Q: So what are you doing?
A: I'm an equities junkie. In some stocks you can find reasonable value. But people have lost confidence in some parts of the market, where they have lost a tremendous amount of money. There's an old saying -- well, it's my old saying: If markets were rational you couldn't make a living.

Q: Well said. Tell us about some reasonable values.
A: There is a community of Korean-American banks in Southern California. The largest and most liquid is Hanmi Financial, which has 11 branches all around Southern California. The stock trades on the Nasdaq for about 17 a share, and there are 8.5 million shares outstanding. It sells for less than 10 times earnings and has a book value of $10.25 per share. Earnings per share were $1.15 in 1998, $1.43 in '99 and $1.84 in 2000. The growth in assets has been quite impressive. Last year, for instance, assets grew by 39.8%, and deposits grew by 42%.


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Archie MacAllaster's Picks

Company Symbol June 21 Price
Hanmi Financial HAFC $17.60
Alfa ALFA 22.80

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Q: Has there been a surge in the Korean population in the region?
A: I don't know, but there are a lot of Koreans in Southern California, and a couple of those banks also have operations in New York and New Jersey. Interestingly, Hanmi is buying another Korean bank, which will increase total assets to $1.5 billion from $1 billion. So Hanmi will be almost twice as large as the next-largest Korean-American bank.

Q: What are the chances that Hanmi will attract a non-Korean-American suitor?
A: It would make an interesting takeover target, but I don't know that a deal would happen as the bank's directors and employees own about 37% of the stock. Anyway, earnings have been growing by about 30% a year, although this year growth might be a little slower. First-quarter profits came to 47 cents, up from 44 cents.

Q: What happened?
A: The bank wrote down some California utility bonds, which cost earnings three or four cents a share. But earnings for the full year will be more than $2. Hanmi doesn't pay a cash dividend, but it has paid a stock dividend for the past four years. Last year it paid a 12% stock dividend, and the year before, 11%.

Q: Nice. Have you another recommendation?