EXHIBIT 99.1
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| Contact: | George Rosenbaum, Chief Financial Officer (702) 966-7400 |
NEWS RELEASE
Western Liberty Bancorp Reports 2Q11 Financial Results
Board Authorizes Up to 5% Share Repurchase Program
Las Vegas, NV — July 28, 2011—Western Liberty Bancorp, Inc. (NASDAQ: WLBC), the holding company for Service1st Bank of Nevada (Service1stBank), today reported exceptionally strong capital ratios, solid core deposits and a recently authorized share repurchase program. With a second quarter $4.4 million provision for loan losses, Western Liberty recorded a loss of $4.6 million, or $0.30 per share, in the second quarter, compared to a loss of $409,000, or $0.03 per share in the first quarter of 2011, and a loss of $1.7 million or $0.15 per share in the second quarter a year ago when it was solely a shell company. In the first six months of 2011, Western Liberty recorded a loss of $5.0 million, or $0.33 per share, which included a $5.7million provision for loan losses. All results in this news release are unaudited. Comparisons for financial results in the second quarter of 2010 generally are not meaningful, because before the acquisition of Service1st Bank on October 28, 2010, Western Liberty had no operating entity. Consequently, comparisons for prior periods are primarily for the first quarter of 2011, which was the first full quarter of operations following the merger completed on October 28, 2010.
“With our extremely strong capital levels, the board of directors has authorized a share repurchase of up to 5% of the shares outstanding recognizing the share prices is under tangible book value and cash per share,” said William Martin, Chief Executive Officer. “We are also continuing to work with Sandler O’Neill + Partners, L.P. as our financial advisor, on strategic alternatives for maximizing shareholder value. We have the capital resources to ride out the downturn, and fortunately have the ability to wait for the right opportunities. In the meantime, we continue to focus on maintaining a strong balance sheet and improving operating performance this year.”
“On a pre-tax, pre-provision basis, Western Liberty operated profitably during the first half of the year,” said George Rosenbaum, Chief Financial Officer. “While we believe the core earnings power of the franchise is positive, the Las Vegas economy continues to be impacted by the long and painful economic downturn. As previously reported, the deterioration of a few large loans in the second quarter required us to record a substantial provision for loan losses.”
Financial Highlights(at or for the quarter ended June 30, 2011)
| • | Service1st Bank has exceptionally strong capital ratios with Tier 1 Capital/risk-adjusted assets of 30.7%. | ||
| • | Western Liberty also has exceptionally strong capital with Tier 1 Capital/risk-adjusted assets of 70.1%. | ||
| • | Book value was $5.91 per share and tangible book value was $5.48 per share, based on 15,088,023 shares outstanding. | ||
| • | Total cash and cash equivalents held by Western Liberty was $103.4 million, of which $51.7 million is at the holding company level. | ||
| • | Noninterest bearing deposits accounted for 41% of total deposits and core deposits (excluding time certificates over $100,000) were 73% of total deposits. | ||
| • | Service1st Bank generated pre-tax, pre-provision net income of $2.8 million in the first half of 2011, primarily from the accretion of fair value adjustments. | ||
| • | Initiating a share repurchase program of up to 5% of shares outstanding. |
Western Liberty Reports 1Q11 Results
July 29, 2011
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July 29, 2011
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Nevada Economic Update
“With U.S. consumption spending slowing, the Nevada economy shows signs of slow growth.” said Stephen P. A. Brown, PhD, Director, Center for Business and Economic Research at the University of Nevada, Las Vegas on its website July 13, 2011. “The pace of economic growth in Clark County remains slow. Compared to a year earlier, visitor volume was up by 2.9% in May. Gaming revenues rose sharply on the basis of strong baccarat play and favorable conditions for the sports books. Taxable sales for May were 0.9% above those for the same month a year earlier. Residential and commercial construction permits rose in May, but remain at historically low levels. Las Vegas employment fell by 100 jobs in May, and the unemployment rate rose from 12.0% to 12.4%.
“Despite a slowing national economy and reduced discretionary spending, the Nevada economy is still showing signs of growth—albeit at a somewhat slower pace than during first quarter 2011. With the U.S. economy in the doldrums, the continued growth of Nevada’s tourism, hospitality and gaming industries depends more heavily on foreign visitors and a continued economic recovery in the West. Nevada’s real estate and construction sectors are showing some signs of life,” Brown concluded.
There are a number of excellent reports on the Las Vegas and Nevada economic outlook on the CBER website, which can be found at http://cber.unlv.edu/snecon.html.
Balance Sheet Review
Western Liberty had $223.3 million in total assets at June 30, 2011, down 13% from $257.5 million at December 31, 2010. The decline in assets reflects the $22.7 million reduction in certificates of deposits held with other institutions, which was used to fund the overall reductions in deposits as discussed below.
Commercial real estate loans accounted for 53% and commercial loans comprised 38% of the loan portfolio. Construction and land development loans accounted for 4% and residential real estate loans were 5% of total loans at the end of June. Of the total loan portfolio, 62% is secured by real estate and 34% of the commercial real estate loan portfolio is owner occupied. The majority, or 59%, of the loan portfolio is adjustable rate loans, with most of these loans indexed to the national prime rate. In addition, most of these loans have interest rate minimums which are above the current prime rate index.
Western Liberty had $131.6 million in total deposits, with 41% in non-interest bearing demand accounts. Deposits declined 18% from $160.3 million at year end primarily due to a single large account relationship that transferred from the bank. “Our core deposit base is almost completely local deposits with no brokered or internet funding in the mix,” said Martin.
Total shares outstanding were 15.1 million at quarter end and there are 200,000 restricted stock units convertible into common shares on a one-for-one basis. The share repurchase program authorizing a buyback of up to 5% of total shares outstanding will be carried out in accordance with applicable rules and regulations. The company intends to repurchase its shares in the open market or privately negotiated transactions. The repurchase program may be modified, suspended or terminated by the Board of Directors at any time without notice. The extent to which the company repurchases its shares and the timing of such repurchases will depend upon market conditions and other corporate considerations, including targets whereby repurchases are accretive to earnings while maintaining capital ratios that exceed the guidelines for a well-capitalized financial institution.
Asset Quality
Nonperforming assets totaled $14.1 million, or 6.3% of total assets at June 30, 2011, up from $13.8 million, or 5.4% of total assets at December 31, 2010. Classified loans, which include nonperforming loans as well as loans that continue to perform but have some identified weakness, totaled $30.4 million, or 30% of the loan portfolio. “In the second quarter, we had one $4.2 million commercial real estate loan move into nonaccrual status, and three commercial loans totaling $1.2 million were charged-off in the second quarter,” said Rosenbaum. “We also sold one property for $1.0 million generating a small gain on other real estate owned (OREO) in the second quarter and foreclosed on $2.0 million in nonperforming loans and moved them into OREO in the first quarter.”
Western Liberty Reports 1Q11 Results
July 29, 2011
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July 29, 2011
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Activity in the allowance for loan losses was as follows:
| Construction, Land | ||||||||||||||||||||||||
| Commercial Real | Residential Real | Development, Other | ||||||||||||||||||||||
| ($ in 000’s) | Commercial | Estate | Estate | Consumer | Land | Total | ||||||||||||||||||
| Beginning balance, December 31, 2010 | $ | 36 | $ | — | $ | — | $ | — | $ | — | $ | 36 | ||||||||||||
| Provision for loan losses | 2,615 | 2,504 | 3 | 1 | 589 | 5,712 | ||||||||||||||||||
| Recoveries | 1 | — | 4 | — | — | 5 | ||||||||||||||||||
| Loan charge-offs | (1,235 | ) | — | — | — | (114 | ) | (1,349 | ) | |||||||||||||||
| Balance, June 30, 2011 | $ | 1,417 | $ | 2,504 | $ | 7 | $ | 1 | $ | 475 | $ | 4,404 | ||||||||||||
The allocation of the allowance for loan losses by loan type is presented below:
| June 30, 2011 | ||||||||
| ($ in 000’s) | Amount | % of loans | ||||||
| Loans Secured by Real Estate | ||||||||
| Construction, land development and other land | $ | 475 | 4.05 | % | ||||
| Commercial real estate | 2,504 | 53.50 | % | |||||
| Residential real estate | 7 | 4.63 | % | |||||
| Total loans secured by real estate | 2,986 | 62.18 | % | |||||
| Commercial and industrial | 1,417 | 37.71 | % | |||||
| Consumer | 1 | 0.11 | % | |||||
| Total allowance for loan losses | $ | 4,404 | 100.00 | % | ||||
Review of Operations
In the second quarter, net interest income, before the provision for loan losses, was $2.0 million, compared to $3.7 million in the first quarter of the year. Net interest income was impacted by a reduction of discount accretion as a result of lower payoffs in the second quarter. Discount accretion contributed $590,000 to interest income in the second quarter of 2011 compared to $2.2 million in the first quarter of 2011.
The provision for loan losses totaled $4.3 million in the second quarter compared to $1.4 million in the first quarter of 2011, bringing the year to date provision to $5.7 million. In the first half of 2010, Service1st Bank recorded a provision for loan losses of $3.2 million. “We continue to work with borrowers to resolve problem assets and we have had a number of successes this year. Until the greater Las Vegas economic recovery begins to gain traction, however, we will continue to focus on asset quality,” said Martin. The fair value adjustments taken at the time of the merger revalued all of the loans in the portfolio to reflect conditions as of that time, but there has been further deterioration in the portfolio since the date of acquisition. Due to accounting requirements, the loan loss allowance established by Service1st prior to the merger did not transfer to Western Liberty. Thus the allowance for loan losses was $4.4 million at the end of the second quarter, up from $36,000 at December 31, 2010.
Non-interest expense was $2.4 million in the second quarter, compared to $2.9 million in the first quarter of 2011. This reduction was primarily the result of a decline in legal and professional fees.
About Western Liberty Bancorp
Western Liberty Bancorp is a Nevada bank holding company which conducts operations through Service1st Bank of Nevada, its wholly owned banking subsidiary. Service1st Bank operates as a traditional community bank and provides a full range of deposit, lending and other banking services to locally-owned businesses, professional firms, individuals and other customers from its headquarters and two retail banking facilities located in the greater Las Vegas area. Services provided include: basic commercial and consumer depository services, commercial working capital and equipment loans, commercial real estate loans, and other traditional commercial banking services. Primarily all of the bank’s business is generated in the Nevada market.
Western Liberty Reports 1Q11 Results
July 29, 2011
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July 29, 2011
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www.westernlibertybank.com
Sources: Nevada economyhttp://cber.unlv.edu/cond.html
FORWARD LOOKING STATEMENTS
This release may contain “forward-looking statements” that are subject to risks and uncertainties. Readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. All statements, other than statements of historical fact, regarding our financial position, business strategy and management’s plans and objectives for future operations are forward-looking statements. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” and “intend” and words or phrases of similar meaning, as they relate to Western Liberty or management, are intended to help identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe that management’s expectations as reflected in forward-looking statements are reasonable, we cannot assure readers that those expectations will prove to be correct. Forward-looking statements are subject to various risks and uncertainties that may cause our actual results to differ materially and adversely from our expectations as indicated in the forward-looking statements. These risks and uncertainties include our ability to maintain or expand our market share or net interest margins, and to implement our marketing and growth strategies. Further, actual results may be affected by our ability to compete on price and other factors with other financial institutions; customer acceptance of new products and services; the regulatory environment in which we operate; and general trends in the local, regional and national banking industry and economy as those factors relate to our cost of funds and return on assets. In addition, there are risks inherent in the banking industry relating to collectability of loans and changes in interest rates. Many of these risks, as well as other risks that may have a material adverse impact on our operations and business, are identified in our other filings with the SEC. However, you should be aware that these factors are not an exhaustive list, and you should not assume these are the only factors that may cause our actual results to differ from our expectations.
| Selected Consolidated Financial Highlights | ||||||||||||
| (Dollars in thousands, except per share data) | June 30, | March 31, | December 31, | |||||||||
| (Unaudited) | 2011 | 2011 | 2010 | |||||||||
Per Share data: | ||||||||||||
| Book Value | $ | 5.91 | $ | 6.21 | $ | 6.22 | ||||||
| Tangible Book Value | $ | 5.48 | $ | 5.78 | $ | 5.79 | ||||||
Selected Balance Sheet Data: | ||||||||||||
| Total Assets | $ | 223,343 | $ | 228,791 | $ | 257,546 | ||||||
| Cash and cash equivalents | 103,426 | 90,443 | 103,227 | |||||||||
| Gross loans, including net deferred loan costs | 101,533 | 102,207 | 106,259 | |||||||||
| Allowance for loan losses | 4,404 | 1,290 | 36 | |||||||||
| Deposits | 131,585 | 131,813 | 160,286 | |||||||||
| Stockholders’ equity | 89,099 | 93,558 | 93,829 | |||||||||
Asset Quality: | ||||||||||||
| Nonperforming loans | $ | 9,650 | $ | 4,665 | $ | 10,426 | ||||||
| Other Real Estate Owned | 4,440 | 5,444 | 3,406 | |||||||||
| Nonperforming assets | $ | 14,090 | $ | 10,109 | $ | 13,832 | ||||||
| Allowance for loan losses as a percentage of nonperforming loans | 45.64 | % | 27.65 | % | 0.35 | % | ||||||
| Allowance for loan losses as a percentage of portfolio loans | 4.34 | % | 1.26 | % | 0.03 | % | ||||||
| Nonperforming loans as a percentage of total portfolio loans | 9.50 | % | 4.56 | % | 9.81 | % | ||||||
| Nonperforming assets as a percentage of total assets | 6.31 | % | 4.42 | % | 5.37 | % | ||||||
| Net charge-offs to average portfolio loans | 1.33 | % | 0.11 | % | 0.00 | % | ||||||
Capital Ratios: | ||||||||||||
| Tier 1 equity to average assets | 31.40 | % | 33.00 | % | 30.50 | % | ||||||
| Tier 1 Risk-Based Capital ratio | 70.10 | % | 70.60 | % | 68.40 | % | ||||||
| Total Risk-Based Capital ratio | 71.30 | % | 71.70 | % | 68.80 | % | ||||||
Western Liberty Reports 1Q11 Results
July 29, 2011
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July 29, 2011
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| Consolidated Balance Sheet | ||||||||||||
| (Dollars in thousands, except per share data) | June 30, | March 31, | December 31, | |||||||||
| (Unaudited) | 2011 | 2011 | 2010 | |||||||||
| Assets: | ||||||||||||
| Cash and due from banks | $ | 7,163 | $ | 8,749 | $ | 11,675 | ||||||
| Money market funds | 51,308 | 52,206 | 52,206 | |||||||||
| Interest-bearing deposits in banks | 44,955 | 29,488 | 39,346 | |||||||||
| Cash and cash equivalents | 103,426 | 90,443 | 103,227 | |||||||||
| Certificates of deposits | 4,195 | 16,784 | 26,889 | |||||||||
| Securities, available for sale | 824 | 1,345 | 1,819 | |||||||||
| Securities, held to maturity | 3,692 | 3,737 | 5,314 | |||||||||
| Loans: | ||||||||||||
| Construction, land development and other land | 4,107 | 4,619 | 5,923 | |||||||||
| Commercial real estate | 54,306 | 53,416 | 54,975 | |||||||||
| Residential real estate | 4,704 | 3,980 | 9,247 | |||||||||
| Commercial and industrial | 38,279 | 40,041 | 35,946 | |||||||||
| Consumer | 102 | 131 | 131 | |||||||||
| Plus: net deferred loan costs | 35 | 20 | 37 | |||||||||
| Total loans | 101,533 | 102,207 | 106,259 | |||||||||
| Less: allowance for loan losses | (4,404 | ) | (1,290 | ) | (36 | ) | ||||||
| Net loans | 97,129 | 100,917 | 106,223 | |||||||||
| Premises and equipment, net | 1,013 | 1,120 | 1,228 | |||||||||
| Other real estate owned, net | 4,440 | 5,444 | 3,406 | |||||||||
| Goodwill, net | 5,633 | 5,633 | 5,633 | |||||||||
| Other intangibles, net | 719 | 744 | 768 | |||||||||
| Accrued interest receivable and other assets | 2,272 | 2,624 | 3,039 | |||||||||
| Total assets | $ | 223,343 | $ | 228,791 | $ | 257,546 | ||||||
| Liabilities: | ||||||||||||
| Demand deposits, noninterest bearing | $ | 54,576 | $ | 51,847 | $ | 67,087 | ||||||
| NOW and money market | 34,056 | 39,721 | 56,509 | |||||||||
| Savings deposits | 925 | 1,031 | 1,273 | |||||||||
| Time deposits $100,000 or more | 35,059 | 33,335 | 30,498 | |||||||||
| Other time deposits | 6,969 | 5,879 | 4,919 | |||||||||
| Total deposits | 131,585 | 131,813 | 160,286 | |||||||||
| Contingent consideration | 1,816 | 1,816 | 1,816 | |||||||||
| Accrued interest and other liabilities | 843 | 1,604 | 1,615 | |||||||||
| Total liabilities | 134,244 | 135,233 | 163,717 | |||||||||
| Shareholders’ Equity: | ||||||||||||
| Common stock | 1 | 1 | 1 | |||||||||
| Additional paid-in capital | 117,597 | 117,458 | 117,317 | |||||||||
| Accumulated deficit | (28,494 | ) | (23,898 | ) | (23,489 | ) | ||||||
| Accumulated other comprehensive loss, net | (5 | ) | (3 | ) | — | |||||||
| Total shareholders’ equity | 89,099 | 93,558 | 93,829 | |||||||||
| Total liabilities and stockholders’ equity | $ | 223,343 | $ | 228,791 | $ | 257,546 | ||||||
Western Liberty Reports 1Q11 Results
July 29, 2011
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July 29, 2011
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| Consolidated Income Statement | Three Months Ended | Six Months | ||||||||||
| (Dollars in thousands, except per share data) | June 30, | March 31, | Ended June 30, | |||||||||
| (Unaudited) | 2011 | 2011 | 2011 | |||||||||
| Interest Income: | ||||||||||||
| Interest and fees on loans | $ | 2,018 | $ | 3,782 | $ | 5,800 | ||||||
| Interest on securities, taxable and other | 68 | 66 | 134 | |||||||||
| Total interest and dividend income | 2,086 | 3,848 | 5,934 | |||||||||
| Interest Expense: | ||||||||||||
| Interest expense on deposits | 127 | 112 | 239 | |||||||||
| Net interest income | 1,959 | 3,736 | 5,695 | |||||||||
| Provision for loan losses | 4,348 | 1,364 | 5,712 | |||||||||
| Net interest income after provision for loan losses | (2,389 | ) | 2,372 | (17 | ) | |||||||
| Other Operating Income: | ||||||||||||
| Service charges | 78 | 78 | 156 | |||||||||
| Other | 114 | 43 | 157 | |||||||||
| Total other operating income | 192 | 121 | 313 | |||||||||
| Other Operating Expense: | ||||||||||||
| Salaries and employee benefits | 765 | 793 | 1,558 | |||||||||
| Occupancy, equipment and depreciation | 374 | 374 | 748 | |||||||||
| Computer service charges | 74 | 77 | 151 | |||||||||
| Federal deposit insurance | 129 | 152 | 281 | |||||||||
| Legal and professional fees | 520 | 935 | 1,455 | |||||||||
| Advertising and business development | 48 | 20 | 68 | |||||||||
| Insurance | 67 | 71 | 138 | |||||||||
| Telephone | 17 | 26 | 43 | |||||||||
| Printing and supplies | 87 | 142 | 229 | |||||||||
| Director fees | 49 | 49 | 98 | |||||||||
| Stock-based compensation | 138 | 142 | 280 | |||||||||
| Provision for unfunded commitments | (203 | ) | (133 | ) | (336 | ) | ||||||
| Other | 334 | 254 | 588 | |||||||||
| Total other operating expense | 2,399 | 2,902 | 5,301 | |||||||||
| Net loss | $ | (4,596 | ) | $ | (409 | ) | $ | (5,005 | ) | |||
| Basic EPS | $ | (0.30 | ) | $ | (0.03 | ) | $ | (0.33 | ) | |||
| Diluted EPS | $ | (0.30 | ) | $ | (0.03 | ) | $ | (0.33 | ) | |||
| Average basic shares | 15,088,023 | 15,088,023 | 15,088,023 | |||||||||
| Average diluted shares | 15,088,023 | 15,088,023 | 15,088,023 | |||||||||
Note Transmitted on GlobeNewswire on July 28, 2011, at 6:36 p.m. Pacific Daylight Time
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