Hanmi Financial Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of California bank holding company Hanmi Financial (Nasdaq: HAFC  ) spiked as much as 20% in intraday trading today, as investors reacted to Nara Bancorp's (Nasdaq: NARA  ) acquisition of Center Financial (Nasdaq: CLFC  ) .

So what: Nara is paying $286 million for Center Financial, in a deal that will make it the largest U.S.-based Korean-American bank. Why does this matter to Hanmi? Because it boosts expectations that more consolidation will go on in the Korean-American banking sector. Hanmi has already attracted significant attention; South Korea's Woori Finance (NYSE: WF  ) has sought to buy a sizable stake in the U.S. bank. That attempt has been held up by U.S. regulators, so Hanmi could still be a target for a U.S. bank looking to grow its footprint. Wilshire Bancorp (Nasdaq: WIBC  ) , another bank in the sector, might be on the hunt.

Now what: Investors love takeover rumors. I don't. When a buyout does materialize, it can often give investors a quick bump as the company gets snatched away from them. However, many rumored acquisitions, even ones that seem to make a lot of sense, never materialize. Of course, in the case of Hanmi, we're talking about a very unhealthy bank, so investors will be speculating here one way or another. Either that the bank does get acquired, or it raises new capital some other way (possibly the Woori deal going through) and is able to get its act together as a stand-alone bank.

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