FDIC-Fueled Rally Ends for Nara
Updates to correct D.A. Davidson analyst's name.
Fueled by hopes it would buy a failed bank from the FDIC, the small Los Angeles-based Korean-American bank surged more than 74% in less than two months on its way to a 52-week high of $12.23 Dec. 29.On Thursday, however, it erased most of those gains, touching a mid-day low of $8.09 before rebounding to close at $9.50. CEO Min Kim had abruptly resigned, and hopes Nara would acquire Hanmi Financial Corp. (HAFC) from the FDIC appeared lost as a spokesman for Korea's Woori Finance Holdings (WF) told the Korean Times Woori was "on course" to buy Hanmi, Thomson Reuters reported. The reports sent Hanmi shares surging Wednesday. Chris Stulpin, an analyst with D.A. Davidson, told TheStreet.com the apparent deal between Woori and Hanmi will force Nara to look at the smaller Saehan Bancorp (SAEB.OB) , and he expects it could face a bidding war as he believes other Los Angeles-based Korean American banks -- Wilshire Bancorp (WIBC) and Center Financial Corp. (CLFC) -- are also circling Saehan. "Hanmi would have been a home run ... it would have been an almost EastWest Bancorp (EWBC) type of situation," Stulpin said, alluding to the Chinese American bank that has become exhibit A for how winning FDIC auctions of failed banks can transform the outlook for certain acquirers. Acquiring Seihan, Stulpin said,"would be good, but it wouldn't double your size overnight." Another setback for Nara comes from the fact that Woori's acquisition of Hanmi would mean Nara would have to face a new competitor with a presence in the Eastern United States and a deep-pocketed parent in Korea, according to a report Wednesday from BMO Capital Markets analyst Lana Chan. Chan believes Woori would also present problems for Wilshire and Center, though Wilshire has seen big gains this week and Center has seen just a modest selloff.
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