Exhibit 99.1
WILSHIRE BANCORP, INC.
CONTACT:
Alex Ko, EVP & CFO, (213) 427-6560
www.wilshirebank.com | 
| NEWS RELEASE |
Wilshire Bancorp Reports Net Income of $5.8 Million or
$0.08 Earnings per Share for Fourth Quarter 2011
LOS ANGELES, January 23, 2012 - Wilshire Bancorp, Inc. (NASDAQ: WIBC), the holding company (“the Company”) for Wilshire State Bank (“the Bank”), today reported net income available to common shareholders of $5.8 million, or $0.08 per diluted common share, for the quarter ended December 31, 2011. This compares to a net loss available to common shareholders of $40.3 million, or ($1.37) per diluted common share, for the same period of the prior year, and net income available to common shareholders of $10.2 million, or $0.14 per diluted common share, for the third quarter of 2011. The decrease in earnings per share from the third quarter of 2011 is attributable to a higher effective tax rate recorded in the fourth quarter of 2011.
Jae Whan (J.W.) Yoo, President and CEO of Wilshire Bancorp, said, “We are pleased to deliver another quarter of solid profitability, which was driven by improved efficiencies and lower credit costs. Compared to the third quarter of 2011, our pre-tax income increased 8%, which reflects the increasing strength in our core operations. We continue to make steady progress on improving our asset quality, which resulted in a 22% decline in non-accrual loans and a 68% decline in charge-offs compared to the prior quarter.
“Our focus for 2012 is to prudently increase our marketing efforts to resume the growth of our franchise. We are adding to our business development staff and re-engaging our markets with more active lending efforts, including re-opening three loan production offices in Georgia, Washington, and Northern California. We are optimistic that our increased loan production will generate higher levels of interest income and gains on sales of loans this year, which should enable us to further increase our level of profitability as we move through 2012,” said Mr. Yoo.
Q4 2011 Summary:
· Net income available to common shareholders of $5.8 million, or $0.08 per share
· Improvement in asset quality from Q3 2011 to Q4 2011 with a 22% decline in non-accrual loans and a 68% decline in charge-offs
· Operating efficiency ratio improved to 52.4% from 55.7% in Q3 2011
· Improved deposit mix with an overall increase in core deposits led by a 9% increase in non-interest bearing accounts
· Annualized return on average assets of 1.01% and return on average equity of 8.72%
· All capital ratios strengthened from prior quarter
STATEMENT OF OPERATIONS
Net Interest Income and Margin
Net interest income before provision for loan losses totaled $25.2 million in the fourth quarter of 2011, a decrease of 4% from $26.3 million in the fourth quarter of 2010, and a decrease of 1% from $25.5 million in the third quarter of 2011.
Net interest margin was 4.17% in the fourth quarter of 2011, compared to 3.72% in the fourth quarter of 2010 and 4.23% in the third quarter of 2011. The decrease in net interest margin for the fourth quarter of 2011 compared to the third quarter of 2011 was primarily due to the reduction in investment yields as a result of newly purchased investments at lower yields in combination with increased prepayment speeds on MBS securities.
Loan yields increased to 5.58% for the fourth quarter of 2011 from 5.54% for the third quarter of 2011 mainly due to the reduction in interest income reversals from non-accrual loans. Total non-accrual loan interest reversals declined to $430 thousand during the fourth quarter of 2011 compared to $812 thousand during the previous quarter. The total cost of deposits continued to decrease and was 0.80% for the fourth quarter of 2011, down from 0.83% for the third quarter of 2011 and down from 1.04% for the fourth quarter of 2010. The decrease from both periods was primarily due to an increase in non-interest bearing deposits.
Net interest margin for the twelve months ended December 31, 2011 was 4.34%, an increase of 58 basis points compared to 3.76% for the same period in 2010. Loan yield for the twelve months ended December 31, 2011 was 5.54%, down from 5.61% for the twelve months ended December 31, 2010. Total cost of interest bearing deposits was 1.07% for 2011 compared to 1.56% for 2010. The increase in net interest margin for the full year was largely the result of a reduction in cost of deposits and borrowings.
Non-Interest Income
Total non-interest income was $5.8 million for the quarter ended December 31, 2011, compared to $7.7 million for the previous quarter and $6.1 million for the quarter ended December 31, 2010. The decline in non-interest income from the prior quarter is primarily due to lower gains on sales of loans. The Company decided to retain all but a few of its SBA loans during the fourth quarter of 2011 and recognize interest income, which resulted in the lower gains on sales of loans. The $733 thousand in gains on sales of loans recognized in the fourth quarter of 2011 was attributable to gains on sales of commercial real estate (“CRE”) loans totaling $643 thousand and gains from mortgage and SBA loans totaling $70 thousand and $20 thousand, respectively.
Other non-interest income was $2.2 million for the quarter ended December 31, 2011, compared to $2.7 million in the previous quarter and $972 thousand for the fourth quarter of 2010. The decrease in other non-interest income from the previous quarter was primarily attributable to a reduction in miscellaneous income while the increase in other non-interest income from the fourth quarter of 2010 was a result of an increase in loan related servicing fees.
Non-Interest Expense
Total non-interest expense was $16.2 million for the fourth quarter of 2011, compared with $18.5 million for the prior quarter and $19.7 million for the fourth quarter of 2010. The decrease in total non-interest expense compared to both prior periods was primarily due to lower other non-interest expenses, as discussed below.
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Total salaries and employee benefits were $7.1 million in the fourth quarter of 2011, compared with $6.8 million in the prior quarter and $7.2 million in the fourth quarter of 2010. The increase from the prior quarter is primarily due to the winter incentive bonus that was awarded to employees during the fourth quarter of 2011.
Other non-interest expenses for the fourth quarter of 2011 totaled $6.5 million, compared with $9.0 million in the third quarter of 2011 and $9.8 million in the fourth quarter of 2010. The decrease in other non-interest expenses from the prior quarter and previous year was primarily attributable to lower expenses related to other real estate owned (“OREO”) and lower legal fees.
The Company’s operating efficiency ratio improved to 52.4% for the quarter ended December 31, 2011 from 55.7% for the quarter ended September 30, 2011 and 60.8% for the quarter ended December 31, 2010.
Tax Provision
For the fourth quarter of 2011 the Company recorded income tax provisions totaling $6.5 million on pretax income of $13.2 million representing a tax rate of 49.1%, compared to income tax provision of $1.1 million on pretax income of $12.2 million, representing an effective tax rate of 9.1% for the previous quarter. The quarter-to-quarter increase in tax provision was the result of discrete reversal of deferred tax assets related to net operating loss carryback due to higher than expected income, in addition to changes in other comprehensive income from unrealized gains on investment securities. The Company does not expect these non-recurring tax adjustments to impact tax provision in future quarters.
BALANCE SHEET
Total gross loans were $1.99 billion at December 31, 2011, compared to $2.00 billion at September 30, 2011. The $11.5 million decline in gross loans during the fourth quarter of 2011 was mostly due to the decrease in covered loans which declined $11.4 million compared to a decline of $117 thousand in non-covered legacy loans.
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 table shows “covered” and “non-covered” gross loans by loan type:
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Loan Categories
(Dollars In Thousands)
| | Quarter Ended | |
| | Dec 31, 2011 | | Sep 30, 2011 | | Jun 30, 2011 | | Mar 31, 2011 | | Dec 31, 2010 | |
Gross Non-Covered Loans | | | | | | | | | | | |
Construction | | $ | 61,832 | | $ | 58,988 | | $ | 70,304 | | $ | 74,538 | | $ | 72,258 | |
Real Estate Secured | | 1,490,504 | | 1,501,297 | | 1,548,559 | | 1,725,298 | | 1,757,328 | |
Commercial & Industrial | | 253,092 | | 244,248 | | 260,990 | | 274,392 | | 276,739 | |
Consumer | | 15,001 | | 16,013 | | 15,350 | | 14,587 | | 15,574 | |
Total Non-Covered Gross Loans | | $ | 1,820,429 | | $ | 1,820,546 | | $ | 1,895,203 | | $ | 2,088,815 | | $ | 2,121,899 | |
| | | | | | | | | | | |
Gross Covered Loans | | | | | | | | | | | |
Real Estate Secured | | $ | 137,144 | | $ | 143,719 | | $ | 154,020 | | $ | 154,655 | | $ | 159,699 | |
Commercial & Industrial | | 28,267 | | 33,103 | | 38,170 | | 45,024 | | 49,680 | |
Consumer | | 79 | | 86 | | 96 | | 104 | | 111 | |
Total Covered Gross Loans | | $ | 165,490 | | $ | 176,908 | | $ | 192,286 | | $ | 199,783 | | $ | 209,490 | |
| | | | | | | | | | | |
Total Gross Loans | | | | | | | | | | | |
Construction | | $ | 61,832 | | $ | 58,988 | | $ | 70,304 | | $ | 74,538 | | $ | 72,258 | |
Real Estate Secured | | 1,627,648 | | 1,645,016 | | 1,702,579 | | 1,879,953 | | 1,917,027 | |
Commercial & Industrial | | 281,359 | | 277,351 | | 299,160 | | 319,416 | | 326,419 | |
Consumer | | 15,080 | | 16,099 | | 15,446 | | 14,691 | | 15,685 | |
Total Gross Loans | | $ | 1,985,919 | | $ | 1,997,454 | | $ | 2,087,489 | | $ | 2,288,598 | | $ | 2,331,389 | |
Loan originations for the fourth quarter of 2011 totaled $109.6 million. This compares to total loan originations of $97.5 million for the third quarter of 2011 and $169.1 million for the fourth quarter of 2010. The increase in loan originations from the prior quarter was attributable to a greater emphasis on commercial and industrial and SBA loan production, in addition to higher loan demand.
The following table shows quarterly loan originations by loan type:
LOAN ORIGINATIONS (Dollars In Thousands)
| | Quarter Ended | |
| | Dec 31, 2011 | | Sep 30, 2011 | | Dec 31, 2010 | |
| | | | | | | | | | | | | |
Real Estate Secured | | $ | 22,608 | | 21 | % | $ | 24,493 | | 25 | % | $ | 85,601 | | 51 | % |
Commercial & Industrial | | 40,517 | | 37 | % | 22,049 | | 23 | % | 17,664 | | 11 | % |
Consumer | | 162 | | 0 | % | 1,510 | | 2 | % | 9,150 | | 5 | % |
SBA Loans | | 29,034 | | 26 | % | 20,746 | | 21 | % | 47,735 | | 28 | % |
Home Mortgage Loans | | 17,292 | | 16 | % | 28,736 | | 29 | % | 8,901 | | 5 | % |
Total Loan Originations | | $ | 109,613 | | 100 | % | $ | 97,534 | | 100 | % | $ | 169,051 | | 100 | % |
Total cash and cash equivalents increased 30% to $325.3 million at December 31, 2011, from $249.9 million at September 30, 2011 and increased 64% from $198.5 million at December 31, 2010. The increase was due to an inflow of deposits during the fourth quarter of 2011 which resulted in the placement of funds into short-term instruments on a temporary basis.
Total OREO was $8.2 million at December 31, 2011, compared with $9.3 million at September 30, 2011 and $15.0 million at December 31, 2010. Outflow from OREO in the fourth quarter of 2011 consisted of 10 sold properties totaling approximately $3.1 million. Inflow to OREO in the fourth quarter of 2011 consisted of 10 properties totaling approximately $3.5 million. The remaining decline in OREO during the fourth quarter was a result of write-downs in value of approximately $1.5 million.
Total deposits were $2.20 billion at December 31, 2011, an increase of 2% from $2.15 billion at September 30, 2011. The increase in total deposits was primarily driven by a 9% increase in non-interest bearing demand deposits, which represented 23.2% of total deposits at December 31, 2011 compared to 21.8% at September 31, 2011. During 2011, total deposits decreased from $2.46 billion at December 31, 2010 to $2.20 billion at December 31, 2011. The decrease of $258.6 million was the result of management’s planned action to reduce high cost deposits during the first half of 2011.
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During the fourth quarter of 2011, all of the Company’s net deferred tax assets decreased to zero as the Company moved the realizable net operating loss carrybacks from 2008 and 2009 to tax receivables. This transaction was a result of the Company’s request of tax refunds from the Internal Revenue Service. Now that the Company expects tax refunds in the amount of the deferred tax assets previously recorded, the amount has been transferred to income tax receivables included in other assets.
CREDIT QUALITY
The Company’s credit quality metrics continued to improve during the fourth quarter of 2011, highlighted by a 22% decrease in non-accrual loans and a 68% decrease in charge-offs compared to the prior quarter. As a result of the improved credit quality metrics, the Company’s provision for loan losses declined to $1.5 million for the fourth quarter of 2011, down from $2.5 million for the prior quarter and $83.6 million for the fourth quarter of 2010.
Despite the reduced provision for loan losses, the Company’s coverage ratios remained relatively stable from the end of the prior quarter. The allowance for loan losses totaled $103.0 million, or 5.19% of gross loans at December 31, 2011, compared to $105.3 million, or 5.27% of gross loans, at September 30, 2011. The coverage ratio of the allowance for loan losses to non-performing assets was 198% at December 31, 2011, compared with 160% at September 30, 2011. Allowance coverage of legacy Wilshire loans was 5.66% at December 31, 2011, compared with 5.78% at September 30, 2011.
Note Sales
The Company sold $21.3 million in held-for-sale CRE loans (excluding SBA or residential mortgage loans) during the fourth quarter of 2011. All of the loans were sold on an individual basis and had an average discount to their principal balance of 32.8%. Loans held-for-sale sold during the quarter were all non-accrual loans at the end of the third quarter of 2011. All of loans held-for-sale sold were previously marked down to their fair values during previous quarters. During the fourth quarter, the Bank was able to record a net gain on sale of loans totaling $733 thousand even with only $20 thousand in gains from SBA loan sales.
Non-Accrual Loans
At December 31, 2011, total non-covered non-accrual loans declined to $29.8 million, or 1.63% of gross non-covered loans, compared to $39.5 million, or 2.18% of non-covered loans, at September 30, 2011.
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The following table shows “covered” and “non-covered” non-accrual loans by loan type:
NON-ACCRUAL LOANS (Dollars In Thousands)
(Net of SBA Guaranteed Portions)
| | Quarter Ended | |
| | Dec 31, 2011 | | Sep 30, 2011 | | Jun 30, 2011 | | Mar 31, 2011 | | Dec 31, 2010 | |
Non-Covered Loans | | | | | | | | | | | |
Construction | | $ | 12,548 | | $ | 316 | | $ | 12,000 | | $ | — | | $ | — | |
Real Estate Secured | | 15,696 | | 37,454 | | 46,447 | | 60,363 | | 59,571 | |
Commercial & Industrial | | 1,573 | | 1,764 | | 808 | | 1,695 | | 1,284 | |
Consumer | | — | | — | | 144 | | 11 | | 27 | |
Total Non-Covered Non-Accrual Loans | | $ | 29,817 | | $ | 39,534 | | $ | 59,399 | | $ | 62,069 | | $ | 60,882 | |
| | | | | | | | | | | |
Covered Loans | | | | | | | | | | | |
Real Estate Secured | | $ | 13,392 | | $ | 15,322 | | $ | 16,392 | | $ | 16,269 | | $ | 8,005 | |
Commercial & Industrial | | 623 | | 1,609 | | 2,151 | | 1,795 | | 2,345 | |
Total Covered Non-Accrual Loans | | $ | 14,015 | | $ | 16,931 | | $ | 18,543 | | $ | 18,064 | | $ | 10,350 | |
| | | | | | | | | | | |
Total Non-Accrual Loans | | | | | | | | | | | |
Construction | | $ | 12,548 | | $ | 316 | | $ | 12,000 | | $ | — | | $ | — | |
Real Estate Secured | | 29,088 | | 52,776 | | 62,839 | | 76,632 | | 67,576 | |
Commercial & Industrial | | 2,196 | | 3,373 | | 2,959 | | 3,490 | | 3,629 | |
Consumer | | — | | — | | 144 | | 11 | | 27 | |
Total Non-Accrual Loans | | $ | 43,832 | | $ | 56,465 | | $ | 77,942 | | $ | 80,133 | | $ | 71,232 | |
The decrease in non-accrual loans is attributable to the sale of $21.3 million of non-accrual loans in addition to a decline in inflows into non-accrual status. Total allowance as a percentage of legacy non-accrual loans increased from 266% at the end of the third quarter of 2011 to 345% at the end of the fourth quarter of 2011.
The inflow into total (covered and non-covered) non-accrual loans was $17.9 million in the fourth quarter of 2011, a slight increase from inflow of $17.1 million in the third quarter of 2011. Total outflow from total non-accrual loans was $30.5 million in the fourth quarter of 2011, compared with $38.6 million in the third quarter of 2011.
Impaired Loans
Loans are classified as impaired when based on current information, it is probable that the Company will not be able to collect all principal and interest payments due in accordance with the terms of the loan. Non-covered impaired loans at December 31, 2011 totaled $54.7 million, compared with $65.7 million at September 30, 2011. The decrease in impaired loans during the fourth quarter of 2011 is largely attributable to note sales. Total inflows into impaired loans were $19.2 million in the fourth quarter of 2011, compared to $18.2 million in the third quarter of 2011.
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Total impaired loans by loan category are shown in the table below:
IMPAIRED LOANS (Dollars In Thousands)
(Net of SBA Guaranteed Portions)
| | Quarter Ended | |
| | Dec 31, 2011 | | Sep 30, 2011 | | Jun 30, 2011 | | Mar 31, 2011 | | Dec 31, 2010 | |
Non-Covered Loans | | | | | | | | | | | |
Construction | | $ | 12,548 | | $ | 316 | | $ | 12,000 | | $ | — | | $ | — | |
Real Estate Secured | | 37,424 | | 60,365 | | 74,845 | | 149,402 | | 93,452 | |
Commercial & Industrial | | 4,754 | | 4,978 | | 4,216 | | 5,456 | | 5,649 | |
Consumer | | — | | — | | 136 | | — | | 27 | |
Total Non-Covered Impaired Loans | | $ | 54,726 | | $ | 65,659 | | $ | 91,197 | | $ | 154,858 | | $ | 99,128 | |
| | | | | | | | | | | |
Covered Loans | | | | | | | | | | | |
Real Estate Secured | | $ | 14,175 | | $ | 16,169 | | $ | 19,236 | | $ | 18,256 | | $ | 15,120 | |
Commercial & Industrial | | 1,718 | | 2,380 | | 2,922 | | 3,332 | | 4,216 | |
Total Covered Impaired Loans | | $ | 15,893 | | $ | 18,549 | | $ | 22,158 | | $ | 21,588 | | $ | 19,336 | |
| | | | | | | | | | | |
Total Impaired Loans | | | | | | | | | | | |
Construction | | $ | 12,548 | | $ | 316 | | $ | 12,000 | | $ | — | | $ | — | |
Real Estate Secured | | 51,599 | | 76,534 | | 94,081 | | 167,658 | | 108,572 | |
Commercial & Industrial | | 6,472 | | 7,358 | | 7,138 | | 8,788 | | 9,865 | |
Consumer | | — | | — | | 136 | | — | | 27 | |
Total Impaired Loans | | $ | 70,619 | | $ | 84,208 | | $ | 113,355 | | $ | 176,446 | | $ | 118,464 | |
Troubled Debt Restructured Loans
At December 31, 2011, total non-covered troubled debt restructured loans or “TDR loans”, were $14.7 million, compared to $13.1 million at September 30, 2011. The increase from the prior quarter was due to a modest increase in the number of requests for loan modifications, combined with a lower level of TDR note sales.
Total TDR loans by loan category are shown in the table below:
TROUBLED DEBT RESTRUCTURED LOANS (Dollars In Thousands)
(net of SBA guaranteed portions)
| | Quarter Ended | |
| | Dec 31, 2011 | | Sep 30, 2011 | | Jun 30, 2011 | | Mar 31, 2011 | | Dec 31, 2010 | |
Non-Covered Loans | | | | | | | | | | | |
Real Estate Secured | | $ | 11,460 | | $ | 10,568 | | $ | 18,733 | | $ | 31,540 | | $ | 36,187 | |
Commercial & Industrial | | 3,235 | | 2,538 | | 3,529 | | 4,117 | | 3,574 | |
Total Non-Covered TDR Loans | | $ | 14,695 | | $ | 13,106 | | $ | 22,262 | | $ | 35,657 | | $ | 39,761 | |
| | | | | | | | | | | |
Covered Loans | | | | | | | | | | | |
Real Estate Secured | | $ | 6,377 | | $ | 6,493 | | $ | 8,518 | | $ | 7,676 | | $ | 7,115 | |
Commercial & Industrial | | 1,311 | | 1,429 | | 1,473 | | 1,844 | | 1,870 | |
Total Covered TDR Loans | | $ | 7,688 | | $ | 7,922 | | $ | 9,991 | | $ | 9,520 | | $ | 8,985 | |
| | | | | | | | | | | |
Total TDRs Loans | | | | | | | | | | | |
Real Estate Secured | | $ | 17,837 | | $ | 17,061 | | $ | 27,251 | | $ | 39,216 | | $ | 43,302 | |
Commercial & Industrial | | 4,546 | | 3,967 | | 5,002 | | 5,961 | | 5,444 | |
Total TDR Loans | | $ | 22,383 | | $ | 21,028 | | $ | 32,253 | | $ | 45,177 | | $ | 48,746 | |
Of the total $22.4 million in TDR loans at December 31, 2011, $7.3 million in TDR loans were also classified as non-accrual, of which $1.5 million was non-covered. The remaining TDR loans were performing in accordance with their modified terms.
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Loan Delinquencies (Excluding Non-Accrual Loans)
At December 31, 2011, total non-covered loan delinquencies were $14.7 million, compared with $7.3 million at September 30, 2011. The increase in delinquencies was primarily attributable to one CRE participation loan totaling $8.3 million. Excluding this participation loan, total inflow into loan delinquencies was $5.4 million in the fourth quarter of 2011, compared with $4.3 million in the prior quarter.
Delinquent loans by days past due are reflected in the table below:
DELINQUENT LOANS - By Days Past Due (Dollars In Thousands)
(Net of SBA Guaranteed Portions)
| | Quarter Ended | |
| | Dec 31, 2011 | | Sep 30, 2011 | | Jun 30, 2011 | | Mar 31, 2011 | | Dec 31, 2010 | |
Non-Covered Loans | | | | | | | | | | | |
30 - 59 Days Past Due | | $ | 4,890 | | $ | 4,146 | | $ | 11,782 | | $ | 8,680 | | $ | 15,641 | |
60 - 89 Days Past Due | | 9,762 | | 2,963 | | 16,594 | | 26,389 | | 11,007 | |
90 Days, and still accruing | | — | | 190 | | — | | — | | — | |
Total Non-Covered Delinquent Loans | | $ | 14,652 | | $ | 7,299 | | $ | 28,376 | | $ | 35,069 | | $ | 26,648 | |
| | | | | | | | | | | |
Covered Loans | | | | | | | | | | | |
30 - 59 Days Past Due | | $ | 355 | | $ | 572 | | $ | 3,303 | | $ | 5,166 | | $ | 4,254 | |
60 - 89 Days Past Due | | 513 | | 186 | | 1,227 | | 968 | | 3,566 | |
90 Days, and still accruing | | — | | — | | — | | — | | — | |
Total Covered Delinquent Loans | | $ | 868 | | $ | 758 | | $ | 4,530 | | $ | 6,134 | | $ | 7,820 | |
| | | | | | | | | | | |
Total Delinquent Loans | | | | | | | | | | | |
30 - 59 Days Past Due | | $ | 5,245 | | $ | 4,718 | | $ | 15,085 | | $ | 13,846 | | $ | 19,895 | |
60 - 89 Days Past Due | | 10,275 | | 3,149 | | 17,821 | | 27,357 | | 14,573 | |
90 Days, and still accruing | | — | | 190 | | — | | — | | — | |
Total Delinquent Loans | | $ | 15,520 | | $ | 8,057 | | $ | 32,906 | | $ | 41,203 | | $ | 34,468 | |
Of the total $15.5 million in delinquent loans at December 31, 2011, $13.0 million was made up of delinquent real estate secured loans and $2.5 million consisted of delinquent commercial and industrial loans.
Loan Classifications
At December 31, 2011, total non-covered classified loans (loans graded substandard, doubtful, and loss) were $142.3 million, compared with $123.5 million at September 30, 2011. Non-covered criticized loans (loans graded special mention) were $119.4 million at December 31, 2011, compared with $159.2 million at September 30, 2011.
The increase in non-covered classified loans was primarily due to the downgrading of several loans from special mention to substandard during the fourth quarter of 2011. The downgrades were primarily due to decreases in cash flows at the underlying businesses.
The Company’s ratio of legacy classified assets to Tier 1 capital plus reserves percentage was 32.2% at December 31, 2011. The requirement for the legacy classified assets to Tier 1 capital plus reserves ratio for the Bank stated in the memorandum of understanding (“MOU”) with its regulators is a maximum of 50.0%, with which the Bank is in compliance.
Loan balances broken down by classification are reflected in the table below:
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LOAN CLASSIFICATIONS (Dollars In Thousands)
| | Quarter Ended | |
| | Dec 31, 2011 | | Sep 30, 2011 | | Jun 30, 2011 | | Mar 31, 2011 | | Dec 31, 2010 | |
Non-Covered Loans | | | | | | | | | | | |
Special Mention | | $ | 119,434 | | $ | 159,248 | | $ | 156,249 | | $ | 180,656 | | $ | 102,990 | |
Substandard | | 136,559 | | 108,616 | | 140,645 | | 207,422 | | 216,283 | |
Doubtful | | 5,769 | | 14,911 | | 17,367 | | 10,231 | | 11,306 | |
Total Non-Covered Gross Loans | | $ | 261,762 | | $ | 282,775 | | $ | 314,261 | | $ | 398,309 | | $ | 330,579 | |
| | | | | | | | | | | |
Covered Loans | | | | | | | | | | | |
Special Mention | | $ | 17,438 | | $ | 14,342 | | $ | 12,639 | | $ | 20,554 | | $ | 15,618 | |
Substandard | | 22,487 | | 25,180 | | 35,006 | | 31,755 | | 30,836 | |
Doubtful | | 10,578 | | 8,511 | | 5,806 | | 2,112 | | 2,921 | |
Total Covered Gross Loans | | $ | 50,503 | | $ | 48,033 | | $ | 53,451 | | $ | 54,421 | | $ | 49,375 | |
| | | | | | | | | | | |
Total Loans | | | | | | | | | | | |
Special Mention | | $ | 136,872 | | $ | 173,590 | | $ | 168,888 | | $ | 201,210 | | $ | 118,608 | |
Substandard | | 159,046 | | 133,796 | | 175,651 | | 239,177 | | 247,119 | |
Doubtful | | 16,347 | | 23,422 | | 23,173 | | 12,343 | | 14,227 | |
Total Gross Loans | | $ | 312,265 | | $ | 330,808 | | $ | 367,712 | | $ | 452,730 | | $ | 379,954 | |
Loan Charge-offs
Non-covered loan charge-offs for the fourth quarter of 2011 totaled $3.4 million, compared to $11.7 million in the third quarter of 2011. The decline in charge-offs reflects the overall improvement in the quality of the loan portfolio following the Company’s efforts to reduce its level of problem loans over the past several quarters.
Charge-offs by loan type is reflected in the table below:
LOAN CHARGE-OFFS (Dollars In Thousands)
| | Quarter Ended | |
| | Dec 31, 2011 | | Sep 30, 2011 | | Jun 30, 2011 | | Mar 31, 2011 | | Dec 31, 2010 | |
Non-Covered Loans | | | | | | | | | | | |
Construction | | $ | — | | $ | — | | $ | 3,000 | | $ | 805 | | $ | 401 | |
Real Estate Secured | | 829 | | 8,507 | | 9,012 | | 39,062 | | 60,317 | |
Commercial & Industrial | | 2,543 | | 2,973 | | 2,185 | | 1,151 | | 10,487 | |
Consumer | | 1 | | 217 | | 9 | | 19 | | 14 | |
Total Non-Covered Charge-Offs Loans | | $ | 3,373 | | $ | 11,697 | | $ | 14,206 | | $ | 41,037 | | $ | 71,219 | |
| | | | | | | | | | | |
Covered Loans | | | | | | | | | | | |
Real Estate Secured | | 426 | | 436 | | 16 | | 171 | | 252 | |
Commercial & Industrial | | 268 | | 384 | | (48 | ) | 489 | | 431 | |
Total Covered Charge-Offs Loans | | $ | 694 | | $ | 820 | | $ | (32 | ) | $ | 660 | | $ | 683 | |
| | | | | | | | | | | |
Total Loan Charge-Offs | | | | | | | | | | | |
Construction | | $ | — | | $ | — | | $ | 3,000 | | $ | 805 | | $ | 401 | |
Real Estate Secured | | 1,255 | | 8,943 | | 9,028 | | 39,233 | | 60,569 | |
Commercial & Industrial | | 2,811 | | 3,357 | | 2,137 | | 1,640 | | 10,918 | |
Consumer | | 1 | | 217 | | 9 | | 19 | | 14 | |
Total Charge-Offs Loans | | $ | 4,067 | | $ | 12,517 | | $ | 14,174 | | $ | 41,697 | | $ | 71,902 | |
Capital Ratios
As of December 31, 2011, the Company’s Tier 1 Leverage ratio was 13.86%. The minimum required Tier 1 capital ratio for the Bank stated in the MOU is 10%, with which the Bank is in compliance.
9
In addition, all of the Company’s capital ratios remain in excess of “well capitalized” regulatory requirements as shown in the following table:
(Dollars In thousands, except per share info) | | Dec 31, 2011 | | Well Capitalized
Regulatory
Requirements | | Total Excess Above
Well Capitalized
Requirements | |
| | | | | | | |
Tier 1 Leverage Capital Ratio | | 13.86 | % | 5.00 | % | $ | 235,961 | |
Tier 1 Risk-Based Capital Ratio | | 19.59 | % | 6.00 | % | 255,993 | |
Total Risk-Based Capital Ratio | | 20.89 | % | 10.00 | % | 205,212 | |
Tangible Common Equity To Tangible Assets | | 8.95 | % | N/A | | N/A | |
Tangible Common Equity Per Common Share | | $ | 3.37 | | N/A | | N/A | |
| | | | | | | | | |
CONFERENCE CALL
Management will host its quarterly conference call on January 24, 2012, at 11:00 a.m. PT (2:00 p.m. ET). Investment professionals are invited to participate in the call by dialing 866-713-8307 (domestic number) or 617-597-5307 (international number) and entering passcode #86489960.
COMPANY INFORMATION
Headquartered in Los Angeles, Wilshire State Bank operates 24 branch offices in California, Texas, New Jersey and New York, and eight loan production offices in Dallas and Houston, TX, Atlanta, GA, Aurora, CO, Annandale, VA, Fort Lee, NJ, Newark, CA, and Bellevue, WA, 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. The Company’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. Visit us at www.wilshirebank.com.
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 the Company’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, the Company’s 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 the Company’s with the Securities and Exchange Commission.
10
CONSOLIDATED BALANCE SHEET
(dollars in thousands) (unaudited)
| | December 31, | | September 30, | | Three Months | | December 31, | | Twelve Months | |
| | 2011 | | 2011 | | % Change | | 2010 | | % Change | |
ASSETS: | | | | | | | | | | | |
Cash and Due from Banks | | $ | 155,245 | | $ | 99,875 | | 55 | % | $ | 68,530 | | 127 | % |
Federal Funds Sold and Other Cash Equivalents | | 170,005 | | 150,005 | | 13 | % | 130,005 | | 31 | % |
Total Cash and Cash Equivalents | | 325,250 | | 249,880 | | 30 | % | 198,535 | | 64 | % |
| | | | | | | | | | | |
Investment Securities Available For Sale | | 320,064 | | 356,148 | | -10 | % | 316,623 | | 1 | % |
Investment Securities Held To Maturity | | 66 | | 70 | | -6 | % | 85 | | -22 | % |
Total Investment Securities | | 320,130 | | 356,218 | | -10 | % | 316,708 | | 1 | % |
| | | | | | | | | | | |
Loans: | | | | | | | | | | | |
Loans Held For Sale | | 53,814 | | 70,652 | | -24 | % | 17,098 | | 215 | % |
| | | | | | | | | | | |
Real Estate Construction | | 61,213 | | 58,275 | | 5 | % | 71,596 | | -15 | % |
Residential Real Estate | | 98,262 | | 94,591 | | 4 | % | 92,901 | | 6 | % |
Commercial Real Estate | | 1,478,254 | | 1,478,281 | | 0 | % | 1,804,731 | | -18 | % |
Commercial and Industrial | | 274,878 | | 274,469 | | 0 | % | 324,627 | | -15 | % |
Consumer | | 15,065 | | 16,082 | | -6 | % | 15,671 | | -4 | % |
Total Loans Receivable | | 1,927,672 | | 1,921,698 | | 0 | % | 2,309,526 | | -17 | % |
Allowance For Loan Losses | | (102,982 | ) | (105,306 | ) | -2 | % | (110,953 | ) | -7 | % |
Total Loans, Net of Allowance for Loan Losses | | 1,878,504 | | 1,887,044 | | 0 | % | 2,215,671 | | -15 | % |
| | | | | | | | | | | |
Accrued Interest Receivable | | 8,118 | | 7,739 | | 5 | % | 10,581 | | -23 | % |
Due from Customers on Acceptances | | 414 | | 255 | | 62 | % | 368 | | 13 | % |
Other Real Estate Owned | | 8,221 | | 9,284 | | -11 | % | 14,983 | | -45 | % |
Premises and Equipment | | 12,612 | | 13,053 | | -3 | % | 13,330 | | -5 | % |
Federal Home Loan Bank (FHLB) Stock, at Cost | | 15,523 | | 16,276 | | -5 | % | 18,531 | | -16 | % |
Cash Surrender Value of Life Insurance | | 19,888 | | 19,735 | | 1 | % | 18,663 | | 7 | % |
Investment in affordable housing partnerships | | 37,676 | | 33,147 | | 14 | % | 28,186 | | 34 | % |
Deferred Income Taxes | | — | | 17,143 | | -100 | % | 46,357 | | -100 | % |
Servicing Assets | | 8,798 | | 9,052 | | -3 | % | 7,331 | | 20 | % |
Goodwill | | 6,675 | | 6,675 | | 0 | % | 6,675 | | 0 | % |
FDIC Indemnification | | 21,922 | | 23,481 | | -7 | % | 28,525 | | -23 | % |
Other Assets | | 33,123 | | 31,736 | | 4 | % | 46,081 | | -28 | % |
TOTAL ASSETS | | $ | 2,696,854 | | $ | 2,680,718 | | 1 | % | $ | 2,970,525 | | -9 | % |
| | | | | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY: | | | | | | | | | | | |
| | | | | | | | | | | |
LIABILITIES: | | | | | | | | | | | |
Non-interest Bearing Demand Deposits | | $ | 511,467 | | $ | 468,596 | | 9 | % | $ | 467,067 | | 10 | % |
Savings and Interest Checking | | 123,051 | | 116,044 | | 6 | % | 106,115 | | 16 | % |
Money Market Deposits | | 572,452 | | 551,152 | | 4 | % | 669,486 | | -14 | % |
Time Deposits in denomination of $100,000 or more | | 647,537 | | 656,847 | | -1 | % | 699,503 | | -7 | % |
Other Time Deposits | | 347,802 | | 356,875 | | -3 | % | 518,769 | | -33 | % |
Total Deposits | | 2,202,309 | | 2,149,514 | | 2 | % | 2,460,940 | | -11 | % |
| | | | | | | | | | | |
FHLB borrowings and Federal Funds Purchased | | 60,000 | | 110,000 | | -45 | % | 158,011 | | -62 | % |
Acceptance Outstanding | | 414 | | 255 | | 62 | % | 368 | | 13 | % |
Junior Subordinated Debentures | | 87,321 | | 87,321 | | 0 | % | 87,321 | | 0 | % |
Accrued Interest Payable | | 3,281 | | 2,728 | | 20 | % | 4,092 | | -20 | % |
Other Liabilities | | 33,947 | | 29,059 | | 17 | % | 30,631 | | 11 | % |
Total Liabilities | | 2,387,272 | | 2,378,877 | | 0 | % | 2,741,363 | | -13 | % |
| | | | | | | | | | | |
STOCKHOLDERS’ EQUITY: | | | | | | | | | | | |
Preferred Stock | | 61,000 | | 60,859 | | 0 | % | 60,450 | | 1 | % |
Common Stock | | 164,711 | | 164,650 | | 0 | % | 55,601 | | 196 | % |
Retained Earnings | | 77,110 | | 71,292 | | 8 | % | 111,099 | | -31 | % |
Accumulated Other Comprehensive Income | | 6,761 | | 5,040 | | 34 | % | 2,012 | | 236 | % |
Total Stockholders’ Equity | | 309,582 | | 301,841 | | 3 | % | 229,162 | | 35 | % |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | $ | 2,696,854 | | $ | 2,680,718 | | 1 | % | $ | 2,970,525 | | -9 | % |
(continued)
11
CONSOLIDATED STATEMENT OF OPERATIONS
(dollars in thousands, except per share data) (unaudited)
| | Quarter Ended | | | | Quarter Ended | | | |
| | December 31, 2011 | | September 30, 2011 | | % Change | | December 31, 2010 | | % Change | |
| | | | | | | | | | | |
INTEREST INCOME | | | | | | | | | | | |
Interest and Fees on Loans | | $ | 28,512 | | $ | 28,966 | | -2 | % | $ | 32,193 | | -11 | % |
Interest on Investment Securities | | 1,387 | | 1,651 | | -16 | % | 1,551 | | -11 | % |
Interest on Federal Funds Sold | | 486 | | 340 | | 43 | % | 476 | | 2 | % |
Total Interest Income | | 30,385 | | 30,957 | | -2 | % | 34,220 | | -11 | % |
| | | | | | | | | | | |
INTEREST EXPENSE | | | | | | | | | | | |
Deposits | | 4,307 | | 4,461 | | -3 | % | 6,758 | | -36 | % |
FHLB Advances and Other Borrowings | | 857 | | 974 | | -12 | % | 1,194 | | -28 | % |
Total Interest Expense | | 5,164 | | 5,435 | | -5 | % | 7,952 | | -35 | % |
| | | | | | | | | | | |
Net Interest Income Before Provision for Losses on Loans and Loan Commitments | | 25,221 | | 25,522 | | -1 | % | 26,268 | | -4 | % |
Provision for Losses on Loans and Loan Commitments | | 1,500 | | 2,500 | | -40 | % | 83,600 | | -98 | % |
Net Interest Income (Loss) After Provision for Losses on Loans and Loan Commitments | | 23,721 | | 23,022 | | 3 | % | (57,332 | ) | -141 | % |
| | | | | | | | | | | |
NONINTEREST INCOME | | | | | | | | | | | |
Service Charges on Deposits | | 3,152 | | 3,189 | | -1 | % | 3,034 | | 4 | % |
Loans Held For Sale Valuation | | (366 | ) | (394 | ) | -7 | % | — | | 0 | % |
Gain on Sales of Loans, Net | | 733 | | 2,143 | | -66 | % | 2,059 | | -64 | % |
Gain on Sale of Investment Securities | | 4 | | 52 | | -92 | % | 40 | | -90 | % |
Other | | 2,234 | | 2,669 | | -16 | % | 972 | | 130 | % |
Total Noninterest Income | | 5,757 | | 7,659 | | -25 | % | 6,105 | | -6 | % |
| | | | | | | | | | | |
NONINTEREST EXPENSES | | | | | | | | | | | |
Salaries and Employee Benefits | | 7,144 | | 6,827 | | 5 | % | 7,217 | | -1 | % |
Occupancy & Equipment | | 1,894 | | 1,899 | | 0 | % | 1,936 | | -2 | % |
Data Processing | | 697 | | 710 | | -2 | % | 692 | | 1 | % |
Other | | 6,504 | | 9,031 | | -28 | % | 9,838 | | -34 | % |
Total Noninterest Expenses | | 16,239 | | 18,467 | | -12 | % | 19,683 | | -17 | % |
| | | | | | | | | | | |
Income (Loss) Before Income Taxes | | 13,239 | | 12,214 | | 8 | % | (70,910 | ) | -119 | % |
Income Taxes Provision (Benefit) | | 6,503 | | 1,112 | | 485 | % | (31,521 | ) | -121 | % |
NET INCOME (LOSS) | | $ | 6,736 | | $ | 11,102 | | -39 | % | $ | (39,389 | ) | -117 | % |
| | | | | | | | | | | |
Preferred Stock Cash Dividend and Accretion of Preferred Stock Discount | | 918 | | 916 | | 0 | % | 910 | | 1 | % |
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | | $ | 5,818 | | $ | 10,186 | | -43 | % | $ | (40,299 | ) | -114 | % |
| | | | | | | | | | | |
PER COMMON SHARE INFORMATION | | | | | | | | | | | |
Basic Income (Loss) Per Common Share | | $ | 0.08 | | $ | 0.14 | | -43 | % | $ | (1.37 | ) | -106 | % |
Diluted Income (Loss) Per Common Share | | $ | 0.08 | | $ | 0.14 | | -43 | % | $ | (1.37 | ) | -106 | % |
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING: | | | | | | | | | | | |
Basic | | 71,291,614 | | 71,291,614 | | | | 29,486,635 | | | |
Diluted | | 71,309,985 | | 71,306,813 | | | | 29,486,635 | | | |
(continued)
12
CONSOLIDATED STATEMENT OF OPERATIONS
(dollars in thousands, except per share data) (unaudited)
| | Twelve Months Ended | | | |
| | December 31, 2011 | | December 31, 2010 | | % Change | |
| | | | | | | |
INTEREST INCOME | | | | | | | |
Interest and Fees on Loans | | $ | 121,707 | | $ | 140,028 | | -13 | % |
Interest on Investment Securities | | 7,177 | | 14,726 | | -51 | % |
Interest on Federal Funds Sold | | 1,080 | | 1,666 | | -35 | % |
Total Interest Income | | 129,964 | | 156,420 | | -17 | % |
| | | | | | | |
INTEREST EXPENSE | | | | | | | |
Deposits | | 18,541 | | 37,096 | | -50 | % |
FHLB Advances and Other Borrowings | | 4,048 | | 5,608 | | -28 | % |
Total Interest Expense | | 22,589 | | 42,704 | | -47 | % |
| | | | | | | |
Net Interest Income Before Provision for Losses on Loans and Loan Commitments | | 107,375 | | 113,716 | | -6 | % |
Provision for Losses on Loans and Loan Commitments | | 59,100 | | 150,800 | | -61 | % |
Net Interest Income (Loss) After Provision for Losses on Loans and Loan Commitments | | 48,275 | | (37,084 | ) | -230 | % |
| | | | | | | |
NONINTEREST INCOME | | | | | | | |
Service Charges on Deposits | | 12,570 | | 12,545 | | 0 | % |
Loans Held For Sale Valuation | | (3,084 | ) | — | | 0 | % |
Gain on Sales of Loans | | 5,186 | | 6,261 | | -17 | % |
Gain on Sale of Investment Securities | | 99 | | 8,782 | | -99 | % |
Other | | 9,034 | | 8,324 | | 9 | % |
Total Noninterest Income | | 23,805 | | 35,912 | | -34 | % |
| | | | | | | |
NONINTEREST EXPENSES | | | | | | | |
Salaries and Employee Benefits | | 28,540 | | 29,074 | | -2 | % |
Occupancy & Equipment | | 7,826 | | 7,984 | | -2 | % |
Data Processing | | 2,892 | | 2,721 | | 6 | % |
Other | | 29,527 | | 27,597 | | 7 | % |
Total Noninterest Expenses | | 68,785 | | 67,376 | | 2 | % |
| | | | | | | |
Income (Loss) Before Income Taxes | | 3,295 | | (68,548 | ) | -105 | % |
Income Taxes Provision (Benefit) | | 33,625 | | (33,790 | ) | -200 | % |
NET LOSS | | $ | (30,330) | | $ | (34,758 | ) | -13 | % |
| | | | | | | |
Preferred Stock Cash Dividend and Accretion of Preferred Stock Discount | | 3,658 | | 3,626 | | 1 | % |
NET LOSS TO COMMON SHAREHOLDERS | | $ | (33,988) | | $ | (38,384 | ) | -11 | % |
| | | | | | | |
PER COMMON SHARE INFORMATION | | | | | | | |
Basic Loss Per Common Share | | $ | (0.61 | ) | $ | (1.30 | ) | -53 | % |
Diluted Loss Per Common Share | | $ | (0.61 | ) | $ | (1.30 | ) | -53 | % |
| | | | | | | |
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING: | | | | | | | |
Basic | | 55,710,427 | | 29,486,351 | | | |
Diluted | | 55,710,427 | | 29,486,351 | | | |
(continued)
13
SUMMARY OF FINANCIAL DATA
(dollars in thousands, except per share data) (unaudited)
| | Quarter Ended | |
AVERAGE BALANCES | | December 31, 2011 | | September 30, 2011 | | December 31, 2010 | |
| | | | | | | |
Average Assets | | $ | 2,678,357 | | $ | 2,687,448 | | $ | 3,135,483 | |
Average Equity | | 308,948 | | 298,323 | | 272,003 | |
Average Net Loans | | 1,868,385 | | 1,926,310 | | 2,332,921 | |
Average Deposits | | 2,145,128 | | 2,154,234 | | 2,594,300 | |
Average Time Deposits in denomination of $100,000 or more | | 655,022 | | 650,453 | | 717,362 | |
Average Interest Earning Assets | | 2,439,374 | | 2,437,040 | | 2,846,537 | |
| | | | | | | | | | |
| | Twelve Months Ended | |
AVERAGE BALANCES | | December 31, 2011 | | | | December 31, 2010 | |
| | | | | | | |
Average Assets | | $ | 2,758,788 | | | | $ | 3,343,413 | |
Average Equity | | 264,666 | | | | 273,896 | |
Average Net Loans | | 2,020,036 | | | | 2,358,149 | |
Average Deposits | | 2,202,445 | | | | 2,806,832 | |
Average Time Deposits in denomination of $100,000 or more | | 658,862 | | | | 745,139 | |
Average Interest Earning Assets | | 2,498,025 | | | | 3,055,609 | |
| | | | | | | | | |
| | Quarter Ended | |
PROFITABILITY | | December 31, 2011 | | September 30, 2011 | | December 31, 2010 | |
| | | | | | | |
Annualized Return on Average Assets | | 1.01 | % | 1.65 | % | -5.02 | % |
Annualized Return on Average Equity | | 8.72 | % | 14.89 | % | -57.92 | % |
Efficiency Ratio | | 52.42 | % | 55.66 | % | 60.80 | % |
Annualized Operating Expense/Average Assets | | 2.43 | % | 2.75 | % | 2.51 | % |
Annualized Net Interest Margin | | 4.17 | % | 4.23 | % | 3.72 | % |
| | Twelve Months Ended | |
PROFITABILITY | | December 31, 2011 | | | | December 31, 2010 | |
| | | | | | | |
Annualized Return on Average Assets | | -1.10 | % | | | -1.04 | % |
Annualized Return on Average Equity | | -11.46 | % | | | -12.69 | % |
Efficiency Ratio | | 52.44 | % | | | 45.03 | % |
Annualized Operating Expense/Average Assets | | 2.49 | % | | | 2.02 | % |
Annualized Net Interest Margin | | 4.34 | % | | | 3.76 | % |
| | As Of | |
DEPOSIT COMPOSITION | | December 31, 2011 | | Fund | | September 30, 2011 | | Fund | | December 31, 2010 | | Fund | |
| | | | | | | | | | | | | |
Noninterest Bearing Demand Deposits | | 23.2 | % | 0.00 | % | 21.8 | % | 0.00 | % | 19.0 | % | 0.00 | % |
Savings & Interest Checking | | 5.6 | % | 2.24 | % | 5.4 | % | 2.26 | % | 4.3 | % | 2.34 | % |
Money Market Deposits | | 26.0 | % | 0.85 | % | 25.6 | % | 0.92 | % | 27.2 | % | 0.91 | % |
Time Deposits of $100,000 or More | | 29.4 | % | 0.93 | % | 30.6 | % | 0.95 | % | 28.4 | % | 1.17 | % |
Other Time Deposits | | 15.8 | % | 1.07 | % | 16.6 | % | 1.07 | % | 21.1 | % | 1.66 | % |
Total Deposits | | 100.0 | % | 0.80 | % | 100.0 | % | 0.83 | % | 100.0 | % | 1.04 | % |
| | As Of | |
CAPITAL RATIOS | | December 31, 2011 | | September 30, 2011 | | December 31, 2010 | |
| | | | | | | |
Tier 1 Leverage Ratio | | 13.86 | % | 13.59 | % | 9.18 | % |
Tier 1 Risk-Based Capital Ratio | | 19.59 | % | 18.75 | % | 12.61 | % |
Total Risk-Based Capital Ratio | | 20.89 | % | 20.15 | % | 14.00 | % |
Total Shareholders’ Equity | | $ | 309,582 | | $ | 301,841 | | $ | 229,162 | |
Book Value Per Common Share | | $ | 3.49 | | $ | 3.38 | | $ | 5.72 | |
Tangible Common Equity Per Common Share * | | $ | 3.37 | | $ | 3.27 | | $ | 5.44 | |
Tangible Common Equity to Tangible Assets ** | | 8.95 | % | 8.71 | % | 5.41 | % |
* Tangible common equity excludes goodwill, other intangible assets, and TARP preferred stock
** Tangible assets excludes goodwill and intangible assets
(continued)
14
ALLOWANCE FOR LOAN LOSSES
(dollars in thousands) (unaudited)
| | Quarter Ended | |
| | December 31, 2011 | | September 30, 2011 | | June 30, 2011 | | March 31, 2011 | | December 31, 2010 | |
| | | | | | | | | | | |
Balance at Beginning of Period | | $ | 105,306 | | $ | 110,995 | | $ | 114,842 | | $ | 110,953 | | $ | 99,020 | |
Provision for Losses on Loans | | 1,500 | | 3,180 | | 10,123 | | 44,800 | | 82,600 | |
Recoveries on loans previously charged-off | | 243 | | 3,648 | | 204 | | 786 | | 1,235 | |
Less Charge-offs | | (4,067 | ) | (12,517 | ) | (14,174 | ) | (41,697 | ) | (71,902 | ) |
Balance at End of Period | | $ | 102,982 | | $ | 105,306 | | $ | 110,995 | | $ | 114,842 | | $ | 110,953 | |
| | | | | | | | | | | |
Net Loan Charge-offs/Average Total Loans | | 0.20 | % | 0.46 | % | 0.67 | % | 1.84 | % | 3.03 | % |
Charge-offs/Average Total Loans | | 0.22 | % | 0.65 | % | 0.68 | % | 1.88 | % | 3.08 | % |
Allowance for Loan Losses/Gross Loans | | 5.19 | % | 5.27 | % | 5.32 | % | 5.02 | % | 4.76 | % |
Allowance for Loan Losses/Legacy Wilshire Loans | | 5.66 | % | 5.78 | % | 5.86 | % | 5.50 | % | 5.23 | % |
Allowance for Loan Losses/Non-accrual Loans | | 234.95 | % | 186.50 | % | 142.41 | % | 143.31 | % | 155.76 | % |
Allowance for Loan Losses/Legacy Non-accrual Loans | | 345.38 | % | 266.36 | % | 186.86 | % | 185.02 | % | 182.24 | % |
Allowance for Loan Losses/Non-performing Loans | | 234.95 | % | 185.87 | % | 142.41 | % | 143.31 | % | 155.76 | % |
Allowance for Loan Losses/Legacy Non-performing Loans | | 345.38 | % | 265.09 | % | 186.86 | % | 185.02 | % | 182.24 | % |
Allowance for Loan Losses/Non-performing Assets | | 197.84 | % | 159.70 | % | 128.41 | % | 129.55 | % | 128.69 | % |
Allowance for Loan Losses/Legacy Non-performing Assets | | 285.36 | % | 217.82 | % | 167.16 | % | 164.68 | % | 151.35 | % |
NON-PERFORMING ASSETS
(net of SBA guaranteed portions)
| | Quarter Ended | |
| | December 31, 2011 | | September 30, 2011 | | June 30, 2011 | | March 31, 2011 | | December 31, 2010 | |
Nonaccrual Loans: | | | | | | | | | | | |
Non-covered | | $ | 29,817 | | $ | 39,535 | | $ | 59,399 | | $ | 62,069 | | $ | 60,882 | |
Covered | | 14,015 | | 16,930 | | 18,543 | | 18,064 | | 10,350 | |
Total | | 43,832 | | 56,465 | | 77,942 | | 80,133 | | 71,232 | |
| | | | | | | | | | | |
Loans 90 days or more past due and still accruing: | | | | | | | | | | | |
Non-covered | | — | | 190 | | — | | — | | — | |
Covered | | — | | — | | — | | — | | — | |
Total | | — | | 190 | | — | | — | | — | |
| | | | | | | | | | | |
Total Nonperforming Loans: | | | | | | | | | | | |
Non-covered | | 29,817 | | 39,725 | | 59,399 | | 62,069 | | 60,882 | |
Covered | | 14,015 | | 16,930 | | 18,543 | | 18,064 | | 10,350 | |
Total | | 43,832 | | 56,655 | | 77,942 | | 80,133 | | 71,232 | |
| | | | | | | | | | | |
OREO and Repossessed Vehicles: | | | | | | | | | | | |
Non-covered | | 6,271 | | 8,620 | | 7,001 | | 7,668 | | 12,429 | |
Covered | | 1,950 | | 664 | | 1,498 | | 844 | | 2,554 | |
Total | | 8,221 | | 9,284 | | 8,499 | | 8,512 | | 14,983 | |
| | | | | | | | | | | |
Total Nonperforming Assets: | | | | | | | | | | | |
Non-covered | | 36,088 | | 48,345 | | 66,400 | | 69,737 | | 73,311 | |
Covered | | 15,965 | | 17,594 | | 20,041 | | 18,908 | | 12,904 | |
Total | | $ | 52,053 | | $ | 65,939 | | $ | 86,441 | | $ | 88,645 | | $ | 86,215 | |
| | | | | | | | | | | |
Total Nonperforming Loans/Gross Loans | | 2.21 | % | 2.84 | % | 3.73 | % | 3.50 | % | 3.06 | % |
Total Legacy Nonperforming Loans/Legacy Gross Loans | | 1.64 | % | 2.18 | % | 3.13 | % | 2.97 | % | 2.87 | % |
| | | | | | | | | | | |
Total Nonperforming Assets/Total Assets | | 1.93 | % | 2.46 | % | 3.22 | % | 3.18 | % | 2.90 | % |
Total Legacy Nonperforming Assets/Total Assets | | 1.34 | % | 1.80 | % | 2.48 | % | 2.50 | % | 2.47 | % |
(continued)
15
ALLOWANCE FOR OFF-BALANCE SHEET ITEMS
(Dollars In Thousands)
| | Quarter Ended | |
| | Dec 31, 2011 | | Sep 30, 2011 | | Jun 30, 2011 | | Mar 30, 2011 | | Dec 31, 2010 | |
| | | | | | | | | | | |
Balance at beginning of period | | $ | 3,423 | | $ | 4,103 | | $ | 3,926 | | $ | 3,926 | | $ | 2,926 | |
(Recapture) provision for losses on off-balance sheet items | | — | | (680 | ) | 177 | | — | | 1,000 | |
Balance at end of period | | $ | 3,423 | | $ | 3,423 | | $ | 4,103 | | $ | 3,926 | | $ | 3,926 | |
| | Twelve Months Ended | | | | | | | |
| | Dec 31, 2011 | | Dec 31, 2010 | | | | | | | |
| | | | | | | | | | | |
Balance at beginning of period | | 3,926 | | 2,515 | | | | | | | |
(Recapture) provision for losses on off-balance sheet items | | (503 | ) | 1,411 | | | | | | | |
Balance at end of period | | $ | 3,423 | | $ | 3,926 | | | | | | | |
| | | | | | | | | | | | | |
Reconciliation of GAAP financial measures to non-GAAP financial measures:
Tangible Common Equity and Tangible Assets (dollars in thousands, except per share data) (unaudited)
| | Quarter Ended | |
| | December 31, 2011 | | September 30, 2011 | | December 31, 2010 | |
| | | | | | | |
Total stockholders’ equity | | $ | 309,582 | | $ | 301,841 | | $ | 229,162 | |
Preferred stock, net of discount | | (61,000 | ) | (60,859 | ) | (60,450 | ) |
Goodwill and other intangible assets, net | | (7,995 | ) | (8,077 | ) | (8,320 | ) |
Tangible common equity | | $ | 240,587 | | $ | 232,905 | | $ | 160,392 | |
| | | | | | | |
Total assets | | $ | 2,696,854 | | $ | 2,680,718 | | $ | 2,970,525 | |
Goodwill and other intangible assets, net | | (7,995 | ) | (8,077 | ) | (8,320 | ) |
Tangible assets | | $ | 2,688,859 | | $ | 2,672,641 | | $ | 2,962,205 | |
| | | | | | | |
Common shares outstanding | | 71,291,614 | | 71,291,614 | | 29,477,778 | |
(continued)
16
WILSHIRE BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCES, AVERAGE YIELDS EARNED AND AVERAGE RATES PAID
(dollars in thousands) (unaudited)
| | For the Quarter Ended | |
| | December 31, 2011 | | September 30, 2011 | | December 31, 2010 | |
| | | | Interest | | Average | | | | Interest | | Average | | | | Interest | | Average | |
| | Average | | Income/ | | Yield/ | | Average | | Income/ | | Yield/ | | Average | | Income/ | | Yield/ | |
| | Balance | | Expense | | Rate | | Balance | | Expense | | Rate | | Balance | | Expense | | Rate | |
INTEREST EARNING ASSETS | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Real Estate Loans | | $ | 1,691,650 | | $ | 24,012 | | 5.68 | % | $ | 1,739,729 | | $ | 24,388 | | 5.61 | % | $ | 2,072,543 | | $ | 26,919 | | 5.20 | % |
Commercial Loans | | 270,425 | | 3,446 | | 5.10 | % | 287,359 | | 3,772 | | 5.25 | % | 346,987 | | 4,435 | | 5.11 | % |
Consumer Loans | | 15,406 | | 115 | | 2.99 | % | 15,827 | | 135 | | 3.41 | % | 16,084 | | 138 | | 3.43 | % |
Total Gross Loans | | 1,977,481 | | 27,573 | | 5.58 | % | 2,042,915 | | 28,295 | | 5.54 | % | 2,435,614 | | 31,492 | | 5.17 | % |
Loan Fees toward Yield | | | | 939 | | | | | | 671 | | | | | | 701 | | | |
Allowance for Loan Losses & Unearned Income | | (109,096 | ) | | | | | (116,605 | ) | | | | | (102,693 | ) | | | | |
Net Loans | | 1,868,385 | | 28,512 | | 6.10 | % | 1,926,310 | | 28,966 | | 6.01 | % | 2,332,921 | | 32,193 | | 5.52 | % |
| | | | | | | | | | | | | | | | | | | |
INVESTMENT SECURITIES AND OTHER INTEREST-EARNING ASSETS: | | | | | | | | | | | | | | | | | | | |
Investment Securities* | | 339,302 | | 1,387 | | 1.90 | % | 306,272 | | 1,651 | | 2.45 | % | 353,983 | | 1,551 | | 2.02 | % |
Federal Funds Sold | | 231,687 | | 486 | | 0.84 | % | 204,458 | | 340 | | 0.67 | % | 159,633 | | 476 | | 1.19 | % |
Total Investment Securities and Other Earning Assets | | 570,989 | | 1,873 | | 1.47 | % | 510,730 | | 1,991 | | 1.74 | % | 513,616 | | 2,027 | | 1.76 | % |
| | | | | | | | | | | | | | | | | | | |
TOTAL INTEREST-EARNING ASSETS | | $ | 2,439,374 | | $ | 30,385 | | 5.02 | % | $ | 2,437,040 | | $ | 30,957 | | 5.12 | % | $ | 2,846,537 | | $ | 34,220 | | 4.84 | % |
| | | | | | | | | | | | | | | | | | | |
INTEREST BEARING LIABILITIES | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
INTEREST-BEARING DEPOSITS: | | | | | | | | | | | | | | | | | | | |
Money Market | | $ | 546,972 | | $ | 1,162 | | 0.85 | % | $ | 570,176 | | $ | 1,317 | | 0.92 | % | $ | 738,538 | | $ | 1,684 | | 0.91 | % |
NOW | | 24,365 | | 20 | | 0.33 | % | 23,657 | | 21 | | 0.36 | % | 22,217 | | 19 | | 0.34 | % |
Savings | | 94,910 | | 649 | | 2.74 | % | 91,619 | | 631 | | 2.75 | % | 81,267 | | 587 | | 2.89 | % |
Time Deposits of $100,000 or More | | 655,022 | | 1,529 | | 0.93 | % | 650,453 | | 1,540 | | 0.95 | % | 717,362 | | 2,106 | | 1.17 | % |
Other Time Deposits | | 355,587 | | 947 | | 1.07 | % | 357,289 | | 952 | | 1.07 | % | 569,725 | | 2,362 | | 1.66 | % |
Total Interest Bearing Deposits | | 1,676,856 | | 4,307 | | 1.03 | % | 1,693,194 | | 4,461 | | 1.05 | % | 2,129,109 | | 6,758 | | 1.27 | % |
| | | | | | | | | | | | | | | | | | | |
BORROWINGS: | | | | | | | | | | | | | | | | | | | |
FHLB Advances and Other Borrowings | | 105,163 | | 340 | | 1.29 | % | 110,000 | | 483 | | 1.76 | % | 144,145 | | 697 | | 1.93 | % |
Junior Subordinated Debentures | | 87,321 | | 517 | | 2.37 | % | 87,321 | | 491 | | 2.25 | % | 87,321 | | 497 | | 2.28 | % |
Total Borrowings | | 192,484 | | 857 | | 1.78 | % | 197,321 | | 974 | | 1.97 | % | 231,466 | | 1,194 | | 2.06 | % |
| | | | | | | | | | | | | | | | | | | |
TOTAL INTEREST BEARING LIABILITIES | | $ | 1,869,340 | | $ | 5,164 | | 1.10 | % | $ | 1,890,515 | | $ | 5,435 | | 1.15 | % | $ | 2,360,575 | | $ | 7,952 | | 1.35 | % |
| | | | | | | | | | | | | | | | | | | |
NET INTEREST INCOME | | | | $ | 25,221 | | | | | | $ | 25,522 | | | | | | $ | 26,268 | | | |
| | | | | | | | | | | | | | | | | | | |
NET INTEREST SPREAD | | | | | | 3.93 | % | | | | | 3.97 | % | | | | | 3.49 | % |
| | | | | | | | | | | | | | | | | | | |
NET INTEREST MARGIN | | | | | | 4.17 | % | | | | | 4.23 | % | | | | | 3.72 | % |
* Tax equivalent ratios for investment securities
(continued)
17
WILSHIRE BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCES, AVERAGE YIELDS EARNED AND AVERAGE RATES PAID
(dollars in thousands) (unaudited)
| | For the Twelve Months Ended | |
| | December 31, 2011 | | December 31, 2010 | |
| | | | Interest | | Average | | | | Interest | | Average | |
| | Average | | Income/ | | Yield/ | | Average | | Income/ | | Yield/ | |
| | Balance | | Expense | | Rate | | Balance | | Expense | | Rate | |
INTEREST EARNING ASSETS | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Real Estate Loans | | $ | 1,826,421 | | $ | 102,175 | | 5.59 | % | $ | 2,062,223 | | $ | 116,585 | | 5.65 | % |
Commercial Loans | | 295,932 | | 15,683 | | 5.30 | % | 367,573 | | 19,959 | | 5.43 | % |
Consumer Loans | | 15,289 | | 442 | | 2.89 | % | 17,162 | | 654 | | 3.81 | % |
Total Gross Loans | | 2,137,642 | | 118,300 | | 5.54 | % | 2,446,958 | | 137,198 | | 5.61 | % |
Loan Fees toward Yield | | | | 3,407 | | | | | | 2,830 | | | |
Allowance for Loan Losses & Unearned Income | | (117,606 | ) | | | | | (88,809 | ) | | | | |
Net Loans | | 2,020,036 | | 121,707 | | 6.03 | % | 2,358,149 | | 140,028 | | 5.94 | % |
| | | | | | | | | | | | | |
INVESTMENT SECURITIES AND OTHER INTEREST-EARNING ASSETS: | | | | | | | | | | | | | |
Investment Securities* | | 328,280 | | 7,177 | | 2.47 | % | 527,999 | | 14,726 | | 3.00 | % |
Federal Funds Sold | | 149,709 | | 1,080 | | 0.72 | % | 169,461 | | 1,666 | | 0.98 | % |
Total Investment Securities and Other Earning Assets | | 477,989 | | 8,257 | | 1.92 | % | 697,460 | | 16,392 | | 2.51 | % |
| | | | | | | | | | | | | |
TOTAL INTEREST-EARNING ASSETS | | $ | 2,498,025 | | $ | 129,964 | | 5.24 | % | $ | 3,055,609 | | $ | 156,420 | | 5.16 | % |
| | | | | | | | | | | | | |
INTEREST BEARING LIABILITIES | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INTEREST-BEARING DEPOSITS: | | | | | | | | | | | | | |
Money Market | | $ | 590,199 | | $ | 5,290 | | 0.90 | % | $ | 880,618 | | $ | 11,755 | | 1.33 | % |
NOW | | 23,869 | | 84 | | 0.35 | % | 22,104 | | 97 | | 0.44 | % |
Savings | | 89,582 | | 2,487 | | 2.78 | % | 77,484 | | 2,380 | | 3.07 | % |
Time Deposits of $100,000 or More | | 658,862 | | 6,346 | | 0.96 | % | 745,139 | | 10,370 | | 1.39 | % |
Other Time Deposits | | 377,491 | | 4,334 | | 1.15 | % | 654,099 | | 12,494 | | 1.91 | % |
Total Interest Bearing Deposits | | 1,740,003 | | 18,541 | | 1.07 | % | 2,379,444 | | 37,096 | | 1.56 | % |
| | | | | | | | | | | | | |
BORROWINGS: | | | | | | | | | | | | | |
FHLB Advances and Other Borrowings | | 163,227 | | 2,057 | | 1.26 | % | 142,759 | | 3,125 | | 2.19 | % |
Junior Subordinated Debentures | | 87,321 | | 1,991 | | 2.28 | % | 87,321 | | 2,483 | | 2.84 | % |
Total Borrowings | | 250,548 | | 4,048 | | 1.62 | % | 230,080 | | 5,608 | | 2.44 | % |
| | | | | | | | | | | | | |
TOTAL INTEREST BEARING LIABILITIES | | $ | 1,990,551 | | $ | 22,589 | | 1.13 | % | $ | 2,609,524 | | $ | 42,704 | | 1.64 | % |
| | | | | | | | | | | | | |
NET INTEREST INCOME | | | | $ | 107,375 | | | | | | $ | 113,716 | | | |
| | | | | | | | | | | | | |
NET INTEREST SPREAD | | | | | | 4.11 | % | | | | | 3.52 | % |
| | | | | | | | | | | | | |
NET INTEREST MARGIN | | | | | | 4.34 | % | | | | | 3.76 | % |
* Tax equivalent ratios for investment securities
(concluded)
18
