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 $38.5 Million or
$0.54 Earnings per Share for Third Quarter 2012
LOS ANGELES, October 22, 2012 - Wilshire Bancorp, Inc. (NASDAQ: WIBC) (‘the Company”), the holding company for Wilshire State Bank (“the Bank”), today reported net income available to common shareholders of $38.5 million, or $0.54 per diluted common share, for the quarter ended September 30, 2012. This compares to net income available to common shareholders of $10.2 million, or $0.14 per common share, for the same period of the prior year, and net income available to common shareholders of $22.1 million, or $0.31 per common share, for the second quarter of 2012. The increase in net income for the third quarter of 2012 is primarily attributable to a $12.0 million negative provision for losses on loans and a $12.6 million tax benefit that resulted from the reversal of the deferred tax asset valuation allowance.
Jae Whan (J.W.) Yoo, President and CEO of Wilshire Bancorp, said, “Our third quarter results represent the highest level of net income and earnings per share in our history. We believe that the Company continues to exhibit positive trends, including solid loan growth, an improving deposit mix, an expanding net interest margin, and improved efficiencies. We also continue to see stable credit quality and a low level of credit losses, which drove a further reduction in our allowance for loan losses from the elevated levels we built last year.
“As we previously announced, both the Company’s and the Bank’s Memoranda of Understanding with their respective regulators have been terminated, and as a result, we anticipate more flexibility in terms of strategic planning.” said Mr. Yoo.
Q3 2012 Summary:
· | | Net income available to common shareholders of $38.5 million or $0.54 per diluted share |
· | | Net interest margin increased to 4.35% for Q3 2012 from 4.13% for Q2 2012 as cash and cash equivalents were shifted to higher yielding loans |
· | | Deferred tax asset valuation allowance fully reversed in Q3 2012 |
· | | Strengthened capital ratios with tier 1 leverage ratio at 15.0%, total risk based ratio at 20.6%, and tangible common equity ratio at 12.3% in Q3 2012. |
· | | Gross loans (including held-for-sale) totaled $2.09 billion at Q3 2012, an increase of 3.2% from $2.03 billion at Q2 2012 |
· | | Improved deposit mix with non-interest-bearing demand deposits increasing to 24.8% of total deposits at Q3 2012 from 23.6% at Q2 2012 |
· | | Non-accrual loans declined to $38.9 million, classified loan declined to $172.8 million, and gross charge-offs declined to $2.8 million in Q3 2012 compared to Q2 2012 |
· | | Improved credit quality and reduced gross charge-offs resulted in $12.0 million negative provision for losses on loans |
· | | FDIC indemnification impairment of $2 million as a result of improved credit quality of covered loans |
· | | Redemption of $10 million in junior subordinated debentures in Q3 2012 that had a rate of approximately 3.5% at redemption |
STATEMENT OF OPERATIONS
Net Interest Income and Margin
Net interest income before credit for losses on loans totaled $25.6 million in the third quarter of 2012, slightly up from $25.5 million for the third quarter of 2011, and an increase of 5.6% from $24.2 million in the second quarter of 2012. The increase from the prior quarter was primarily due to an increase in average loans outstanding and a decrease in interest expense.
Net interest margin was 4.35% for the third quarter of 2012, compared to 4.23% in the third quarter of 2011, and 4.13% for the second quarter of 2012. The increase in net interest margin from the second quarter of 2012 was primarily due to a higher percentage of loans in the mix of interest-earning assets, as well as a reduction in the cost of overall deposits.
Loan yields increased to 5.73% for the third quarter of 2012 from 5.71% for the second quarter of 2012, due to an increase in prepayment penalty fees collected during the quarter. These prepayment penalty fees totaled $336 thousand for the third quarter of 2012, compared to $16 thousand for the second quarter of 2012. The total cost of interest-bearing deposits declined to 0.87% for the third quarter of 2012, down from 0.96% for the second quarter of 2012. Cost of total deposits was reduced to 0.66% for the third quarter of 2012 compared to 0.74% during the previous quarter. The reduction in deposit rates was a result of declines in deposit costs across all categories combined with an increase in demand deposits as a percentage of total deposits.
Non-Interest Income
Total non-interest income was $6.6 million for the third quarter of 2012, compared to $7.7 million for the third quarter of 2011, and $8.5 million for second quarter of 2012. The decrease in non-interest income from the prior quarter was primarily due to lower gains on sales of loans, as the Company decided to retain a larger portion of its SBA loan production during the third quarter of 2012. Total SBA loans held-for-sale at the end of the third quarter of 2012 totaled $51.6 million compared to $33.9 million at the end of the previous quarter. The decision to retain or sell SBA loan production will be made on a quarter-to-quarter basis, dependent upon pricing in the secondary market and the Company’s liquidity needs.
The $1.2 million in net gains on sales of loans recognized in the third quarter of 2012 included $1.1 million in gains from the sale of SBA loans and $86 thousand in gains from the sale of mortgage loans.
Non-Interest Expense
Total non-interest expense totaled $18.3 million for the third quarter of 2012, compared with $18.5 million for the third quarter of 2011, and $20.4 million for the second quarter of 2012. The decrease in total non-interest expense for the third quarter of 2012, compared to the second quarter of 2012 was primarily due to lower other non-interest expense. Other non-interest expense for the third quarter of 2012 totaled $4.4 million, a 51.5% decline compared with $9.0 million in the third quarter of 2011 and a 34.3% decline from $6.7 million for the second quarter of 2012. The decrease from the prior quarters was primarily attributable to lower professional fees, a decline in expenses related to other real estate owned (“OREO”), and lower regulatory assessment fees.
Total salaries and employee benefits expense was $9.4 million in the third quarter of 2012, compared with $6.8 million in the third quarter of 2011, and $9.0 million in the second quarter of 2012. The increase from the prior quarters was largely due an increase in staff, particularly in areas related to lending and loan underwriting.
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During the third quarter of 2012, the Company recorded an impairment of the FDIC indemnification asset amounting to $2.0 million. The impairment reflected overall improved credit quality in the covered loan portfolio. As such the FDIC indemnification asset balance at September 30, 2012, net of the impairment charge of $2.0 million, was $9.9 million.
The Company’s operating efficiency ratio was 57.0% for the third quarter of 2012, compared with 55.7% for the third quarter of 2011 and 62.2% for the second quarter of 2012.
Tax Provision
For the third quarter of 2012, the Company recorded a tax benefit of $12.6 million, primarily related to the full reversal of the remaining valuation allowance held against the Company’s deferred tax asset. This compares to $215 thousand in tax provision for the second quarter of 2012 and $1.1 million tax provision for the third quarter of 2011.
The Company recorded a valuation allowance during the first quarter of 2011 against its entire net deferred tax asset, primarily due to accumulated taxable losses and the absence of clear and objective positive evidence that future taxable income would be sufficient enough to realize the tax benefits of its deferred tax assets. However, with 12 quarters (3 years) of cumulative positive income, 6 continuous quarters of earnings, strengthening capital, significantly improved asset quality, and removal of regulatory orders, management concluded that those deferred tax assets are now more likely than not to be realized and thus maintaining a valuation allowance was no longer required.
Going forward, the Company expects its effective tax rate to be comparable to its normalized historical tax rate, approximately 37%-38%.
BALANCE SHEET
Total gross loans were $2.09 billion at September 30, 2012, compared to $2.03 billion at June 30, 2012. The increase in total gross loans during the third quarter of 2012 was primarily due to increases in the commercial real estate and residential real estate portfolio, offset primarily by declines in construction 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.
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The following table shows “covered” and “non-covered” gross loans (excluding loan fees and allowance for loan losses) by loan type:
Loan Categories
(Dollars In Thousands)
| | Quarter Ended | |
| | Sep 30, 2012 | | Jun 30, 2012 | | Mar 31, 2012 | | Dec 31, 2011 | | Sep 30, 2011 | |
| | | | | | | | | | | |
Gross Non-Covered Loans | | | | | | | | | | | |
Construction | | $ | 20,311 | | $ | 27,030 | | $ | 38,552 | | $ | 61,832 | | $ | 58,988 | |
Real Estate Secured | | 1,641,851 | | 1,558,274 | | 1,472,450 | | 1,490,504 | | 1,501,297 | |
Commercial & Industrial | | 287,045 | | 290,063 | | 269,501 | | 253,092 | | 244,248 | |
Consumer | | 14,139 | | 13,530 | | 16,362 | | 15,001 | | 16,013 | |
Total Non-Covered Gross Loans | | $ | 1,963,346 | | $ | 1,888,897 | | $ | 1,796,865 | | $ | 1,820,429 | | $ | 1,820,546 | |
| | | | | | | | | | | |
Gross Covered Loans | | | | | | | | | | | |
| | | | | | | | | | | |
Real Estate Secured | | $ | 113,874 | | $ | 119,985 | | $ | 137,051 | | $ | 137,144 | | $ | 143,719 | |
Commercial & Industrial | | 15,875 | | 18,756 | | 20,824 | | 28,267 | | 33,103 | |
Consumer | | 14 | | 65 | | 71 | | 79 | | 86 | |
Total Covered Gross Loans | | $ | 129,763 | | $ | 138,806 | | $ | 157,946 | | $ | 165,490 | | $ | 176,908 | |
| | | | | | | | | | | |
Total Gross Loans | | | | | | | | | | | |
| | | | | | | | | | | |
Construction | | $ | 20,311 | | $ | 27,030 | | $ | 38,552 | | $ | 61,832 | | $ | 58,988 | |
Real Estate Secured | | 1,755,725 | | 1,678,259 | | 1,609,501 | | 1,627,648 | | 1,645,016 | |
Commercial & Industrial | | 302,920 | | 308,819 | | 290,325 | | 281,359 | | 277,351 | |
Consumer | | 14,153 | | 13,595 | | 16,433 | | 15,080 | | 16,099 | |
Total Gross Loans | | $ | 2,093,109 | | $ | 2,027,703 | | $ | 1,954,811 | | $ | 1,985,919 | | $ | 1,997,454 | |
Loan originations for the third quarter of 2012 totaled $209.2 million, compared to total loan originations of $245.2 million for the second quarter of 2012. The decrease in total loan originations from the prior quarter was attributable to a decrease in originations of commercial and industrial loans, residential mortgage loans, and SBA loans.
The following table shows quarterly loan originations by loan type:
LOAN ORIGINATIONS
(Dollars In Thousands)
| | Quarter Ended | |
| | September 30, 2012 | | June 30, 2012 | | March 31, 2012 | | December 31, 2011 | | September 30, 2011 | |
| | | | | | | | | | | | | | | | | | | | | |
Real Estate Secured | | $ | 80,700 | | 39 | % | $ | 81,782 | | 33 | % | $ | 24,493 | | 25 | % | $ | 22,608 | | 21 | % | $ | 24,493 | | 25 | % |
Commercial & Industrial | | 40,683 | | 19 | % | 50,469 | | 21 | % | 22,049 | | 23 | % | 40,517 | | 37 | % | 22,049 | | 23 | % |
Consumer | | 1,805 | | 1 | % | 304 | | 0 | % | 1,510 | | 2 | % | 161 | | 0 | % | 1,510 | | 2 | % |
SBA Loans | | 27,457 | | 13 | % | 37,989 | | 16 | % | 20,746 | | 21 | % | 29,035 | | 26 | % | 20,746 | | 21 | % |
Residential Mortgage Loans | | 58,589 | | 28 | % | 74,673 | | 30 | % | 28,736 | | 29 | % | 17,292 | | 16 | % | 28,736 | | 29 | % |
Total Loan Originations | | $ | 209,234 | | 100 | % | $ | 245,217 | | 100 | % | $ | 97,534 | | 100 | % | $ | 109,613 | | 100 | % | $ | 97,534 | | 100 | % |
During the third quarter of 2012 the Company had a 30.9% reduction in cash and cash equivalents. These funds were used for loan originations and to offset the departure of high cost deposits. As a result, the Company had a more favorable mix of interest-earning assets and a lower cost of deposits, which helped drive the increase in net interest margin during the third quarter of 2012.
The Company, during the third quarter of 2012, redeemed all of the $10.0 million in subordinated debentures issued by Wilshire State Bank. The junior subordinated debentures issued by the Bank in 2002 had a rate of approximately 3.5% at the time of the redemption. The remaining $77.3 million in junior subordinated debentures were issued by the Company.
Total OREO was $2.3 million at September 30, 2012, compared with $4.4 million at June 30, 2012. Compared to the third quarter of 2011, total OREO declined 75.5%, from $9.3 million. Outflow from OREO during the third quarter of 2012 consisted of 6 sold properties totaling approximately $4.1 million. Inflow into OREO during the third quarter of 2012 consisted of 5 properties totaling approximately $2.0 million.
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Total deposits were $2.17 billion at September 30, 2012, compared with $2.18 billion at June 30, 2012. Increases in non-interest bearing demand deposits and money market accounts enabled the Company to run off higher costing time deposits, resulting in a decrease in total deposits, but an overall improved deposit mix. Non-interest bearing deposits increased 4.6% during the third quarter of 2012 and increased 14.9% during the twelve months ended September 30, 2012.
CREDIT QUALITY
The Company has experienced improving credit trends for over a year with declining trends in non-performing loans and charge-offs. Non-accrual loans have declined by 31.1% from September 30, 2011 to September 30, 2012 and gross quarterly charge-offs have been below 25 bps of average total loans for four consecutive quarters.
In light of the continued improvements in credit quality, the Company recorded a negative provision for losses on loans and loan commitments of $12.0 million in the third quarter of 2012. The allowance for loan losses totaled $74.4 million, or 3.81% of gross loans (excluding loans held-for-sale) at September 30, 2012, compared to $89.1 million, or 4.54% of gross loans at June 30, 2012. The coverage ratio of the allowance for loan losses to non-performing assets was 180.7% at September 30, 2012, compared with 190.6% at June 30, 2012. Allowance coverage of legacy Wilshire loans (excluding loans held-for-sale) was 4.08% at September 30, 2012, compared with 4.89% at June 30, 2012.
Non-Accrual Loans
At September 30, 2012, total non-covered non-accrual loans were $33.7 million, or 1.72% of gross non-covered loans, compared to $35.0 million, or 1.85% of gross non-covered loans, at June 30, 2012, and $39.5 million, or 2.17% of gross non-covered loans, at September 30, 2011.
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 | |
| | Sep 30, 2012 | | Jun 30, 2012 | | Mar 31, 2012 | | Dec 31, 2011 | | Sep 30, 2011 | |
| | | | | | | | | | | |
Non-Covered Loans | | | | | | | | | | | |
| | | | | | | | | | | |
Construction | | $ | 7,678 | | $ | 8,139 | | $ | 8,139 | | $ | 12,548 | | $ | 316 | |
Real Estate Secured | | 25,124 | | 25,762 | | 26,082 | | 15,696 | | 37,454 | |
Commercial & Industrial | | 892 | | 1,095 | | 1,261 | | 1,573 | | 1,764 | |
Total Non-Covered Non-Accrual Loans | | $ | 33,694 | | $ | 34,996 | | $ | 35,482 | | $ | 29,817 | | $ | 39,534 | |
| | | | | | | | | | | |
Covered Loans | | | | | | | | | | | |
| | | | | | | | | | | |
Real Estate Secured | | $ | 4,602 | | $ | 6,396 | | $ | 15,400 | | $ | 13,392 | | $ | 15,322 | |
Commercial & Industrial | | 586 | | 93 | | 109 | | 623 | | 1,609 | |
Total Covered Non-Accrual Loans | | $ | 5,188 | | $ | 6,489 | | $ | 15,509 | | $ | 14,015 | | $ | 16,931 | |
| | | | | | | | | | | |
Total Non-Accrual Loans | | | | | | | | | | | |
| | | | | | | | | | | |
Construction | | $ | 7,678 | | $ | 8,139 | | $ | 8,139 | | $ | 12,548 | | $ | 316 | |
Real Estate Secured | | 29,726 | | 32,158 | | 41,482 | | 29,088 | | 52,776 | |
Commercial & Industrial | | 1,478 | | 1,188 | | 1,370 | | 2,196 | | 3,373 | |
Total Non-Accrual Loans | | $ | 38,882 | | $ | 41,485 | | $ | 50,991 | | $ | 43,832 | | $ | 56,465 | |
The inflow into total (covered and non-covered) non-accrual loans was $5.3 million in the third quarter of 2012, compared with inflow of $6.1 million in the second quarter of 2012. Half of the inflow into total non-accrual loans for the third quarter of 2012 was related to two large loans totaling $2.9 million.
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Total outflow from total non-accrual loans was $7.9 million during the third quarter of 2012, compared with $15.6 million for the second quarter of 2012. The decrease in outflow of non-accrual loans reflects a decrease in sales of non-performing loans during the third quarter.
Troubled Debt Restructured Loans
At September 30, 2012, total non-covered troubled debt restructured loans or “TDR loans”, were $29.8 million, compared to $24.2 million at June 30, 2012, and $13.1 million at September 30, 2011. The increase in TDR loans for the third quarter of 2012 compared to the previous quarter was largely due to one borrower relationship with two loans totaling $5.0 million that were restructured as TDRs during the quarter.
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 | |
| | Sep 30, 2012 | | Jun 30, 2012 | | Mar 31, 2012 | | Dec 31, 2011 | | Sep 30, 2011 | |
Non-Covered Loans | | | | | | | | | | | |
| | | | | | | | | | | |
Real Estate Secured | | $ | 24,136 | | $ | 18,347 | | $ | 12,648 | | $ | 11,460 | | $ | 10,568 | |
Commercial & Industrial | | 5,695 | | 5,845 | | 6,046 | | 3,235 | | 2,538 | |
Total Non-Covered TDR Loans | | $ | 29,831 | | $ | 24,192 | | $ | 18,694 | | $ | 14,695 | | $ | 13,106 | |
| | | | | | | | | | | |
Covered Loans | | | | | | | | | | | |
| | | | | | | | | | | |
Real Estate Secured | | $ | 4,388 | | $ | 2,372 | | $ | 7,964 | | $ | 6,377 | | $ | 6,493 | |
Commercial & Industrial | | 1,787 | | 1,138 | | 1,283 | | 1,311 | | 1,429 | |
Total Covered TDR Loans | | $ | 6,175 | | $ | 3,510 | | $ | 9,247 | | $ | 7,688 | | $ | 7,922 | |
| | | | | | | | | | | |
Total TDRs Loans | | | | | | | | | | | |
| | | | | | | | | | | |
Real Estate Secured | | $ | 28,524 | | $ | 20,719 | | $ | 20,612 | | $ | 17,837 | | $ | 17,061 | |
Commercial & Industrial | | 7,482 | | 6,983 | | 7,329 | | 4,546 | | 3,967 | |
Total TDR Loans | | $ | 36,006 | | $ | 27,702 | | 27,941 | | $ | 22,383 | | $ | 21,028 | |
Of the total $36.0 million in TDR loans at September 30, 2012, $8.1 million were also classified as non-accrual, of which $5.7 million were non-covered. The remaining TDR loans were performing in accordance with their modified terms.
Loan Delinquencies (Excluding Non-Accrual Loans)
At September 30, 2012, total non-covered loan delinquencies were $8.4 million, compared with $10.8 million at June 30, 2012, and $7.3 million at September 30, 2011. Total inflow into loan delinquencies was $8.6 million in the third quarter of 2012, compared with $8.2 million in the prior quarter. Total outflow from loan delinquencies was $9.6 million in the third quarter of 2012, compared with $7.0 million in the prior quarter. The $9.6 million in third quarter outflows consisted of $4.0 million in delinquencies that migrated to non-accrual status, $3.9 million in loans that migrated to current status, $1.1 million that was sold, and the remaining either were paid-down or charged-off.
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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 | |
| | Sep 30, 2012 | | Jun 30, 2012 | | Mar 31, 2012 | | Dec 31, 2011 | | Sep 30, 2011 | |
Non-Covered Loans | | | | | | | | | | | |
| | | | | | | | | | | |
30 - 59 Days Past Due | | $ | 6,855 | | $ | 8,461 | | $ | 5,361 | | $ | 4,890 | | $ | 4,146 | |
60 - 89 Days Past Due | | 1,503 | | 1,412 | | 2,837 | | 9,762 | | 2,963 | |
90 Days, and still accruing | | — | | 923 | | 933 | | — | | 190 | |
Total Non-Covered Delinquent Loans | | $ | 8,358 | | $ | 10,796 | | $ | 9,131 | | $ | 14,652 | | $ | 7,299 | |
| | | | | | | | | | | |
Covered Loans | | | | | | | | | | | |
| | | | | | | | | | | |
30 - 59 Days Past Due | | $ | 652 | | $ | 696 | | $ | 987 | | $ | 355 | | $ | 572 | |
60 - 89 Days Past Due | | 1,491 | | — | | 240 | | 513 | | 186 | |
90 Days, and still accruing | | — | | — | | — | | — | | — | |
Total Covered Delinquent Loans | | $ | 2,143 | | $ | 696 | | $ | 1,227 | | $ | 868 | | $ | 758 | |
| | | | | | | | | | | |
Total Delinquent Loans | | | | | | | | | | | |
| | | | | | | | | | | |
30 - 59 Days Past Due | | $ | 7,507 | | $ | 9,157 | | $ | 6,348 | | $ | 5,245 | | $ | 4,718 | |
60 - 89 Days Past Due | | 2,994 | | 1,412 | | 3,077 | | 10,275 | | 3,149 | |
90 Days, and still accruing | | — | | 923 | | 933 | | — | | 190 | |
Total Delinquent Loans | | $ | 10,501 | | $ | 11,492 | | $ | 10,358 | | $ | 15,520 | | $ | 8,057 | |
Of the total $10.5 million in delinquent loans at September 30, 2012, $7.5 million was comprised of delinquent real estate secured loans and $3.0 million consisted of delinquent commercial and industrial loans. Over 70% of total delinquent loans at September 30, 2012 were past due less than 59 days.
Loan Classifications
At September 30, 2012, total non-covered classified loans (loans graded substandard, doubtful, and loss) totaled $145.2 million, compared with $159.0 million at June 30, 2012, and $123.5 million at September 30, 2011. Non-covered criticized loans (loans graded special mention) were $89.5 million at September 30, 2012, compared with $75.2 million at June 30, 2012 and $159.2 million at September 30, 2011. Approximately $4.9 million of the increase in non-covered criticized loans was attributable to the upgrading of loans from substandard classification.
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Loan balances broken down by classification are reflected in the table below:
LOAN CLASSIFICATIONS
(Dollars In Thousands, Net of SBA Guaranteed Portions)
| | Quarter Ended | |
| | Sep 30, 2012 | | Jun 30, 2012 | | Mar 31, 2012 | | Dec 31, 2011 | | Sep 30, 2011 | |
Non-Covered Loans | | | | | | | | | | | |
| | | | | | | | | | | |
Special Mention | | $ | 89,522 | | $ | 75,219 | | $ | 93,303 | | $ | 119,434 | | $ | 159,248 | |
Substandard | | 139,414 | | 153,699 | | 148,788 | | 136,559 | | 108,616 | |
Doubtful | | 5,740 | | 5,316 | | 6,032 | | 5,769 | | 14,911 | |
Total Non-Covered Gross Loans | | $ | 234,676 | | $ | 234,234 | | $ | 248,123 | | $ | 261,762 | | $ | 282,775 | |
| | | | | | | | | | | |
Covered Loans | | | | | | | | | | | |
| | | | | | | | | | | |
Special Mention | | $ | 5,194 | | $ | 9,126 | | $ | 15,357 | | $ | 17,438 | | $ | 14,342 | |
Substandard | | 26,059 | | 24,591 | | 27,087 | | 22,487 | | 25,180 | |
Doubtful | | 1,604 | | 3,405 | | 11,668 | | 10,578 | | 8,511 | |
Total Covered Gross Loans | | $ | 32,857 | | $ | 37,122 | | $ | 54,112 | | $ | 50,503 | | $ | 48,033 | |
| | | | | | | | | | | |
Total Loans | | | | | | | | | | | |
| | | | | | | | | | | |
Special Mention | | $ | 94,716 | | $ | 84,345 | | $ | 108,660 | | $ | 136,872 | | $ | 173,590 | |
Substandard | | 165,473 | | 178,290 | | 175,875 | | 159,046 | | 133,796 | |
Doubtful | | 7,344 | | 8,721 | | 17,700 | | 16,347 | | 23,422 | |
Total Gross Loans | | $ | 267,533 | | $ | 271,356 | | $ | 302,235 | | $ | 312,265 | | $ | 330,808 | |
Gross Loan Charge-offs
Non-covered loan charge-offs for the third quarter of 2012 totaled $3.1 million, compared to $3.2 million in the second quarter of 2012, and $11.7 million in the third quarter of 2011.
Charge-offs by loan type is reflected in the table below:
LOAN CHARGE-OFFS
(Dollars In Thousands)
| | Quarter Ended | |
| | Sep 30, 2012 | | Jun 30, 2012 | | Mar 31, 2012 | | Dec 31, 2011 | | Sep 30, 2011 | |
Non-Covered Loans | | | | | | | | | | | |
| | | | | | | | | | | |
Real Estate Secured | | $ | 3,004 | | $ | 2,734 | | $ | 2,826 | | $ | 829 | | $ | 8,507 | |
Commercial & Industrial | | 70 | | 502 | | 1,299 | | 2,543 | | 2,973 | |
Consumer | | — | | 1 | | 1 | | 1 | | 217 | |
Total Non-Covered Charge-Offs Loans | | $ | 3,074 | | $ | 3,237 | | $ | 4,126 | | $ | 3,373 | | $ | 11,697 | |
| | | | | | | | | | | |
Covered Loans | | | | | | | | | | | |
| | | | | | | | | | | |
Real Estate Secured | | $ | 11 | | $ | 196 | | $ | 102 | | $ | 426 | | $ | 436 | |
Commercial & Industrial | | 42 | | 9 | | 136 | | 268 | | 384 | |
Total Covered Charge-Offs Loans | | $ | 53 | | $ | 205 | | $ | 238 | | $ | 694 | | $ | 820 | |
| | | | | | | | | | | |
Total Loan Charge-Offs | | | | | | | | | | | |
| | | | | | | | | | | |
Real Estate Secured | | 3,015 | | 2,930 | | 2,928 | | 1,255 | | 8,943 | |
Commercial & Industrial | | 112 | | 511 | | 1,435 | | 2,811 | | 3,357 | |
Consumer | | — | | 1 | | 1 | | 1 | | 217 | |
Total Charge-Offs Loans | | $ | 3,127 | | $ | 3,442 | | $ | 4,364 | | $ | 4,067 | | $ | 12,517 | |
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CAPITAL RATIOS
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)
| | September 30, 2012 | | Well Capitalized
Regulatory
Requirements | | Total Excess Above
Well Capitalized
Requirements | |
| | | | | | | |
Tier 1 Leverage Capital Ratio | | 14.96 | % | 5.00 | % | 254,603 | |
Tier 1 Risk-Based Capital Ratio | | 19.33 | % | 6.00 | % | 263,704 | |
Total Risk-Based Capital Ratio | | 20.61 | % | 10.00 | % | 209,927 | |
Tangible Common Equity To Tangible Assets | | 12.31 | % | N/A | | N/A | |
Tangible Common Equity Per Common Share | | $ | 4.50 | | N/A | | N/A | |
| | | | | | | | |
9
CONFERENCE CALL
Management will host its quarterly conference call on October 23, 2012, at 11:00 a.m. PT (2:00 p.m. ET). Investment professionals are invited to participate in the call by dialing 800-659-2056 (domestic number) or 617-614-2714 (international number) and entering passcode #13410832.
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
This press release contains statements that we believe are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Rule 175 promulgated thereunder, and Section 21E of the Securities Exchange Act of 1934, as amended, and Rule 3b-6 promulgated thereunder. Statements concerning future performance, events, financial condition, results of operations, plans 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. You should not place undue reliance on forward-looking statements, as they are subject to risks and uncertainties, including but not limited to the risk factors set forth in our most recent Annual Report on Form 10-K. Specific factors that could cause future results to differ materially from historical performance and these forward-looking statements include, but are not limited to, (1) loan production and sales, (2) credit quality, (3) the ability to expand net interest margin, (4) the ability to continue to attract low-cost deposits, (5) success of expansion efforts, (6) competition in the marketplace, (7) political developments, war or other hostilities, (8) changes in the interest rate environment, (9) the ability of our borrowers to repay their loans, (10) the ability to maintain capital requirements and adequate sources of liquidity, (11) effects of or changes in accounting policies, (12) legislative or regulatory changes or actions, (13) the ability to attract and retain key personnel, (14) the ability to receive dividends from our subsidiaries, (15) the ability to secure confidential information through the use of computer systems and telecommunications networks, (16) weakening in the economy, specifically the real estate market, either nationally or in the states in which we do business, and (17) 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 with the Securities and Exchange Commission.
10
CONSOLIDATED BALANCE SHEET
(Dollars In Thousands) (Unaudited)
| | September 30, | | June 30, | | Three Months | | September 30, | | Twelve Months | |
| | 2012 | | 2012 | | % Change | | 2011 | | % Change | |
ASSETS: | | | | | | | | | | | |
Cash and Due from Banks | | $ | 113,258 | | $ | 147,202 | | -23 | % | $ | 99,875 | | 13 | % |
Federal Funds Sold and Other Cash Equivalents | | 30,005 | | 60,004 | | -50 | % | 150,005 | | -80 | % |
Total Cash and Cash Equivalents | | 143,263 | | 207,206 | | -31 | % | 249,880 | | -43 | % |
| | | | | | | | | | | |
Investment Securities Available For Sale | | 292,254 | | 298,364 | | -2 | % | 356,148 | | -18 | % |
Investment Securities Held To Maturity | | 53 | | 57 | | -7 | % | 70 | | -24 | % |
Total Investment Securities | | 292,307 | | 298,421 | | -2 | % | 356,218 | | -18 | % |
| | | | | | | | | | | |
Loans Held For Sale | | 140,109 | | 66,485 | | 111 | % | 70,652 | | 98 | % |
| | | | | | | | | | | |
Real Estate Construction | | 19,679 | | 26,386 | | -25 | % | 58,275 | | -66 | % |
Residential Real Estate | | 130,706 | | 117,318 | | 11 | % | 94,591 | | 38 | % |
Commercial Real Estate | | 1,533,396 | | 1,502,273 | | 2 | % | 1,478,281 | | 4 | % |
Commercial and Industrial | | 250,560 | | 297,049 | | -16 | % | 274,469 | | -9 | % |
Consumer | | 14,138 | | 13,580 | | 4 | % | 16,082 | | -12 | % |
Total Loans Receivable | | 1,948,479 | | 1,956,606 | | 0 | % | 1,921,698 | | 1 | % |
Allowance For Loan Losses | | (74,353 | ) | (89,134 | ) | -17 | % | (105,306 | ) | -29 | % |
Total Loans, Net of Allowance for Loan Losses | | 2,014,235 | | 1,933,957 | | 4 | % | 1,887,044 | | 7 | % |
| | | | | | | | | | | |
Accrued Interest Receivable | | 7,570 | | 7,806 | | -3 | % | 7,739 | | -2 | % |
Due from Customers on Acceptances | | 388 | | 382 | | 2 | % | 255 | | 52 | % |
Other Real Estate Owned | | 2,277 | | 4,351 | | -48 | % | 9,284 | | -75 | % |
Premises and Equipment | | 12,010 | | 12,248 | | -2 | % | 13,053 | | -8 | % |
Federal Home Loan Bank (FHLB) Stock, at Cost | | 13,327 | | 14,051 | | -5 | % | 16,276 | | -18 | % |
Cash Surrender Value of Life Insurance | | 20,735 | | 20,181 | | 3 | % | 19,735 | | 5 | % |
Investment in affordable housing partnerships | | 40,048 | | 36,007 | | 11 | % | 33,147 | | 21 | % |
Deferred Income Taxes | | 21,337 | | 6,115 | | 249 | % | 17,143 | | 24 | % |
Servicing Assets | | 9,645 | | 9,505 | | 1 | % | 9,052 | | 7 | % |
Goodwill | | 6,675 | | 6,675 | | 0 | % | 6,675 | | 0 | % |
FDIC Indemnification | | 9,927 | | 12,629 | | -21 | % | 23,481 | | -58 | % |
Other Assets | | 22,145 | | 21,865 | | 1 | % | 31,736 | | -30 | % |
TOTAL ASSETS | | $ | 2,615,889 | | $ | 2,591,399 | | 1 | % | $ | 2,680,718 | | -2 | % |
| | | | | | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY: | | | | | | | | | | | |
LIABILITIES: | | | | | | | | | | | |
Non-interest Bearing Demand Deposits | | $ | 538,291 | | $ | 514,418 | | 5 | % | $ | 468,596 | | 15 | % |
Savings and Interest Checking | | 124,397 | | 129,157 | | -4 | % | 116,044 | | 7 | % |
Money Market Deposits | | 662,322 | | 622,177 | | 6 | % | 551,152 | | 20 | % |
Time Deposits in denomination of $100,000 or more | | 594,500 | | 608,123 | | -2 | % | 656,847 | | -9 | % |
Other Time Deposits | | 255,342 | | 306,123 | | -17 | % | 356,875 | | -28 | % |
Total Deposits | | 2,174,852 | | 2,179,998 | | 0 | % | 2,149,514 | | 1 | % |
| | | | | | | | | | | |
FHLB borrowings | | — | | — | | N/A | | 110,000 | | -100 | % |
Acceptance Outstanding | | 388 | | 382 | | 2 | % | 255 | | 52 | % |
Junior Subordinated Debentures | | 77,321 | | 87,321 | | -11 | % | 87,321 | | -11 | % |
Accrued Interest Payable | | 2,465 | | 3,238 | | -24 | % | 2,728 | | -10 | % |
Other Liabilities | | 32,095 | | 31,404 | | 2 | % | 29,059 | | 10 | % |
Total Liabilities | | 2,287,121 | | 2,302,343 | | -1 | % | 2,378,877 | | -4 | % |
| | | | | | | | | | | |
SHAREHOLDERS’ EQUITY: | | | | | | | | | | | |
Preferred Stock | | — | | — | | 0 | % | 60,859 | | -100 | % |
Common Stock | | 164,649 | | 164,480 | | 0 | % | 164,650 | | 0 | % |
Retained Earnings | | 155,606 | | 117,137 | | 33 | % | 71,292 | | 118 | % |
Accumulated Other Comprehensive Income | | 8,513 | | 7,439 | | 14 | % | 5,040 | | 69 | % |
Total Shareholders’ Equity | | 328,768 | | 289,056 | | 14 | % | 301,841 | | 9 | % |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 2,615,889 | | $ | 2,591,399 | | 1 | % | $ | 2,680,718 | | -2 | % |
(continued)
11
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars In Thousands, Except Per Share Data) (Unaudited)
| | Quarter Ended | | Three Mths | | Quarter Ended | | Twelve Mths | |
| | September 30, 2012 | | June 30, 2012 | | % Change | | September 30, 2011 | | % Change | |
| | | | | | | | | | | |
INTEREST INCOME | | | | | | | | | | | |
Interest and Fees on Loans | | $ | 27,966 | | $ | 26,808 | | 4 | % | $ | 28,966 | | -3 | % |
Interest on Investment Securities | | 1,651 | | 1,560 | | 6 | % | 1,651 | | 0 | % |
Interest on Federal Funds Sold | | 79 | | 423 | | -81 | % | 340 | | -77 | % |
Total Interest Income | | 29,696 | | 28,791 | | 3 | % | 30,957 | | -4 | % |
| | | | | | | | | | | |
INTEREST EXPENSE | | | | | | | | | | | |
Deposits | | 3,575 | | 4,015 | | -11 | % | 4,461 | | -20 | % |
FHLB Advances and Other Borrowings | | 529 | | 532 | | -1 | % | 974 | | -46 | % |
Total Interest Expense | | 4,104 | | 4,547 | | -10 | % | 5,435 | | -24 | % |
| | | | | | | | | | | |
Net Interest Income Before (Credit) Provision for Losses on | | | | | | | | | | | |
Loans and Loan Commitments | | 25,592 | | 24,244 | | 6 | % | 25,522 | | 0 | % |
(Credit) Provision for Losses on Loans and Loan Commitments | | (12,000 | ) | (10,000 | ) | 20 | % | 2,500 | | N/A | |
| | | | | | | | | | | |
Net Interest Income After (Credit) Provision for Losses on Loans and Loan Commitments | | 37,592 | | 34,244 | | 10 | % | 23,022 | | 63 | % |
| | | | | | | | | | | |
NONINTEREST INCOME | | | | | | | | | | | |
Service Charges on Deposits | | 3,157 | | 3,238 | | -3 | % | 3,189 | | -1 | % |
Gain on Sales of Loans, Net | | 1,222 | | 3,254 | | -62 | % | 1,749 | | -30 | % |
Gain on Sale of Investment Securities | | — | | — | | 0 | % | 52 | | -100 | % |
Other | | 2,231 | | 2,022 | | 10 | % | 2,669 | | -16 | % |
Total Noninterest Income | | 6,610 | | 8,514 | | -22 | % | 7,659 | | -14 | % |
| | | | | | | | | | | |
NONINTEREST EXPENSES | | | | | | | | | | | |
Salaries and Employee Benefits | | 9,355 | | 9,038 | | 4 | % | 6,827 | | 37 | % |
FDIC Indemnification Impairment | | 2,000 | | 2,000 | | 0 | % | — | | N/A | |
Occupancy & Equipment | | 1,930 | | 1,950 | | -1 | % | 1,899 | | 2 | % |
Data Processing | | 680 | | 717 | | -5 | % | 710 | | -4 | % |
Other | | 4,377 | | 6,663 | | -34 | % | 9,031 | | -52 | % |
Total Noninterest Expenses | | 18,342 | | 20,368 | | -10 | % | 18,467 | | -1 | % |
| | | | | | | | | | | |
Income Before Income Taxes | | 25,860 | | 22,390 | | 15 | % | 12,214 | | 112 | % |
Income Taxes (Benefit) Provision | | (12,609 | ) | 215 | | N/A | | 1,112 | | N/A | |
NET INCOME | | $ | 38,469 | | $ | 22,175 | | 73 | % | $ | 11,102 | | 247 | % |
| | | | | | | | | | | |
Preferred Stock Cash Dividend | | — | | (29 | ) | -100 | % | (777 | ) | -100 | % |
Accretion of Preferred Stock Discount | | — | | (35 | ) | -100 | % | (139 | ) | -100 | % |
Total Preferred Stock Related Adjustment | | — | | (64 | ) | -100 | % | (916 | ) | -100 | % |
| | | | | | | | | | | |
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS | | $ | 38,469 | | $ | 22,111 | | 74 | % | $ | 10,186 | | 278 | % |
| | | | | | | | | | | |
PER COMMON SHARE INFORMATION: | | | | | | | | | | | |
Basic Income Per Common Share | | $ | 0.54 | | $ | 0.31 | | 74 | % | $ | 0.14 | | 278 | % |
Diluted Income Per Common Share | | $ | 0.54 | | $ | 0.31 | | 74 | % | $ | 0.14 | | 277 | % |
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING: | | | | | | | | | | | |
Basic | | 71,290,881 | | 71,285,870 | | | | 71,291,614 | | | |
Diluted | | 71,420,567 | | 71,385,624 | | | | 71,306,813 | | | |
(continued)
12
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars In Thousands, Except Per Share Data) (Unaudited)
| | Nine Months Ended | | Twelve Mths | |
| | September 30, 2012 | | September 30, 2011 | | % Change | |
| | | | | | | |
INTEREST INCOME | | | | | | | |
Interest and Fees on Loans | | $ | 81,895 | | $ | 93,195 | | -12 | % |
Interest on Investment Securities | | 4,737 | | 5,790 | | -18 | % |
Interest on Federal Funds Sold | | 1,102 | | 594 | | 86 | % |
Total Interest Income | | 87,734 | | 99,579 | | -12 | % |
| | | | | | | |
INTEREST EXPENSE | | | | | | | |
Deposits | | 11,844 | | 14,235 | | -17 | % |
FHLB Advances and Other Borrowings | | 1,615 | | 3,192 | | -49 | % |
Total Interest Expense | | 13,459 | | 17,427 | | -23 | % |
| | | | | | | |
Net Interest Income Before (Credit) Provision for | | | | | | | |
Losses on Loans and Loan Commitments | | 74,275 | | 82,152 | | -10 | % |
(Credit) Provision for Losses on Loans and Loan Commitments | | (22,000 | ) | 57,600 | | N/A | |
| | | | | | | |
Net Interest Income After (Credit) Provision for Losses on Loans and Loan Commitments | | 96,275 | | 24,552 | | 292 | % |
| | | | | | | |
NONINTEREST INCOME | | | | | | | |
Service Charges on Deposits | | 9,621 | | 9,418 | | 2 | % |
Gain on Sales of Loans, Net | | 5,234 | | 1,735 | | 202 | % |
Gain on Sale of Investment Securities | | 3 | | 95 | | -97 | % |
Other | | 6,652 | | 6,800 | | -2 | % |
Total Noninterest Income | | 21,510 | | 18,048 | | 19 | % |
| | | | | | | |
NONINTEREST EXPENSES | | | | | | | |
Salaries and Employee Benefits | | 26,555 | | 21,397 | | 24 | % |
FDIC Indemnification Impairment | | 4,000 | | — | | 0 | % |
Occupancy & Equipment | | 5,822 | | 5,933 | | -2 | % |
Data Processing | | 2,129 | | 2,195 | | -3 | % |
Other | | 14,932 | | 23,019 | | -35 | % |
Total Noninterest Expenses | | 53,438 | | 52,544 | | 2 | % |
| | | | | | | |
Income (Loss) Before Income Taxes | | 64,347 | | (9,944 | ) | N/A | |
Income Taxes (Benefit) Provision | | (12,748 | ) | 27,122 | | N/A | |
NET INCOME (LOSS) | | $ | 77,095 | | $ | (37,066 | ) | N/A | |
| | | | | | | |
Preferred Stock Cash Dividend | | (830 | ) | (2,331 | ) | -64 | % |
Accretion of Preferred Stock Discount | | (1,158 | ) | (410 | ) | 182 | % |
One-time Adjustment From Repurchase of Preferred Stock | | 3,389 | | — | | N/A | |
Total Preferred Stock Related Adjustment | | 1,401 | | (2,741 | ) | N/A | |
| | | | | | | |
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | | $ | 78,496 | | $ | (39,807 | ) | N/A | |
| | | | | | | |
PER COMMON SHARE INFORMATION: | | | | | | | |
Basic Income (Loss) Per Common Share | | $ | 1.10 | | $ | (0.79 | ) | N/A | |
Diluted Income (Loss) Per Common Share | | $ | 1.10 | | $ | (0.79 | ) | N/A | |
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING: | | | | | | | |
Basic | | 71,286,439 | | 50,459,623 | | | |
Diluted | | 71,362,802 | | 50,459,623 | | | |
(continued)
13
SUMMARY OF FINANCIAL DATA
(Dollars In Thousands, Except Per Share Data) (Unaudited)
| | Quarter Ended | |
| | September 30, 2012 | | June 30, 2012 | | September 30, 2011 | |
AVERAGE BALANCES | | | | | | | |
| | | | | | | |
Average Assets | | $ | 2,579,203 | | $ | 2,570,530 | | $ | 2,687,448 | |
Average Equity | | 297,725 | | 276,021 | | 298,323 | |
Average Net Loans | | 1,951,126 | | 1,877,716 | | 1,926,310 | |
Average Deposits | | 2,162,430 | | 2,169,831 | | 2,154,234 | |
Average Time Deposits in denomination of $100,000 or more | | 600,204 | | 616,612 | | 650,453 | |
Average Interest Earning Assets | | 2,370,619 | | 2,365,217 | | 2,437,040 | |
| | | | | | | | | | |
| | Nine Months Ended | |
| | September 30, 2012 | | | | September 30, 2011 | |
AVERAGE BALANCES | | | | | | | |
| | | | | | | |
Average Assets | | $ | 2,597,172 | | | | $ | 2,785,893 | |
Average Equity | | 296,247 | | | | 249,743 | |
Average Net Loans | | 1,894,923 | | | | 2,071,142 | |
Average Deposits | | 2,170,442 | | | | 2,221,761 | |
Average Time Deposits in denomination of $100,000 or more | | 620,917 | | | | 660,156 | |
Average Interest Earning Assets | | 2,386,006 | | | | 2,517,792 | |
| | | | | | | | | |
| | Quarter Ended | |
| | September 30, 2012 | | June 30, 2012 | | September 30, 2011 | |
PROFITABILITY | | | | | | | |
| | | | | | | |
Annualized Return on Average Assets | | 5.97 | % | 3.45 | % | 1.65 | % |
Annualized Return on Average Equity | | 51.68 | % | 32.14 | % | 14.89 | % |
Efficiency Ratio | | 56.96 | % | 62.18 | % | 55.66 | % |
Annualized Operating Expense/Average Assets | | 2.84 | % | 3.17 | % | 2.75 | % |
Annualized Net Interest Margin | | 4.35 | % | 4.13 | % | 4.23 | % |
| | Nine Months Ended | |
| | September 30, 2012 | | | | September 30, 2011 | |
PROFITABILITY | | | | | | | |
| | | | | | | |
Annualized Return on Average Assets | | 3.96 | % | | | -1.77 | % |
Annualized Return on Average Equity | | 34.70 | % | | | -19.79 | % |
Efficiency Ratio | | 55.79 | % | | | 52.44 | % |
Annualized Operating Expense/Average Assets | | 2.74 | % | | | 2.51 | % |
Annualized Net Interest Margin | | 4.19 | % | | | 4.39 | % |
| | As Of | |
DEPOSIT COMPOSITION | | September 30,2012 | | Cost of
Funds | | June 30 ,2012 | | Cost of
Funds | | September 30,2011 | | Cost of
Funds | |
| | | | | | | | | | | | | |
Noninterest Bearing Demand Deposits | | 24.8 | % | 0.00 | % | 23.6 | % | 0.00 | % | 21.8 | % | 0.00 | % |
Savings & Interest Checking | | 5.7 | % | 1.78 | % | 5.9 | % | 2.05 | % | 5.4 | % | 2.26 | % |
Money Market Deposits | | 30.5 | % | 0.76 | % | 28.5 | % | 0.83 | % | 25.6 | % | 0.92 | % |
Time Deposits of $100,000 or More | | 27.3 | % | 0.78 | % | 27.9 | % | 0.84 | % | 30.6 | % | 0.95 | % |
Other Time Deposits | | 11.7 | % | 0.92 | % | 14.0 | % | 1.01 | % | 16.6 | % | 1.07 | % |
Total Deposits | | 100.0 | % | 0.66 | % | 100.0 | % | 0.74 | % | 100.0 | % | 0.83 | % |
| | As Of | |
| | September 30,2012 | | June 30 ,2012 | | September 30,2011 | |
CAPITAL RATIOS | | | | | | | |
| | | | | | | |
Tier 1 Leverage Ratio | | 14.96 | % | 13.62 | % | 13.59 | % |
Tier 1 Risk-Based Capital Ratio | | 19.33 | % | 18.11 | % | 18.75 | % |
Total Risk-Based Capital Ratio | | 20.61 | % | 19.41 | % | 20.15 | % |
Total Shareholders’ Equity | | $ | 328,768 | | $ | 289,056 | | $ | 301,841 | |
Book Value Per Common Share | | $ | 4.61 | | $ | 4.05 | | $ | 3.38 | |
Tangible Common Equity Per Common Share * | | $ | 4.50 | | $ | 3.94 | | $ | 3.27 | |
Tangible Common Equity to Tangible Assets ** | | 12.31 | % | 10.88 | % | 8.71 | % |
* 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 | |
| | September 30, 2012 | | June 30, 2012 | | March 31, 2012 | | December 31, 2011 | | September 30, 2011 | |
| | | | | | | | | | | |
Balance at Beginning of Period | | $ | 89,134 | | $ | 99,826 | | $ | 102,982 | | $ | 105,306 | | $ | 110,995 | |
(Credit) Provision for Losses on Loans | | (12,000 | ) | (9,000 | ) | — | | 1,500 | | 3,180 | |
Recoveries on Loans Previously Charged-off | | 346 | | 1,750 | | 1,208 | | 243 | | 3,648 | |
Less Charge-offs | | (3,127 | ) | (3,442 | ) | (4,364 | ) | (4,067 | ) | (12,517 | ) |
Balance at End of Period | | $ | 74,353 | | $ | 89,134 | | $ | 99,826 | | $ | 102,982 | | $ | 105,306 | |
| | | | | | | | | | | |
Net Loan Charge-offs/Average Total Loans | | 0.14 | % | 0.09 | % | 0.17 | % | 0.20 | % | 0.46 | % |
Charge-offs/Average Total Loans | | 0.16 | % | 0.18 | % | 0.24 | % | 0.22 | % | 0.65 | % |
Allowance for Loan Losses/Gross Loans * | | 3.81 | % | 4.54 | % | 5.24 | % | 5.33 | % | 5.47 | % |
Allowance for Loan Losses/Legacy Wilshire Loans * | | 4.08 | % | 4.89 | % | 5.69 | % | 5.81 | % | 6.00 | % |
Allowance for Loan Losses/Non-accrual Loans | | 191.23 | % | 214.86 | % | 195.77 | % | 234.95 | % | 186.50 | % |
Allowance for Loan Losses/Legacy Non-accrual Loans | | 220.67 | % | 254.70 | % | 281.34 | % | 345.38 | % | 266.36 | % |
Allowance for Loan Losses/Non-performing Loans | | 191.23 | % | 210.18 | % | 192.25 | % | 234.95 | % | 185.87 | % |
Allowance for Loan Losses/Legacy Non-performing Loans | | 220.67 | % | 248.15 | % | 274.13 | % | 345.38 | % | 265.09 | % |
Allowance for Loan Losses/Non-performing Assets | | 180.65 | % | 190.62 | % | 184.20 | % | 197.84 | % | 159.70 | % |
Allowance for Loan Losses/Legacy Non-performing Assets | | 214.15 | % | 238.90 | % | 258.04 | % | 285.36 | % | 217.82 | % |
* Excluding held-for-sale loans
NON-PERFORMING ASSETS
(Dollars In Thousands, Net of SBA Guaranteed Portions)
(Unaudited)
| | Quarter Ended | |
| | September 30, 2012 | | June 30, 2012 | | March 31, 2012 | | December 31, 2011 | | September 30, 2011 | |
Non-accrual Loans: | | | | | | | | | | | |
Non-covered | | $ | 33,694 | | $ | 34,996 | | $ | 35,482 | | $ | 29,817 | | $ | 39,534 | |
Covered | | 5,188 | | 6,489 | | 15,509 | | 14,015 | | 16,931 | |
Total | | 38,882 | | 41,485 | | 50,991 | | 43,832 | | 56,465 | |
| | | | | | | | | | | |
Loans 90 days or more past due and still accruing: | | | | | | | | | | | |
Non-covered | | — | | 923 | | 933 | | — | | 190 | |
Covered | | — | | — | | — | | — | | — | |
Total | | — | | 923 | | 933 | | — | | 190 | |
| | | | | | | | | | | |
Total Non-performing Loans: | | | | | | | | | | | |
Non-covered | | 33,694 | | 35,919 | | 36,415 | | 29,817 | | 39,724 | |
Covered | | 5,188 | | 6,489 | | 15,509 | | 14,015 | | 16,931 | |
Total | | 38,882 | | 42,408 | | 51,924 | | 43,832 | | 56,655 | |
| | | | | | | | | | | |
OREO and Repossessed Vehicles: | | | | | | | | | | | |
Non-covered | | 1,026 | | 1,391 | | 2,271 | | 6,271 | | 8,620 | |
Covered | | 1,251 | | 2,960 | | — | | 1,950 | | 664 | |
Total | | 2,277 | | 4,351 | | 2,271 | | 8,221 | | 9,284 | |
| | | | | | | | | | | |
Total Non-performing Assets: | | | | | | | | | | | |
Non-covered | | 34,720 | | 37,310 | | 38,686 | | 36,088 | | 48,344 | |
Covered | | 6,439 | | 9,449 | | 15,509 | | 15,965 | | 17,595 | |
Total | | $ | 41,159 | | $ | 46,759 | | $ | 54,195 | | $ | 52,053 | | $ | 65,939 | |
| | | | | | | | | | | |
Total Non-performing Loans/Gross Loans | | 1.86 | % | 2.09 | % | 2.66 | % | 2.21 | % | 2.84 | % |
Total Legacy Non-performing Loans/Legacy Gross Loans | | 1.72 | % | 1.90 | % | 2.03 | % | 1.64 | % | 2.18 | % |
| | | | | | | | | | | |
Total Non-performing Assets/Total Assets | | 1.57 | % | 1.80 | % | 2.04 | % | 1.93 | % | 2.46 | % |
Total Legacy Non-performing Assets/Total Assets | | 1.33 | % | 1.44 | % | 1.45 | % | 1.34 | % | 1.80 | % |
(continued)
15
ALLOWANCE FOR OFF-BALANCE SHEET ITEMS
(Dollars In Thousands) (Unaudited)
| | Quarter Ended | |
| | September 30, 2012 | | June 30, 2012 | | March 31, 2012 | | December 31, 2011 | | September 30, 2011 | |
| | | | | | | | | | | |
Balance at beginning of period | | $ | 2,423 | | $ | 3,423 | | $ | 3,423 | | $ | 3,423 | | $ | 4,103 | |
(Credit) provision for losses on off-balance sheet items | | — | | (1,000 | ) | — | | — | | (680 | ) |
Balance at end of period | | $ | 2,423 | | $ | 2,423 | | $ | 3,423 | | $ | 3,423 | | $ | 3,423 | |
| | Nine Months Ended | |
| | September 30, 2012 | | September 30, 2011 | |
| | | | | |
Balance at beginning of period | | $ | 3,423 | | $ | 3,926 | |
(Credit) provision for losses on off-balance sheet items | | (1,000 | ) | (503 | ) |
Balance at end of period | | $ | 2,423 | | $ | 3,423 | |
RECONCILIATION OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES:
TANGIBLE COMMON EQUITY AND TANGIBLE ASSETS
(Dollars In Thousands, Except Share Data) (Unaudited)
| | Quarter Ended | |
| | September 30, 2012 | | June 30, 2012 | | September 30, 2011 | |
| | | | | | | |
Total shareholders’ equity | | $ | 328,768 | | $ | 289,056 | | $ | 301,841 | |
Preferred stock, net of discount | | — | | — | | (60,859 | ) |
Goodwill and other intangible assets, net | | (7,783 | ) | (7,854 | ) | (8,077 | ) |
Tangible common equity | | $ | 320,985 | | $ | 281,202 | | $ | 232,905 | |
| | | | | | | |
Total assets | | $ | 2,615,889 | | $ | 2,591,399 | | $ | 2,680,718 | |
Goodwill and other intangible assets, net | | (7,783 | ) | (7,854 | ) | (8,077 | ) |
Tangible assets | | $ | 2,608,106 | | $ | 2,583,545 | | $ | 2,672,641 | |
| | | | | | | |
Common shares outstanding | | 71,293,394 | | 71,287,518 | | 71,291,614 | |
(continued)
16
WILSHIRE BANCORP, INC. AND SUBSIDIARIES
AVERAGE BALANCES, AVERAGE YIELDS EARNED AND AVERAGE RATES PAID
(Dollars In Thousands) (Unaudited)
| | For the Quarter Ended | |
| | September 30, 2012 | | June 30, 2012 | | September 30, 2011 | |
| | | | 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 | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
LOANS: | | | | | | | | | | | | | | | | | | | |
Real Estate Loans | | $ | 1,727,223 | | $ | 23,530 | | 5.45 | % | $ | 1,671,048 | | $ | 22,657 | | 5.42 | % | $ | 1,739,729 | | $ | 24,429 | | 5.62 | % |
Commercial Loans | | 303,338 | | 3,572 | | 4.71 | % | 295,630 | | 3,657 | | 4.95 | % | 287,359 | | 3,772 | | 5.25 | % |
Consumer Loans | | 13,899 | | 87 | | 2.50 | % | 15,283 | | 100 | | 2.62 | % | 15,827 | | 94 | | 2.38 | % |
Total Gross Loans | | 2,044,460 | | 27,189 | | 5.32 | % | 1,981,961 | | 26,414 | | 5.33 | % | 2,042,915 | | 28,295 | | 5.54 | % |
Loan Fees toward Yield | | | | 777 | | | | | | 394 | | | | | | 671 | | | |
Allowance for Loan Losses & Unearned Income | | (93,334 | ) | | | | | (104,245 | ) | | | | | (116,605 | ) | | | | |
Net Loans | | 1,951,126 | | 27,966 | | 5.73 | % | 1,877,716 | | 26,808 | | 5.71 | % | 1,926,310 | | 28,966 | | 6.02 | % |
| | | | | | | | | | | | | | | | | | | |
INVESTMENT SECURITIES AND OTHER INTEREST-EARNING ASSETS: | | | | | | | | | | | | | | | | | | | |
Investment Securities* | | 294,535 | | 1,651 | | 2.51 | % | 291,258 | | 1,560 | | 2.42 | % | 306,272 | | 1,651 | | 2.45 | % |
Federal Funds Sold | | 124,958 | | 79 | | 0.25 | % | 196,243 | | 423 | | 0.86 | % | 204,458 | | 340 | | 0.67 | % |
Total Investment Securities and Other Earning Assets | | 419,493 | | 1,730 | | 1.84 | % | 487,501 | | 1,983 | | 1.79 | % | 510,730 | | 1,991 | | 1.74 | % |
| | | | | | | | | | | | | | | | | | | |
TOTAL INTEREST-EARNING ASSETS | | $ | 2,370,619 | | $ | 29,696 | | 5.04 | % | $ | 2,365,217 | | $ | 28,791 | | 4.90 | % | $ | 2,437,040 | | $ | 30,957 | | 5.12 | % |
| | | | | | | | | | | | | | | | | | | |
Total Non-Interest Earning Assets | | 208,584 | | | | | | 205,313 | | | | | | 250,408 | | | | | |
TOTAL ASSETS | | $ | 2,579,203 | | | | | | $ | 2,570,530 | | | | | | $ | 2,687,448 | | | | | |
| | | | | | | | | | | | | | | | | | | |
INTEREST BEARING LIABILITIES | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
INTEREST-BEARING DEPOSITS: | | | | | | | | | | | | | | | | | | | |
Money Market | | $ | 637,082 | | $ | 1,206 | | 0.76 | % | $ | 612,223 | | $ | 1,267 | | 0.83 | % | $ | 570,176 | | $ | 1,317 | | 0.92 | % |
NOW | | 27,310 | | 16 | | 0.23 | % | 25,747 | | 22 | | 0.34 | % | 23,657 | | 21 | | 0.36 | % |
Savings | | 100,299 | | 551 | | 2.20 | % | 102,348 | | 633 | | 2.47 | % | 91,619 | | 631 | | 2.76 | % |
Time Deposits of $100,000 or More | | 600,204 | | 1,169 | | 0.78 | % | 616,612 | | 1,293 | | 0.84 | % | 650,453 | | 1,540 | | 0.95 | % |
Other Time Deposits | | 274,366 | | 633 | | 0.92 | % | 318,400 | | 800 | | 1.01 | % | 357,289 | | 952 | | 1.07 | % |
Total Interest Bearing Deposits | | 1,639,261 | | 3,575 | | 0.87 | % | 1,675,330 | | 4,015 | | 0.96 | % | 1,693,194 | | 4,461 | | 1.05 | % |
| | | | | | | | | | | | | | | | | | | |
BORROWINGS: | | | | | | | | | | | | | | | | | | | |
FHLB Advances and Other Borrowings | | — | | — | | 0.00 | % | — | | — | | 0.00 | % | 110,000 | | 483 | | 1.76 | % |
Junior Subordinated Debentures | | 86,669 | | 529 | | 2.44 | % | 87,321 | | 532 | | 2.44 | % | 87,321 | | 491 | | 2.25 | % |
Total Borrowings | | 86,669 | | 529 | | 2.44 | % | 87,321 | | 532 | | 2.44 | % | 197,321 | | 974 | | 1.97 | % |
| | | | | | | | | | | | | | | | | | | |
TOTAL INTEREST BEARING LIABILITIES | | $ | 1,725,930 | | $ | 4,104 | | 0.95 | % | $ | 1,762,651 | | $ | 4,547 | | 1.03 | % | $ | 1,890,515 | | $ | 5,435 | | 1.15 | % |
| | | | | | | | | | | | | | | | | | | |
Non-Interest Bearing Deposits | | 523,169 | | | | | | 494,501 | | | | | | 461,040 | | | | | |
Other Liabilities | | 32,379 | | | | | | 37,357 | | | | | | 37,570 | | | | | |
Shareholders’ Equity | | 297,725 | | | | | | 276,021 | | | | | | 298,323 | | | | | |
TOTAL LIABILITIES AND EQUITY | | $ | 2,579,203 | | | | | | $ | 2,570,530 | | | | | | $ | 2,687,448 | | | | | |
| | | | | | | | | | | | | | | | | | | |
NET INTEREST INCOME | | | | $ | 25,592 | | | | | | $ | 24,244 | | | | | | $ | 25,522 | | | |
| | | | | | | | | | | | | | | | | | | |
NET INTEREST SPREAD | | | | | | 4.09 | % | | | | | 3.87 | % | | | | | 3.97 | % |
| | | | | | | | | | | | | | | | | | | |
NET INTEREST MARGIN | | | | | | 4.35 | % | | | | | 4.13 | % | | | | | 4.23 | % |
* 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 Nine Months Ended | |
| | September 30, 2012 | | September 30, 2011 | |
| | | | Interest | | Average | | | | Interest | | Average | |
| | Average | | Income/ | | Yield/ | | Average | | Income/ | | Yield/ | |
| | Balance | | Expense | | Rate | | Balance | | Expense | | Rate | |
INTEREST EARNING ASSETS | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
LOANS: | | | | | | | | | | | | | |
Real Estate Loans | | $ | 1,687,973 | | $ | 69,101 | | 5.46 | % | $ | 1,871,839 | | $ | 78,162 | | 5.57 | % |
Commercial Loans | | 293,612 | | 10,626 | | 4.83 | % | 304,528 | | 12,237 | | 5.36 | % |
Consumer Loans | | 14,970 | | 292 | | 2.60 | % | 15,249 | | 327 | | 2.86 | % |
Total Gross Loans | | 1,996,555 | | 80,019 | | 5.34 | % | 2,191,616 | | 90,726 | | 5.52 | % |
Loan Fees toward Yield | | | | 1,876 | | | | | | 2,469 | | | |
Allowance for Loan Losses & Unearned Income | | (101,632 | ) | | | | | (120,474 | ) | | | | |
Net Loans | | 1,894,923 | | 81,895 | | 5.76 | % | 2,071,142 | | 93,195 | | 6.00 | % |
| | | | | | | | | | | | | |
INVESTMENT SECURITIES AND OTHER INTEREST-EARNING ASSETS: | | | | | | | | | | | | | |
Investment Securities* | | 298,080 | | 4,737 | | 2.40 | % | 324,566 | | 5,790 | | 2.66 | % |
Federal Funds Sold | | 193,003 | | 1,102 | | 0.76 | % | 122,084 | | 594 | | 0.65 | % |
Total Investment Securities and Other Earning Assets | | 491,083 | | 5,839 | | 1.76 | % | 446,650 | | 6,384 | | 2.11 | % |
| | | | | | | | | | | | | |
TOTAL INTEREST-EARNING ASSETS | | $ | 2,386,006 | | $ | 87,734 | | 4.94 | % | $ | 2,517,792 | | $ | 99,579 | | 5.31 | % |
| | | | | | | | | | | | | |
Total Non-Interest Earnings Assets | | 211,166 | | | | | | 268,101 | | | | | |
TOTAL ASSETS | | $ | 2,597,172 | | | | | | $ | 2,785,893 | | | | | |
| | | | | | | | | | | | | |
INTEREST BEARING LIABILITIES | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
INTEREST-BEARING DEPOSITS: | | | | | | | | | | | | | |
Money Market | | $ | 611,102 | | $ | 3,696 | | 0.81 | % | $ | 604,766 | | $ | 4,128 | | 0.91 | % |
NOW | | 25,763 | | 57 | | 0.30 | % | 23,702 | | 64 | | 0.36 | % |
Savings | | 101,200 | | 1,859 | | 2.45 | % | 87,786 | | 1,839 | | 2.79 | % |
Time Deposits of $100,000 or More | | 620,917 | | 3,909 | | 0.84 | % | 660,156 | | 4,817 | | 0.97 | % |
Other Time Deposits | | 311,109 | | 2,323 | | 1.00 | % | 384,872 | | 3,387 | | 1.17 | % |
Total Interest Bearing Deposits | | 1,670,091 | | 11,844 | | 0.95 | % | 1,761,282 | | 14,235 | | 1.08 | % |
| | | | | | | | | | | | | |
BORROWINGS: | | | | | | | | | | | | | |
FHLB Advances and Other Borrowings | | 7,018 | | 6 | | 0.11 | % | 182,794 | | 1,718 | | 1.25 | % |
Junior Subordinated Debentures | | 87,102 | | 1,609 | | 2.46 | % | 87,321 | | 1,474 | | 2.25 | % |
Total Borrowings | | 94,120 | | 1,615 | | 2.29 | % | 270,115 | | 3,192 | | 1.58 | % |
| | | | | | | | | | | | | |
TOTAL INTEREST BEARING LIABILITIES | | $ | 1,764,211 | | $ | 13,459 | | 1.02 | % | $ | 2,031,397 | | $ | 17,427 | | 1.14 | % |
| | | | | | | | | | | | | |
Non-Interest Bearing Deposits | | 500,351 | | | | | | 460,479 | | | | | |
Other Liabilities | | 36,363 | | | | | | 44,274 | | | | | |
Shareholders’ Equity | | 296,247 | | | | | | 249,743 | | | | | |
TOTAL LIABILITIES AND EQUITY | | $ | 2,597,172 | | | | | | $ | 2,785,893 | | | | | |
| | | | | | | | | | | | | |
NET INTEREST INCOME | | | | $ | 74,275 | | | | | | $ | 82,152 | | | |
| | | | | | | | | | | | | |
NET INTEREST SPREAD | | | | | | 3.92 | % | | | | | 4.17 | % |
| | | | | | | | | | | | | |
NET INTEREST MARGIN | | | | | | 4.19 | % | | | | | 4.39 | % |
* Tax equivalent ratios for investment securities
(concluded)
18
