LOS ANGELES, Oct. 26, 2010 (GLOBE NEWSWIRE) -- Wilshire Bancorp, Inc. (Nasdaq:WIBC), the holding company for Wilshire State Bank, today reported net income available to common shareholders of $4.1 million, or $0.14 per basic and diluted common share, for the quarter ended September 30, 2010. This compares to a net loss of $1.7 million to common shareholders, or ($0.06) per basic and diluted common share, for the same period of the prior year.
"We are pleased to deliver a quarter of strong profitability to our shareholders while improving capital ratios and reducing problem assets," said Ms. Joanne Kim, President and CEO of Wilshire Bancorp. "Our main focus remains on improving our credit quality. I believe that the strength of our core earnings will continue to allow us to take an aggressive approach in resolving problem assets."
THIRD QUARTER 2010 SUMMARY:
- Expanding net interest margin – At September 30, 2010, net interest margin increased 22 basis points from the prior quarter, and the same period the prior year.
- Increase in demand deposits– Although deposits decreased to $2.7 billion at September 30, 2010, from $2.9 billion at June 30, 2010, non-interest bearing demand deposits increased $25.5 million, or 6.0%, from the end of the prior quarter further improving the deposit mix.
- Decline in non-accrual loans – Non-accrual loans declined to $76.3 million, or 3.12% of gross loans, at September 30, 2010, from $83.1 million, or 3.38% of gross loans, at June 30, 2010.
- Decline in delinquent loans – Delinquent loans declined to $34.8 million, or 1.42% of gross loans, at September 30, 2010, from $37.0 million, or 1.50% of gross loans, at June 30, 2010.
- Increase in allowance for loan losses – The allowance for loan losses as a percentage of gross loans was strengthened to 4.04% at September 30, 2010 from 3.72% at June 30, 2010.
- Improved efficiency ratio – Efficiency ratio was improved to 37.21% at September 30, 2010 compared to 41.24% at June 30, 2010 and 40.26% at September 30, 2009.
- Strengthened capital position – Tangible common equity ratio (TCE) increased 48 basis points to 6.28% at September 30, 2010 from 5.80% at June 30, 2010.
CREDIT QUALITY
For the third quarter of 2010, the Company recorded a provision for losses on loans and loan commitments of $18.0 million compared to $32.2 million in the second quarter of 2010. The lower provision reflects reduced levels of non-accrual loans, delinquent loans, classified loans, and net charge-offs in the third quarter of 2010 relative to the second quarter of 2010.
The allowance for loan losses was increased to $99.0 million, or 4.04% of gross loans, on September 30, 2010, from $91.4 million, or 3.72% of gross loans, on June 30, 2010. Allowance for loan losses as a percentage of legacy Wilshire loans increased 33 basis points to 4.44% from 4.11% for the same period. The coverage ratio of allowance for loan losses to non-performing assets also increased to 106.88% at September 30, 2010 from 101.97% at June 30, 2010.
Non-accrual Loans
At September 30, 2010, total non-accrual loans totaled $76.3 million, or 3.12% of gross loans, compared to $83.1 million, or 3.38% of gross loans, at June 30, 2010. The decrease is primarily attributable to sales of non-performing loans. During the third quarter of 2010, the Company sold seven non-performing commercial real estate loans with an outstanding balance of approximately $18.1 million at an approximate 28.9% average weighted discount to their outstanding principal balance. These loans were primarily secured by gas station, hotel/motel, and shopping center properties. We will continue to look for similar opportunities to sell problem loans in the fourth quarter of 2010.
As previously disclosed, upon acquiring certain assets and liabilities of the former Mirae Bank, the Company entered into a loss sharing agreement with the FDIC whereby the FDIC has agreed to share in losses on assets covered under the agreement. The assets covered by the loss sharing agreement include loans and foreclosed loan collateral existing on June 26, 2009 and acquired from Mirae Bank. As a result, loans acquired through the acquisition of Mirae Bank are identified as "covered" loans, and those that were originated at Wilshire are "non-covered" loans or "legacy Wilshire" loans. The following is a table showing "covered" and "non-covered" non-accrual loans by loan type:
Loan Delinquencies
At September 30, 2010, total loan delinquencies decreased to $34.8 million from $37.0 million at June 30, 2010. As a percentage of gross loans, delinquencies declined to 1.42% at September 30, 2010 from 1.50% at June 30, 2010. The greatest decline occurred in 30-59 day delinquencies, which decreased from $21.3 million at June 30, 2010 to $15.3 million at September 30, 2010. Delinquencies by days past due and loan type are reflected in the tables below:
Loan Charge-offs
Net loan charge-offs for the third quarter of 2010 were $14.3 million, compared to $17.2 million in the second quarter of 2010. Approximately $2.4 million of the charge-offs in the third quarter of 2010 were related to the sale of non-performing loans discussed above. Charge-offs by loan type are reflected in the table below:
BALANCE SHEET
The Company implemented a strategy during the third quarter of 2010 in which it utilized cash and cash equivalents and the sale of low-yielding investment securities to reduce higher-costing money market and time deposit accounts to effectively lower the overall cost of funds.
As a result of this strategy, total assets declined to $3.23 billion at September 30, 2010, from $3.44 billion at June 30, 2010.
Total loans were $2.44 billion on September 30, 2010, compared to $2.46 billion on June, 2010. Total new loan originations were $112.9 million in the third quarter of 2010, compared to $186.1 million in the second quarter of 2010. SBA loans origination declined to $17.6 million at September 30, 2010 from $32.6 million at June 30, 2010. As of September 30, 2010, Wilshire State Bank was ranked 11th for 2010 total volume of originations of SBA loans nationwide out of over 2,500 banks according to the Small Business Administration statistics. The Bank intends to continue to focus on SBA loan originations and sales in future quarters.
Total deposits were $2.71 billion on September 30, 2010, down from $2.90 billion on June 30, 2010. The decline came from money market accounts and time deposits. This decline was partially offset by an increase of $25.5 million, or 6.0%, in non-interest bearing deposits. As a result of the change in deposit mix over the past year, core deposits represented 72.9% of total deposits at September 30, 2010, compared to 65.3% of total deposits at September 30, 2009. As part of the deposit mix strategy, the Bank will continue to focus on attracting more demand deposits while reducing higher cost time deposits and money market deposits in the fourth quarter of 2010.
During the third quarter of 2010, the Company sold $115.0 million in total investments for a realized gain of $2.6 million. A total of $139.0 million in investments matured or were called in the third quarter of 2010, of which $116.0 million were reinvested into similar securities. The portions that were not reinvested in the third quarter were used to fund outflows from higher interest deposit accounts.
Total OREOs increased by $9.5 million in the third quarter to $16.0 million from $6.5 million at the end of the second quarter of 2010. Covered OREOs at September 30, 2010 were $6.5 million and non-covered OREOs were $9.5 million. The increase in total OREOs was comprised of 14 loans that were transferred to OREO in the third quarter of 2010. The bulk of OREO at September 30, 2010 were hotel/motels and commercial or industrial buildings, together accounting for more than 59% of total OREOs.
Strong Capital Ratios
Capital ratios improved in the third quarter of 2010 and were well in excess of "well capitalized" regulatory requirements. Tangible common equity to tangible assets at September 30, 2010 was 6.28%, an increase of 48 basis points from 5.80% at June 30, 2010. This is a non-GAAP financial measure. Please refer to our financial statements below for a reconciliation of our non-GAAP financial measures to the most comparable GAAP measure.
STATEMENT OF OPERATIONS
Net interest Income and Margin
Net interest income was $29.7 million in the third quarter of 2010, compared to $29.2 million in the second quarter of 2010 and $29.4 million in the third quarter of 2009.
Net interest margin was 3.93% in the third quarter of 2010, compared to 3.71% in the second quarter of 2010 and 3.87% in the third quarter of 2009. The increase in net interest margin is primarily attributable to a lower cost of funds. The Company's total cost of funds declined to 1.24% in the third quarter of 2010 from 1.43% in the second quarter of 2010 and 2.04% for the third quarter of 2009.
Non-Interest Income
Non-interest income was $10.0 million in the third quarter of 2010, which was increased from both the previous quarter's non-interest income of $9.9 million and $7.4 million for the third quarter of 2009. The increase was primarily due to increases in gain on sale of securities and gain on sales of loans.
During the third quarter of 2010, the Company originated $17.6 million in SBA loans and sold approximately $19.6 million, compared to originations of $32.6 million and sales of $25.0 million in the third quarter of 2009.
Non-Interest Expense
Total non-interest expense was $14.8 million in the third quarter of 2010, unchanged from $14.8 million in the same period of the prior year. A 5% increase in salaries and employee benefits expense was offset by a 35% decrease in data processing costs.
Compared to the previous quarter, non-interest expense decreased 8% from $16.1 million on June 30, 2010. The decrease was primarily due to declines in legal fees and loan expenses in the third quarter.
The Company's efficiency ratio in the third quarter of 2010 was 37.21%, compared to 41.24% in the second quarter of 2010 and 40.26% in the third quarter of 2009.
CONFERENCE CALL
Management will host its quarterly conference call on October 26, 2010, at 11:00 a.m. PDT (2:00 p.m. EDT). Investment professionals are invited to participate in the call by dialing 866-783-2137 (domestic number) or857-350-1596 (international number) and entering passcode 95248568.
COMPANY INFORMATION
Headquartered in Los Angeles, Wilshire State Bank operates 24 branch offices in California, Texas, New Jersey and New York, and six loan production offices in Dallas, Houston, Atlanta, Denver, Annandale, Virginia, and Fort Lee, New Jersey, and is an SBA preferred lender nationwide. Wilshire State Bank is a community bank with a focus on commercial real estate lending and general commercial banking, with its primary market encompassing the multi-ethnic populations of the Los Angeles Metropolitan area. Wilshire Bancorp's strategic goals include increasing shareholder and franchise value by continuing to grow its multi-ethnic banking business and expanding its geographic reach to other similar markets with strong levels of small business activity.
FORWARD-LOOKING STATEMENTS
Statements concerning future performance, events, or any other guidance on future periods constitute forward-looking statements that are subject to a number of risks and uncertainties that might cause actual results to differ materially from stated expectations. Specific factors include, but are not limited to, loan production and sales, credit quality, the ability to expand net interest margin, the ability to continue to attract low-cost deposits, success of expansion efforts, competition in the marketplace and general economic conditions. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes included in Wilshire Bancorp's most recent reports on Form 10-K and Form 10-Q, as filed with the Securities and Exchange Commission, as they may be amended from time to time. Results of operations for the most recent quarter are not necessarily indicative of operating results for any future periods. Any projections in this release are based on limited information currently available to management and are subject to change. Since management will only provide guidance at certain points during the year, Wilshire Bancorp will not necessarily update the information. Such information speaks only as of the date of this release. Additional information on these and other factors that could affect financial results are included in filings by Wilshire Bancorp with the Securities and Exchange Commission.
CONTACT: Wilshire Bancorp, Inc. Joanne Kim, President & CEO (213) 639-1843 Alex Ko, EVP & CFO (213) 427-6560 www.wilshirebank.com