Magazine article American Banker

Nara Upgraded on Talk Agencies May Lift an Order

Magazine article American Banker

Nara Upgraded on Talk Agencies May Lift an Order

Article excerpt

Despite reporting lackluster earnings this week, Nara Bancorp received an upgrade Wednesday on speculation that the Los Angeles company will emerge soon from a memorandum of understanding ready to spend capital.

Manuel Ramirez, an analyst at KBW Inc.'s Keefe, Bruyette & Woods Inc. boosted his rating on the $2.1 billion-asset Nara's stock to "outperform," from "market perform," citing Nara's "ample excess capital," its attractive valuation, and the "benign" credit trends evident in its first-quarter earnings report.

Nara reported late Monday that profits dropped 7% from a year earlier, to $7.3 million, or 28 cents a share, because its net interest margin decreased 48 basis points from the fourth quarter and 55 basis points from a year earlier, to 4.62%. Net loan chargeoffs were $1.3 million, or 0.31% of average loans, compared with $1.2 million, or 0.27%, in the fourth quarter.

"We acknowledge the fundamentals have deteriorated (as they have for most banks), but in our view the valuation is compelling enough to provide downside cushion for this historically high-performing bank," Mr. Ramirez wrote in a research note.

He added that Nara's tangible-equity-to-assets ratio stands at a "robust" 8.95%, and the money could be used for share buybacks or to acquire other banking companies that, like itself, target Korean-Americans.

Such companies have consistently been among the industry's top performers, but fierce competition for loans and deposits has started to take its toll. Three Nara rivals - Hanmi Financial Corp. …

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