Wilshire Bancorp Earns $6.9 Million, or $0.23 per Diluted Share in Third Quarter,
Credit Metrics Remain Strong and Interest Margins Expand
LOS ANGELES, CA – October 21, 2008 – Wilshire Bancorp, Inc. (NASDAQ: WIBC), the holding company for Wilshire State Bank,
today reported that net income increased 3% to $6.9 million, or $0.23 per diluted share, in the third quarter of 2008 compared with $6.6
million, or $0.23 per diluted share, in the third quarter a year ago. Net interest margin increased 8 basis points to 3.86% at September 30,
2008 from 3.78% at June 30, 2008. Allowance for loan losses to gross loans ratio increased to 1.28% at September 30, 2008, as
compared with 1.18% at June 30, 2008 and 1.21% at September 30, 2007.
“Wilshire had another successful quarter with steady loan growth and an expansion of net interest margin. We also improved certain
credit quality metrics, with both nonperforming and delinquent loans decreasing, and allowance coverage increasing, compared with the
prior quarter,” stated Ms. Joanne Kim, President and CEO. “Part of the reason we have been successful is that we have been able to
maintain a strong capital position, allowing us to take advantage of sound lending opportunities and grow our loan portfolio, while being
more selective as to whom we lend to and on the lending terms. This has enabled us to better manage our loan pricing, as loan pricing is
now based more on risk and not based on competition in the market. With fewer lenders competing in our market, we have been able to
effectively manage loan pricing. While we are still affected by weaker economic conditions, we are confident that we are well positioned
for growth during this challenging economic environment.”
THIRD QUARTER 2008 FINANCIAL HIGHLIGHTS:
Compared with third quarter 2007
• Net income increased 3% to $6.9 million, compared with $6.6 million in the third quarter a year ago.
• Gross loan charge offs decreased 39% to $1.5 million.
• Service charges on deposit increased 30% to $3.1 million, compared with $2.4 million in 3Q07.
• Average size of the net loan portfolio increased 19% to $1.98 billion, compared with $1.67 billion a year ago.
• Average interest-earning assets increased 15% to $2.22 billion, compared with $1.93 billion a year ago.
• Capital position remained strong with total risk based capital ratio at 14.0%.
Compared with second quarter 2008
• Total nonperforming loans decreased 17% to $13.7 million, net of SBA guarantee, or 0.67% of total loans compared with
$16.5 million, or 0.83% of total loans, at June 30, 2008.
• Total nonperforming assets decreased to $15.2 million, net of SBA guarantee, or 0.64% of total assets, compared with $17.0
million, or 0.72% of total assets at June 30, 2008.
• Gross loan charge offs decreased 20% to $1.5 million.
• Net interest margin improved eight basis points to 3.86% from 3.78% in 2Q08.
• Efficiency ratio improved to 46.0% from 48.4% in 2Q08.
CREDIT QUALITY
“Credit quality continues to be our top priority,” Ms. Kim said. “Even though our asset quality metrics have been impacted in recent
quarters by weaker economic conditions, our credit matrix remained strong. This is a result of our strong commitment to sound
underwriting standards, effective servicing, and diligent collection efforts. We believe that our strong credit culture will continue to
serve us well.”
Non-performing loans were reduced to $13.7 million, or 0.67% of gross loans at September 30, 2008, compared with $16.5 million,
or 0.83% of gross loans, at June 30, 2008 and $8.3 million, or 0.48% of gross loans, at September 30, 2007.
“The decrease in non-performing loans during the quarter is primarily due to our deliberate effort to aggressively identify and manage
problem credits,” Ms. Kim said.
Gross loan charge offs decreased to $1.5 million during the quarter, compared with $1.9 million in the second quarter of 2008 and
$2.5 million in the same quarter 2007.
WIBC – 3Q08 results
October 21, 2008
Page 2
The provision for losses for loans and loan commitments was $3.4 million during the third quarter of 2008, compared with $1.4
million during the second quarter of 2008 and $4.1 million during the third quarter a year ago. For the first nine months of 2008 the
provision for losses on loans and loan commitments was $6.2 million, compared with $10.2 million in the same period a year ago.
The allowance for loan losses totaled $26.0 million at the quarter end of September 30, 2008, representing 1.28% of gross loans and
189.01% of nonperforming loans, compared with $23.5 million, representing 1.18% of gross loans and 142.64% of nonperforming
loans, at June 30, 2008, and $20.9 million, representing 1.21% of gross loans and 251.48% of nonperforming loans at the end of
September 2007.
“The primary reason for the increase in the provision for loan losses for the quarter over the immediately preceding quarter is due to
our continued loan growth, as well as the increase in our classified loans,” said Ms. Kim. “During the third quarter, we proactively
identified several real estate loans as potential weak credits, and we have downgraded them as Substandard, even though they are
performing, well collateralized and in current status. This is an example of what we believe to be a conservative and prudent
approach in loan portfolio management.”
CAPITAL POSITION
Wilshire’s capital ratios remained strong and continued to exceed the “Well Capitalized” guidelines established by regulatory
agencies. The leverage ratio was 10.19% at September 30, 2008, compared with 10.21% at June 30, 2008, and 10.41% at September
30, 2007. The total risk-based capital ratio was 14.01% at September 30, 2008, compared with 13.99% at June 30, 2008, and 15.06%
at the end of September 30, 2007.
BALANCE SHEET
Total assets increased 14% to $2.39 billion at September 30, 2008, compared with $2.10 billion a year ago, and increased 9%,
compared with $2.20 billion at December 31, 2007. The loan portfolio increased 18% to $2.03 billion at September 30, 2008,
compared with $1.72 billion a year ago, and increased 12%, compared with $1.81 billion at December 31, 2007.
At September 30, 2008, commercial real estate loans comprised 73% of the loan portfolio. “Nearly 30% of our commercial real estate
loans are owner occupied. These properties are used to operate a customer’s own business and are supported by the cash flows from
those businesses,” added Ms. Kim. Wilshire continues to reduce its exposure to construction loans, which accounted for only 2% of its
loan portfolio at September 30, 2008, compared with 4% a year ago. Commercial and industrial loans accounted for 20% of total loans
and consumer loans make up just 1% of total loans. Additionally, Wilshire does not have any land development loans in its loan
portfolio.
Wilshire has not engaged in any subprime lending and the loan portfolio does not contain any such loans. For the purpose of making
this determination, Wilshire considers “subprime loans” to be loans made to a borrower with a diminished or impaired credit rating or
with a limited credit history.
Total deposits increased 3% compared with the end of the previous quarter and 2% compared with a year ago. Total deposits were $1.79
billion at September 30, 2008 compared with $1.74 billion at June 30, 2008 and $1.75 billion a year ago. Core deposits were at $1.02
billion at September 30, 2008, representing a 6% increase compared with the preceding quarter end, and a 3% increase compared with a
year ago. The growth in core deposits came primarily from time deposits under $100,000, which increased 23% from the preceding
quarter end and 55% from a year ago. A majority of the loan growth during the third quarter of 2008 was funded by core deposits growth,
which resulted in a decrease in FHLB borrowing from the previous quarter. FHLB borrowings were $300 million at September 30, 2008,
compared with $320 million at the end of June 2008.
At the end of the third quarter of 2008, the investment portfolio allocation was 94% United States Government agency securities, 3%
corporate securities, and 3% municipal securities. 95% of the portfolio carries the top rating of “Aaa/AAA” while the remaining 5% of
the portfolio carries a high “Investment Grade” rating of at least “A” or above. The investment portfolio does not contain any government
sponsored enterprises (GSE) preferred securities or any distressed corporate securities that have required other-than-temporaryimpairment
charges during the third quarter of 2008.
NET INTEREST MARGIN
“Continued loan growth and higher loan pricing, combined with a substantial decrease on deposit yields, contributed to our net
interest margin expanding eight basis points compared with the previous quarter,” said Mr. Alex Ko, CFO. The net interest margin
was 3.86% in the third quarter of 2008, compared with 3.78% in the previous quarter and 4.35% in the third quarter a year ago. For
the first nine months of 2008 the net interest margin was 3.82% compared with 4.32% for the first nine months of 2007.
WIBC – 3Q08 results
October 21, 2008
Page 3
In the third quarter of 2008, the weighted average yield of the loan portfolio decreased nine basis points to 7.02% from 7.11% in the
preceding quarter. Deposit cost during the quarter also decreased, with the average cost on total interest bearing deposits decreasing
23 basis points to 3.39%, compared with 3.62% during the previous quarter, with other time deposit cost decreasing 39 basis points to
3.69% during the third quarter compared with 4.08% in the previous quarter.
As a result of disciplined deposit pricing during the third quarter of 2008, the net interest spread has increased to 3.31%, compared with
3.17% at June 30, 2008. The weighted average cost of interest-bearing liabilities for the third quarter decreased 19 basis points to 3.46%
from 3.65% for the preceding quarter. The decrease was due to core deposit growth, combined with disciplined pricing during the
quarter. In addition, our non-time deposits have increased $15.4 million, or 2% to $807.4 million at September 30, 2008, while FLHB
borrowings has decreased $20.0 million, or 6% to $300 million at September 30, 2008 from the previous quarter end. “While we
continue to use FHLB advances as a cost effective alternative to our funding needs, our primary goal is to continue to fund loan growth
with low-cost core deposits,” said Mr. Ko.
INCOME STATEMENT AND PERFORMANCE METRICS
In the third quarter of 2008, interest income was down 7% while interest expense was down 17% compared with the third quarter of
2007. Net interest income increased 2% to $21.4 million, from $20.9 million in the third quarter of 2007, while it was up 5%
compared with the second quarter of 2008. Service charges on deposits grew by 30% to $3.1 million, compared with $2.4 million in
the third quarter a year ago largely due to effective deposit service fee management and increased number of checking accounts over
the prior year. Total noninterest income increased 2% to $5.3 million, compared with $5.2 million in the third quarter a year ago,
despite the decrease in SBA loan sales during the third quarter of 2008.
For the first nine months of 2008 interest income was down 5% while interest expense was down 11% compared with the first nine
months of 2007. Net interest income increased 1% to $61.5 million, from $60.9 million in the first nine months of 2007. Due to the
decrease in SBA loan sales, our gain on loan sales in the first nine months of 2008 decreased 62%, compared with the same period of
2007. Nonetheless, such decrease was largely offset by 24% increase in service charges on deposits, which resulted in fairly
comparable total noninterest income between the two periods. Total noninterest income was $16.1 million for the first nine months in
2008, compared with $16.7 million for the first nine months of 2007.
SBA loan production levels decreased 74% to $10.2 million in the third quarter of 2008 compared with $39.7 million in the third
quarter a year ago, reflecting the overall weaker economic environment and tougher underwriting standards. The average sales
premium of SBA 7(a) guaranteed loans was lower in the third quarter of 2008 compared with the third quarter a year ago. The lowered
sales volume and premium of SBA 7(a) guaranteed loans resulted in a 74% decline in gain on sale of loans to $410,000 in the third quarter of
2008, compared with $1.6 million in the third quarter of 2007, and a 62% decline in gain on sale of loans to $2.2 million in the first nine
months of the year, compared with $5.7 million in the same period a year ago. However, as stated earlier, the healthy increase in service
charges on deposits and other operating income offset the decrease in SBA gain on sale income, resulting in constant non-interest income
year over year.
Total noninterest expense was $12.3 million in the third quarter of 2008, compared with $12.6 million in the previous quarter and $11.0
million in the third quarter a year ago. Year-to-date, total noninterest expense was $37.1 million compared with $32.2 million in the same
period a year ago. The year-to-date increase in salary and employee benefits is primarily due to increase in stock option expenses for new
stock options granted in June 2008 and various expenses related to the new Los Angeles branch that opened in the third quarter of 2008.
“During the third quarter we have successfully opened a new branch in Los Angeles. Further, we decided to close a small market
branch in Rancho Cucamonga, and we plan to consolidate it into our neighboring branch in the same city during December of 2008,”
said Ms. Kim. Additionally, our fourth branch in East Coast, at Flushing New York, is scheduled to open during the first quarter of
2009, and we continue to explore branch expansion opportunities in our primary markets.”
The efficiency ratio was 46.0% in the third quarter of 2008, compared with 48.4% in the immediately preceding quarter and 42.2% in the
third quarter a year ago. For the first nine months of the year the efficiency ratio was 47.8% compared with 41.5% for the same period a
year earlier.
Wilshire’s return on equity (ROE) in the third quarter of 2008 was 14.74% compared with 15.91% in the third quarter a year ago and
return on assets (ROA) was 1.15%, compared with 1.28% in the third quarter a year ago. For the first nine months of 2008, ROE was
15.71% and ROA was 1.24%, compared with 17.61% and 1.41%, respectively, in the first nine months of 2007.
“We believe our financial performance has been strong and it has continued to remain stable even in the current weakened economic
environment. We continue to have sufficient capital, allowing us to lend to customers who meet our credit standards” said Mr. Ko.
https://www.wilshirebank.com/public/pdf/2008-3Q-EarningsFinal.pdf
News 
Market Data 
Discover 
AI
