Nara Extends New York Foothold With Acquisition
By CONNOR DOUGHERTY
Expanding its base in the New York market, Nara Bank has signed an agreement to buy $58 million in deposits from the New York branch of Industrial Bank of Korea.
The move bolsters Nara’s position on the East Coast, where it has three branches and a loan production office. But it also presents operational hurdles for the Los Angeles-based bank. Nara has a branch in Fullerton among its nine offices in Southern California.
Nara said it expects the deal, which included $1 million in loans, to close by the fourth quarter, subject to regulatory approval. The price has not been disclosed.
“There is tremendous opportunity (in New York),” said Benjamin Hong, Nara’s president and chief executive.
With $793 million in assets, Nara Bank is the 17th largest L.A.-based bank and third largest Korean-American bank. Nara has been aggressive in its acquisition strategy, particularly outside of Southern California.
Nara’s entrance into the New York market came in early 2000 when it bought Korea First Bank for $9 million in cash, about book value. That deal included $79 million in assets and $71 million in deposits, as well as branches in Manhattan and Queens. Hong would only say that both assets and deposits have grown at Nara’s New York operations.
Hong said Industrial Bank of Korea sold the deposits, which will be transferred to Nara’s Manhattan branch upon the deal’s closing, so it could concentrate on its wholesale banking business.
Given Nara’s status as a community bank with a marginal asset base, analysts warn that operational risks could outweigh the benefits. “Managing the operation from (across the country) is considerably different from operating within the L.A. basin,” said Jim Hill, a managing director at Friedman, Billings, Ramsey & Co. in Newport Beach. “It doesn’t mean it can’t be done, it’s just more challenging.”
But Hong disputed the size of those risks.
“In a traditional sense, distance is an issue,” he said. “But now we have this Internet. All the data (for the New York region) is consolidated in Los Angeles. The loan quality is monitored very closely.”
Dougherty is a staff reporter with the Los Angeles Business Journal.
