CORPORATE INVESTOR RELATIONS 5333 - 15TH Avenue South, Suite 1500 Seattle, WA 98108 206.762.0993 www.stockvalues.com | | CLIENT: CONTACT: | Wilshire Bancorp, Inc. Brian E. Cho, EVP & CFO 213.387.3200 www.wilshirebank.com |
| | | News Release |
WILSHIRE BANCORP POSTS 40% EARNINGS GROWTH IN SECOND QUARTER;
MARGIN EXPANSION AND STRONG LOAN PRODUCTION CONTINUE
LOS ANGELES, CA - July 21, 2005 - Wilshire Bancorp, Inc. (Nasdaq: WIBC), the holding company for Wilshire State Bank, today reported that five consecutive quarters of net interest margin expansion combined with continued strong loan growth contributed to 40% net income growth in both the second quarter and first half of 2005. For the quarter ended June 30, 2005, net income was a record $6.8 million, or $0.23 per diluted share, compared to $4.8 million, or $0.17 per share in the second quarter of last year. For the first half of 2005, net income was $12.8 million, or $0.44 per diluted share, up from $9.2 million, or $0.32 per share in the first six months of 2004.
In August 2004, Wilshire Bancorp was formed as a holding company for Wilshire State Bank. All previous results reflect the operations of Wilshire State Bank, which are comparable to those of the holding company. All per share results reflect the one-for-one conversion of Wilshire State Bank stock into Wilshire Bancorp stock, and the two-for-one stock split that followed in December 2004.
“In the first half of 2005, we added over $100 million in new loans, opened loan production offices in Atlanta, Houston, Denver and New York, converted our Dallas LPO into a full-service branch, and opened another branch in Torrance,” stated Soo Bong Min, President and CEO. “At the same time we have controlled operating costs and maintained strong credit quality, which contributed to another quarter of record profits. Our constant focus on sound banking practices, superior customer service and continued growth have helped us improve all of the key profitability ratios, which already ranked among the best in the nation.”
In the second quarter, Wilshire’s annualized return on average equity (ROE) improved to 27.2%, from 25.6% in the second quarter of 2004. For the six-month period ended June 30, ROE was 26.8% in 2005, compared to 26.5% the previous year. Return on average assets (ROA) grew to 1.92% in the second quarter, from 1.73% a year ago, and for the first half of 2005, ROA was 1.90%, compared to 1.74% in the same six-month period in 2004. The efficiency ratio improved to 38.5% in the second quarter of 2005, compared to 41.0% in the previous year, and was 40.3% for the first half of 2005, versus 42.0% in the previous year.
“Keeping our operating expenses in check remains a priority, particularly as salary and occupancy expense increases are inherent in a growing company,” stated Brian Cho, Executive Vice President and Chief Financial Officer. “Although our efficiency ratio dropped below 40% in the second quarter, I’m not sure that level is sustainable, particularly with the opening of full-service branches in Rancho Cucamonga and Garden Grove planned for the third quarter.”
Reflecting the success of Wilshire’s recent expansion efforts, loan originations increased 15% to $218.3 million in the second quarter of 2005, compared to $189.6 million in the second quarter last year. Year-to-date originations are up 19% to $410.5 million, from $344.8 million in the first half of 2004. Wilshire increased its total loans 22% to $1.13 billion at June 30, 2005, compared to $927.2 million at the end of the second quarter of last year, and total assets increased 21% to $1.46 billion at June 30, 2005, from $1.20 billion a year ago.
Total deposits increased 20% to $1.24 billion at the end of the second quarter of 2005, compared to $1.04 billion a year earlier. “We have grown noninterest bearing deposits by 14% in the past year, giving us a no-cost source of funds,” Cho said. “However, in order to support our loan growth in a very competitive environment, we are utilizing more time deposits, which have grown by 30% since mid-2004, as well as other borrowings.”
“Five consecutive quarters of net interest margin expansion have been aided by a continued slow rise in rates,” Min said. “With nearly 90% of our loan portfolio tied to prime, our yields improve almost immediately after an interest rate hike. Interest-bearing deposits are slower to reprice than loans, so we see a temporary margin expansion after each rate increase. Relative to noninterest bearing deposits, however, that benefit lasts until interest rates drop back down.” Wilshire’s net interest margin was 4.61% in the second quarter of 2005, compared to 3.74% in the comparable period a year ago. For the six-month period ended June 30, 2005, the margin improved to 4.58% from 3.88% in the first half of 2004.
Rising interest rates and balance sheet growth contributed to 66% interest income growth and 86% interest expense growth, compared to the second quarter of last year. Net interest income increased 57% to $15.0 million in the quarter ended June 30, 2005, from $9.5 million in the second quarter last year.
Noninterest income was $4.6 million in the second quarter of 2005, compared to $5.2 million during the comparable period a year ago. “We generally sell our SBA-guaranteed loan production each quarter and portfolio the non-guaranteed portion, which is sold less frequently and is not considered a stable and recurring source of income,” Cho said. “We have not sold any non-guaranteed loans so far this year, but we sold $8.8 million for a gain of $900,000 in the first half of last year, including $304,000 in the second quarter. SBA production remains strong, and the gain on sale of the guaranteed loans is a sustainable and recurring source of noninterest income.”
“As we expand into new markets, our operating expenses have continued to trend upward,” Min added. “Although noninterest expense grew 25% to $7.5 million in the second quarter of 2005, from $6.0 million in the same quarter last year, we are running a very efficient bank.”
In the first six months of 2005, net interest income increased 53% to $28.6 million, compared to $18.6 million in the first half of last year. Noninterest income declined 7% to $9.6 million, from $10.3 million in the six-month period ended June 30, 2004, as gain on sale of SBA loans declined. Noninterest expense increased 27% to $15.4 million, compared to $12.1 million in first six months of 2004, reflecting the opening of three full-service branches and six loan production offices in the past twelve months.
“We are committed to maintaining our strict underwriting standards, both in new markets and here in Southern California,” Min said. “Asset quality has actually improved over the last year, and we have posted small net recoveries for both the second quarter and year-to-date.” Non-performing loans (NPLs) and non-performing assets (NPAs) were both flat from a year ago $3.7 million. Reflecting the balance sheet growth, NPLs dropped to 0.32% of total loans at the end of June 2005, compared to 0.39% a year earlier. NPAs were 0.25% of total assets at the end of the most recent quarter, compared to 0.30% a year ago.
WIBC – Record Profits in 2Q05
July 21, 2005
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“While our credit quality remains very solid, we increased our provision for loan losses by $50,000 to $720,000 in the second quarter to keep pace with the continued growth in our loan portfolio,” Cho said. “Including the $93,000 net recovery, our allowance for loan losses increased 21% to $12.5 million at the end of June 2005, compared to $10.3 million a year ago. The allowance represents 1.10% of total loans at the end of June and is more than three times NPAs.”
At June 30, 2005, shareholders’ equity was $100.9 million, up 31% from $77.1 million a year earlier, and book value had grown to $3.53 per share from $2.76 a year ago. Capital ratios continue to exceed the “Well Capitalized” guidelines established by regulatory agencies. At quarter-end, Tier 1 Leverage Ratio was 9.57%, Tier 1 Risk-Based Capital Ratio was 11.29%, and Total Risk-Based Capital Ratio was 13.33%, compared to 6.94%, 8.00%, and 11.74%, respectively, at the end of June 2004.
Over the last two years, Wilshire has received considerable recognition for its banking excellence. In late December 2003, Investor’s Business Daily ranked Wilshire State Bank at the top of the ‘Who’s Who Among Regional Banks’ list. In June 2004, Wilshire was added to the Russell 3000 index, and the following month Wilshire ranked #8 in the Top 200 Publicly Traded Banks by U.S. Banker, which listed community banks by their three-year average return on equity. In both 2004 and 2005, Wilshire was named one of Sandler O’Neill’s Bank and Thrift Sm-All Stars, which honored the top performing small banks in the country,.
Headquartered in Los Angeles, Wilshire Bancorp is the parent company of Wilshire State Bank, which operates 15 branch offices in California and Texas, and nine Loan Production Offices in San Jose, Seattle, Oklahoma City, San Antonio, Las Vegas, Houston, Atlanta, Denver and New York. Wilshire State Bank is an SBA preferred lender at all of its office locations, excluding the newest LPO in New York. The Bank is a community bank with a focus on commercial real estate lending and general commercial banking, with its primary market encompassing the multi-ethnic populations of the Los Angeles Metropolitan area. Wilshire Bancorp’s strategic goals include increasing shareholder and franchise value by continuing to grow its multi-ethnic banking business and expanding its geographic reach to other similar markets with strong levels of small business activity.
CONSOLIDATED FINANCIAL RATIOS | | Quarter Ended June 30, | | Six Months Ended June 30, | |
(unaudited)(dollars in thousands, except per share data) | | 2005 | | 2004 | | 2005 | | 2004 | |
| Annualized Return on Average Assets | | | 1.92 | % | | 1.73 | % | | 1.90 | % | | 1.74 | % |
| Annualized Return on Average Equity | | | 27.20 | % | | 25.59 | % | | 26.75 | % | | 26.45 | % |
| Efficiency Ratio | | | 38.45 | % | | 41.04 | % | | 40.28 | % | | 42.02 | % |
| Annualized Operating Expense/Average Assets | | | 2.14 | % | | 2.16 | % | | 2.27 | % | | 2.31 | % |
| Annualized Net Interest Margin | | | 4.61 | % | | 3.74 | % | | 4.58 | % | | 3.88 | % |
| Tier 1 Leverage Ratio | | | 9.57 | % | | 6.94 | % | | | | | | |
| Tier 1 Risk-Based Capital Ratio | | | 11.29 | % | | 8.00 | % | | | | | | |
| Total Risk-Based Capital Ratio | | | 13.33 | % | | 11.74 | % | | | | | | |
| Book Value Per Share | | $ | 3.53 | | $ | 2.76 | | | | | | | |
| | | | | | | | | | | | | | |
ALLOWANCE FOR LOAN LOSSES | | Quarter Ended June 30, | | Six Months Ended June 30, | |
(unaudited) (dollars in thousands) | | 2005 | | 2004 | | 2005 | | 2004 | |
| Balance at Beginning of Period | | $ | 11,669 | | $ | 9,487 | | $ | 11,111 | | $ | 9,011 | |
| Provision for Loan Losses | | $ | 720 | | $ | 670 | | $ | 1,220 | | $ | 1,567 | |
| Less Charge Offs (Net Recoveries) | | $ | (93 | ) | $ | (54 | ) | $ | (149 | ) | $ | (60 | ) |
| Less: Provision for (recapture of) losses on off balance sheet item | | $ | 32 | | $ | (40 | ) | $ | 30 | | $ | 387 | |
| Balance at End of Period | | $ | 12,450 | | $ | 10,251 | | $ | 12,450 | | $ | 10,251 | |
| Loan Loss Allowance/Gross Loans | | | 1.10 | % | | 1.11 | % | | | | | | |
| Loan Loss Allowance/Non-performing Loans | | | 339.22 | % | | 280.62 | % | | | | | | |
| Loan Loss Allowance/Total Assets | | | 0.85 | % | | 0.85 | % | | | | | | |
| Loan Loss Allowance/Non-performing Assets | | | 339.22 | % | | 280.62 | % | | | | | | |
| | | | | | | | | | | | | | |
NON-PERFORMING ASSETS | | | | | | | | | | | | | |
(net of guaranteed portion) | | | June 30, 2005 | | | June 30, 2004 | | | | | | | |
| Accruing Loans - 90 Days Past Due | | | 402 | | | 6 | | | | | | | |
| Non-accrual Loans | | | 3,268 | | | 3,629 | | | | | | | |
| Restructured Loans | | | 0 | | | 18 | | | | | | | |
| Total Non-performing Loans | | | 3,670 | | | 3,653 | | | | | | | |
| Total Non-performing Loans/Gross Loans | | | 0.32 | % | | 0.39 | % | | | | | | |
| OREO | | $ | -- | | $ | -- | | | | | | | |
| Total Non-performing Assets | | $ | 3,670 | | $ | 3,653 | | | | | | | |
| Total Non-performing Assets/Total Assets | | | 0.25 | % | | 0.30 | % | | | | | | |
| | | | | | | | | | | | | | |
WIBC - Record Profits in 2Q05
July 21, 2005
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CONSOLIDATED STATEMENT OF OPERATIONS | | | | | | | | | | |
(unaudited) (dollars in thousands, except per share data) | | Three Months Ended June 30, | | Percentage | | Six Months Ended June 30, | | Percentage | |
| | | 2005 | | 2004 | | Change | | 2005 | | 2004 | | Change | |
INTEREST INCOME | | | | | | | | | | | | | |
| Interest on Loans & Leases | | $ | 20,780 | | $ | 12,764 | | | 63 | % | $ | 39,009 | | $ | 24,612 | | | 58 | % |
| Interest on Securities | | | 1,147 | | | 698 | | | 65 | % | | 2,019 | | | 1,388 | | | 45 | % |
| Interest on Federal funds sold | | | 545 | | | 143 | | | 280 | % | | 972 | | | 258 | | | 276 | % |
| Interest on Commercial Papers | | | 67 | | | -- | | | NA | | | 67 | | | -- | | | NA | |
Total Interest Income | | | 22,539 | | | 13,605 | | | 66 | % | | 42,067 | | | 26,258 | | | 60 | % |
| | | | | | | | | | | | | | | | | | | | |
INTEREST EXPENSE | | | | | | | | | | | | | | | | | | | |
| Deposits | | | 6,536 | | | 3,657 | | | 79 | % | | 11,646 | | | 6,838 | | | 70 | % |
| FHLB Advances and Other | | | 1,035 | | | 410 | | | 152 | % | | 1,813 | | | 777 | | | 133 | % |
Total Interest Expense | | | 7,571 | | | 4,067 | | | 86 | % | | 13,459 | | | 7,615 | | | 77 | % |
| | | | | | | | | | | | | | | | | | | | |
| Net Interest Income | | | 14,968 | | | 9,538 | | | 57 | % | | 28,608 | | | 18,643 | | | 53 | % |
| Provision for Loan Losses | | | 720 | | | 670 | | | 7 | % | | 1,220 | | | 1,567 | | | -22 | % |
| Net Interest Income After Provision for Loan Losses | | | 14,248 | | | 8,868 | | | 61 | % | | 27,388 | | | 17,076 | | | 60 | % |
| | | | | | | | | | | | | | | | | | | | |
OTHER OPERATING INCOME | | | | | | | | | | | | | | | | | | | |
| Fees on Deposits | | | 1,815 | | | 1,834 | | | -1 | % | | 3,534 | | | 3,657 | | | -3 | % |
| Gain on Sales of Loans | | | 1,489 | | | 2,034 | | | -27 | % | | 3,512 | | | 4,171 | | | -16 | % |
| Other | | | 1,313 | | | 1,320 | | | -1 | % | | 2,507 | | | 2,432 | | | 3 | % |
Total Other Operating Income | | | 4,617 | | | 5,188 | | | -11 | % | | 9,553 | | | 10,260 | | | -7 | % |
| | | | | | | | | | | | | | | | | | | | |
OPERATING EXPENSES | | | | | | | | | | | | | | | | | | | |
| Salaries and Employee Benefits | | | 4,317 | | | 3,297 | | | 31 | % | | 8,693 | | | 6,739 | | | 29 | % |
| Occupancy & Equipment | | | 770 | | | 676 | | | 14 | % | | 1,603 | | | 1,285 | | | 25 | % |
| Other | | | 2,444 | | | 2,070 | | | 18 | % | | 5,074 | | | 4,121 | | | 23 | % |
Total Other Operating Expenses | | | 7,531 | | | 6,043 | | | 25 | % | | 15,370 | | | 12,145 | | | 27 | % |
| | | | | | | | | | | | | | | | | | | | |
| Income Before Taxes | | | 11,334 | | | 8,013 | | | 41 | % | | 21,571 | | | 15,191 | | | 42 | % |
| Income Tax | | | 4,582 | | | 3,190 | | | 44 | % | | 8,749 | | | 6,023 | | | 45 | % |
NET INCOME | | $ | 6,752 | | $ | 4,823 | | | 40 | % | $ | 12,822 | | $ | 9,168 | | | 40 | % |
| | | | | | | | | | | | | | | | | | | | |
Per Share Data | | | | | | | | | | | | | | | | | | | |
| Basic Earnings Per Common Share | | $ | 0.24 | | $ | 0.17 | | | 36 | % | $ | 0.45 | | $ | 0.34 | | | 33 | % |
| Earnings Per Share – Assuming Dilution | | $ | 0.23 | | $ | 0.17 | | | 38 | % | $ | 0.44 | | $ | 0.32 | | | 37 | % |
| Weighted Average Shares Outstanding | | | 28,574,385 | | | 27,840,519 | | | | | | 28,499,455 | | | 27,158,132 | | | | |
| Weighted Average Shares Outstanding Including | | | | | | | | | | | | | | | | | | | |
| Dilutive Effect Of Stock Options | | | 28,924,459 | | | 28,602,677 | | | | | | 28,894,933 | | | 28,302,083 | | | | |
