WIBC Wilshire Bancorp, Inc. (MM)

Wilshire Bancorp, Inc. (Nasdaq:WIBC), the holding company for Wilshire State Bank, today reported that the net interest margin expanded for the sixth consecutive quarter and loan growth remained strong, contributing to net income increasing 41% in the third quarter and 40% in the first nine months of 2005. For the quarter ended September 30, 2005, net income was a record $7.2 million, or $0.25 per diluted share, compared to $5.1 million, or $0.18 per share in the third quarter of last year. Year-to-date, net income was $20.0 million, or $0.69 per diluted share, up from $14.3 million, or $0.50 per share in the first nine 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. Management will host its quarterly conference call today, October 25, at 10:30 am PDT (1:30 pm EDT). Investment professionals are invited to participate in the call by dialing 866-831-6272 using passcode 48897052. Current and prospective shareholders are invited to listen to the live or archived call on the Internet, at www.wilshirebank.com, or www.earnings.com. "Our significant growth continues, with total loans up 22% and deposits up 24% since the end of September last year," stated Soo Bong Min, President and CEO. "We have opened two branches in Southern California, one in Dallas, and four business lending offices nationally since the beginning of the year, providing a platform for our balance sheet growth. In addition, I expect our acquisition of Liberty Bank of New York to close before year-end, adding two branches to our existing presence there. Despite investing in our infrastructure, we have continued to grow revenues and kept operating expenses in check, as is evidenced by the continued improvement in our already solid profitability ratios." Wilshire's annualized return on average equity (ROE) improved to 27.4%, from 25.3% in the third quarter of 2004. Year-to-date, ROE was 27.0%, compared to 26.0% in the first nine months of 2004. Return on average assets (ROA) grew to 1.96% in the third quarter, from 1.67% a year ago, and for the nine-month period ROA was 1.92%, compared to 1.71% in the first three quarters of last year. The efficiency ratio improved to 39.0% in the third quarter of 2005, compared to 41.8% in the previous year, and was 39.8% year-to-date, versus 41.9% in the nine months ended September 30, 2004. "Although our third quarter efficiency ratio was again below 40%, I don't believe it will improve much further in the near term as we fully absorb the operating costs associated with our new offices," stated Brian Cho, Executive Vice President and Chief Financial Officer. "And while our net interest margin has improved for six consecutive quarters, it will be difficult to maintain that momentum should rates stop increasing or start to move back down. In the meantime, however, the lag between the repricing of loans and deposits has been extremely beneficial." Wilshire's net interest margin was 4.84% in the third quarter of 2005, compared to 4.61% in the preceding quarter and 3.97% a year ago. For the nine-month period ended September 30, 2005, the margin improved to 4.67%, from 3.91% in the same period last year. Total loan originations increased 29% in the quarter to $229.1 million, from $177.5 million in third quarter of 2004. Year-to-date, loan originations grew by 22% to $639.6 million, compared to $522.3 million in the same period last year. Total loans increased by 22% to $1.19 billion at September 30, 2005, compared to $927.8 million at the end of the third quarter of last year. Total assets grew 28% to $1.55 billion at the end of the third quarter, from $1.21 billion a year ago, due to the loan growth as well as an increase in federal funds sold and securities available for sale. Total deposits have grown by 24% over the past year, to $1.30 billion at the end of the third quarter of 2005, compared to $1.05 billion at the end of September last year. "We remain focused on building core deposits to keep our funding costs down, and non-interest bearing deposits are up 22% in the past twelve months," Cho said. "In order to continue our growth in an extremely competitive environment, however, we are also utilizing time deposits and other borrowings to fund our new loans." "As a community commercial bank, we are focused on building relationships with our borrowers," Min said. "We truly understand the customers we lend to, and work with them when their businesses face challenges. As a result, we have historically maintained very good credit quality and minimal charge offs. While non-performing loans ticked up slightly in the third quarter, we believe we are well protected with adequate reserves and tangible collateral." Non-performing loans (NPLs) were $4.1 million, or 0.35% of total loans, at the end of September 2005, compared to $3.7 million, or 0.32% of loans at the end of June 2005. At the end of the third quarter last year, NPLs were $3.0 million, or 0.31% of total loans. Non-performing assets (NPAs) were $4.3 million at the end of the third quarter, representing 0.28% of total assets. NPAs were $3.7 million, or 0.25% of total assets at the end of June 2005, and $3.0 million, or 0.25% of total assets at the end of the third quarter a year ago. "Net charge offs were just $90,000 in the third quarter, and year-to-date we have a net recovery of $59,000," Cho said. "However, our provision for loan losses was $1.3 million in the third quarter and totals $2.5 million year-to-date, reflecting the continued growth in our portfolio. As a result, our allowance for loan losses has grown by 22% over the last year to $13.6 million at the end of September 2005, compared to $11.1 million a year ago. The allowance represented 1.14% of total loans at the end of September 2005 and was more than triple our NPAs." Due to the growing balance sheet and the rising interest rate environment, interest income grew by $9.4 million over the third quarter last year, while interest expense increased by $4.1 million. As a result, net interest income was up 47% to $16.3 million in the quarter, compared to $11.1 million in the third quarter of 2004. Noninterest income was $5.1 million in the third quarter of 2005, versus $5.9 million a year earlier, due to the absence of gain on sale of non-guaranteed SBA loans. Noninterest expense grew 17% to $8.4 million in the third quarter of 2005, from $7.1 million in the same quarter last year, due to the increased costs associated with operating the additional branches and loan production offices. In the nine-month period ended September 30, 2005, interest income increased by $25.2 million relative to the same period in 2004, while interest expense grew by $10.0 million. Net interest income increased 51% to $44.9 million, compared to $29.8 million in the same period last year. Noninterest income declined 9% to $14.7 million in the first nine months of 2005, from $16.2 million a year ago, reflecting no gain on sale of non-guaranteed SBA loans year-to-date, compared to $1.1 million in first three quarters of last year. Noninterest expense increased 23% year-to-date to $23.7 million, compared to $19.3 million in the first nine months of 2004. At September 30, 2005, shareholders' equity was $106.8 million, up 28% from $83.4 million a year earlier, and book value grew to $3.74 per share, from $2.97 a year ago. Capital ratios continue to exceed the "Well Capitalized" guidelines established by regulatory agencies. At quarter-end, Tier 1 Leverage Ratio was 9.71%, Tier 1 Risk-Based Capital Ratio was 11.76%, and Total Risk-Based Capital Ratio was 14.94%, compared to 8.03%, 9.84%, and 12.01%, respectively, at the end of September 2004. Wilshire Bancorp and its Wilshire State Bank subsidiary have received significant accolades for growth, performance and profitability. In September 2005, Fortune named Wilshire the 79th fastest growing public company in the nation. A month earlier, U.S. Banker magazine ranked Wilshire seventh on its list of the Top 100 Publicly Traded Mid-Tier Banks, those with less than $10 billion in assets, based on their three-year return on equity. In addition, Sandler O'Neill has identified Wilshire as one of its Bank and Thrift Sm-All Stars in each of the last two years, among just 38 companies out of 573 with market capitalizations below $2 billion. Headquartered in Los Angeles Wilshire State Bank operates 16 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, and is an SBA preferred lender at all of its office locations. 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. -0- *T CONSOLIDATED STATEMENT OF OPERATIONS (unaudited) (dollars in thousands, except per share data) Quarter Ended Sept. 30, Percentage INTEREST INCOME 2005 2004 Change ----------- ----------- ---------- Interest on Loans & Leases $ 23,426 $ 14,837 58% Interest on Securities 1,333 821 62% Interest on Federal funds sold 505 267 89% Interest on Commercial Paper 15 - na ----------- ----------- ---------- Total Interest Income 25,279 15,925 59% INTEREST EXPENSE Deposits 7,829 4,313 82% FHLB Advances and Other 1,124 499 125% ----------- ----------- Total Interest Expense 8,953 4,812 86% Net Interest Income 16,326 11,113 47% Provision for Loan Losses 1,250 1,450 -14% ----------- ----------- Net Interest Income After Provision for Loan Losses 15,076 9,663 56% OTHER OPERATING INCOME Fees on Deposits 1,973 1,892 4% Gain on Sales of Loans 2,162 2,731 -21% Other 991 1,324 -25% ----------- ----------- Total Other Operating Income 5,126 5,947 -14% OPERATING EXPENSES Salaries and Employee Benefits 4,924 3,646 35% Occupancy & Equipment 893 711 26% Other 2,543 2,771 -8% ----------- ----------- Total Other Operating Expenses 8,360 7,128 17% ----------- ----------- Income Before Taxes 11,842 8,482 40% Income Tax 4,663 3,382 38% ----------- ----------- NET INCOME $ 7,179 $ 5,100 41% =========== =========== Per Share Data Basic Earnings Per Common Share $ 0.25 $ 0.18 38% Earnings Per Share - Assuming Dilution $ 0.25 $ 0.18 40% Weighted Average Shares Outstanding 28,585,640 28,045,290 Weighted Average Shares Outstanding Including Dilutive Effect Of Stock Options 28,931,230 28,703,132 Nine Months Ended September 30, Percentage INTEREST INCOME 2005 2004 Change ----------- ----------- ---------- Interest on Loans & Leases $ 62,436 $ 39,449 58% Interest on Securities 3,351 2,209 52% Interest on Federal funds sold 1,477 525 181% Interest on Commercial Paper 82 - na ----------- ----------- ---------- Total Interest Income 67,346 42,183 60% INTEREST EXPENSE Deposits 19,475 11,150 75% FHLB Advances and Other 2,937 1,276 130% ----------- ----------- Total Interest Expense 22,412 12,426 80% Net Interest Income 44,934 29,757 51% Provision for Loan Losses 2,470 3,017 -18% ----------- ----------- Net Interest Income After Provision for Loan Losses 42,464 26,740 59% OTHER OPERATING INCOME Fees on Deposits 5,508 5,549 -1% Gain on Sales of Loans 5,674 6,902 -18% Other 3,496 3,756 -7% ----------- ----------- Total Other Operating Income 14,678 16,207 -9% OPERATING EXPENSES Salaries and Employee Benefits 13,617 10,386 31% Occupancy & Equipment 2,496 1,996 25% Other 7,617 6,891 11% ----------- ----------- Total Other Operating Expenses 23,730 19,273 23% ----------- ----------- Income Before Taxes 33,412 23,674 41% Income Tax 13,412 9,405 43% ----------- ----------- NET INCOME $ 20,000 $ 14,269 40% =========== =========== Per Share Data Basic Earnings Per Common Share $ 0.70 $ 0.52 35% Earnings Per Share - Assuming Dilution $ 0.69 $ 0.50 38% Weighted Average Shares Outstanding 28,528,499 27,456,010 Weighted Average Shares Outstanding Including Dilutive Effect Of Stock Options 28,906,440 28,438,169 CONSOLIDATED BALANCE SHEET (unaudited)(dollars in thousands, except share data) One Year Sept. 30, Dec. 31, Sept. 30, Percentage 2005 2004 2004 Change ---------- ---------- ---------- ----------- ASSETS: Noninterest-Earning Demand Deposits and Cash on Hand $ 59,398 $ 53,903 $ 47,713 24% Federal Funds Sold 100,000 45,000 60,000 67% ---------- ---------- ---------- --------- Total Cash and Cash Equivalents 159,398 98,903 107,713 48% Interest-Bearing Deposits in Other Financial Institutions 3 3 3 0% Securities Available For Sale 126,798 85,712 73,497 73% Securities Held To Maturity 24,881 29,262 26,309 -5% ---------- ---------- ---------- Total Securities 151,682 114,977 99,809 52% Loans & Leases Receivable 1,189,166 1,020,723 972,830 22% Allowance For Loan Losses 13,551 11,111 11,131 22% ---------- ---------- ---------- Loans & Leases Receivable, Net 1,175,615 1,009,612 961,699 22% Accrued Interest Receivable 6,164 3,867 3,572 73% Acceptance 2,972 2,041 2,312 29% Other Real Estate Owned 156 - - 0% Premises and Equipment 8,724 5,480 5,338 63% Federal Home Loan Bank (FHLB) Stock, at Cost 6,112 4,372 4,278 43% Cash Surrender Value of Life Insurance 14,956 11,536 11,435 31% Other Assets 20,057 14,853 15,745 27% ---------- ---------- ---------- TOTAL ASSETS 1,545,836 1,265,641 1,211,901 28% ========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY: LIABILITIES: Non-interest Bearing Demand Deposits $ 312,890 $ 273,940 $ 255,423 22% Savings & NOW Deposits 47,195 47,594 47,776 -1% Money Market Deposits 231,882 212,916 205,362 13% Time Deposits 707,497 564,255 538,727 31% ---------- ---------- ---------- Total Deposits 1,299,464 1,098,705 1,047,288 24% FHLB Advances 61,000 41,000 45,000 36% Acceptance 2,972 2,041 2,312 29% Subordinated Debentures 61,547 25,464 25,464 142% Accrued Interest and Other Liabilities 14,054 10,124 8,469 66% ---------- ---------- ---------- Total Liabilities 1,439,037 1,177,334 1,128,533 28% STOCKHOLDERS' EQUITY: Common Stock - No Par Value-Authorized, 80,000,000 Shares Issued and Outstanding, 28,585,640, 28,142,470 and 28,104,390 Shares, Respectively 41,079 38,926 38,997 5% Retained Earnings 66,176 49,605 44,415 49% Accumulated Other Comprehensive Loss, Net of Taxes (456) (224) (44) 923% ---------- ---------- ---------- Total Stockholders' Equity 106,799 88,307 83,368 28% ---------- ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,545,836 $1,265,641 $1,211,901 28% ========== ========== ========== AVERAGE BALANCES (unaudited)(dollars in thousands) Quarter Ended Nine Months Ended Sept. 30, Sept. 30, 2005 2004 2005 2004 ----------- ---------- ---------- ---------- Average Assets $ 1,468,264 $1,223,991 $1,391,433 $1,109,718 Average Equity $ 104,974 $ 80,783 $ 98,923 $ 73,175 Average Net Loans (includes LHFS) $ 1,145,588 $ 945,462 $1,086,350 $ 867,439 Average Deposits $ 1,247,913 $1,053,405 $1,182,330 $ 955,364 Average Interest Earning Assets $ 1,350,199 $1,120,497 $1,283,666 $1,014,887 CONSOLIDATED FINANCIAL RATIOS (unaudited)(dollars in thousands, except per share data) Quarter Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 ------- ------- ------- ------- Annualized Return on Average Assets 1.96% 1.67% 1.92% 1.71% Annualized Return on Average Equity 27.35% 25.25% 26.96% 26.00% Efficiency Ratio 38.97% 41.78% 39.81% 41.93% Annualized Operating Expense/Average Assets 2.28% 2.33% 2.27% 2.32% Annualized Net Interest Margin 4.84% 3.97% 4.67% 3.91% Tier 1 Leverage Ratio 9.71% 8.03% Tier 1 Risk-Based Capital Ratio 11.76% 9.84% Total Risk-Based Capital Ratio 14.94% 12.01% Book Value Per Share $ 3.74 $ 2.97 ALLOWANCE FOR LOAN LOSSES (unaudited) (dollars in thousands) Quarter Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 ------- ------- ------- ------- Balance at Beginning of Period $12,450 $10,251 $11,111 $ 9,011 Provision for Loan Losses 1,250 1,450 2,470 3,017 Less Charge Offs (Net Recoveries) 90 501 (59) 441 Less Adjustment to Allowance for Unfunded Loan Commitments 59 69 89 456 ------- ------- ------- ------- Balance at End of Period $13,551 $11,131 $13,551 $11,131 Loan Loss Allowance/Gross Loans 1.14% 1.14% Loan Loss Allowance/Non-performing Loans 329.99% 369.75% Loan Loss Allowance/Total Assets 0.88% 0.92% Loan Loss Allowance/Non-performing Assets 317.89% 369.75% NON-PERFORMING ASSETS (net of guaranteed portion) September 30, 2005 2004 ------- ------- Accruing Loans - 90 Days Past Due $ 305 $ 156 Non-accrual Loans 3,801 2,838 Restructured Loans 0 16 ------- ------- Total Non-performing Loans $ 4,106 $ 3,010 Total Non-performing Loans/Gross Loans 0.35% 0.31% OREO 156 - ------- ------- Total Non-performing Assets $ 4,263 $ 3,010 Total Non-performing Assets/Total Assets 0.28% 0.25% *T 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, which is subject to change, and, Wilshire Bancorp will not necessarily update the information, since management will only provide guidance at certain points during the year. 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.