending the completion of the merger, which may materially and adversely affect its ability to fully execute its business plan;

 

•

under the merger agreement, SWNB is required to pay a termination fee if the merger agreement is terminated under specific circumstances, including if SWNB accepts an acquisition proposal from a third party other than Hanmi;

 

•

under the merger agreement, SWNB may be required to reimburse Hanmi for its documented reasonable costs and expenses incurred in connection with obtaining the regulatory approvals required under the merger agreement if the merger agreement is terminated pursuant to SWNB’s failure to obtain a favorable private letter ruling from the IRS; and

 

•

matters relating to the merger may require substantial commitments of time and resources by Hanmi and SWNB management, which could otherwise have been devoted to other opportunities that may be beneficial to Hanmi or SWNB as independent companies.

In addition, the financial markets as well as customers and employees of Hanmi or SWNB may react unfavorably if the merger is not completed. Hanmi or SWNB also may be subject to litigation related to any failure to complete the merger.

Both Hanmi and SWNB stockholders will have a reduced ownership and voting interest after the merger and will exercise less influence over management of the combined organization.

Each of Hanmi and SWNB stockholders currently have the right to vote in the election of their respective boards of directors and on various other matters affecting their respective companies. Upon the completion of the merger, SWNB stockholders who receive Hanmi common stock in the merger will become stockholders of Hanmi with a percentage ownership interest in the combined organization that is substantially less than their percentage ownership of SWNB. Further, because shares of Hanmi common stock will be issued to SWNB stockholders, existing Hanmi common stockholders will have their ownership and voting interests diluted by approximately 6.0%. Accordingly, Hanmi and SWNB stockholders will not be able to exercise as much influence over the management and policies of the combined organization as they currently can.

If the merger does not constitute a reorganization under Section 368(a) of the Code, then each SWNB stockholder may be responsible for payment of U.S. income taxes related to the merger.

The IRS may determine that the merger does not qualify as a nontaxable reorganization under Section 368(a) of the Code. In that case, each SWNB stockholder would recognize a gain or loss equal to the difference between the (1) the sum of the fair market value of Hanmi common stock and the amount of cash consideration, if any, received by the SWNB stockholder in the merger and (2) the SWNB stockholder’s adjusted tax basis in the shares of SWNB common stock exchanged therefor.

 

15

In certain circumstances, cash merger consideration received may be taxed as a dividend rather than capital gains and SWNB’s counsel is not able to provide an opinion regarding whether this tax treatment will apply to any individual stockholder.

In certain circumstances, the cash merger consideration received by a SWNB stockholder who receives Hanmi common stock and cash may be taxed as a dividend, rather than as capital gain. For purposes of this determination, the stockholder generally will be treated as if the stockholder first exchanged all of the stockholder’s shares of SWNB common stock solely for Hanmi common stock and then Hanmi immediately redeemed a portion of the Hanmi common stock in exchange for the cash the stockholder actually received. Moreover, under the Code, the SWNB stockholder may be deemed to constructively own shares of Hanmi common stock held by certain members of the stockholder’s family, by certain estates and trusts of which the stockholder is a beneficiary or by certain entities in which the stockholder has an ownership or beneficial interest, and certain stock options actually or constructively owned by the stockholder or such other persons may be aggregated with the stockholder’s shares of Hanmi common stock. Receipt of cash in such deemed redemption will generally be treated as a capital gain and will not have the effect of a dividend if such deemed redemption is “not essentially equivalent to a dividend” or “substantially disproportionate,” each within the meaning of Section 302(b) of the Code. For further information see the section of this document entitled “Material U.S. Federal Income Tax Consequences of the Merger.”

Because the determination as to whether an SWNB stockholder will recognize a capital gain or dividend income as a result of the exchange of SWNB common stock for a combination of Hanmi common stock and cash in the merger is based on facts and circumstances unique to each stockholder, the opinion received from SWNB’s legal counsel will not opine as to such treatment at the individual stockholder level. Accordingly, we urge you to consult your own tax advisor with respect to any such determination that is applicable to your individual situation.

SWNB stockholders who make elections may be unable to sell their shares in the market pending the merger.

SWNB stockholders may elect to receive cash or Hanmi common stock consideration in the merger by completing an election form that will be sent under separate cover. Making an election will require that stockholders who hold their shares in certificate form turn in their SWNB stock certificates before the merger has been completed. This means that during the time between when the election is made and the date the merger is completed, SWNB stockholders will be unable to sell their SWNB common stock. If the merger is unexpectedly delayed, this period could be extended for a significant period of time. SWNB stockholders can shorten the period during which they cannot sell their shares by delivering their election shortly before the election deadline. However, elections received after the election deadline will not be accepted or honored.

The fairness opinion received by the board of directors of SWNB from SWNB’s financial advisor does not reflect changes in circumstances subsequent to the date of the fairness opinion.

Sheshunoff, SWNB’s financial advisor in connection with the merger, delivered to the board of directors of SWNB an opinion dated May 18, 2018. The opinion does not speak as of the time the merger will be completed or any date other than the date of such opinion. The opinion does not reflect changes that may occur or may have occurred after the date of the opinion, including changes to the operations and prospects of Hanmi or SWNB, changes in general market and economic conditions or regulatory or other factors. Any such changes may materially alter or affect the relative values of Hanmi or SWNB.

The shares of Hanmi common stock to be received by SWNB stockholders as a result of the merger will have different rights than shares of SWNB common stock.

Following completion of the merger, SWNB stockholders who receive the stock consideration will become Hanmi stockholders and be governed by Delaware law and Hanmi’s certificate of incorporation and bylaws.

 

16

There are differences between the current rights of SWNB stockholders and the rights of Hanmi stockholders that may be important to SWNB stockholders. See “Comparison of Rights of Stockholders” for a discussion of the different rights associated with Hanmi common stock and SWNB common stock.

Regulatory approvals may not be received, may take longer to receive than expected, or may impose conditions that are not presently anticipated or that could have an adverse effect on the combined company following the merger.

Before the merger may be completed, Hanmi and SWNB must obtain the approval, non-objection or waiver of the Department of Business Oversight, the FDIC, the Texas Department of Banking and the Federal Reserve. In determining whether to grant these approvals, non-objections or waivers, the regulators consider a variety of factors, including the regulatory standing of each party. An adverse development in either party’s regulatory standing or other factors could result in an inability to obtain approvals or delay their receipt. These regulators may impose conditions on the completion of the merger or the bank merger or require changes to the terms of the merger or the bank merger. Such conditions or changes could have the effect of delaying or preventing completion of the merger or the bank merger or imposing additional costs on or limiting the revenues of the combined company following the merger and the bank merger, any of which might have an adverse effect on the combined company following the merger.

Goodwill incurred in the merger may negatively affect Hanmi’s financial condition.

To the extent that the merger consideration, consisting of shares of Hanmi common stock and cash to be issued in the merger, exceeds the fair value of the net assets, including identifiable intangibles, of SWNB, that amount will be reported as goodwill by Hanmi. In accordance with current accounting guidance, goodwill will not be amortized but will be evaluated for impairment annually. A failure to realize expected benefits of the merger could adversely impact the carrying value of the goodwill recognized in the merger, and in turn negatively affect Hanmi’s financial condition.

Risks Related to Hanmi’s Business

You should read and consider risk factors specific to Hanmi’s business that will affect the combined company after the merger. These risks are described in the section entitled “Risk Factors” in Hanmi’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and in other documents incorporated by reference into this document. See the section entitled “Where You Can Find More Information” for a description of the information incorporated by reference into this document.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Forward-Looking Statements

This document contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “assume,” “plan,” “seek,” “expect,” “will,” “may,” “should,” “indicate,” “would,” “believe,” “contemplate,” “continue,” “target” and words of similar meaning. These forward-looking statements include, but are not limited to:

 

•

statements of Hanmi’s and SWNB’s respective goals, intentions and expectations;

 

•

statements regarding Hanmi’s and SWNB’s respective business plans, prospects, growth and operating strategies;

 

•

statements regarding the quality of Hanmi’s and SWNB’s respective loan and investment portfolios; and

 

•

estimates of Hanmi’s and SWNB’s respective risks and future costs and benefits.

 

17

These forward-looking statements are based on current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond Hanmi’s and SWNB’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. 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:

 

•

failure to complete the merger due to the failure of SWNB stockholders to approve the merger agreement, failure to obtain applicable regulatory approvals or the failure to satisfy other closing conditions;

 

•

failure to complete the merger in a timely manner or on the expected terms and schedule;

 

•

the potential impact of announcement or consummation of the proposed merger with SWNB on relationships with third parties, including customers, employees, and competitors;

 

•

business disruption following the merger, including the challenges of integrating, retaining, and hiring key personnel;

 

•

difficulties and delays in integrating the Hanmi and SWNB businesses or fully realizing expected cost savings and other benefits;

 

•

Hanmi’s potential exposure to unknown or contingent liabilities of SWNB;

 

•

failure to attract new customers and retain existing customers in the manner anticipated;

 

•

the outcome of pending or threatened litigation, or of matters before regulatory agencies, whether currently existing or commencing in the future, including litigation related to the merger;

 

•

any interruption or breach of security resulting in failures or disruptions in customer account management, general ledger, deposit, loan, or other systems;

 

•

changes in Hanmi’s stock price before the closing of the merger, including as a result of the financial performance of Hanmi and/or SWNB before the closing of the merger;

 

•

operational issues stemming from, or capital spending necessitated by, the potential need to adapt to industry changes in information technology systems, on which Hanmi and SWNB are highly dependent;

 

•

changes in legislation, regulation, policies, or administrative practices, whether by judicial, governmental, or legislative action, and other changes pertaining to banking, securities, taxation, rent regulation and housing, financial accounting and reporting, environmental protection, and insurance, and the ability to comply with such changes in a timely manner;

 

•

changes in the monetary and fiscal policies of the U.S. government, including policies of the U.S. Department of the Treasury and the Federal Reserve;

 

•

changes in interest rates, which may affect Hanmi’s and/or SWNB’s net income or cash flows, or the market value of Hanmi’s and/or SWNB’s assets;

 

•

changes to the federal tax code;

 

•

changes in accounting principles, policies, practices, or guidelines;

 

•

changes in Hanmi’s credit ratings or in Hanmi’s ability to access the capital markets;

 

•

natural disasters, war, or terrorist activities; and

 

•

other economic, competitive, governmental, regulatory, technological, and geopolitical factors affecting Hanmi’s or SWNB’s operations, pricing, and services.

 

18

Additionally, the timing and occurrence or non-occurrence of events may be subject to circumstances beyond Hanmi’s or SWNB’s control.

Annualized, projected and estimated numbers are used for illustrative purposes only, are not forecasts and may not reflect actual results.

For any forward-looking statements made in this document or in any documents incorporated by reference into this document, Hanmi and SWNB claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. You are cautioned not to place undue reliance on these statements, which speak only as of the date of this document or the date of the applicable document incorporated by reference in this document. Except to the extent required by applicable law, neither Hanmi nor SWNB undertake to update forward-looking statements to reflect facts, circumstances, assumptions, or events that occur after the date the forward-looking statements are made. All written and oral forward-looking statements concerning the merger or other matters addressed in this document and attributable to Hanmi, SWNB, or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this document.

 

19

SELECTED HISTORICAL FINANCIAL INFORMATION

The following tables present selected historical financial information for Hanmi and for SWNB at and for the dates indicated. The following information is only a summary and not necessarily indicative of the results of future operations of Hanmi, SWNB or the combined company. The summary financial information for Hanmi is derived from prior filings made with the SEC, which are incorporated by reference into this document. The financial information for Hanmi at December 31, 2017 and 2016 and for the three years ended December 31, 2017 should be read in connection with the audited consolidated financial statements and related notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2017. The financial information for Hanmi for the three months ended March 31, 2018 and 2017 should be read in connection with the unaudited financial statements and notes thereto included in its Quarterly Report on Form 10-Q for the period ended March 31, 2018. The results of operations for the three months ended March 31, 2018 are not necessarily indicative of the operating results for the year ending December 31, 2018 or for any other period. See “Where You Can Find More Information” on page 83.

Selected Historical Consolidated Financial Data of Hanmi

 

		As of and for the Three Months Ended March 31,								As of and for the Year Ended December 31,
		2018				2017				2017				2016				2015				2014				2013
		(In thousands, except share and per share data)
Summary Statements of Operations:
Interest and dividend income		$	55,082			$	48,349			$	209,321			$	178,471			$	164,226			$	136,734			$	119,140
Interest expense			10,158				5,995				32,519				18,274				16,109				14,033				13,507
Net interest income			44,924				42,354				176,802				160,197				148,117				122,701				105,633
Loan and lease loss provision (income)			649				(80	)			831				(4,339	)			(11,614	)			(6,258	)			576
Noninterest income			6,061				7,217				33,415				33,075				47,602				42,296				27,900
Noninterest expense			29,757				27,240				114,102				108,223				115,328				98,671				70,441
Income before provision for income taxes			20,579				22,411				95,284				89,388				92,005				72,584				62,516
Provision for income taxes			5,724				8,628				40,624				32,899				38,182				22,379				22,732
Net income from continuing operations			14,855				13,783				54,660				56,489				53,823				50,205				39,784
(Loss) income from discontinued operations			—				—				—				—				—				(444	)			73
Net income		$	14,855			$	13,783			$	54,660			$	56,489			$	53,823			$	49,761			$	39,857
Summary Balance Sheets:
Cash and due from banks		$	151,611			$	138,592			$	153,826			$	147,235			$	164,364			$	158,320			$	179,357
Securities			570,351				548,010				578,804				516,964				698,296				1,060,717				530,926
Loans and leases receivable (1)			4,381,780				3,910,799				4,273,415				3,812,340				3,140,381				2,735,832				2,177,498
Assets			5,305,641				4,811,821				5,210,485				4,701,346				4,234,521				4,232,443				3,054,379
Deposits			4,378,101				4,083,165				4,348,654				3,809,737				3,509,976				3,556,746				2,512,325
Liabilities			4,741,363				4,272,279				4,648,008				4,170,321				3,740,603				3,779,056				2,654,302
Stockholders’ equity			564,278				539,542				562,477				531,025				493,918				453,387				400,077
Tangible equity (2)			551,824				526,745				549,933				518,136				492,217				451,307				398,906
Average loans and leases (3)			4,310,964				3,881,686				4,039,346				3,423,292				2,901,698				2,440,682				2,156,626
Average securities			588,738				526,549				583,971				614,749				788,156				648,937				418,273
Average interest-earning assets			4,948,488				4,463,220				4,680,035				4,103,960				3,805,877				3,163,141				2,687,799
Average assets			5,213,790				4,738,221				4,952,466				4,372,698				4,076,669				3,410,751				2,827,508
Average deposits			4,317,627				3,873,840				4,160,072				3,607,585				3,502,886				2,872,029				2,391,248
Average interest-bearing liabilities			3,306,878				2,979,139				3,125,766				2,640,953				2,493,513				2,054,680				1,678,618
Average stockholders’ equity			565,867				534,273				548,135				518,867				476,401				425,913				392,601
Average tangible equity (4)			553,362				521,420				535,416				516,238				474,498				425,018				391,342

 

20

		As of and for the Three Months Ended March 31,								As of and for the Year Ended December 31,
		2018				2017				2017				2016				2015				2014				2013
Per Share Data:
Earnings per share—basic		$	0.46			$	0.43			$	1.70			$	1.76			$	1.69			$	1.57			$	1.26
Earnings per share—diluted			0.46				0.43				1.69				1.75				1.68				1.56				1.26
Book value per share (5)			17.36				16.66				17.34				16.42				15.45				14.21				12.60
Tangible book value per share (6)			16.98				16.26				16.96				16.03				15.39				14.14				12.56
Cash dividends declared per share			0.24				0.19				0.80				0.66				0.47				0.28				0.14
Common shares outstanding			32,502,658				32,392,580				32,431,627				32,330,747				31,974,359				31,910,203				31,761,550
Selected Performance Ratios:
Return on average assets (7) (8)			1.16	%			1.18	%			1.10	%			1.29	%			1.32	%			1.47	%			1.41	%
Return on average stockholders’ equity (8) (9)			10.65	%			10.46	%			9.97	%			10.89	%			11.30	%			11.79	%			10.13	%
Return on average tangible equity (8) (10)			10.89	%			10.72	%			10.21	%			10.94	%			11.34	%			11.81	%			10.18	%
Net interest margin (11)			3.70	%			3.89	%			3.82	%			3.95	%			3.90	%			3.88	%			3.94	%
Efficiency ratio (12)			58.36	%			54.95	%			54.28	%			56.00	%			58.93	%			59.80	%			52.75	%
Dividend payout ratio (13)			52.17	%			44.39	%			47.06	%			37.57	%			27.81	%			17.83	%			11.11	%
Average stockholders’ equity to average assets			10.85	%			11.28	%			11.07	%			11.87	%			11.69	%			12.49	%			13.89	%
Selected Capital Ratios:
Total risk-based capital ratio:
Hanmi Financial			15.43	%			16.16	%			15.50	%			13.86	%			14.91	%			15.89	%			17.48	%
Hanmi Bank			15.13	%			15.91	%			15.20	%			13.64	%			14.86	%			15.18	%			16.79	%
Tier 1 risk-based capital ratio:
Hanmi Financial			12.52	%			12.93	%			12.55	%			13.02	%			13.65	%			14.63	%			16.26	%
Hanmi Bank			14.39	%			15.07	%			14.47	%			12.80	%			13.60	%			13.93	%			15.53	%
Common equity tier 1 capital ratio:
Hanmi Financial			12.09	%			12.56	%			12.19	%			12.73	%			13.65	%			—	%			—	%
Hanmi Bank			14.39	%			15.07	%			14.47	%			12.80	%			13.60	%			—	%			—	%
Tier 1 leverage ratio:
Hanmi Financial			10.88	%			11.21	%			10.79	%			11.53	%			11.31	%			10.91	%			13.62	%
Hanmi Bank			12.51	%			13.08	%			12.44	%			11.33	%			11.27	%			10.39	%			13.05	%
Selected Asset Quality Ratios:
Non-performing loans and leases to loans and leases (14) (15)			0.35	%			0.32	%			0.37	%			0.30	%			0.60	%			0.92	%			1.16	%
Non-performing assets to assets (16)			0.32	%			0.36	%			0.34	%			0.40	%			0.65	%			0.97	%			0.87	%
Net loan and lease charge-offs (recoveries) to average loans and leases (15)			(0.01	)%			(0.08	)%			0.05	%			0.18	%			(0.06	)%			(0.06	)%			0.29	%
Allowance for loan and lease losses to loans and leases			0.72	%			0.84	%			0.72	%			0.84	%			1.35	%			1.88	%			2.58	%
Allowance for loan and lease losses to non-performing loans and leases (17)			206.85	%			259.53	%			194.39	%			275.80	%			196.12	%			204.26	%			222.42	%

 

(1)	Excludes loans held for sale.

(2)	Tangible equity is calculated by subtracting goodwill and other intangible assets from stockholders’ equity. Tangible equity is a “Non-GAAP” financial measure, as discussed in the following section.

(3)	Includes loans held for sale.

(4)	Average tangible equity is calculated by subtracting average goodwill and average other intangible assets from average stockholders’ equity. Average tangible equity is a “Non-GAAP” financial measure, as discussed in the following section.

(5)	Stockholders’ equity divided by shares of common stock outstanding.

(6)	Tangible equity divided by common shares outstanding. Tangible equity is a “Non-GAAP” financial measure, as discussed in the following section.

 

21

(7)	Net income divided by average assets.

(8)	Amounts calculated on net income from continuing operations.

(9)	Net income divided by average stockholders’ equity.

(10)	Net income divided by average tangible equity. Average tangible equity is a “Non-GAAP” financial measure, as discussed in the following section.

(11)	Net interest income divided by average interest-earning assets. Computed on a tax-equivalent basis using the 35% statutory federal tax rate.

(12)	Noninterest expense divided by the sum of net interest income and noninterest income.

(13)	Dividends declared per share divided by basic earnings per share.

(14)	Nonperforming loans and leases, excluding loans held for sale, consist of nonaccrual loans and leases, and loans and leases past due 90 days or more still accruing interest; except for the three months ended March 31, 2018 and March 31, 2017.

(15)	Excludes PCI loans; except for the three months ended March 31, 2018 and March 31, 2017.

(16)	Nonperforming assets consist of nonperforming loans and leases and other real estate owned; except for the three months ended March 31, 2018 and March 31, 2017.

(17)	Excludes allowance for loan losses on PCI loans; except for the three months ended March 31, 2018 and March 31, 2017.

Non-GAAP Financial Measures

Hanmi calculates certain supplemental financial information determined by methods other than in accordance with GAAP, including tangible assets, tangible stockholders’ equity and tangible book value per share. These non-GAAP measures are used by management in analyzing Hanmi’s capital strength.

Tangible equity is calculated by subtracting goodwill and other intangible assets from stockholders’ equity. Banking and financial institution regulators also exclude goodwill and other intangible assets from stockholders’ equity when assessing the capital adequacy of a financial institution.

Management believes the presentation of these financial measures excluding the impact of items described in the preceding paragraph provide useful supplemental information that is essential to a proper understanding of the capital strength of Hanmi. These disclosures should not be viewed as a substitution for results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Average Tangible Equity and Return on Average Tangible Equity

The following table reconciles these non-GAAP performance measure to the GAAP performance measure for the periods indicated:

 

		As of and for the Three Months Ended March 31,								As of and for the Year Ended December 31,
		2018				2017				2017				2016				2015				2014				2013
		(Dollars in thousands)
Average stockholders’ equity		$	565,867			$	534,273			$	548,135			$	518,867			$	476,401			$	425,913			$	392,601
Less average goodwill			(11,031	)			(11,031	)			(11,031	)			(1,078	)			—				—				—
Less average other intangible assets			(1,474	)			(1,822	)			(1,688	)			(1,551	)			(1,903	)			(895	)			(1,259	)
Average tangible equity		$	553,362			$	521,420			$	535,416			$	516,238			$	474,498			$	425,018			$	391,342
Return on average stockholders’ equity			10.65	%			10.46	%			9.97	%			10.89	%			11.30	%			11.79	%			10.13	%
Effect of average intangible assets			0.24	%			0.26	%			0.24	%			0.05	%			0.04	%			0.02	%			0.05	%
Return on average tangible equity			10.89	%			10.72	%			10.21	%			10.94	%			11.34	%			11.81	%			10.18	%

 

22

Tangible Stockholders’ Equity and Tangible Book Value Per Share

The following table reconciles these non-GAAP performance measure to the GAAP performance measure for the periods indicated:

 

		Three Months Ended March 31,								Year Ended December 31,
		2018				2017				2017				2016				2015				2014				2013
		(In thousands, except per share data)
Stockholders’ equity		$	564,278			$	539,542			$	562,477			$	531,025			$	493,918			$	543,387			$	400,077
Less goodwill			(11,031	)			(11,031	)			(11,031	)			(11,031	)			—				—				—
Less other intangible assets			(1,423	)			(1,766	)			(1,513	)			(1,858	)			(1,701	)			(2,080	)			(1,171	)
Tangible stockholders’ equity		$	551,824			$	526,745			$	549,933			$	518,136			$	492,217			$	451,307			$	398,906
Book value per share			17.36				16.66				17.34				16.42				15.45				14.21				12.60
Effect of intangible assets			(0.38	)			(0.40	)			(0.38	)			(0.39	)			(0.06	)			(0.07	)			(0.04	)
Tangible book value per share		$	16.98			$	16.26			$	16.96			$	16.03			$	15.39			$	14.14			$	12.56

Selected Historical Consolidated Financial Data of SWNB

 

		At or For the Three Months Ended March 31,*								At or For the Year Ended December 31,
		2018				2017				2017				2016				2015				2014				2013
		(Dollars in thousands, except per share amounts)
FINANCIAL CONDITION DATA
Total assets		$	409,435			$	359,951			$	394,841			$	358,469			$	349,221			$	343,202			$	348,025
Cash and cash equivalents			69,019				50,255				64,046				62,832				58,072				53,555				54,057
Investment securities			66,146				83,047				69,880				85,753				116,340				141,348				159,013
Net loans			256,965				210,562				243,227				187,146				147,728				128,113				110,934
Deposits			345,753				298,600				330,535				297,600				287,975				282,689				288,286
Total stockholders’ equity			48,411				46,313				48,563				45,080				46,068				45,030				38,758
OPERATING DATA
Net interest income		$	3,156			$	2,666			$	11,721			$	9,615			$	8,739			$	9,219			$	8,950
Provision (credit) for loan losses			—				(4	)			(4	)			(334	)			(670	)			(1,562	)			(1,100	)
Non-interest income			503				481				2,275				1,795				1,916				1,849				2,581
Non-interest expense			2,700				2,235				9,343				8,349				8,441				8,753				9,387
Income tax expense			—				—				—				—				—				—				—
Net income			960				916				4,657				3,395				2,883				3,876				3,244
COMMON SHARE DATA
Basic earnings per share		$	0.07			$	0.07			$	0.35			$	0.25			$	0.21			$	0.28			$	0.24
Diluted earnings per share			0.07				0.07				0.34				0.25				0.21				0.27				0.23
Dividends per share			0.03				0.02				0.13				0.10				0.10				0.06				0.05
Book value per share (1)			3.58				3.45				3.60				3.36				3.33				3.27				2.81
Basic earnings per share (2)			0.06				0.05				0.20				N/A				N/A				N/A				N/A
Diluted earnings per share (2)			0.06				0.05				0.20				N/A				N/A				N/A				N/A
Book value per share (2)			3.56				3.43				3.50				N/A				N/A				N/A				N/A
Outstanding shares (basic)			13,535,036				13,435,036				13,495,036				13,435,036				13,827,434				13,771,878				13,771,878
Outstanding shares (diluted)			13,764,480				13,704,480				13,704,480				13,621,703				14,021,601				14,098,101				14,072,101
KEY OPERATING RATIOS
Return on average assets			1.03	%			1.04	%			1.26	%			0.96	%			0.90	%			1.17	%			0.63	%
Return on average common equity			8.67	%			8.21	%			10.00	%			7.41	%			6.88	%			10.02	%			5.77	%
Interest rate spread			3.17	%			3.06	%			3.22	%			2.75	%			2.62	%			2.76	%			2.61	%
Net interest margin (3)			3.40	%			3.29	%			3.46	%			3.02	%			2.80	%			2.92	%			2.75	%

 

23

		At or For the Three Months Ended March 31,*								At or For the Year Ended December 31,
		2018				2017				2017				2016				2015				2014				2013
Average stockholders’ equity to average assets			11.91	%			12.63	%			12.56	%			12.97	%			13.06	%			11.79	%			10.89	%
Dividend payout ratio (4)			41.40	%			33.12	%			37.48	%			85.48	%			45.67	%			0.00	%			0.00	%
Efficiency ratio (5)			70.84	%			68.83	%			65.27	%			71.97	%			74.43	%			74.64	%			81.23	%
Allowance for loan losses to total loans			1.63	%			1.67	%			1.71	%			1.87	%			2.34	%			3.13	%			4.82	%
Non-performing loans to total loans (6)			0.29	%			0.35	%			0.30	%			0.39	%			0.50	%			0.87	%			4.96	%
Non-performing assets to total assets (7)			0.18	%			0.19	%			0.19	%			0.21	%			0.22	%			0.34	%			1.70	%
Allowance for loan losses to non-performing loans			0.00	%			0.00	%			0.00	%			0.00	%			0.00	%			0.00	%			1.83	%
Net charge-offs to average loans			(0.05	)%			(0.03	)%			(0.31	)%			(0.21	)%			(0.06	)%			(0.06	)%			0.44	%
CAPITAL RATIOS
Total risk-based capital ratio			17.22	%			19.06	%			17.96	%			20.31	%			23.74	%			25.12	%			24.36	%
Tier 1 risk-based capital ratio			15.97	%			17.81	%			16.71	%			19.06	%			22.48	%			23.86	%			23.08	%
Leverage ratio			12.14	%			12.83	%			12.24	%			12.36	%			12.80	%			12.40	%			11.16	%
Common equity tier 1 risk-based			15.97	%			17.81	%			16.71	%			19.06	%			22.48	%			N/A				N/A

 

(1)	Stockholders’ equity divided by shares of common stock outstanding.

(2)	SWNB is a Subchapter S corporation; to allow comparability, the data has been tax effected at the then current income tax rates.

(3)	Net interest income divided by average interest-earning assets.

(4)	Dividends declared per share divided by basic earnings per share.

(5)	Noninterest expense divided by the sum of net interest income and noninterest income.

(6)	Non-performing loans include non-accrual loans and loans past due 90 days or more and still accruing interest.

(7)	Non-performing assets include non-accrual loans, loans past due 90 days or more and still accruing interest and other real estate owned.

*	BKD, LLP, SWNB’s independent auditor, has not been engaged to perform, any procedures related to the unaudited financial information of SWNB contained in this offering document.

 

24

COMPARATIVE PRO FORMA PER SHARE DATA

The following table summarizes selected share and per share information about Hanmi and SWNB giving effect to the merger (which we refer to as “pro forma” information). The data in the table should be read together with the financial information and the financial statements of Hanmi incorporated by reference to this document. The pro forma information is presented as an illustration only. The data does not necessarily indicate the combined financial position per share or combined results of operations per share that would have been reported if the merger had occurred when indicated, nor is the data a forecast of the combined financial position or combined results of operations for any future period.

The information listed as “per equivalent SWNB share” was obtained by multiplying the pro forma amounts by the exchange ratio of 0.1961, and does not reflect the receipt of cash by holders of SWNB common stock. We anticipate that the merger will provide the combined company with financial benefits that include reduced operating expenses and greater revenue. We also expect that Hanmi and SWNB will incur merger and integration charges as a result of combining Hanmi and SWNB. The pro forma information, while helpful in illustrating the financial characteristics of Hanmi following the merger under one set of assumptions, does not reflect these anticipated benefits and, accordingly, does not attempt to predict or suggest future results. The pro forma information also does not necessarily reflect what the historical results of Hanmi would have been had the companies been combined during these periods.

The information in the following table is based on, and should be read together with, the historical financial information that we have presented in or incorporated by reference in this document.

 

		SWNB Historical (1)				Hanmi Historical				Pro Forma Combined (2)				Per Equivalent SWNB Share
Book value per share:
At March 31, 2018		$	3.56			$	17.36			$	17.97			$	3.52
At December 31, 2017			3.50				17.34				17.96				3.52
Cash dividends declared per share (3):
Three months ended March 31, 2018		$	0.03			$	0.24			$	0.24			$	0.05
Year ended December 31, 2017			0.13				0.80				0.80				0.16
Earnings per share—basic:
Three months ended March 31, 2018		$	0.06			$	0.46			$	0.46			$	0.09
Year ended December 31, 2017			0.20				1.70				1.69				0.33
Earnings per share—diluted:
Three months ended March 31, 2018		$	0.06			$	0.46			$	0.46			$	0.09
Year ended December 31, 2017			0.20				1.69				1.67				0.33

 

(1)	SWNB historical book value per share, basic earnings per share and diluted earnings per share have been adjusted to reflect a C-Corp basis.

(2)	The pro forma combined book value per share of Hanmi common stock is based upon the pro forma combined common stockholders’ equity for Hanmi and SWNB divided by total pro forma common shares of the combined entity.

(3)	The pro forma combined cash dividend information assumes continuation of Hanmi’s historical dividend.

 

25

MARKET PRICE AND DIVIDEND INFORMATION

Hanmi common stock is listed on the Nasdaq Global Select Market under the symbol “HAFC.” There is no established public trading market for SWNB common stock and no broker makes a market in the stock. The closing sale price reported for Hanmi common stock on May 18, 2018, the last trading day before the proposed merger was publicly announced, was $28.65. The following table lists the high and low sales prices per share for Hanmi common stock and the dividends declared for the periods indicated.

 

		Hanmi Common Stock
		High				Low				Dividends
Quarter Ended
September 30, 2018 (through July 9, 2018)		$	29.55			$	28.15			$	—
June 30, 2018			31.85				26.95				0.24
March 31, 2018			32.46				28.01				0.24
December 31, 2017			33.10				28.45				0.21
September 30, 2017			31.20				25.45				0.21
June 30, 2017			30.90				25.95				0.19
March 31, 2017			35.85				28.20				0.19
December 31, 2016			35.40				22.78				0.19
September 30, 2016			26.97				22.32				0.19
June 30, 2016			24.44				20.64				0.14
March 31, 2016			23.38				18.92				0.14

You should obtain current market prices for Hanmi common stock because the market price of Hanmi common stock will fluctuate between the date of this document and the date on which the merger is completed, and thereafter. You can obtain these quotations on the Internet or by calling your broker.

As of July 9, 2018, there were approximately 917 holders of record of Hanmi common stock. This does not reflect the number of persons or entities who may hold their stock in nominee or “street name” through brokerage firms.

As of July 9, 2018, there were approximately 130 holders of record of SWNB common stock. This does not reflect the number of persons or entities who may hold their stock in nominee or “street name” through brokerage firms. Stock transfer records maintained by SWNB indicate that there have been relatively infrequent transactions in SWNB stock. Sales and purchases of shares of SWNB common stock are privately negotiated, and SWNB may not be aware of the price for those transactions. As a result, trading price data is very limited and may not accurately reflect the actual market value of the shares.

Following the merger, the declaration of dividends will be at the discretion of Hanmi’s board of directors and will be determined after consideration of various factors, including earnings, cash requirements, the financial condition of Hanmi, applicable state law and government regulations and other factors deemed relevant by Hanmi’s board of directors. See the section of this document entitled “Comparative Pro Forma Per Share Data” for more information.

 

26

SPECIAL MEETING OF SWNB STOCKHOLDERS

This document is being provided to holders of SWNB common stock as SWNB’s proxy statement in connection with the solicitation of proxies by and on behalf of its board of directors to be voted at the special meeting of SWNB stockholders to be held on August 16, 2018, and at any adjournment or postponement of the special meeting. This document is also being provided to SWNB stockholders as Hanmi’s prospectus in connection with the issuance by Hanmi of its shares of common stock as consideration in the merger.

Date, Place and Time of the Meeting

The special meeting will be held at the main office of Southwestern National Bank at 6901 Corporate Drive, Houston, Texas 77036 at 2:00 p.m., local time, on August 16, 2018.

Matters to be Considered

At the special meeting, you will be asked to vote on a proposal to approve the merger agreement. You also may be asked to vote on a proposal to adjourn the special meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the meeting to approve the merger agreement.

Who Can Vote at the Meeting

You are entitled to vote if the records of SWNB showed that you held shares of SWNB common stock as of the close of business on July 9, 2018. As of the close of business on that date, 13,535,036 shares of SWNB common stock were issued and outstanding. Each share of SWNB common stock has one vote. If you are a beneficial owner of shares of SWNB common stock held by a broker, bank or other nominee (i.e., in “street name”) and you want to vote your shares in person at the meeting, you will have to get a written proxy in your name from the broker, bank or other nominee who holds your shares.

Quorum; Vote Required

The special meeting will conduct business only if a majority of the outstanding shares of SWNB common stock entitled to vote (a “quorum”) is represented in person or by proxy at the meeting. If you return valid proxy instructions or attend the meeting in person, your shares will be counted to determine whether there is a quorum, even if you abstain from voting. Broker non-votes also will be counted to determine the existence of a quorum. A broker non-vote occurs when a broker, bank or other nominee holding shares of SWNB common stock for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner.

Approval of the merger agreement will require the affirmative vote of at least two-thirds of the issued and outstanding shares of common stock of SWNB at which a quorum is present. Failure to submit valid proxy instructions or to vote in person will have the same effect as a vote against the merger agreement. Abstentions and broker non-votes will have the same effect as shares voted against the merger agreement.

The affirmative vote of the majority of votes cast at a meeting at which a quorum is present is required to approve the Adjournment Proposal. The failure to vote in person or submit valid proxy instructions, abstentions and broker non-votes will have no effect on the Adjournment Proposal.

Shares Held by SWNB’s Officers and Directors

As of July 9, 2018, directors and executive officers of SWNB beneficially owned 6,711,286 shares of SWNB common stock, representing 48.79% of the issued and outstanding shares of SWNB common stock. SWNB’s directors have entered into voting agreements with Hanmi to vote 6,491,842 shares of SWNB common stock over which they have the power to vote or the power to direct the vote, representing 47.96% of the issued and outstanding shares of SWNB common stock, in favor of the merger agreement at the special meeting.

 

27

Voting and Revocability of Proxies

You may vote in person at the special meeting or by proxy. To ensure your representation at the special meeting, SWNB recommends that you vote by proxy even if you plan to attend the special meeting. You can always change your vote at the special meeting.

If you are a “stockholder of record,” you can vote your shares:

 

•

by completing and mailing the proxy card that is enclosed; or

 

•

by voting in person at the special meeting.

Please refer to the specific instructions set forth on the proxy card. We encourage you to vote by completing and mailing the proxy card that is enclosed.

SWNB stockholders whose shares are held in “street name” by their broker, bank or other nominee must follow the instructions provided by their broker, bank or other nominee to vote their shares. Your broker or bank may allow you to deliver your voting instructions via telephone or Internet.

If you properly complete and timely submit your proxy, your shares will be voted as you have directed. You may vote for, against, or abstain with respect to the approval of the merger agreement and the Adjournment Proposal. If you are the record holder of your shares of SWNB common stock and submit your proxy without specifying a voting instruction, your shares will be voted “FOR” the proposal to approve the merger agreement and “FOR” the Adjournment Proposal. SWNB’s board of directors unanimously recommends a vote “FOR” approval of the merger agreement and “FOR” the Adjournment Proposal.

You may revoke your proxy before it is voted by:

 

•

filing with SWNB’s Corporate Secretary a duly executed revocation of proxy;

 

•

submitting a new proxy at a later date; or

 

•

voting in person at the special meeting.

Attendance at the special meeting will not, in and of itself, constitute a revocation of a proxy. Address written notices of revocation and other communication with respect to the revocation of proxies to:

Doris Chen, Corporate Secretary

SWNB Bancorp, Inc.

6901 Corporate Drive

Houston, Texas 77036

If any matters not described in this document are properly presented at the special meeting, the persons named in the proxy card will use their own judgment to determine how to vote your shares. SWNB does not know of any other matters to be presented at the meeting.

Solicitation of Proxies

This proxy solicitation is made by the board of directors of SWNB. Additionally, officers and directors of SWNB may solicit proxies personally or by telephone or other means of communication, without additional compensation. SWNB will reimburse banks, brokers and other custodians, nominees and fiduciaries for their reasonable expenses in forwarding the proxy materials to beneficial owners of SWNB common stock.

 

28

PROPOSAL NO. 1—MERGER PROPOSAL

SWNB is asking its stockholders to approve the merger agreement. Holders of SWNB common stock should read this document carefully and in its entirety, including the appendices, for more detailed information concerning the merger agreement and the merger. A copy of the merger agreement is attached to this document as Appendix A.

After careful consideration, the SWNB board of directors unanimously approved the merger agreement and declared the merger agreement and the transactions contemplated thereby, including the merger, to be advisable and in the best interests of SWNB and the stockholders of SWNB. See “Description of the Merger—SWNB’s Reasons for the Merger; Recommendation of SWNB’s Board of Directors” included elsewhere in this document for a more detailed discussion of the SWNB board of directors’ recommendation.

SWNB’s board of directors unanimously recommends a vote “FOR” the merger proposal.

PROPOSAL NO. 2—ADJOURNMENT PROPOSAL

If, at the SWNB special meeting, the number of shares of SWNB common stock present or represented and voting in favor of the merger proposal is insufficient to approve the merger proposal, SWNB intends to move to adjourn the SWNB special meeting in order to enable SWNB’s board of directors to solicit additional proxies for approval of the merger proposal. In that event, SWNB will ask its stockholders to vote upon the Adjournment Proposal, but not the merger proposal. SWNB is asking its stockholders to authorize the holder of any proxy solicited by the SWNB board of directors on a discretionary basis to vote in favor of adjourning the SWNB special meeting to another time and place to solicit additional proxies, including the solicitation of proxies from SWNB stockholders who have previously voted.

SWNB’s board of directors unanimously recommends a vote “FOR” the Adjournment Proposal.

 

29