Nara Bancorp's stock plunged as much as 20 percent as the L.A.-based commercial bank said after Wednesday's market close that it would restate its 2002 financial results and it wouldn't file its 2004 annual report Form 10-K on time.

The company said the financial restatement was called for after it discovered a "material weakness" in its internal controls related to $600,000 paid in 2003 to its former president and chief executive for reimbursement of automobile and country club expenses that were not properly accounted for. Nara Bancorp said it determined that the failure to disclose and account for the arrangement existed in 2002 as well.

Due to the material weakness, the company said its 2002 earnings were restated to $15.1 million (66 cents per diluted share) from $15.5 million (67 cents).

Nara said it removed former President and Chief Executive Benjamin Hong from the board of directors and committees of its Nara Bank unit and requested by letter that he resign from the board of directors of Nara Bancorp Inc. Hong still hasn't resigned.

The company also said Dr. Thomas Chung had resigned from its board of directors and that it had reassigned Chief Financial Officer Timothy Chang to "other duties." Christine Oh was appointed the acting CFO.

Nara said it would delay filing its annual report due March 31 for the year ended Dec. 31. Analyst Joseph Gladue at Cohen Bros. Securities said in a research note that although he believed these were isolated events, "the disruptions will likely divert management's attention from the business and create uncertainty ... always a negative from an investor perspective."

Gladue downgraded Nara's stock to "hold" from "buy," and said the company's late filing would likely result in a pending delisting notification from Nasdaq.

Nara's stock was also cut by analyst Michael P. McMahon at Sandler O'Neill & Partners LP, who downgraded it to "sell" from "hold."

Nara Bancorp's stock was down $3.32, or 19.3 percent, to $13.93 in mid-afternoon trading.

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