NEW YORK (TheStreet) -- Wilshire Bancorp (WIBC) stock is up by 5.18% to $12.38 on heavy trading volume on Monday afternoon, after the banking company announced it will be acquired by BBCN Bancorp (BBCN) for $1 billion.
Both Los Angeles-based companies specialize in lending to businesses owned by Korean immigrants, and the merger would make it the country's largest Korean American bank, the Los Angeles Times reports.
BBCN is buying Wilshire for $13 per share, or an estimated $1 billion. The deal is expected to close in mid-2016.
"This historic merger of equals combines the top two commercial lenders in the Korean-American banking space and creates for the first time a super regional Korean-American franchise that will also be the seventh largest publicly traded bank headquartered in California," Wilshire Chairman Steven Koh said in a statement.
Shares of BBCN are down by 2.41% to $18.03 this afternoon.
So far today, 1.91 million shares of Wilshire have traded, versus its 30-day average of about 462,000 shares.
Separately, TheStreet Ratings team rates WILSHIRE BANCORP INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
We rate WILSHIRE BANCORP INC (WIBC) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, solid stock price performance, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- WIBC's revenue growth has slightly outpaced the industry average of 3.2%. Since the same quarter one year prior, revenues slightly increased by 5.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, WILSHIRE BANCORP INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- WILSHIRE BANCORP INC's earnings per share declined by 10.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, WILSHIRE BANCORP INC increased its bottom line by earning $0.75 versus $0.63 in the prior year. This year, the market expects an improvement in earnings ($0.79 versus $0.75).
- Net operating cash flow has significantly increased by 112.67% to $19.76 million when compared to the same quarter last year. Despite an increase in cash flow of 112.67%, WILSHIRE BANCORP INC is still growing at a significantly lower rate than the industry average of 310.31%.
- You can view the full analysis from the report here: WIBC
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.