[BUSINESS] Sung Won Sohn Heads Hanmi Financial Corp.
- Sohn Expected to Shine Over Hanmi Financial
The leading Korean American bank boosts its star power as the high-
profile economist takes over as CEO.
By E. Scott Reckard, Times Staff Writer
One good acquisition sometimes leads to another.
Hanmi Financial Corp. emerged as the clear leader in Korean American
banking last year when it took over rival Pacific Union Bank. The
resulting heft allowed Hanmi Bank's parent to achieve a longtime
goal by hiring Wells Fargo & Co.'s high-profile chief economist,
Sung Won Sohn, as its president and chief executive.
"Hanmi had been talking to me for more than 10 years," said Sohn,
who took the reins Monday. "But in the past the bank was just too
Analysts said netting Sohn was a coup for the business-oriented
bank, which has its headquarters on Wilshire Boulevard in Koreatown
and 20 full-service branches from San Francisco to San Diego.
"Not only does Dr. Sohn bring tremendous potential in terms of
mainstream business relationships but also a loyal following of
Korean Americans, some of whom view Dr. Sohn as the Korean version
of Alan Greenspan," wrote analyst Kathleen L. Steinbrecher at Piper
Jaffray & Co.
Steinbrecher on Monday reiterated her "outperform" rating on Hanmi,
citing Sohn's arrival. And the bank's stock jumped by nearly 5%,
rising $1.71 to $37.65 on Nasdaq.
Sohn, 60, stands to benefit if that upward trend continues. He'll
make at least $825,000 in salary and bonus in his first year and
his contract says he'll be showered with stock options worth
millions of dollars if he can double and quadruple Hanmi's earnings
and stock price.
To make that happen, Sohn said, his first goal was increasing the
number of services performed for each customer, a Wells Fargo
specialty. By anticipating needs and "cross-selling" financial
products a mantra of Wells Chairman and CEO Richard Kovacevich
banks create tighter bonds with clients even as profits
rise "exponentially," Sohn said in an interview.
Longer term, Sohn expects Hanmi to open additional branches, first
on the West Coast. The plan is to use Hanmi's experience in "hand-
holding" levels of service to appeal to immigrants, mainly those
from South Korea but also new arrivals from other Asian countries
and the Middle East, he said.
He hopes to see Hanmi grow from its current $3.1 billion in assets
to $10 billion by the time his contract runs out in six years.
To help accomplish that, Sohn said, Hanmi must attract and retain
talented executives from mainstream banks as well as among Korean
Americans. The bank, he said, has been a "graduate school for Korean
bank executives" who departed to help run major Los Angeles-based
rivals such as Nara Bancorp, Center Financial Corp. and Wilshire
Executives and directors at Hanmi said they were confident Sohn
could reverse that trend.
"Dr. Sohn is the most prominent Korean American banker in the world,
and he will get people to migrate to Hanmi," said William J. Ruh, co-
founder of Castle Creek Capital, a Rancho Santa Fe, Calif., firm
that specializes in small-bank mergers. Castle Creek financed the
Pacific Union deal, and Ruh joined Hanmi's board last spring.
Sohn replaced former Hanmi President and CEO Jae Wahn Yoo, who won
praise for helping engineer the $295-million Pacific Union deal last
year. Hanmi executives said Yoo, halfway through a three-year
contract, was negotiating his severance package.
Ruh noted that Sohn's move from Wells to Hanmi was front-page news
in his native South Korea, where the press has closely followed his
After leaving Seoul as a teenager, Sohn picked up a Harvard MBA and
a doctorate in economics from the University of Pittsburgh, then
landed on President Nixon's Council of Economic Advisors all while
in his 20s before joining Norwest Corp., the Minneapolis bank that
took over Wells Fargo and adopted its name in 1998.
After more than 30 years at Wells and in Minnesota, Sohn said, he
was keen for a career, and geographic, change. He had always
anticipated retiring in Southern California because of its weather,
relative proximity to Asia and Korean American population, the
largest in the nation. This was also a plus for his wife, Soon, and
their 9-year-old son, Andrew.
At Wells, Sohn became known for short and snappy observations, made
in interviews with major newspapers and on CNBC shows such
as "Morning Call."
With business borrowing stalled and interest-free financing on cars
propping up the economy in late 2002, for instance, Sohn warned
against relying on consumers for too long: "There is a limit to how
many new cars you need."
In the interview, Sohn said he would be the banker equivalent of
football coaching legend Vince Lombardi, focusing Hanmi 80% on
defense retaining its core clientele and 20% on offense, moving
into new markets such as the Inland Empire, additional West Coast
cities and ultimately New York, Chicago and other big ethnic markets.
Investors increasingly have taken note of Asian American banks,
which are admired for their high growth rates and low loan
Hanmi's stock rose 81.8% last year, from $19.77 to $35.94 a share on
Nasdaq, while a broad index of Nasdaq banking stocks rose 11%.
Sohn will labor amid increasing competition, as smaller ethnic banks
and Asia-based banks bump heads with big U.S. institutions attracted
to the lucrative market, predicted Dominic Ng, chairman and chief
executive of East West Bancorp in San Marino, a leading Chinese
"Some of the competition doesn't know what they are doing it's a
herd mentality, like the dot-coms," said Ng, predicting an eventual
shakeout. "There's a lot of players, and not everyone can be
successful. But it will create a lot of noise, and somewhat of a
hardship" for even the best banks in the niche.
"That's what I like about Hanmi taking this kind of step to bring in
a marquee player," said Ng, who isn't acquainted with Sohn but knows
him by reputation. "They'll get some instant credibility and
differentiate themselves away from other players."