NEW YORK (
's stock has been flying in recent days on hopes it will be the next beneficiary of a failed bank sale from the
Federal Deposit Insurance Corp.
Shares of tiny Los Angeles-based bank, whose market capitalization is below $500 million, are up 18% since Dec. 11; and 55% since it raised $82 million via an Oct. 27 equity offering.
Aaron James Deer, analyst at Sandler O'Neill, attributes the run-up to speculation Nara will buy a failed bank from the FDIC.
One possible takeover candidate is
Hanmi Financial Corp.
. Like Nara, it is headquartered in Los Angeles and serves a mostly Korean-American clientele. On Nov. 5, Hanmi disclosed its receipt of formal notices from its regulators expressing concern over issues such as capital adequacy and risk management. Its stock price closed Wednesday at $1.22. Executives at Hanmi did not return calls.
whether Nara was eyeing Hanmi, Nara president and CEO Min Jung Kim said: "There's been a lot of speculation and it also depends on the opportunity and other things. It may be a possible scenario but I don't think that I should be able to make any type of comments at this point."
Asked whether she attributed the run-up in Nara's stock to such deal speculation, Kim said "since we had a public offering in October, maybe there has been some market expectation or anticipation that we may do any sort of FDIC-assisted deal in our marketplace and then you know Hanmi Bank is not the only one which is challenging with capital issues but there are smaller Korean American banks also facing the same challenges as well so I don't think the market is just expecting or targeting just one bank."
When asked what banks she was referring to, she said: "Since I can only disclose the public information,
-- they are under a regulatory consent order, which is public information."
Indeed, Saehan, also based in Los Angeles, entered into a Dec. 7 consent order with the FDIC and the California Department of Financial Institutions. Its shares closed at 19 cents Wednesday. Executives at the bank did not return calls.
While banks including
have all snapped up failed institutions from the FDIC, smaller players have been getting the biggest pop from such deals.
The most notable example is
East West Bancorp
, a bank catering to Chinese Americans that has seen its shares nearly double since it bought
from the FDIC last month.
The thing that makes such deals so attractive is that the FDIC assumes a large portion of potential losses from the portfolio of the bank that gets acquired. East West Bancorp, for example, picked up a $7.7 billion loan portfolio from UCBH on which the maximum loss it could possibly incur is $692 million.
Nara CEO Kim says there would be no incentive to make acquisitions if it weren't for the FDIC's loss sharing.
"Because the deal is so sweet, why do you want to take the risk outside of FDIC-assisted
deals?" Kim says.
Written by Dan Freed in New York