Wilshire Bancorp, Inc (WIBC)

[Enterprising Investor]

WIBC Reports Net Income of $22.1 Million or $0.31 Earnings per Share for Second Quarter 2012 (7/23/12)

LOS ANGELES, July 23, 2012 (GLOBE NEWSWIRE) -- 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 $22.1 million, or $0.31 per diluted common share, for the quarter ended June 30, 2012. This compares to net income available to common shareholders of $2.1 million, or $0.04 per common share, for the same period of the prior year, and net income available to common shareholders of $17.9 million, or $0.25 per common share, for the first quarter of 2012. The increase in net income for the second quarter of 2012 is primarily attributable to a $10.0 million negative provision for losses on loans and commitments and higher non-interest income.

Jae Whan (J.W.) Yoo, President and CEO of Wilshire Bancorp, said, "We delivered another strong quarter that was driven by low credit costs, increased loan production, and improved net interest margin. Our higher loan production helped generate 15% annualized growth in total gross loans during the second quarter. Importantly, we believe we are achieving very balanced growth with meaningful increases in our commercial real estate, commercial and industrial, residential real estate, and SBA loan production.

"We have also seen several consecutive quarters of positive trends in credit quality, which among other factors, contributes to our conclusion that it is the appropriate time for us to reduce our allowance for loan losses from the elevated level we built last year. This resulted in recording a negative provision for loan losses of $10 million during the second quarter. If credit quality remains at its current level or improves further, we may determine that a further reduction in our allowance for loan losses going forward is appropriate. We expect to continue generating a strong level of profitability over the remainder of 2012, driven by low credit costs and a continued low tax rate," said Mr. Yoo.

Q2 2012 Summary:

Net income available to common shareholders of $22.1 million or $0.31 per diluted share

Loan originations increased 93.0% to $245.2 million in Q2 2012 from $127.0 million during Q1 2012

Non-accrual loans declined by 18.6% to $41.5 million in Q2 2012 from $51.0 million in Q1 2012

Reduction in criticized and classified loans during Q2 2012

Improved deposit mix with non-interest-bearing demand deposits increasing to 23.6% of total deposits for Q2 2012 from 23.0% for Q1 2012

Net interest margin expanded to 4.13% in Q2 2012 from 4.07% in Q1 2012

Improved credit quality and continued low net charge-offs resulted in $10.0 million negative provision for losses on loans and loan commitments in Q2 2012

Annualized return on average assets of 3.45% and return on average equity of 32.1% for Q2 2012

FDIC indemnification impairment of $2 million in Q2 2012

Fully repurchased shares of TARP preferred stock in addition to TARP warrants in Q2 2012

STATEMENT OF OPERATIONS

Net Interest Income and Margin

Net interest income before credit for losses on loans and loan commitments totaled $24.2 million in the second quarter of 2012, a decrease of 11% from $27.3 million in the second quarter of 2011, and a decrease of 1% from $24.4 million in the first quarter of 2012. The decrease from the prior quarters is primarily due to a lower average balance of interest-earning assets and a reduction in overall loan yields in the second quarter of 2012.

Net interest margin was 4.13% for the second quarter of 2012, compared to 4.42% in the second quarter of 2011, and 4.07% for the first quarter of 2012. The increase in net interest margin from the first 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 interest bearing deposits. The increase in average loans and decline in higher costing time deposits were funded by a decline in cash and lower yielding federal funds sold, which also contributed to the increase in net interest margin for the second quarter of 2012.

Loan yields declined to 5.71% for the second quarter of 2012 from 5.85% for the first quarter of 2012, primarily due to the addition of newly originated loans that have lower yields than the existing portfolio. The total cost of deposits continued to decrease and was 0.74% for the second quarter of 2012, down from 0.78% for the first quarter of 2012. The decrease was primarily due to lower rates paid on savings and time deposit accounts and an increase in demand deposit account balances.

Non-Interest Income

Total non-interest income was $8.5 million for the second quarter of 2012, compared to $1.7 million for the second quarter of 2011, and $6.4 million for first quarter of 2012. The increase in non-interest income from the prior quarters is primarily due to higher gains on sales of loans. The $3.3 million in net gains on sales of loans recognized in the second quarter of 2012 includes gains on sales of SBA loans totaling $2.5 million, net gains on sales of commercial real estate loans totaling $684 thousand, and gains on sales of residential mortgage loans of $129 thousand.

Non-Interest Expense

Total non-interest expense was $20.4 million for the second quarter of 2012, compared with $16.6 million for the second quarter of 2011, and $14.7 million for the first quarter of 2012. The increase in total non-interest expense for the second quarter of 2012, compared to the first quarter of 2012 and second quarter of 2011 was primarily due to higher salaries and employee benefits expense, FDIC indemnification impairment expense and higher other non-interest expense.

Total salaries and employee benefits expense was $9.0 million in the second quarter of 2012, compared with $6.8 million in the second quarter of 2011 and $8.2 million in the first quarter of 2012. The increase from the prior quarter is primarily due to the impact of annual salary increases given in the second quarter of 2012 and $271 thousand in stock-based compensation expense related to stock option grants made in the second quarter of 2012.

During the second quarter of 2012, the Company recorded an impairment of the FDIC indemnification assets amounting to $2.0 million. The impairment reflected overall improved credit quality in the covered loan portfolio.

Other non-interest expenses for the second quarter of 2012 totaled $6.7 million, compared with $7.0 million in the second quarter of 2011 and $3.9 million in the first quarter of 2012. The increase in other non-interest expenses from the prior quarter was primarily attributable to higher expenses related to other real estate owned ("OREO"), an increase in expenses related to low income housing tax credit investments, and an increase in legal fees.

The Company's operating efficiency ratio was 62.2% for the second quarter of 2012, compared with 57.2% for the second quarter of 2011 and 47.8% for the first quarter of 2012.

Tax Provision

For the second quarter of 2012, the Company recorded an income tax provision totaling $215 thousand on pretax income of $22.4 million, representing a tax rate of 1.0%, compared to income tax benefit of $354 thousand on pretax income of $16.1 million, representing an effective tax rate of -2.2% for the previous quarter. The second quarter of 2012 increase in the effective tax rate compared to the first quarter of 2012 was the result of non-recurring favorable State tax settlements in the first quarter offset by the effect of an increase in pretax income in the second quarter.

BALANCE SHEET

Total gross loans were $2.03 billion at June 30, 2012, compared to $1.95 billion at March 31, 2012. The increase in total gross loans during the second quarter of 2012 was primarily due to increases in the commercial real estate, commercial and industrial, and residential real estate portfolios.

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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