Wilshire Bancorp Reports Fourth Quarter and Year End Results: Highlights Include Fourth Quarter Net Income of $3.2 Million or $0.11 Per Common Share, Strengthened Allowance for Loan Losses, and Improved Efficiency Ratio

LOS ANGELES, Jan. 21, 2010 (GLOBE NEWSWIRE) -- Wilshire Bancorp, Inc. (Nasdaq:WIBC), the holding company for Wilshire State Bank, today reported net income available to common shareholders of $3.2 million, or $0.11 per basic and diluted common share, for the fiscal quarter ended December 31, 2009. This compares to a net loss of $1.7 million or ($0.06) per basic and diluted share for the quarter ended September 30, 2009, and a profit of $5.0 million or $0.17 per basic and diluted share for the year-earlier fourth quarter.

“In spite of our continued steps in the fourth quarter to further improve the quality of our balance sheet by aggressively charging-off problem loans as well as increasing our allowance for loan losses, our core profitability remains strong due to our stable net interest margin and low efficiency ratio. Total non-performing assets decreased from the third quarter of 2009, a large portion of which can be attributed to a decrease in non-accrual loans,” said Ms. Joanne Kim, President and CEO. She added “Overall, 2009 was a good year, and with the successful acquisition of Mirae Bank in the second quarter, we will continue to cautiously look ahead for other growth opportunities in the future.”

For the full fiscal year, the Company reported net income available to common shareholders of $16.5 million or $0.56 per basic and diluted share, compared to $26.3 million or $0.90 per basic and diluted common share for the fiscal year ended December 31, 2008.

FOURTH QUARTER 2009 HIGHLIGHTS:

• Decrease in non-performing assets – Non-performing assets decreased by 12%, or $9.8 million during 4Q 2009, compared to 3Q 2009. The decrease in non-performing assets was comprised of a decrease of $7.4 million in non-accrual loans and a $2.4 million decrease in ORE. TDR loans decreased by $1.6 million from 3Q 2009 to 4Q 2009. Total non-performing loans to gross loans and non-performing assets to total asset ratios decreased from 3.2% and 2.5% to 2.9% and 2.2%, respectively.
   
• Allowance for loan losses – The allowance for loan losses as a percentage of total gross loans was strengthened to 2.56% for 4Q 2009, compared to 2.24% at 3Q 2009 and 1.43% at 4Q 2008. Provision for loan losses and loan commitments was $25.6 million for the latest quarter, comparable to the $24.2 million in 3Q 2009 and $5.9 million for 4Q 2008. For the full year, the provision for loan losses was $68.6 million, compared to $12.1 million in 2008.       
   
• Improved efficiency ratio – The efficiency ratio improved to 35.08% at 4Q 2009 from 40.26% at 3Q 2009 and 44.08% at 4Q 2008.
   
• Strong capital position – Total risk-based capital ratio remained strong at 15.81%, compared to 15.82% at 3Q 2009, but was down from 17.09% at 4Q 2008. Tangible common equity per common share was $6.71, down from $6.93 at 3Q 2009 but up from $6.38 at 4Q 2008.
   
• Strong core deposits growth – Core deposits increased to $2.03 billion, a 17% increase from 3Q 2009 and a 123% increase from 4Q 2008.
   

CREDIT QUALITY

During the fourth quarter we continued to accelerate the resolution of our problem loans. As a result, allowance for loan losses increased to $62.1 million, or 2.56% of gross loans. This compares to $54.7 million, or 2.24% of gross loans at 3Q 2009, and $29.4 million or 1.43% of gross loans at Q4 2008. The provision for loan losses and loan commitments was $25.6 million, compared to $24.2 million at 3Q 2009 and $5.9 million at 4Q 2008.

As previously disclosed, upon acquiring certain assets and liabilities of the former Mirae Bank, we entered into a loss sharing agreement with the FDIC where the FDIC will share in losses on assets covered under the agreement. Such loss sharing includes loans and foreclosed loan collateral existing at June 26, 2009 acquired from Mirae. As a result, loans acquired through the acquisition of Mirae Bank are identified herein as “covered” loans, and those that were originated at Wilshire are “non-covered” loans or “legacy Wilshire” loans. The following is a table of “covered” and “non-covered” loans as of the quarter ended December 31, 2009 and September 30, 2009:

Loan Categories

Loan Delinquencies

During the fourth quarter of 2009, total loan delinquencies increased to $40.6 million, compared to $27.6 million at 3Q 2009. However, delinquencies as a percentage of total gross loans was still relatively low at 1.67% for 4Q 2009 compared to 1.13% at 3Q 2009. Delinquencies by days past due and loan type are reflected in the tables below:

Non-covered loan delinquencies that were 30-59 days past due increased by $17.0 million, compared to 3Q 2009, while loans 60-89 days delinquent decreased by $6.8 million. Most categories of delinquencies by loan types experienced increases in during 4Q 2009 led by an increase of $11.5 million in covered and non-covered secured real estate loans delinquencies. A large portion of the increase in delinquencies is attributable to two loans with principal amounts of $4.4 million and $5.0 million, respectively that were categorized as delinquent in the fourth quarter of 2009. Both loans are real estate secured and are not more than 40 days past due.

Non-accrual Loans

Compared to the 3Q 2009, total non-accrual loans decreased by $7.9 million to $69.4 million, or 2.86% of gross loans at the end of the 4Q 2009. The decrease is attributed to the reduction of loans through sales and charge-offs in the fourth quarter 2009. During the fourth quarter, we sold loans that were classified as non-accrual, resulting in a decrease in non-accrual loans of $8.5 million.

Loan Charge-offs
 

Loan charge-offs for 4Q 2009 totaled $18.7 million, an increase of $10.4 million from 3Q 2009. The increase in charge-offs resulted from management’s proactive response to charge-offs of unsecured non-accrual loan amounts, and partially charging-off of loans as a result of updated appraisal values for CRE loans. All loans charged-offs in the fourth quarter had previously been reserved for in prior quarters.

COMMERCIAL REAL ESTATE PORTFOLIO

CRE Loan Composition

Total CRE loans at 4Q 2009 were essentially unchanged from $1.89 billion at 3Q 2009 and increased by $364 million or 24% from the $1.52 billion at year-end 2008, as noted below:

The CRE loan maturity distributions for 4Q 2009 were as listed below:

We believe that our refinance risk is limited based on our relatively low loan-to-value ratios and the fact that fewer of our loans are due for refinance or maturity, with  85% of our CRE loan portfolio having maturities in 2011 or later. 

BALANCE SHEET

Total assets increased by $58.4 million or 2% to $3.44 billion at 4Q 2009, from $3.38 billion at 3Q 2009. The increase was primarily due to an increase of $91.7 million in investment securities, offset in part by a $17.9 million decrease in gross loans. The gross loan portfolio was $2.43 billion at 4Q 2009, compared to $2.45 billion at 3Q 2009, and $2.05 billion at 4Q 2008.                                 

Total deposits increased to $2.83 billion at 4Q 2009 from $2.67 billion at 3Q 2009, an increase of 6.0% or $156.1 million from the prior quarter and 56.0% or $1.02 billion from the $1.81 billion of 4Q 2008.

The increase in deposits resulted from a substantial increase in core deposits of $289.1 million or 16.6% from 3Q 2009, and $1.12 billion or 123.4% from year-end 2008. Core deposits consist of demand deposits, savings, NOW accounts, money market accounts, and time deposits accounts under $100,000.

We have successfully grown core deposits by introducing new deposit products, attracting new customers, and expanding existing customer relationships. With the successful increase in core deposits, the cost of deposits has decreased considerably. The cost of deposits in 4Q 2009 decreased to 2.12%, 27 basis points less than 3Q 2009. The inflow of core deposits allowed us to pay down higher rate brokered deposits during the fourth quarter. Our brokered deposits decreased to $25.5 million or 58.2% as of 4Q 2009, compared to $64.1 million as of 3Q 2009 and $147.9 million at 4Q 2008.

As a result of continual growth in core deposits, Wilshire was also able to pay off $90 million in FHLB borrowings during the 4Q 2009. Compared to total FHLB borrowings of $322 million in the third quarter of the same year, borrowings are down by 28% to $232 million.

Strong Capital Ratios

Capital ratios remained strong in the fourth quarter and were well in excess of “well capitalized” regulatory requirements. Based on our capital levels as of 4Q 2009, we had excess capital to absorb future credit costs, as noted in the table below:

During the fourth quarter, we declared dividends on our common stock in the amount of $.05 per share, consistent with prior quarterly dividends. We also paid the dividend owing to the U.S. Treasury on our non-cumulative perpetual convertible preferred stock, series A We will continue to monitor our dividend policy in light of the current economic environment.

NET INTEREST MARGIN

Net interest income remained virtually the same at $29.4 million, compared to 3Q 2009. Net interest income increased by 39% from the $21.1 million reported at 4Q 2008. The year-over-year increase in interest income and net interest income is largely due to increased earning assets obtained through the acquisition of the assets of Mirae Bank, as well as strong organic growth.

Net interest margin decreased by 14 basis points to 3.73% in 4Q 2009 from the 3.87% in the prior quarter, and decreased by one basis point from the 3.74% for 4Q 2008.  The weighted average loan yield decreased by 14 basis points to 6.44% in 4Q 2009 from 6.58% at 3Q 2009. The yield on investment securities decreased 30 basis points to 3.24% from 3.54% at 3Q 2009.

Net interest income reversal on non-accrual loans was $780 thousand at 4Q 2009, compared to $2.5 million in the 3Q 2009. Net interest income reversal in 4Q 2009 impacted our net interest margin by 10 basis points for the same period.

Average interest-bearing deposits increased by $227 million to $2.40 billion during 4Q 2009, from the $2.17 billion at 3Q 2009. The cost of deposits decreased by 27 basis points in 4Q 2009 compared to 2.39% in the 3Q 2009. The decrease in the cost of deposits was due to repricing at lower levels of related interest bearing deposits. Certificate of deposits, excluding State of California time deposits, of $273 million with a weighted average rate of 2.18% are expected to mature in the first quarter of 2010. We expect to reprice most of these certificates of deposits at lower rates upon maturity.

During the fourth quarter Wilshire was able to realize a gain on sale of investment securities of $9.6 million and a gain on sale of loans of $2.0 million. The stability and strength of our liquidity position had enabled us to capitalize on these gains and as a result our efficiency ratio has continued to improve. Compared to 40.26% at the end of the 3Q 2009, our efficiency ratio stood at 35.08% a decrease of 5.18% from quarter to quarter.

Year to date interest income increased from $148.6 million at Q4 2008 to $158.3 million at Q4 2009, an increase of 7% from year to year. Net interest income before provision for loan losses also increased for the twelve months ending December 31, 2009 to $99.5 million, an increase of $16.8 million or 20%. Although deposits increased by $1.0 billion or 56% during the 1 year period, we were able to decrease interest expense by $7.1 million to $58.9 million, an 11% decrease. For the twelve months ending 2009, non-interest expense increased to $57.4 million or 19% from $48.4 million at year end 2008 in part due to an increase in FDIC and state assessments. However, the largest portion of non-interest expense, salaries and employee benefits, increased by only $19 thousand for the same period. 

CONFERENCE CALL

Management will host its quarterly conference call on January 21, 2010, at 11:00 a.m. PST (2:00 p.m. EST). Investment professionals are invited to participate in the call by dialing 1-866-788-0545 (domestic number) or 1-857-350-1683 (international number) and entering passcode 64779674.

COMPANY INFORMATION

Headquartered in Los Angeles, Wilshire State Bank operates 23 branch offices in California, Texas, New Jersey and New York, and five loan production offices in Dallas, Houston, Atlanta, Denver, and Annandale, Virginia, 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. 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. www.wilshirebank.com

FORWARD-LOOKING STATEMENTS

Statements concerning future performance, events, 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. Specific factors include, but are not limited to, loan production and sales, credit quality, the ability to expand net interest margin, the ability to continue to attract low-cost deposits, success of expansion efforts, competition in the marketplace and general economic conditions. The financial information contained in this release should be read in conjunction with the consolidated financial statements and notes included in Wilshire Bancorp’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, Wilshire Bancorp 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 Wilshire Bancorp with the Securities and Exchange Commission.