UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
________________________________________________________
FORM
10-Q
(Mark
One)
x
|
Quarterly
report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934
|
For
the quarterly period ended March 31, 2008.
OR
o
|
Transition
report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of
1934
|
For
the transition period from
to
Commission
File Number 000-50923
__________________________
WILSHIRE
BANCORP, INC.
(Exact
name of registrant as specified in its charter)
|
|
California
|
20-0711133
|
State
or other jurisdiction of incorporation or organization
|
I.R.S.
Employer Identification Number
|
|
|
3200
Wilshire Blvd.
|
|
Los
Angeles, California
|
90010
|
Address
of principal executive offices
|
Zip
Code
|
(213)
387-3200
|
Registrant’s
telephone number, including area
code
|
Securities
registered pursuant to Section 12(b) of the Act:
Common
Stock, no par value
Securities
registered pursuant to Section 12(g) of the Act:
None
______________________
Indicate
by check mark whether the registrant (1) has filed all reports required to
be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements
for
the past 90 days. Yes
x
No
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer
|
o
|
|
Accelerated
filer
|
x
|
Non-accelerated
filer
|
o
(Do
not check if a smaller reporting company)
|
|
Smaller
reporting company
|
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes
o
No
x
The
number of shares of Common Stock of the registrant outstanding as of April
30,
2008 was 29,391,177.
FORM
10-Q
INDEX
WILSHIRE
BANCORP, INC.
Part
I.
FINANCIAL
INFORMATION
|
1
|
|
|
|
Item
1.
|
Financial
Statements
|
1
|
|
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
14
|
|
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
36
|
|
|
|
Item
4.
|
Controls
and Procedures
|
38
|
|
|
Part
II.
OTHER
INFORMATION
|
39
|
|
|
Item
1.
|
Legal
Proceedings
|
39
|
|
|
|
Item
1A.
|
Risk
Factors
|
39
|
|
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
39
|
|
|
|
Item
3.
|
Defaults
Upon Senior Securities
|
39
|
|
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
39
|
|
|
|
Item
5.
|
Other
Information
|
39
|
|
|
|
Item
6.
|
Exhibits
|
40
|
|
|
|
SIGNATURES
|
41
|
Part
I. FINANCIAL INFORMATION
Item
1.
|
Financial
Statements
|
WILSHIRE
BANCORP, INC.
|
CONSOLIDATED
STATEMENTS OF FINANCIAL CONDITION
|
(DOLLARS
IN THOUSANDS)
|
|
|
|
|
|
|
ASSETS
|
|
|
March
31, 2008
|
|
|
December
31,
2007
|
|
|
|
|
(Unaudited)
|
|
|
|
|
Cash
and due from banks
|
|
$
|
77,225
|
|
$
|
82,506
|
|
Federal
funds sold and other cash equivalents
|
|
|
20,004
|
|
|
10,003
|
|
Cash
and cash equivalents
|
|
|
97,229
|
|
|
92,509
|
|
|
|
|
|
|
|
|
|
Securities
available for sale, at fair value (amortized cost of $215,549
and $223,933
at March 31, 2008 and Decemeber 31, 2007,
respectively)
|
|
|
218,505
|
|
|
224,256
|
|
Securities
held to maturity, at amortized cost (fair value of $371 and
$7,372 at
March 31, 2008 and December 31, 2007, respectively)
|
|
|
377
|
|
|
7,384
|
|
Loans
receivable, net of allowance for loan losses of $22,072 and
$21,579 at
March 31, 2008 and December 31, 2007, respectively
|
|
|
1,851,115
|
|
|
1,779,558
|
|
Loans
held for sale—at the lower of cost or market
|
|
|
10,313
|
|
|
7,912
|
|
Federal
Home Loan Bank stock, at cost
|
|
|
11,280
|
|
|
8,695
|
|
Other
real estate owned
|
|
|
133
|
|
|
133
|
|
Due
from customers on acceptances
|
|
|
2,332
|
|
|
3,377
|
|
Cash
surrender value of bank owned life insurance
|
|
|
16,367
|
|
|
16,228
|
|
Investment
in affordable housing partnerships
|
|
|
6,518
|
|
|
6,222
|
|
Bank
premises and equipment
|
|
|
10,828
|
|
|
10,960
|
|
Accrued
interest receivable
|
|
|
9,832
|
|
|
10,062
|
|
Deferred
income taxes
|
|
|
7,106
|
|
|
9,151
|
|
Servicing
assets
|
|
|
4,931
|
|
|
4,950
|
|
Interest-only
strips, at fair value (amortized cost of $379 and $430 at March
31, 2008
and December 31, 2007, respectively)
|
|
|
727
|
|
|
753
|
|
Goodwill
|
|
|
6,675
|
|
|
6,675
|
|
Other
intangible assets
|
|
|
1,512
|
|
|
1,587
|
|
Other
assets
|
|
|
4,655
|
|
|
6,293
|
|
TOTAL
|
|
$
|
2,260,435
|
|
$
|
2,196,705
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
LIABILITIES:
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
Noninterest
bearing
|
|
$
|
308,037
|
|
$
|
314,114
|
|
Interest
bearing:
|
|
|
|
|
|
|
|
Savings
|
|
|
34,740
|
|
|
31,812
|
|
Money
market checking and NOW accounts
|
|
|
415,393
|
|
|
485,547
|
|
Time
deposits of $100 or more
|
|
|
793,235
|
|
|
788,883
|
|
Other
time deposits
|
|
|
176,182
|
|
|
142,715
|
|
Total
deposits
|
|
|
1,727,587
|
|
|
1,763,071
|
|
Federal
Home Loan Bank borrowings
|
|
|
240,000
|
|
|
150,000
|
|
Junior
subordinated debentures
|
|
|
87,321
|
|
|
87,321
|
|
Accrued
interest payable
|
|
|
10,339
|
|
|
10,440
|
|
Acceptances
outstanding
|
|
|
2,332
|
|
|
3,377
|
|
Other
liabilities
|
|
|
15,320
|
|
|
10,710
|
|
Total
liabilities
|
|
|
2,082,899
|
|
|
2,024,919
|
|
|
|
|
|
|
|
|
|
SHAREHOLDERS’
EQUITY:
|
|
|
|
|
|
|
|
Preferred
stock, no par value—authorized, 5,000,000 shares; issued and outstanding,
none
|
|
|
|
|
|
|
|
Common
stock, no par value—authorized, 80,000,000 shares; issued and outstanding,
29,391,177 shares and 29,253,311 shares at March 31, 2008 and
December 31,
2007, respectively
|
|
|
51,399
|
|
|
50,895
|
|
Accumulated
other comprehensive income, net of tax expense of $1,388 and
$271 at March
31, 2008 and December 31, 2007, respectively
|
|
|
1,916
|
|
|
375
|
|
Retained
earnings
|
|
|
125,483
|
|
|
121,778
|
|
|
|
|
178,798
|
|
|
173,048
|
|
|
|
|
|
|
|
|
|
Less
Treasury stock, at cost, 127,425 shares at March 31, 2008 and
December 31,
2007
|
|
|
(1,262
|
)
|
|
(1,262
|
)
|
Total
shareholders’ equity
|
|
|
177,536
|
|
|
171,786
|
|
TOTAL
|
|
$
|
2,260,435
|
|
$
|
2,196,705
|
|
See
accompanying notes to consolidated financial statements.
WILSHIRE
BANCORP, INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)
|
(DOLLARS
IN THOUSANDS, EXCEPT PER SHARE DATA)
|
|
|
Three
Months Ended March 31,
|
|
|
|
2008
|
|
2007
|
|
INTEREST
INCOME:
|
|
|
|
|
|
|
|
Interest
and fees on loans
|
|
$
|
35,318
|
|
$
|
33,901
|
|
Interest
on investment securities
|
|
|
2,584
|
|
|
2,239
|
|
Interest
on federal funds sold
|
|
|
80
|
|
|
1,509
|
|
Total
interest income
|
|
|
37,982
|
|
|
37,649
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE:
|
|
|
|
|
|
|
|
Interest
on deposits
|
|
|
14,738
|
|
|
17,362
|
|
Interest
on FHLB advances and other borrowings
|
|
|
2,043
|
|
|
182
|
|
Interest
on junior subordinated debentures
|
|
|
1,457
|
|
|
1,132
|
|
Total
interest expense
|
|
|
18,238
|
|
|
18,676
|
|
|
|
|
|
|
|
|
|
NET
INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES AND LOAN
COMMITMENTS
|
|
|
19,744
|
|
|
18,973
|
|
|
|
|
|
|
|
|
|
PROVISION
FOR LOSSES ON LOANS AND LOAN COMMITMENTS
|
|
|
1,400
|
|
|
1,630
|
|
|
|
|
|
|
|
|
|
NET
INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES AND LOAN
COMMITMENTS
|
|
|
18,344
|
|
|
17,343
|
|
|
|
|
|
|
|
|
|
NON-INTEREST
INCOME:
|
|
|
|
|
|
|
|
Service
charges on deposit accounts
|
|
|
2,748
|
|
|
2,287
|
|
Gain
on sale of loans
|
|
|
864
|
|
|
1,809
|
|
Loan-related
servicing fees
|
|
|
675
|
|
|
419
|
|
Income
from other earning assets
|
|
|
319
|
|
|
277
|
|
Other
income
|
|
|
548
|
|
|
418
|
|
Total
noninterest income
|
|
|
5,154
|
|
|
5,210
|
|
|
|
|
|
|
|
|
|
NON-INTEREST
EXPENSES:
|
|
|
|
|
|
|
|
Salaries
and employee benefits
|
|
|
6,976
|
|
|
5,698
|
|
Occupancy
and equipment
|
|
|
1,425
|
|
|
1,270
|
|
Data
processing
|
|
|
764
|
|
|
765
|
|
Loan
referral fee
|
|
|
280
|
|
|
420
|
|
Outsourced
service for customer
|
|
|
449
|
|
|
376
|
|
Advertising
and promotional
|
|
|
177
|
|
|
146
|
|
Professional
fees
|
|
|
500
|
|
|
315
|
|
Office
supplies
|
|
|
217
|
|
|
174
|
|
Directors’
fees
|
|
|
96
|
|
|
140
|
|
Communications
|
|
|
123
|
|
|
115
|
|
Investor
relation expenses
|
|
|
79
|
|
|
81
|
|
Deposit
insurance premiums
|
|
|
330
|
|
|
50
|
|
Amortization
of investments in affordable housing partnerships
|
|
|
174
|
|
|
113
|
|
Amortization
of other intangible assets
|
|
|
74
|
|
|
74
|
|
Other
operating
|
|
|
560
|
|
|
766
|
|
Total
noninterest expenses
|
|
|
12,224
|
|
|
10,503
|
|
|
|
|
|
|
|
|
|
INCOME
BEFORE INCOME TAXES
|
|
|
11,274
|
|
|
12,050
|
|
|
|
|
|
|
|
|
|
INCOME
TAXES
|
|
|
4,224
|
|
|
4,733
|
|
|
|
|
|
|
|
|
|
NET
INCOME
|
|
$
|
7,050
|
|
$
|
7,317
|
|
EARNINGS
PER SHARE:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.24
|
|
$
|
0.25
|
|
Diluted
|
|
$
|
0.24
|
|
$
|
0.25
|
|
WEIGHTED-AVERAGE
SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
Basic
|
|
|
29,276,871
|
|
|
29,346,442
|
|
Diluted
|
|
|
29,341,080
|
|
|
29,517,299
|
|
See
accompanying notes to consolidated financial statements.
WILSHIRE
BANCORP, INC.
|
CONSOLIDATED
STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)
|
(DOLLARS
IN THOUSANDS)
|
|
|
Common
Stock
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Shares
|
|
|
|
|
|
|
|
|
|
|
|
Treasury
|
|
Total
|
|
|
|
Issued
and
|
|
Treasury
|
|
Shares
|
|
|
|
Comprehensive
|
|
Retained
|
|
Stock,
|
|
Shareholders’
|
|
|
|
Outstanding
|
|
Shares
|
|
Outstanding
|
|
Amount
|
|
Income
(Loss)
|
|
Earnings
|
|
at
Cost
|
|
Equity
|
|
BALANCE—January
1, 2007
|
|
|
29,197,420
|
|
|
|
|
|
29,197,420
|
|
$
|
49,123
|
|
$
|
(408
|
)
|
$
|
100,920
|
|
$
|
-
|
|
$
|
149,635
|
|
Stock
options exercised
|
|
|
171,476
|
|
|
|
|
|
171,476
|
|
|
108
|
|
|
|
|
|
|
|
|
|
|
|
108
|
|
Cash
dividend declared
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,468
|
)
|
|
|
|
|
(1,468
|
)
|
Share-based
compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
118
|
|
|
|
|
|
|
|
|
|
|
|
118
|
|
Tax
benefit from stock options exercised
|
|
|
|
|
|
|
|
|
|
|
|
1,286
|
|
|
|
|
|
|
|
|
|
|
|
1,286
|
|
Cumulative
impact of change in accounting for uncertainties in income
tases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(162
|
)
|
|
|
|
|
(162
|
)
|
Cumulative
impact of change in accounting for fair valuation method
adoption
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80
|
|
|
|
|
|
80
|
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,317
|
|
|
|
|
|
7,317
|
|
Other
comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in unrealized gain on interest - only strips
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51
|
|
|
|
|
|
|
|
|
51
|
|
Change
in unrealized gain on securities available for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
221
|
|
|
|
|
|
|
|
|
221
|
|
Comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
7,589
|
|
BALANCE—March
31, 2007
|
|
|
29,368,896
|
|
|
-
|
|
|
29,368,896
|
|
$
|
50,635
|
|
$
|
(136
|
)
|
$
|
106,687
|
|
$
|
-
|
|
$
|
157,186
|
|
|
|
Common
Stock
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Shares
|
|
|
|
|
|
|
|
|
|
|
|
Treasury
|
|
Total
|
|
|
|
Issued
and
|
|
Treasury
|
|
Shares
|
|
|
|
Comprehensive
|
|
Retained
|
|
Stock,
|
|
Shareholders’
|
|
|
|
Outstanding
|
|
Shares
|
|
Outstanding
|
|
Amount
|
|
Income
(Loss)
|
|
Earnings
|
|
at
Cost
|
|
Equity
|
|
BALANCE—January
1, 2008
|
|
|
29,380,736
|
|
|
(127,425
|
)
|
|
29,253,311
|
|
$
|
50,895
|
|
$
|
375
|
|
$
|
121,778
|
|
$
|
(1,262
|
)
|
$
|
171,786
|
|
Stock
options exercised
|
|
|
137,866
|
|
|
|
|
|
137,866
|
|
|
391
|
|
|
|
|
|
|
|
|
|
|
|
391
|
|
Cash
dividend declared
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,469
|
)
|
|
|
|
|
(1,469
|
)
|
Share-based
compensation expense
|
|
|
|
|
|
|
|
|
|
|
|
56
|
|
|
|
|
|
|
|
|
|
|
|
56
|
|
Tax
benefit from stock options exercised
|
|
|
|
|
|
|
|
|
|
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
57
|
|
Cumulative
impact of change in accounting
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,876
|
)
|
|
|
|
|
(1,876
|
)
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,050
|
|
|
|
|
|
7,050
|
|
Other
comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in unrealized gain on interest - only strips
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
14
|
|
Change
in unrealized gain on securities available for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,527
|
|
|
|
|
|
|
|
|
1,527
|
|
Comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8,591
|
|
BALANCE—March
31, 2008
|
|
|
29,518,602
|
|
|
(127,425
|
)
|
|
29,391,177
|
|
$
|
51,399
|
|
$
|
1,916
|
|
$
|
125,483
|
|
$
|
(1,262
|
)
|
$
|
177,536
|
|
|
|
|
|
|
|
|
|
Three
Months Ended March 31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
DISCLOSURE
OF RECLASSIFICATION AMOUNTS WITHIN ACCUMULATED OTHER COMPREHENSIVE
INCOME:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized
gains on securities available for sale arising during
period
|
|
|
|
|
|
|
|
|
|
|
$
|
2,633
|
|
$
|
381
|
|
|
|
|
|
|
|
|
|
|
Less
income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
1,106
|
|
|
160
|
|
|
|
|
|
|
|
|
|
|
Net
unrealized gains on securities available for sale
|
|
|
|
|
|
|
|
|
|
|
$
|
1,527
|
|
$
|
221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
unrealized gains on interest-only strips arising during
period
|
|
|
|
|
|
|
|
|
|
|
$
|
24
|
|
$
|
87
|
|
|
|
|
|
|
|
|
|
|
Less
income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
|
37
|
|
|
|
|
|
|
|
|
|
|
Net
unrealized gains on interest-only strips
|
|
|
|
|
|
|
|
|
|
|
$
|
14
|
|
$
|
50
|
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to consolidated financial statements.
WILSHIRE
BANCORP, INC.
|
|
|
|
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
|
|
|
|
(DOLLARS
IN THOUSANDS)
|
|
|
|
|
|
|
|
Three
Months Ended March 31,
|
|
|
|
2008
|
|
2007
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
7,050
|
|
$
|
7,317
|
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Amortization
(accretion) of investment securities
|
|
|
271
|
|
|
(46
|
)
|
Depreciation
of bank premises & equipment
|
|
|
441
|
|
|
395
|
|
Amortization
of other intangible assets
|
|
|
74
|
|
|
74
|
|
Amortization
of investments in affordable housing partnerships
|
|
|
174
|
|
|
113
|
|
Provision
for losses on loans and loan commitments
|
|
|
1,400
|
|
|
1,630
|
|
Deferred
tax benefit
|
|
|
929
|
|
|
2,086
|
|
Loss
on disposition of bank premises and equipment
|
|
|
1
|
|
|
9
|
|
Net
gain on sale of loans
|
|
|
(864
|
)
|
|
(1,809
|
)
|
Origination
of loans held for sale
|
|
|
(23,083
|
)
|
|
(41,960
|
)
|
Proceeds
from sale of loans held for sale
|
|
|
21,547
|
|
|
38,986
|
|
Gain
on sale or call of available for sale securities
|
|
|
(3
|
)
|
|
-
|
|
Decrease
in fair value of serving rights
|
|
|
332
|
|
|
547
|
|
Loss
on sale of other real estate owned
|
|
|
-
|
|
|
22
|
|
Loss
on sale of repossessed vehicles
|
|
|
2
|
|
|
18
|
|
Share-based
compensation expense
|
|
|
56
|
|
|
118
|
|
Change
in cash surrender value of life insurance
|
|
|
(139
|
)
|
|
(148
|
)
|
Servicing
assets capitalized
|
|
|
(304
|
)
|
|
(456
|
)
|
Decrease
in interest-only strips
|
|
|
50
|
|
|
244
|
|
Decrease in
accrued interest receivable
|
|
|
230
|
|
|
458
|
|
Decrease in
other assets
|
|
|
1,486
|
|
|
22
|
|
Dividends
of Federal Home Loan Bank stock
|
|
|
(118
|
)
|
|
(110
|
)
|
Tax
benefit from exercise of stock options
|
|
|
(57
|
)
|
|
(1,286
|
)
|
(Decrease)
Increase in accrued interest payable
|
|
|
(102
|
)
|
|
267
|
|
Increase
in other liabilities
|
|
|
2,887
|
|
|
1,352
|
|
Net
cash provided by operating activities
|
|
|
12,260
|
|
|
7,843
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Proceeds
from principal repayment, matured or called securities held
to
maturity
|
|
|
7,007
|
|
|
9
|
|
Purchase
of securities available for sale
|
|
|
(46,165
|
)
|
|
(24,956
|
)
|
Proceeds
from sale, principle repayment, matured or called securities
available for sale
|
|
|
54,281
|
|
|
21,429
|
|
Net
increase in loans receivable
|
|
|
(73,068
|
)
|
|
(52,727
|
)
|
Proceeds
from sale of other real estate owned
|
|
|
-
|
|
|
78
|
|
Proceeds
from sale of repossessed vehicles
|
|
|
-
|
|
|
42
|
|
Purchases
of investments in affordable housing partnerships
|
|
|
(470
|
)
|
|
(241
|
)
|
Purchases
of Bank premises and equipment
|
|
|
(160
|
)
|
|
(148
|
)
|
Purchases
of Federal Home Loan Bank stock
|
|
|
(2,467
|
)
|
|
-
|
|
Proceeds
from disposition of Bank equipment
|
|
|
1
|
|
|
-
|
|
Net
cash used in investing activities
|
|
|
(61,041
|
)
|
|
(56,514
|
)
|
See accompanying notes to consolidated
financial statements.
|
(Continued)
|
WILSHIRE
BANCORP, INC.
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED)
|
|
(DOLLARS
IN THOUSANDS)
|
|
|
|
Three
Months Ended March 31,
|
|
|
|
2008
|
|
2007
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Proceeds
from exercise of stock options
|
|
$
|
391
|
|
$
|
108
|
|
Payment
of cash dividend
|
|
|
(1,463
|
)
|
|
(1,460
|
)
|
Increase
in Federal Home Loan Bank borrowings
|
|
|
90,000
|
|
|
-
|
|
Tax
benefit from exercise of stock options
|
|
|
57
|
|
|
1,286
|
|
Net
increase in deposits
|
|
|
(35,484
|
)
|
|
(16,289
|
)
|
Net
cash provided by (used in) financing activities
|
|
|
53,501
|
|
|
(16,355
|
)
|
|
|
|
|
|
|
|
|
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
|
4,720
|
|
|
(65,026
|
)
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS—Beginning of period
|
|
|
92,509
|
|
|
205,247
|
|
CASH
AND CASH EQUIVALENTS—End of period
|
|
$
|
97,229
|
|
$
|
140,221
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
Interest
paid
|
|
$
|
18,339
|
|
$
|
18,410
|
|
Income
taxes paid
|
|
$
|
37
|
|
$
|
226
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
SCHEDULE OF NONCASH INVESTING ACTIVITES:
|
|
|
|
|
|
|
|
Other
assets transferred to Bank premises and equipment
|
|
$
|
150
|
|
$
|
187
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
SCHEDULE OF NONCASH FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Cash
dividend declared, but not paid
|
|
$
|
1,469
|
|
$
|
1,468
|
|
See accompanying notes to consolidated
financial statements.
|
(Concluded)
|
WILSHIRE
BANCORP, INC.
Notes
to Consolidated Financial Statements
Note
1.
|
Business
of Wilshire Bancorp, Inc.
|
Wilshire
Bancorp, Inc. (hereafter, the “Company,” “we,” “us,” or “our”) succeeded to the
business and operations of Wilshire State Bank, a California state-chartered
commercial bank (the “Bank”), upon consummation of the reorganization of the
Bank into a holding company structure, effective as of August 25, 2004. The
Bank
was incorporated under the laws of the State of California on May 20, 1980
and
commenced operations on December 30, 1980. The Company was incorporated in
December 2003 as a wholly-owned subsidiary of the Bank for the purpose of
facilitating the issuance of trust preferred securities for the Bank and
eventually serving as the holding company of the Bank. The Bank’s shareholders
approved a reorganization into a holding company structure at a meeting held
on
August 25, 2004. As a result of the reorganization, shareholders of the Bank
are
now shareholders of the Company, and the Bank is a direct wholly-owned
subsidiary of the Company.
Our
corporate headquarters and primary banking facilities are located at 3200
Wilshire Boulevard, Los Angeles, California 90010. In addition
,
we
have
20
full-service Bank branch offices in Southern California, Texas, New York and
New
Jersey. We also have 7 loan production offices utilized primarily for the
origination of loans under our Small Business Administration (“SBA”) lending
program in Colorado, Georgia, New Jersey, Texas, Virginia, and
Washington.
Note
2.
|
Basis
of Presentation
|
The
financial statements have been prepared in accordance with the Securities and
Exchange Commission (“SEC”) rules and regulations for interim financial
reporting and therefore do not necessarily include all information and footnote
disclosures normally included in annual financial statements prepared in
accordance with accounting principles generally accepted in the United States
of
America (“GAAP”). The information provided by these interim financial statements
reflects all adjustments which are, in the opinion of management, necessary
for
a fair presentation of the Company’s consolidated statements of financial
condition as of March 31, 2008 and December 31, 2007, the related statements
of
operations and shareholders’ equity and comprehensive income for the three
months ended March 31, 2008 and 2007, and the statements of cash flows for
the
three months ended March 31, 2008 and 2007. Operating results for interim
periods are not necessarily indicative of operating results for an entire fiscal
year. To conform to the consolidated financial statements of the prior period
to
the current period’s presentation, we (i) reclassified change in the fair
valuation of servicing assets of $148,000 from non-interest income to loan
servicing income (ii) separately disclosed investment in affordable housing
partnerships from other assets, increasing the net cash provided by operating
activities and net cash used in investing activities by $241,000.
The
unaudited financial statements should be read in conjunction with the audited
financial statements and notes thereto included in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2007. The accounting policies
used
in the preparation of these interim financial statements were consistent with
those used in the preparation of the financial statements for the year ended
December 31, 2007.
Note
3.
|
Fair
Value Option and Measurement for Financial Assets and Liabilities
|
In
February 2007, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standards (“SFAS”) No. 159,
The
Fair Value Option for Financial Assets and Financial
Liabilities
,
which
permits all entities to choose to measure eligible items at fair value at
specified election dates. A business entity shall report unrealized gains and
losses on items for which the fair value option has been elected in earnings
at
each subsequent reporting date. Under the statement, the fair value option
may
be applied instrument by instrument, with only a few exceptions, but may only
apply to entire instruments and not to portions of instruments. The fair value
option is a one-time election for existing instruments and is irrevocable.
The
Company adopted SFAS No. 159 as of January 1, 2008. All assets and liabilities
are evaluated for eligibility of the fair value option under the statement.
Based on the analysis performed, the Company concluded that the fair value
option provided by this statement is not elected for any of the existing
instruments under its current asset and liability balances. The Company will
constantly review the new asset and liability additions on an ongoing basis,
and
will elect fair value option pursuant to SFAS No. 159 for any new instruments
that fall in line with the fair value accounting and reporting.
In
September 2006, the FASB issued SFAS No. 157,
Fair
Value Measurements
,
which
provides a definition of fair value, establishes a framework for measuring
fair
value, and requires expanded disclosures about fair value measurements. The
standard applies when GAAP requires or allows assets or liabilities to be
measured at fair value, and therefore, does not expand the use of fair value
in
any new circumstance. SFAS No. 157 defines fair value as the price that would
be
received to sell an asset or paid to transfer a liability in an arm’s length
transaction between market participants in the markets where we conduct
business. SFAS No. 157 clarifies that fair value should be based on the
assumptions market participants would use when pricing an asset or liability
and
establishes a fair value hierarchy that prioritizes the information used to
develop those assumptions. The fair value hierarchy gives the highest priority
to quoted prices available in active markets and the lowest priority to data
lacking transparency.
The
fair
value inputs of the instruments are classified and disclosed in one of the
following categories pursuant to SFAS No. 157:
Level
1
-
Unadjusted quoted prices in active markets for identical assets or liabilities
that the reporting entity has the ability to access at the measurement date.
The
quoted price shall not be adjusted for the position size.
Level
2
-
Pricing inputs are inputs other than quoted prices included within Level 1
that
are observable for the asset or liability, either directly or indirectly. Fair
value is determined through the use of models or other valuation methodologies,
including the use of pricing matrices. If the asset or liability has a specified
(contractual) term, a Level 2 input must be observable for substantially the
full term of the asset or liability.
Level
3
-
Pricing inputs are inputs unobservable inputs for the asset or liability.
Unobservable inputs shall be used to measure fair value to the extent that
observable inputs are not available, thereby allowing for situations in which
there is little, if any, market activity for the asset or liability at the
measurement date. The inputs into the determination of fair value require
significant management judgment or estimation.
In
certain cases, the inputs used to measure fair value may fall into different
levels of the fair value hierarchy. In such cases, an investment’s level within
the fair value hierarchy is based on the lowest level of input that is
significant to the fair value measurement. Our assessment of the significance
of
a particular input to the fair value measurement in its entirety requires
judgment and considers factors specific to the investment.
The
Company adopted SFAS No. 157 as of January 1, 2008. It used the following
methods and assumptions in estimating our fair value disclosure for financial
instruments. Financial assets and liabilities recorded at fair value on a
recurring basis are listed as follows:
Securities
available for sale
-
Investment in available-for-sale securities is recorded at
fair
value pursuant to SFAS 115,
Accounting
for Certain Investments in Debt and Equity Securities
.
Fair
value measurement is based upon quoted prices for similar assets, if available.
If quoted prices are not available, fair values are measured using matrix
pricing models, or other model-based valuation techniques requiring observable
inputs other than quoted prices such as yield curves, prepayment speeds,
and
default rates. The securities available for sale include federal agency
securities, mortgage-backed securities, collateralized mortgage obligations,
municipal bonds and corporate debt securities. Our existing investment
available-for-sale security holdings as of March 31, 2008 are measured using
matrix pricing models in lieu of direct price quotes and recorded based on
Level
2 measurement inputs.
Servicing
assets and interest-only strips
- SBA
loan servicing assets represent the value associated with servicing SBA loans
sold. The value is determined through a discounted cash flow analysis which
uses
interest rates, prepayment speeds and delinquency rate assumptions as inputs.
All of these assumptions require a significant degree of management judgment.
Adjustments are only made when the discounted cash flows are less than the
carrying value. The Company classifies SBA loan servicing assets as recurring
with Level 3 measurement inputs.
Financial
assets and liabilities recorded at fair value on a nonrecurring basis are
listed
as follows:
Impaired
loans
- A loan
is considered to be impaired when it is probable that all of the principal
and
interest due under the original underwriting terms of the loan may not be
collected. Impairment is measured based on the fair value of the underlying
collateral. The fair value is determined through appraisals and other matrix
pricing models, which required a significant degree of management judgment.
The
Company measures impairment on all nonaccrual loans, except automobile loans,
for which it has established specific reserves as part of the specific allocated
allowance component of the allowance for loan losses. The Company records
impaired loans as nonrecurring with Level 3 measurement inputs.
The
table
below summarizes the valuation of our investments by the above SFAS No. 157
fair
value hierarchy levels as of March 31, 2008:
Assets
Measured at Fair Value
(dollars
in thousands)
|
|
As
of March 31, 2008
|
|
|
|
|
|
Fair
Value Measurements Using:
|
|
|
|
Total
Fair
Value
|
|
Quoted
Prices in
Active
Markets
(Level
1)
|
|
Significant
Other
Observable
Inputs
(Level
2)
|
|
Significant
Unobservable Inputs
(Level
3)
|
|
Available
for sale
securities
|
|
$
|
218,505
|
|
$
|
-
|
|
$
|
218,505
|
|
$
|
-
|
|
Servicing
assets
|
|
|
4,931
|
|
|
-
|
|
|
-
|
|
|
4,931
|
|
Interest-only
strips
|
|
|
727
|
|
|
-
|
|
|
-
|
|
|
727
|
|
Impaired
loans
|
|
|
22,180
|
|
|
-
|
|
|
-
|
|
|
22,180
|
|
Financial
instruments measured at fair value on a recurring basis, which were part of
the
asset balances that were deemed to have Level 3 fair value inputs when
determining valuation, are identified in the table below by asset category
with
a summary of changes in fair value for the quarter-ended March 31, 2008 (dollars
in thousands):
|
|
At
December 31, 2007
|
|
Net
Realized
Losses
in Net Income
|
|
Net
Unrealized Gains in Other Comprehensive Income
|
|
Net
Purchases Sales and Settlements
|
|
Transfers
In/out of Level 3
|
|
At
March 31, 2008
|
|
Net
Cumulative
Unrealized
Gains
|
|
Servicing
assets
|
|
$
|
4,950
|
|
$
|
(322
|
)
|
$
|
-
|
|
$
|
303
|
|
$
|
-
|
|
$
|
4,931
|
|
$
|
-
|
|
Interest-only
strips
|
|
|
753
|
|
|
(50
|
)
|
|
24
|
|
|
-
|
|
|
-
|
|
|
727
|
|
|
202
|
|
Note
4.
|
Bank
Owned Life Insurance (BOLI) Obligation
|
FASB
Emerging Issue Task Force (“EITF”) 06-4 requires an employer to recognize
obligations associated with endorsement split-dollar life insurance arrangements
that extend into the participant’s post-employment benefit cost for the
continuing life insurance or based on the future death benefit depending on
the
contractual terms of the underlying agreement. EITF 06-4 is effective as of
the
beginning of the entity’s first fiscal year after December 15, 2007. We adopted
EITF 06-4 on January 1, 2008 using the later option, i.e., based on the future
death benefit. Upon this adoption, we recognized increases in the liability
for
unrecognized post-retirement obligations of $806,000 and $1,070,000 for
directors and officers, respectively, as a cumulative adjustment to the current
year’s beginning equity. During the first quarter of 2008, the increase in BOLI
expense and liability related to the adoption of EITF 06-4 was $36,000, which
was included as part of the other expense and other liabilities balances in
the
consolidated financial statements.
Note
5.
|
Shareholder’s
Equity
|
Earnings
per Share
Basic
earnings per share (“EPS”) excludes dilution and is computed by dividing income
available to common shareholders by the weighted-average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that would then share in the earnings of the entity. The following table
provides the basic and diluted EPS computations for the periods indicated
below:
|
|
For
the Quarter Ended
March
31,
(dollars
in thousands)
|
|
|
|
2008
|
|
2007
|
|
Numerator:
|
|
|
|
|
|
|
|
Net
income - numerator for basic earnings
per
share and diluted earnings per share-
income
available to common stockholders
|
|
$
|
7,050
|
|
$
|
7,317
|
|
Denominator:
|
|
|
|
|
|
|
|
Denominator
for basic earnings per share:
Weighted-average
shares
|
|
|
29,276,871
|
|
|
29,346,442
|
|
Effect
of dilutive securities:
Stock
option dilution
|
|
|
64,209
|
|
|
170,857
|
|
Denominator
for diluted earnings per share:
Adjusted
weighted-average shares
And
assumed conversions
|
|
|
29,341,080
|
|
|
29,517,299
|
|
Basic
earnings per share
|
|
$
|
0.24
|
|
$
|
0.25
|
|
Diluted
earnings per share
|
|
$
|
0.24
|
|
$
|
0.25
|
|
Stock
Repurchase Program
In
July
2007, the Company’s Board of Directors authorized a stock repurchase program to
repurchase up to $10 million of the Company’s common stock until July 31, 2008.
During first quarter of 2008, there were no such repurchases. The approximate
dollar value of shares that may yet be purchased under the program as of March
31, 2008 was $8.7 million.
Note
6.
|
Share-Based
Compensation
|
During
1997, the Bank established the 1997 stock option plan (“1997 Plan”) that
provided for the issuance of options to purchase up to 6,499,800 shares of
its
authorized but unissued common stock to managerial employees and directors.
The
options granted under the 1997 Plan are exercisable into shares of the Company’s
common stock. Exercise prices may not be less than the fair market value at
the
date of grant. This 1997 Plan completed its ten-year term and expired in May
2007, with 307,650 previously granted options outstanding as of March 31, 2008.
In accordance with the terms of the 1997 Plan, options granted under the 1997
Plan will remain outstanding according to their respective terms, despite
expiration of the 1997 Plan. Options granted through 2005 under this stock
option plan expire not more than 10 years after the date of grant, but options
granted after 2005 expire not more than 5 years after the date of grant.
On
January 1, 2006, the Company adopted the SFAS No. 123R, using the prospective
method. The adoption of SFAS No. 123R resulted in incremental stock-based
compensation expense of $56,000 and $118,000 for the three months ended March
31, 2008 and 2007, respectively, and accordingly decreased the periodic income
before income taxes by the respective amounts and their effects on basic or
diluted earnings per share was negligible. For the three months ended March
31,
2008 and 2007, cash provided by operating activities decreased by $57,000 and
$1,286,000, respectively, and cash provided by financing activities increased
by
identical amounts for 2008 and 2007, respectively, related to excess tax
benefits from stock-based payment arrangements.
The
Company has issued stock options to employees under share-based compensation
plans. Stock options are issued at the current market price on the date of
grant. The vesting period and contractual term are determined at the time of
grant, but the contractual term may not exceed 10 years from the date of grant.
The grant date fair value of each option award is estimated on the date of
grant
using the Black-Scholes option valuation model. The expected life (estimated
period of time outstanding) of options was estimated using the simple method
in
accordance with SFAS No. 123R. The expected volatility was based on historical
volatility for a period equal to the stock option’s expected life. The risk-free
rate is based on the U.S. Treasury yield curve in effect at the time of
grant.
For
the
three months ended March 31, 2008 and 2007, there were no stock options
granted.
A
summary
of activity for the Company’s stock options as of and for the three months ended
March 31, 2008 is presented below:
|
|
Shares
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
term
(in
years)
|
|
Aggregate
Intrinsic
Value
|
|
Outstanding
at January 1, 2008
|
|
|
522,476
|
|
$
|
12.16
|
|
|
|
|
|
|
|
Granted
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
Exercised
|
|
|
(137,866
|
)
|
|
2.84
|
|
|
|
|
|
|
|
Forfeited
|
|
|
(76,960
|
)
|
|
17.73
|
|
|
|
|
|
|
|
Outstanding
at March 31, 2008
|
|
|
307,650
|
|
|
14.94
|
|
|
5.23
|
|
$
|
170,035
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
exercisable at March 31, 2008
|
|
|
197,690
|
|
|
13.63
|
|
|
5.50
|
|
$
|
170,035
|
|
The
following table summarizes information about stock options outstanding as
of
March 31, 2008:
|
|
Options
Outstanding
|
|
Options
Exercisable
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
Average
|
|
|
|
Weighted
|
|
|
|
Number
of
|
|
Average
|
|
Remaining
|
|
Number
of
|
|
Average
|
|
|
|
Outstanding
|
|
Exercise
|
|
Contractual
|
|
Exercisable
|
|
Exercise
|
|
Range
of Exercise Prices
|
|
Options
|
|
Price
|
|
Life
|
|
Options
|
|
Price
|
|
$1.00
to $1.99
|
|
|
4,800
|
|
$
|
1.39
|
|
|
2.72
years
|
|
|
4,800
|
|
$
|
1.39
|
|
$2.00
to $2.99
|
|
|
20,260
|
|
|
2.57
|
|
|
4.15
years
|
|
|
20,260
|
|
|
2.57
|
|
$3.00
to $4.99
|
|
|
12,000
|
|
|
4.53
|
|
|
5.33
years
|
|
|
12,000
|
|
|
4.53
|
|
$13.00
to $14.99
|
|
|
47,000
|
|
|
13.74
|
|
|
7.03
years
|
|
|
32,200
|
|
|
13.73
|
|
$15.00
to $16.99
|
|
|
102,090
|
|
|
15.21
|
|
|
6.98
years
|
|
|
75,630
|
|
|
15.22
|
|
$17.00
to $19.99
|
|
|
121,500
|
|
|
18.80
|
|
|
3.33
years
|
|
|
52,800
|
|
|
18.72
|
|
$1.00
to $19.99
|
|
|
307,650
|
|
|
14.94
|
|
|
5.23
years
|
|
|
197,690
|
|
|
13.63
|
|
During
the three months ended March 31, 2008 and 2007, information related to stock
options is presented as follows:
|
|
Three
Months
Ended
|
|
|
|
March
31,
|
|
|
|
2008
|
|
2007
|
|
|
|
|
|
|
|
Total
intrinsic value of options exercised
|
|
$
|
618,443
|
|
$
|
3,071,873
|
|
Total
fair value of options vested
|
|
|
54,116
|
|
|
73,379
|
|
Weighted
average fair value of options
granted
during the period
|
|
|
-
|
|
|
-
|
|
As
of
March 31, 2008, total unrecognized compensation cost related to stock options
amounted to $195,000, which is expected to be recognized over a weighted
average
period of 1.02 years.
A
summary
of the status and changes of the Company’s nonvested shares related to the
Company’s stock plans as of and during the three months ended March 31, 2008 is
presented below:
|
|
Shares
|
|
Weighted
Average
Grant
date
Fair
value
|
|
Nonvested
at January 1, 2008
|
|
|
164,540
|
|
$
|
4.15
|
|
Granted
|
|
|
-
|
|
|
-
|
|
Vested
|
|
|
(21,520
|
)
|
|
2.51
|
|
Forfeited
on unvested shares
|
|
|
(33,060
|
)
|
|
5.29
|
|
Nonvested
at March 31, 2008
|
|
|
109,960
|
|
|
4.13
|
|
Note
7.
|
Business
Segment Information
|
The
following disclosure about segments of the Company is made in accordance with
the requirements of SFAS No. 131,
Disclosures
about Segments of an Enterprise and Related Information
.
The
Company segregates its operations into three primary segments: banking
operations, trade finance services (“TFS”) and Small Business Administration
lending services. The Company determines the operating results of each segment
based on an internal management system that allocates certain expenses to each
segment.
Banking
Operations
-
The
Company provides lending products, including commercial, consumer and real
estate loans to its customers.
Trade
Finance Services
-
The
trade finance department allows the Company’s import/export customers to handle
their international transactions. Trade finance products include, among others,
the issuance and collection of letters of credit, international collection,
and
import/export financing.
Small
Business Administration Lending Services
-
The SBA
department mainly provides customers with access to the U.S. SBA guaranteed
lending program.
The
following are the results of operations of the Company’s segments for the
periods indicated below:
(dollars
in thousands)
|
|
Three
Months Ended March 31, 2008
|
|
Three
Months Ended March 31, 2007
|
|
Business
Segment
|
|
Banking
Operations
|
|
TFS
|
|
SBA
|
|
Total
|
|
Banking
Operations
|
|
TFS
|
|
SBA
|
|
Total
|
|
Net
interest income
|
|
$
|
15,901
|
|
$
|
620
|
|
$
|
3,223
|
|
$
|
19,744
|
|
$
|
14,113
|
|
$
|
951
|
|
$
|
3,909
|
|
$
|
18,973
|
|
Less
provision for loan losses
|
|
|
(1,014
|
)
|
|
422
|
|
|
1,992
|
|
|
1,400
|
|
|
1,550
|
|
|
(84
|
)
|
|
164
|
|
|
1,630
|
|
Other
operating income
|
|
|
3,528
|
|
|
275
|
|
|
1,351
|
|
|
5,154
|
|
|
3,040
|
|
|
343
|
|
|
1,827
|
|
|
5,210
|
|
Net
revenue
|
|
|
20,443
|
|
|
473
|
|
|
2,582
|
|
|
23,498
|
|
|
15,603
|
|
|
1,378
|
|
|
5,572
|
|
|
22,553
|
|
Other
operating expenses
|
|
|
10,896
|
|
|
260
|
|
|
1,068
|
|
|
12,224
|
|
|
9,142
|
|
|
236
|
|
|
1,125
|
|
|
10,503
|
|
Income
before taxes
|
|
$
|
9,547
|
|
$
|
213
|
|
$
|
1,514
|
|
$
|
11,274
|
|
$
|
6,461
|
|
$
|
1,142
|
|
$
|
4,447
|
|
$
|
12,050
|
|
Business
segment assets
|
|
$
|
2,063,297
|
|
$
|
42,387
|
|
$
|
154,751
|
|
$
|
2,260,435
|
|
$
|
1,800,073
|
|
$
|
50,208
|
|
$
|
150,802
|
|
$
|
2,001,083
|
|
Note
8.
|
Commitments
and Contingencies
|
We
are a
party to financial instruments with off-balance sheet risk in the normal course
of business to meet the financing needs of our customers. These financial
instruments include commitments to extend credit, standby letters of credit,
and
commercial letters of credit. These instruments involve, to varying degrees,
elements of credit and interest rate risk in excess of the amount recognized
in
the consolidated statements of financial condition. Our exposure to credit
loss
in the event of nonperformance on commitments to extend credit and standby
letters of credit is represented by the contractual notional amount of those
instruments. We use the same credit policies in making commitments and
conditional obligations as we do for extending loan facilities to customers.
We
evaluate each customer’s creditworthiness on a case-by-case basis. The amount of
collateral obtained, if deemed necessary upon extension of credit, is based
on
our credit evaluation of the counterparty. Collateral held varies but may
include accounts receivable, inventory, property, plant, and equipment and
income-producing properties. Commitments at March 31, 2008 are summarized as
follows (dollars in thousands):
Commitments
to extend credit
|
|
$
|
233,436
|
|
|
|
|
|
|
Standby
letters of credit
|
|
$
|
9,333
|
|
|
|
|
|
|
Commercial
letters of credit
|
|
$
|
12,615
|
|
In
the
normal course of business, we are involved in various legal claims. We have
reviewed all legal claims against us with counsel and have taken into
consideration the views of such counsel as to the outcome of the claims. We
do
not believe the final disposition of all such claims will have a material
adverse effect on our financial position or results of operations.
Note
9.
|
Recent
Accounting Pronouncements
|
In
December 2007, the FASB issued SFAS No. 141R,
Business
Combinations.
This
new
statement revises SFAS No. 141, which was issued June 2001. SFAS No. 141R
changes multiple aspects of the accounting for business combinations. Under
the
guidance in SFAS No. 141R, the acquisition method must be used, which requires
the acquirer to recognize most identifiable assets acquired, liabilities assumed
and non-controlling interests in the acquiree at their full fair value on the
acquisition date. Goodwill is to be recognized as the excess of the
consideration transferred plus the fair value of the non-controlling interest
over the fair values of the identifiable net assets acquired. Subsequent changes
in the fair value of contingent consideration classified as a liability are
to
be recognized in earnings, while contingent consideration classified as equity
is not to be remeasured. Costs such as transaction costs are to be excluded
from
acquisition accounting, generally leading to recognizing expense and
additionally, restructuring costs that do not meet certain criteria at the
acquisition date are to be subsequently recognized as post-acquisition costs.
SFAS No. 141R is effective for business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning
on or after December 15, 2008. We are currently assessing the impact that the
adoption of SFAS No. 141R will have on our consolidated financial
statements.
In
December 2007, the FASB issued SFAS No. 160,
Noncontrolling
Interests in Consolidated Financial Statements
,
which
amends Accounting Research Bulletin (“ARB”) No. 51,
Consolidated
Financial Statements
.
SFAS
No. 160 requires a non-controlling interest or minority interest to be reported
by all entities in the same way, which is as equity in the consolidated
financial statements. It also requires income attributable to the
non-controlling interest to be disclosed on the face of the consolidated
statement of income. Furthermore, SFAS No. 160 eliminates the diversity that
currently exists in accounting for transactions between an entity and
non-controlling interests by requiring they be treated as equity transactions.
SFAS No. 160 is effective for financial statements issued for fiscal years
beginning on or after December 15, 2008, and interim periods within those years.
Early adoption is prohibited. The provisions of SFAS No. 160 should be applied
prospectively, except for presentation and disclosure requirements. The
presentation and disclosure requirements should be applied retrospectively
for
all periods presented. We are currently assessing the impact that the adoption
of SFAS No. 160 will have on our consolidated financial statements.
In
February 2008, the FASB issued FASB Staff Position (“FSP”) No. 157-2, which
delays the effective date of SFAS No. 157, for nonfinancial assets and
nonfinancial liabilities, except for items that are recognized or disclosed
at
fair value in the financial statements on a recurring basis. The delay is
intended to allow the FASB and constituents additional time to consider the
effect of various implementation issues that have arise, or that may arise,
from
the application of SFAS No. 157. This FSP applies to various nonfinancial assets
and liabilities, including goodwill and nonfinancial long-lived assets, and
it
defers the effective date of SFAS No. 157 to such nonfinancial assets and
liabilities to fiscal years beginning after November 15, 2008, and interim
periods within those fiscal years for items within the scope of this FSP. We
are
currently assessing the impact that the adoption of FSP No. 157-2 will have
on
our consolidated financial statements.
In
March
2008, the FASB issued SFAS No. 161,
Disclosure
about Derivative Instruments and Hedging Activities,
which
amends SFAS No. 133,
Accounting
for Derivative Instruments and Hedging Activities.
This
new
statement has the same scope as SFAS No. 133. Accordingly, it applies to all
entities. SFAS No. 161 is intended to improve financial reporting about
derivative instruments and hedging activities by requiring enhanced disclosures
to enable investors a better and clearer understanding of the derivative
instruments and hedging activities. Entities are required to provide enhanced
disclosures about how and why an entity uses derivative instruments, how
derivative instruments and related hedged items are accounted for under SFAS
No.
133 and its related interpretations, and how derivative instruments and related
hedged items affect an entity’s financial position, financial performance, and
cash flows. SFAS No. 161 is effective for financial statements issued for fiscal
years and interim periods beginning after November 15, 2008, with early adoption
encouraged. The statement encourages, but does not require, comparative
disclosures for earlier periods at initial adoption. We are currently assessing
the impact that the adoption of SFAS No. 161 will have on our consolidated
financial statements.
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
This
discussion presents management’s analysis of our results of operations and
financial condition as of and for the three months ended March 31, 2008 and
2007, respectively, and includes the statistical disclosures required by the
Securities and Exchange Commission Guide 3 (“Statistical Disclosure by Bank
Holding Companies”). The discussion should be read in conjunction with our
financial statements and the notes related thereto which appear elsewhere in
this Quarterly Report on Form 10-Q.
Statements
contained in this report that are not purely historical are forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act
of
1934, as amended, including our expectations, intentions, beliefs, or strategies
regarding the future.
Any
statements in this document about expectations, beliefs, plans, objectives,
assumptions or future events or performance are not historical facts and are
forward-looking statements. These statements are often, but not always, made
through the use of words or phrases such as “may,” “should,” “could,” “predict,”
“potential,” “believe,” “expect,” “anticipate,” “seek,” “estimate,” “intend,”
“plan,” “projection,” and “outlook,” and similar expressions. Accordingly, these
statements involve estimates, assumptions and uncertainties, which could cause
actual results to differ materially from those expressed in them. Any
forward-looking statements are qualified in their entirety by reference to
the
factors discussed throughout this document.
All
forward-looking statements concerning economic conditions, rates of growth,
rates of income or values as may be included in this document are based on
information available to us on the dates noted, and we assume no obligation
to
update any such forward-looking statements. It is important to note that our
actual results may differ materially from those in such forward-looking
statements due to fluctuations in interest rates, inflation, government
regulations, economic conditions, customer disintermediation and competitive
product and pricing pressures in the geographic and business areas in which
we
conduct operations, including our plans, objectives, expectations and intentions
and other factors discussed under the section entitled “Risk Factors,” in our
Annual Report on Form 10-K for the year ended December 31, 2007, including
the
following:
|
·
|
If
a significant number of customers fail to perform under their loans,
our
business, profitability, and financial condition would be adversely
affected.
|
|
·
|
Increases
in our allowance for loan losses
could
materially affect our earnings adversely
.
|
|
·
|
Banking
organizations are subject to interest rate risk and variations in
interest
rates may negatively affect our financial
performance.
|
|
·
|
The
profitability of Wilshire Bancorp will be dependent on the profitability
of the Bank.
|
|
·
|
Wilshire
Bancorp relies heavily on the payment of dividends from the Bank.
|
|
·
|
The
holders of recently issued debentures have rights that are senior
to those
of our common shareholders.
|
|
·
|
Adverse
changes in domestic or global economic conditions, especially in
California, could have a material adverse effect on our business,
growth,
and profitability.
|
|
·
|
Recently
negative development in the financial industry and U.S. and global
credit
markets may affect our operations and
results.
|
|
·
|
Our
operations may require us to raise additional capital in the future,
but
that capital may not be available or may not be on terms acceptable
to us
when it is needed.
|
|
·
|
The
short-term and long-term impact of the new Basel II capital standards
and
the forthcoming new capital rules to be proposed for non-Basel II
U.S.
banks is uncertain.
|
|
·
|
Maintaining
or increasing our market share depends on market acceptance and regulatory
approval of new products and
services.
|
|
·
|
Significant
reliance on loans secured by real estate may increase our vulnerability
to
downturns in the California real estate market and other variables
impacting the value of real estate.
|
|
·
|
If
we fail to retain our key employees, our growth and profitability
could be
adversely affected.
|
|
·
|
We
may be unable to manage future
growth.
|
|
·
|
Unexpected
litigation or unexpected outcomes of pending litigation matters may
negatively affect our results of operations, financial condition
or
reputation.
|
|
·
|
We
could be liable for breaches of security in our online banking services.
Fear of security breaches could limit the growth of our online services.
|
|
·
|
Our
directors and executive officers beneficially own a significant portion
of
our outstanding common stock.
|
|
·
|
The
market for our common stock is limited, and potentially subject to
volatile changes in price.
|
|
·
|
We
face substantial competition in our primary market
area.
|
|
·
|
Anti-takeover
provisions of our charter documents may have the effect of delaying
or
preventing changes in control or management.
|
|
·
|
We
are subject to significant government regulation and legislation
that
increase the cost of doing business and inhibits our ability to
compete.
|
|
·
|
We
could be negatively impacted by downturns in the South Korean
economy.
|
|
·
|
Additional
shares of our common stock issued in the future could have a dilutive
effect.
|
|
·
|
Shares
of our preferred stock issued in the future could have dilutive and
other
effects.
|
These
factors and the risk factors referred to in our Annual Report on Form 10-K
for
the year ended December 31, 2007 could cause actual results or outcomes to
differ materially from those expressed in any forward-looking statements made
by
us, and you should not place undue reliance on any such forward-looking
statements. Any forward-looking statement speaks only as of the date on which
it
is made and we do not undertake any obligation to update any forward-looking
statement or statements to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time, and it is not possible for us
to
predict which will arise. In addition, we cannot assess the impact of each
factor on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained
in
any forward-looking statements.
Selected
Financial Data
The
following table presents selected historical financial information (unaudited)
as of and for the three months ended March 31, 2008 and 2007. In the opinion
of
our management, the information presented reflects all adjustments considered
necessary for a fair presentation of the results of such periods. The operating
results for the interim periods are not necessarily indicative of our future
operating results.
Executive
Overview
(dollars
in thousands, except per share data)
|
|
|
|
|
|
|
|
As
of and for the Three Months Ended
|
|
March
31, 2008
|
|
March
31, 2007
|
|
|
|
Net
income
|
|
$
|
7,050
|
|
$
|
7,317
|
|
|
|
|
Net
income per share, basic
|
|
|
0.24
|
|
|
0.25
|
|
|
|
|
Net
income per share, diluted
|
|
|
0.24
|
|
|
0.25
|
|
|
|
|
Net
interest income before provision for loan losses and
off-balance
sheet commitments
|
|
|
19,744
|
|
|
18,973
|
|
|
|
|
Average
balances:
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
2,211,860
|
|
|
1,991,923
|
|
|
|
|
Cash
and cash equivalents
|
|
|
76,202
|
|
|
175,918
|
|
|
|
|
Investment
securities
|
|
|
222,525
|
|
|
186,563
|
|
|
|
|
Net
loans
|
|
|
1,828,889
|
|
|
1,551,416
|
|
|
|
|
Total
deposits
|
|
|
1,704,820
|
|
|
1,731,159
|
|
|
|
|
Shareholders’
equity
|
|
|
175,332
|
|
|
155,100
|
|
|
|
|
Performance
Ratios:
|
|
|
|
|
|
|
|
|
|
|
Annualized
return on average assets
|
|
|
1.28
|
%
|
|
1.47
|
%
|
|
|
|
Annualized
return on average equity
|
|
|
16.08
|
%
|
|
18.87
|
%
|
|
|
|
Net
interest margin
|
|
|
3.83
|
%
|
|
4.10
|
%
|
|
|
|
Efficiency
ratio
|
|
|
49.10
|
%
|
|
43.43
|
%
|
|
|
|
Capital
Ratios:
|
|
|
|
|
|
|
|
|
|
|
Tier
1 capital to adjusted total assets
|
|
|
10.24
|
%
|
|
10.00
|
%
|
|
|
|
Tier
1 capital to risk-weighted assets
|
|
|
11.75
|
%
|
|
12.07
|
%
|
|
|
|
Total
capital to risk-weighted assets
|
|
|
14.37
|
%
|
|
13.80
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Period-end
balances as of:
|
|
March
31, 2008
|
|
December
31, 2007
|
|
March
31, 2007
|
|
Total
assets
|
|
$
|
2,260,435
|
|
$
|
2,196,705
|
|
$
|
2,001,083
|
|
Investment
securities
|
|
|
218,882
|
|
|
231,640
|
|
|
186,403
|
|
Total
loans, net of unearned income
|
|
|
1,883,500
|
|
|
1,809,050
|
|
|
1,615,355
|
|
Total
deposits
|
|
|
1,727,587
|
|
|
1,763,071
|
|
|
1,735,683
|
|
Junior
subordinated debentures
|
|
|
87,321
|
|
|
87,321
|
|
|
61,547
|
|
FHLB
borrowings
|
|
|
240,000
|
|
|
150,000
|
|
|
20,000
|
|
Shareholders’
equity
|
|
|
177,536
|
|
|
171,786
|
|
|
157,186
|
|
Asset
Quality Ratios:
|
|
|
|
|
|
|
|
|
|
|
Net
charge-off to average total loans for the quarter
|
|
|
0.06
|
%
|
|
0.23
|
%
|
|
0.17
|
%
|
Nonperforming
loans to total loans
|
|
|
0.64
|
%
|
|
0.59
|
%
|
|
1.25
|
%
|
Nonperforming
assets to total loans and other real estate owned
|
|
|
0.72
|
%
|
|
0.60
|
%
|
|
1.25
|
%
|
Allowance
for loan losses to total loans
|
|
|
1.17
|
%
|
|
1.19
|
%
|
|
1.07
|
%
|
Allowance
for loan losses to nonperforming loans
|
|
|
184.35
|
%
|
|
203.55
|
%
|
|
85.01
|
%
|
Wilshire
Bancorp, Inc. succeeded to the business and operations of Wilshire State
Bank
upon consummation of the reorganization of the Bank into a holding company
structure, effective as of August 25, 2004. Prior to the completion of the
reorganization, the Bank was subject to the information, reporting and proxy
statement requirements of the Exchange Act pursuant to the regulations of
its
primary regulator, the Federal Deposit Insurance Corporation, or FDIC.
Accordingly, the Bank filed annual and quarterly reports, proxy statements
and
other information with the FDIC. Pursuant to Rule 12g-3 of the Securities
Exchange Act of 1934, as amended, or Exchange Act, the Company has succeeded
to
the reporting obligations of the Bank and the reporting obligations of the
Bank
to the FDIC have terminated. Filings by the Company under the Exchange Act,
like
this Form 10-Q, are to be made with the Securities and Exchange Commission,
or
SEC. Note that while we refer generally to the “Company” throughout this filing,
all references to the Company prior to August 25, 2004, except where otherwise
indicated, are to the Bank.
We
operate community banks doing a general commercial banking business, with our
primary market encompassing the multi-ethnic population of the Los Angeles
metropolitan area. Our full-service offices are located primarily in areas
where
a majority of the businesses are owned by Korean-speaking immigrants, with
many
of the remaining businesses that we served are owned by Hispanic and other
minority groups.
We
have
also expanded and diversified our business with the focus on our commercial
and
consumer lending divisions. Over the past several years, our network of branches
and loan production offices has been expanded geographically. We currently
maintain 20 full-service branch banking offices in Southern California, Texas,
New Jersey, and New York, and 7 separate loan production offices in
Aurora,
Colorado (the Denver area); Atlanta, Georgia; Palisades Park, New Jersey;
Dallas, Texas; Houston, Texas; Annandale, Virginia, and Seattle,
Washington.
In
July
2007, the Company implemented a stock repurchase program whereby the Company
may
repurchase up to an aggregate of $10 million worth of shares of its common
stock
from time to time until July 31, 2008. Thus far, 127,425 shares have been
repurchased under this program amounting to $1.3 million. We believe this
program represents an efficient way to manage capital as well as affirming
our
optimism for the long term value for shareholders.
First
Quarter 2008 Key Performance Indicators
We
believe the following were key indicators of our performance for operations
during the first quarter of 2008:
|
·
|
Under
our strategy of disciplined loan and asset growth, our total assets
grew
to $2.26 billion at the end of first quarter of 2008, or an increase
of
2.90% from $2.20 billion at the end of
2007.
|
|
·
|
Consistent
with our strategy and asset growth, our total loans, net of allowance
for
loan losses, grew in a more controlled way by 4.14% to $1.86 billion
at
the end of the first quarter of 2008, as compared with $1.79 billion
at
the end of 2007.
|
|
·
|
Despite
the overall weak economy and fierce competition for deposits among
financial institutions, our total deposits only slightly declined
2.01% to
$1.73 billion at the end of the first quarter of 2008, as compared
with
$1.76 billion at the end of 2007.
|
|
·
|
Due
to the significant 200 basis point cuts of federal funds rate in
January
and March 2008, total interest income decreased 5.08% to $38.0 million
in
the first quarter of 2008, as compared with $40.0 million in the
fourth
quarter of 2007. However, it increased 0.89% when compared to $37.6
million in the first quarter of 2007.
|
|
·
|
Consistent
with the interest rate cuts, our total interest expense was reduced
to
$18.2 million in the first quarter of 2008, or 6.42% and 2.35% decreases
from $19.5 million and $18.7 million in the fourth quarter and first
quarter of 2007, respectively.
|
|
·
|
Net
income for the first quarter of 2008 was $7.1 million, which represents
a
slight decrease of 3.65% from $7.3 million in the first quarter of
2007
and a significant increase of 28.21% from $5.5 million in the fourth
quarter of 2007. Such income growth compared to the previous quarter
was
primarily explained by steady loan growth and improved loan quality.
|
Critical
Accounting Policies
The
discussion and analysis of our financial condition and results of operations
is
based upon our financial statements, which have been prepared in accordance
with
GAAP. The preparation of these financial statements requires management to
make
estimates and judgments that affect the reported amounts of assets and
liabilities, revenues and expenses, and related disclosures of contingent assets
and liabilities at the date of our financial statements. Actual results may
differ from these estimates under different assumptions or
conditions.
Various
elements of our accounting policies, by their nature, are inherently subject
to
estimation techniques, valuation assumptions and other subjective assessments.
Besides the newly adopted accounting pronouncements noted at Note 3 and Note
4,
we have particularly identified several accounting policies that, due to
judgments, estimates and assumptions inherent in those policies are critical
to
an understanding of our consolidated financial statements. These policies relate
to the classification and valuation of investment securities, the methodologies
that determine our allowance for loan losses, the treatment of non-accrual
loans, the valuation of retained interests and servicing assets related to
the
sales of SBA loans, and the accounting for income tax provisions and the
uncertainty in income taxes. In each area, we have identified the variables
most
important in the estimation process. We have used the best information available
to make the estimates necessary to value the related assets and liabilities.
Actual performance that differs from our estimates and future changes in the
key
variables could change future valuation and impact net income.
Our
significant accounting policies are described in greater detail in our 2007
Annual Report on Form 10-K in the “Critical Accounting Policies” section of
“Management’s Discussion and Analysis of Financial Condition and Result of
Operations” and in Note 1 to the Consolidated Financial Statements (“Significant
Accounting Policies”) of this report, which are essential to understanding
Management’s Discussion and Analysis of Results of Operations and Financial
Condition. There has been no material modification to these policies during
the
quarter ended March 31, 2008.
Results
of Operations
Net
Interest Income and Net Interest Margin
Our
primary source of revenue is net interest income, which is the difference
between interest and fees derived from earning assets and interest paid on
liabilities obtained to fund those assets. Our net interest income is affected
by changes in the level and mix of interest-earning assets and interest-bearing
liabilities, referred to as volume changes. Our net interest income is also
affected by changes in the yields earned on assets and rates paid on
liabilities, referred to as rate changes. Interest rates charged on our loans
are affected principally by the demand for such loans, the supply of money
available for lending purposes and competitive factors. Those factors are,
in
turn, affected by general economic conditions and other factors beyond our
control, such as federal economic policies, the general supply of money in
the
economy, legislative tax policies, governmental budgetary matters and the
actions of the Federal Reserve Board.
Average
interest-earning assets increased 11.33% to $2.06 billion in the first quarter
of 2008, as compared with $1.85 billion in the same quarter of 2007 and average
net loans increased 17.89% to $1.83 billion in the first quarter of 2008, as
compared with $1.55 billion in the same quarter of 2007. Our average
interest-bearing deposits slightly decreased 1.08% to $1.40 billion in the
first
quarter of 2008, as compared with $1.42 billion in the same quarter of 2007.
Among which, average FHLB advances and other borrowings have significantly
increased $197.6 million to $217.6 million in the first quarter of 2008 from
$20.0 million in the same quarter of last year (see “Financial
Condition-Deposits and Other Sources of Funds” below), and average junior
subordinated debenture has increased $25.8 million to $87.3 million in the
first
quarter of 2008 from $61.5 million in the first quarter of 2007. As a result,
total interest bearing liabilities increased 13.85% to $1.71 billion in the
first quarter of 2008, as compared with $1.50 billion in the first quarter
of
2007.
The
recent interest rate cuts have decreased our earning-asset yields as well as
our
cost of funds. However, due the stiff competition in our local market, our
earning-asset yields have decreased relatively more when compared to our cost
of
funds. The average yields on our interest-earning assets decreased to 7.37%
for
the first quarter of 2008 from 8.13% for the first quarter of the prior year.
Consistent with the decrease in average yields on interest-earning assets,
the
cost of funds for average yields on interest-earning liabilities also decreased
to 4.27% for the first quarter of 2008 from 4.97% for the prior year’s same
quarter. Although interest income slightly grew 0.89%, because of the higher
interest-earning asset balance, to $38.0 million for the first quarter of 2008,
as compared with $37.6 million for the prior year’s same period, the interest
expense has slightly decreased 2.35% to $18.2 million for the first quarter
of
2008, as compared with $18.7 million for the same quarter a year ago. The net
result of our growth in interest income and decline in interest expense was
an
increase in net interest income of 4.07% to $19.7 million for the first quarter
of 2008, as compared with $19.0 million for the same quarter a year
ago.
Despite
our net interest income having increased by $0.8 million in the first quarter
2008, our net interest spread and margin were lowered, primarily impacted by
the
stiff deposit competition among financial institutions and 200 basis point
federal funds rate cuts in January and March 2008. Our net interest spread
and
net interest margin have deteriorated in the first quarter of 2008 to 3.10%
and
3.83%, respectively, lowered from 3.29% and 4.15% in the prior quarter, and
3.16% and 4.10% in the same quarter a year ago. M
anagement
believes
that the recent federal funds rate cut of 75 basis points on March 18, 2008,
will further affect and compress our margins in the second quarter of 2008.
The
following table sets forth, for the periods indicated, our average balances
of
assets, liabilities and shareholders’ equity, in addition to the major
components of net interest income and net interest margin (all yields were
calculated without the consideration of tax effects, if any):
Distribution,
Yield and Rate Analysis of Net Interest Income
|
|
For
the Quarter Ended March 31,
|
|
|
|
2008
|
|
2007
|
|
|
|
(dollars
in thousands)
|
|
|
|
Average
Balance
|
|
Interest
Income/ Expense
|
|
Annualized
Average Rate/Yield
|
|
Average
Balance
|
|
Interest
Income/ Expense
|
|
Annualized
Average
Rate/Yield
|
|
Assets
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loans
1
|
|
$
|
1,828,889
|
|
$
|
35,318
|
|
|
7.72
|
%
|
$
|
1,551,416
|
|
$
|
33,901
|
|
|
8.74
|
%
|
Securities
of U.S. government agencies
|
|
|
204,313
|
|
|
2,378
|
|
|
4.66
|
%
|
|
161,064
|
|
|
1,933
|
|
|
4.80
|
%
|
Other
investment securities
|
|
|
18,211
|
|
|
206
|
|
|
4.52
|
%
|
|
25,499
|
|
|
306
|
|
|
4.80
|
%
|
Interest
on federal fund sold
|
|
|
9,851
|
|
|
80
|
|
|
3.27
|
%
|
|
113,444
|
|
|
1,509
|
|
|
5.32
|
%
|
Total
interest-earning assets
|
|
|
2,061,264
|
|
|
37,982
|
|
|
7.37
|
%
|
|
1,851,423
|
|
|
37,649
|
|
|
8.13
|
%
|
Cash
and due from banks
|
|
|
66,351
|
|
|
|
|
|
|
|
|
62,474
|
|
|
|
|
|
|
|
Other
assets
|
|
|
84,245
|
|
|
|
|
|
|
|
|
78,026
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
2,211,860
|
|
|
|
|
|
|
|
$
|
1,991,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
and Shareholders’ Equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money
market deposits
|
|
$
|
396,595
|
|
|
3,725
|
|
|
3.76
|
%
|
$
|
405,927
|
|
|
4,598
|
|
|
4.53
|
%
|
Super
NOW deposits
|
|
|
22,520
|
|
|
79
|
|
|
1.41
|
%
|
|
20,957
|
|
|
58
|
|
|
1.11
|
%
|
Savings
deposits
|
|
|
32,617
|
|
|
249
|
|
|
3.05
|
%
|
|
29,270
|
|
|
141
|
|
|
1.93
|
%
|
Time
certificates of deposit in denominations of $100,000 or
more
|
|
|
788,630
|
|
|
8,799
|
|
|
4.46
|
%
|
|
803,630
|
|
|
10,618
|
|
|
5.28
|
%
|
Other
time deposits
|
|
|
163,993
|
|
|
1,886
|
|
|
4.60
|
%
|
|
159,946
|
|
|
1,948
|
|
|
4.87
|
%
|
FHLB
advances and other borrowings
|
|
|
217,593
|
|
|
2,043
|
|
|
3.76
|
%
|
|
20,017
|
|
|
181
|
|
|
3.63
|
%
|
Junior
subordinated debenture
|
|
|
87,321
|
|
|
1,457
|
|
|
6.68
|
%
|
|
61,547
|
|
|
1,132
|
|
|
7.36
|
%
|
Total
interest-bearing liabilities
|
|
|
1,709,269
|
|
|
18,238
|
|
|
4.27
|
%
|
|
1,501,294
|
|
|
18,676
|
|
|
4.97
|
%
|
Non-interest-bearing
deposits
|
|
|
300,465
|
|
|
|
|
|
|
|
|
311,428
|
|
|
|
|
|
|
|
Total
deposits and other borrowings
|
|
|
2,009,734
|
|
|
|
|
|
1,812,722
|
|
|
|
|
|
|
|
|
|
|
Other
liabilities
|
|
|
26,794
|
|
|
|
|
|
|
|
|
24,101
|
|
|
|
|
|
|
|
Shareholders’
equity
|
|
|
175,332
|
|
|
|
|
|
|
|
|
155,100
|
|
|
|
|
|
|
|
Total
liabilities and shareholders’ equity
|
|
$
|
2,211,860
|
|
|
|
|
|
|
|
$
|
1,991,923
|
|
|
|
|
|
|
|
Net
interest income
|
|
|
|
|
$
|
19,744
|
|
|
|
|
|
|
|
$
|
18,973
|
|
|
|
|
Net
interest spread
2
|
|
|
|
|
|
|
|
|
3.10
|
%
|
|
|
|
|
|
|
|
3.16
|
%
|
Net
interest margin
3
|
|
|
|
|
|
|
|
|
3.83
|
%
|
|
|
|
|
|
|
|
4.10
|
%
|
___________________________
1
Net loan
fees have been included in the calculation of interest income. Loan fees were
approximately $1,282,000 and $1,599,000 for the quarters ended March 31, 2008
and 2007, respectively. Loans are net of the allowance for loan losses, deferred
fees, unearned income and related direct costs, but include those loans placed
on non-accrual status.
2
Represents the average rate earned on interest-earning assets less the average
rate paid on interest-bearing liabilities.
3
Represents net interest income as a percentage of average interest-earning
assets.
The
following table sets forth, for the periods indicated, the dollar amount of
changes in interest earned and paid for interest-earning assets and
interest-bearing liabilities, respectively, and the amount of change
attributable to changes in average daily balances (volume) or changes in average
daily interest rates (rate). All yields were calculated without the
consideration of tax effects, if any, and the variances attributable to both
the
volume and rate changes have been allocated to volume and rate changes in
proportion to the relationship of the absolute dollar amount of the changes
in
each:
Rate/Volume
Analysis of Net Interest Income
(dollars
in thousands)
|
|
For
the Quarter Ended March 31,
2008
vs. 2007
|
|
|
|
Increase
(Decrease) Due to Change In
|
|
|
|
Volume
|
|
Rate
|
|
Total
|
|
Interest
income:
|
|
|
|
|
|
|
|
|
|
|
Net
loans
1
|
|
$
|
5,637
|
|
$
|
(4,220
|
)
|
$
|
1,417
|
|
Securities
of U.S. government agencies
|
|
|
504
|
|
|
(59
|
)
|
|
445
|
|
Other
investment securities
|
|
|
(83
|
)
|
|
(17
|
)
|
|
(100
|
)
|
Interest
on federal fund sold
|
|
|
(1,005
|
)
|
|
(424
|
)
|
|
(1,429
|
)
|
Total
interest income
|
|
|
5,053
|
|
|
(4,720
|
)
|
|
333
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense:
|
|
|
|
|
|
|
|
|
|
|
Money
market deposits
|
|
|
(104
|
)
|
|
(769
|
)
|
|
(873
|
)
|
Super
NOW deposits
|
|
|
5
|
|
|
16
|
|
|
21
|
|
Savings
deposits
|
|
|
18
|
|
|
90
|
|
|
108
|
|
Time
certificates of deposit in
denominations
of $100,000 or more
|
|
|
(195
|
)
|
|
(1,624
|
)
|
|
(1,819
|
)
|
Other
time deposits
|
|
|
48
|
|
|
(110
|
)
|
|
(62
|
)
|
FHLB
advances and other borrowings
|
|
|
1,855
|
|
|
7
|
|
|
1,862
|
|
Junior
subordinated debenture
|
|
|
438
|
|
|
(113
|
)
|
|
325
|
|
Total
interest expense
|
|
|
2,065
|
|
|
(2,503
|
)
|
|
(438
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Change
in net interest income
|
|
$
|
2,988
|
|
$
|
(2,217
|
)
|
$
|
771
|
|
___________________________
1
Net loan
fees have been included in the calculation of interest income. Net loan fees
were approximately $1,282,000 and $1,599,000 for the quarters ended March
31,
2008 and 2007, respectively. Loans are net of the allowance for loan losses,
deferred fees, unearned income, and related direct costs, but includes those
placed on non-accrual status.
P
rovision
for Loan Losses and Provision for Off-balance Sheet Losses
Due
to
the credit risk inherent in our lending business, we set aside allowances
through charges to earnings. Such charges are made not only for our outstanding
loan portfolio, but also for off-balance sheet items, such as commitments to
extend credits or letters of credit. The charges made for our outstanding loan
portfolio were credited to allowance for loan losses, whereas charges for
off-balance sheet items were credited to reserve for off-balance sheet items,
which is presented as a component of other liabilities.
We
recorded a provision for loan and off-balance sheet losses of $1.4 million
in
the first quarter of 2008 as compared to a provision of $1.6 million for the
prior year’s same quarter. The decrease in the provision for credit and
off-balance sheet losses was in line with our enhanced lending policy and our
strategy of improving loan quality (see “Financial Condition - Allowance for
Loan and Off-Balance Sheet Losses” below for further discussion). The $1.4
million provision in the first quarter of 2008 was net of a recovery of $112,000
provision for off-balance-sheet items, while the $1.6 million provision in
the
first quarter of 2007 included $375,000 provision to the reserve for
off-balance-sheet items. The procedures for monitoring the adequacy of the
allowance for loan and off-balance sheet losses, as well as detailed information
concerning the allowance itself, are described in the section entitled
“Allowance for Loan and Off-Balance Sheet Losses” below.
Non-interest
Income
Total
non-interest income stayed fairly stable at $5.2 million in the first quarter
of
2008 and 2007. This was because the $945,000 decrease in gain of sale of loans
was offset by the income increase in other areas, primarily related to the
$461,000 increase in service charges on deposit accounts, $256,000 increase
in
loan-related servicing income, and $130,000 increase in income from other
income. Non-interest income as a percentage of average assets decreased to
0.23%
for the first quarter of 2008 from 0.26% for the prior year’s same period, which
was because the non-interest income stayed unchanged while the average asset
base has grown 11.05% to $2.21 billion in the first quarter of 2008, as compared
with $1.99 billion in the same quarter a year ago. We currently earn
non-interest income from various sources, including an income stream provided
by
BOLI in the form of an increase in cash surrender value.
The
following table sets forth the various components of our non-interest income
for
the periods indicated:
Non-interest
Income
(dollars
in thousands)
For
Three Months Ended March 31,
|
|
2008
|
|
2007
|
|
|
|
(Amount)
|
|
(%)
|
|
(Amount)
|
|
(%)
|
|
Service
charges on deposit accounts
|
|
$
|
2,748
|
|
|
53.3
|
%
|
$
|
2,287
|
|
|
43.9
|
%
|
Gain
on sale of loans
|
|
|
864
|
|
|
16.8
|
%
|
|
1,809
|
|
|
34.8
|
%
|
Trade
finance and loan servicing income
|
|
|
675
|
|
|
13.1
|
%
|
|
419
|
|
|
8.0
|
%
|
Income
from other earning assets
|
|
|
319
|
|
|
6.2
|
%
|
|
277
|
|
|
5.3
|
%
|
Other
income
|
|
|
548
|
|
|
10.6
|
%
|
|
418
|
|
|
8.0
|
%
|
Total
|
|
$
|
5,154
|
|
|
100.0
|
%
|
$
|
5,210
|
|
|
100.0
|
%
|
Average
assets
|
|
$
|
2,211,860
|
|
|
|
|
$
|
1,991,923
|
|
|
|
|
Non-interest
income as a % of average assets
|
|
|
|
|
|
0.23
|
%
|
|
|
|
|
0.26
|
%
|
Our
largest source of non-interest income in the first quarter of 2008 was the
service charge income on deposit accounts, which generally increases as the
number of transactional accounts increase. The service charge income was $2.7
million, representing over $53% of the total non-interest income for the first
quarter of 2008. It has increased 20.2% as compared to $2.3 million in the
first
quarter of 2007.
Our
second largest source of non-interest income for the first quarter of 2008
was
the gain on the sale of loans, which was $864,000 for the first quarter of
2008,
representing approximately 17% of the total non-interest income. It has
substantially decreased to $864,000 in the first quarter of 2008 from $1.8
million in the same period of prior year. This non-interest income is derived
primarily from the sale of the guaranteed portion of SBA loans. We sell the
portion of SBA loans guaranteed under the SBA 7(a) program in government
securities secondary markets and retain servicing rights. We also recognized
minimal gains from the sale of residential mortgage loans of $14,000 in first
quarter 2008 due to the slow-down of the residential mortgage market. Since
there were no unguaranteed SBA loan sales, and only $14,000 sales gain on
residential mortgage sales in the first quarter of 2008, the $945,000 decrease
in gain on sale was primarily related to the sale of guaranteed portions of
the
SBA loans. Such decrease in gain on sale of loans was primarily related to
the
combined effect of decrease in SBA loan production level, and decrease in sales
premium rate. SBA loan production levels decreased $16.5 million or 42.6% to
$22.3 million in first quarter of 2008 compared to $38.8 million in first
quarter 2007. The average sales premium of SBA loans we have received decreased
233 basis points to 5.12% in the first quarter of 2008, as compared with 7.45%
in the first quarter 2007.
The
third
largest source of non-interest income was loan-related servicing income. This
fee income consists of trade-financing fees and servicing fees on SBA loans
sold. With the expansion of our trade-financing activities and the growth of
our
servicing loan portfolio, this fee income has generally increased. In the first
quarter of 2008, it increased to $675,000 as compared with $419,000 for the
prior year’s same period. Such increase was primarily $413,000 income increase
related to the disposal of servicing assets and interest-only (“I/O”) strips
between the current quarter and the same quarter a year ago. The servicing
fee
income on sold loans is credited when we collect the monthly payments on the
sold loans we are servicing and charged by the monthly amortization of servicing
rights and I/O strips that we capitalize upon sale of the related loans. Such
servicing rights and I/O strips are also charged against the loan service fee
income account when the sold loans are paid off. For the first three months
of
2008, $194,000 of servicing assets and I/O strips were charged back to this
loan
service fee income account by the early pay-offs as compared to $607,000 for
the
prior year’s same period.
Income
from other earning assets mainly represents dividend income on FHLB stock
ownership and increases in cash surrender value of BOLI. For the first quarter
of 2008, the balance increased to $319,000 as compared to $277,000 in the prior
year’s same period. The $42,000 increase was primarily attributable to $32,000
increase in FHLB stock dividend income, which was due to $2.6 million increase
in FHLB stock corresponding to our increase in FHLB borrowings.
Non-interest
income, other than the categories specifically addressed above, represents
income from miscellaneous sources, such as checkbook sales income, gain on
sales
of investment securities, excess of insurance proceeds over carrying value
of an
insured loss, and generally increases as our business activities grow. For
the
first quarter of 2008, this miscellaneous income amounted to $548,000 as
compared to $418,000 in the prior year’s same period.
Non-interest
Expense
Total
noninterest expense increased to $12.2 million in the first quarter of 2008
from
$10.5 million in the same period of 2007. This increase is attributed to the
expanded personnel and premises associated with our business growth, including
the increase in expenses associated with the new offices opened in the third
and
fourth quarters of 2007. However, due to continuing efforts to minimize
operating expenses during our expansion, we were able to maintain non-interest
expenses as a percentage of average assets at the low level of 0.55% and 0.53%
in the first quarter of 2008 and 2007, respectively. Our
efficiency ratio was 49.1%
i
n
the
first quarter of 2008, compared to 43.4% in the same quarter a year ago, which
was mainly due to the integration of the operation for the newly opened New
Jersey and California branches in the previous quarters.
The
following table sets forth a summary of non-interest expenses for the periods
indicated:
Non-interest
Expense
s
(dollars
in thousands)
For
the Quarter Ended March 31,
|
|
2008
|
|
2007
|
|
|
|
(Amount)
|
|
(%)
|
|
(Amount)
|
|
(%)
|
|
Salaries
and employee benefits
|
|
$
|
6,976
|
|
|
57.1
|
%
|
$
|
5,698
|
|
|
54.3
|
%
|
Occupancy
and equipment
|
|
|
1,425
|
|
|
11.7
|
%
|
|
1,270
|
|
|
12.1
|
%
|
Data
processing
|
|
|
764
|
|
|
6.2
|
%
|
|
765
|
|
|
7.3
|
%
|
Loan
referral fee
|
|
|
280
|
|
|
2.3
|
%
|
|
420
|
|
|
4.0
|
%
|
Professional
fees
|
|
|
500
|
|
|
4.1
|
%
|
|
315
|
|
|
3.0
|
%
|
Directors’
fees
|
|
|
96
|
|
|
0.8
|
%
|
|
140
|
|
|
1.3
|
%
|
Office
supplies
|
|
|
217
|
|
|
1.8
|
%
|
|
174
|
|
|
1.7
|
%
|
Advertising
|
|
|
177
|
|
|
1.4
|
%
|
|
146
|
|
|
1.4
|
%
|
Communications
|
|
|
123
|
|
|
1.0
|
%
|
|
115
|
|
|
1.1
|
%
|
Deposit
insurance premium
|
|
|
330
|
|
|
2.7
|
%
|
|
50
|
|
|
0.5
|
%
|
Outsourced
service for customer
|
|
|
449
|
|
|
3.7
|
%
|
|
376
|
|
|
3.6
|
%
|
Investor
relation expenses
|
|
|
79
|
|
|
0.6
|
%
|
|
81
|
|
|
0.8
|
%
|
Amortization
of investments in affordable housing
partnerships
|
|
|
174
|
|
|
1.4
|
%
|
|
113
|
|
|
1.1
|
%
|
Amortization
of other intangible assets
|
|
|
74
|
|
|
0.6
|
%
|
|
74
|
|
|
0.7
|
%
|
Other
operating
|
|
|
560
|
|
|
4.6
|
%
|
|
766
|
|
|
7.1
|
%
|
Total
|
|
$
|
12,224
|
|
|
100.0
|
%
|
$
|
10,503
|
|
|
100.0
|
%
|
Average
assets
|
|
$
|
2,211,860
|
|
|
|
|
$
|
1,991,923
|
|
|
|
|
Non-interest
expenses as a % of average assets
|
|
|
|
|
|
0.55
|
%
|
|
|
|
|
0.53
|
%
|
Salaries
and employee benefits historically represent more than half of total
non-interest expense and generally increase as our branch network and business
volume expand. Associated with the new branches opened in the third and fourth
quarters in 2007, these expenses increased 22.4% to $7.0 million or 57% of
total
noninterest expenses in the first quarters of 2008, as compared with $5.7
million, or 54% for the prior year’s same quarter. Such increase was the result
of overall compensation increase caused by stiff competition for qualified
bankers in our niche market in addition to our new office openings and business
growth in the past 12 months that require additional staffing. The number of
full-time equivalent employees increased to 352 as of March 31, 2008, as
compared with 347 as of March 31, 2007, Nonetheless, our significant asset
growth helped us improved assets per employee ratio to $6.4 million in the
first
quarter of 2008, as compared with $5.8 million in the same quarter a year
ago.
Occupancy
and equipment expenses increased to $1.4 million or 12% of total noninterest
expenses, in the first quarter of 2008 as compared with $1.3 million for the
same quarter a year ago. The increase was primarily attributable to the
additional office space and lease expenses for of the two additional branch
offices in New Jersey and California.
Data
processing expenses and office supplies together represent about 8% of total
noninterest expenses. The balances remained fairly the same at $764,000 in
the
first quarter of 2008, as compared with $765,000 for the same quarter a year
ago. The expenses were fairly maintained at the same level due to our effort
of
controlling expenses while keeping up with the growth pace of our business.
Loan
referral fees are paid to brokers who refer loans to us, mostly SBA loans.
Although we also pay referral fees for some qualified commercial loans, referral
fee expenses generally correspond to our SBA loan production level. SBA loan
production level decreased $16.5 million or 42.6% to $22.3 million in first
quarter of 2008 compared to $38.8 million in first quarter 2007. The loan
referral fees also decreased consistent with the decline in the SBA loan
production level.
Professional
fees generally increase as we grow and were $500,000 and $315,000, or 4% and
3%
of total noninterest expenses, in the first quarters of 2008 and 2007,
respectively. The $185,000 increase in professional fees is mainly attributable
to the $170,000 increase in legal fees related to loan collection, property
foreclosure and repossession, and various other legal consultations.
Deposit
insurance premium expenses represent The Financing Corporation (“FICO”) and FDIC
insurance premium assessments. In the first quarter of 2008, the expenses
sharply increased to $330,000 from $50,000 in the same quarter a year ago,
which
was primarily attributable to the new $251,000 FDIC risk insurance premium
assessment. In the same quarter a year ago, only FICO premium of $50,000 was
assessed.
Outsourced
service costs for customers are payments made to third parties who provide
services that were traditionally provided by the Bank’s customers, such as
armored car services or bookkeeping services, and are recouped from their
deposit balances maintained with us. Due mainly to the increase in service
activities and the increase in depositors demanding such services, such as
escrow accounts and brokerage accounts, these expenses increased to $449,000
in
the first quarter of 2008 from $376,000 in the same period of 2007. The $73,000
increase in this expense category was related to various vendor services, which
is consistent with our business growth.
Non-interest
expense other than the categories specifically addressed above, such as
director’s fees, office supplies, advertising, communications, and other
miscellaneous expenses, decreased to $1.5 million in total in the first quarter
of 2008 as compared with $1.6 million for the prior year’s same quarter.
Provision
for Income Taxes
For
the
quarter ended March 31, 2008, we made a provision for income taxes of $4.2
million on pretax net income of $11.3 million, representing an effective tax
rate of 37.5%, as compared with a provision for income taxes of $4.7 million
on
pretax net income of $12.1 million, representing an effective tax rate of 39.3%
for the prior year’s same period.
Our
effective tax rate in the first quarter of 2008 was 1.8% lower when compared
to
the same quarter a year ago, which was mainly due to the increase in low income
tax credit to which we were entitled for our investment in various government
defined low income communities. Our effective tax rate in general has been
lower
than the statutory rate due to state tax benefits derived from doing business
in
an Enterprise Zone and our ownership of BOLI and Low Income Housing Tax Credit
Funds.
Based
upon consideration of all relevant facts and circumstances, we do not believe
the ultimate resolution of tax issues for all open tax periods will have a
materially adverse effect upon our results of operations or financial
condition.
Financial
Condition
Investment
Portfolio
Investments
are one of our major sources of interest income and are acquired in accordance
with a written comprehensive investment policy addressing strategies, types
and
levels of allowable investments. Management of our investment portfolio is
set
in accordance with strategies developed and overseen by our Asset/Liability
Committee. Investment balances, including cash equivalents and interest-bearing
deposits in other financial institutions, are subject to change over time based
on our asset/liability funding needs and interest rate risk management
objectives. Our liquidity levels take into consideration anticipated future
cash
flows and all available sources of credits and are maintained at levels
management believes are appropriate to assure future flexibility in meeting
anticipated funding needs.
Cash
Equivalents and Interest-bearing Deposits in other Financial
Institutions
We
sell
federal funds and high quality money market instruments, and deposit
interest-bearing accounts in other financial institutions to help meet liquidity
requirements and provide temporary holdings until the funds can be otherwise
deployed or invested.
Investment
Securities
Management
of
our
investment securities portfolio focuses on providing an adequate level of
liquidity and establishing an interest rate-sensitive position, while earning
an
adequate level of investment income without taking undue risk. As of March
31,
2008, our investment portfolio is primarily comprised of United States
government agency securities, accounting for 93% of the entire investment
portfolio. Our U.S. government agency securities holdings are all
“prime/conforming” mortgage backed securities, or MBS’s, and collateralized
mortgage obligations, or CMO’s, guaranteed by FNMA, FHLMC, or GNMA. Our
investment portfolio currently contains 0% subprime mortgages. Besides the
U.S.
government agency securities, we also have a 3% investment in corporate debt
and
4% in municipal debt securities. Among all the corporate and municipal debt
securities, the majority of which are “Triple A” rated, and all are considered
investment grade. We adopted SFAS No. 157 and SFAS No. 159 effective January
1,
2008. Pursuant to the fair value elective option of SFAS No. 159, we have chosen
to continue classifying our existing instruments of investment securities as
“held-to-maturity” or “available-for-sale” under SFAS No. 115. Investment
securities that we intend to hold until maturity are classified as
held-to-maturity securities, and all other investment securities are classified
as available-for-sale. The carrying values of available-for-sale investment
securities are adjusted for unrealized gains or losses as a valuation allowance
and any gain or loss is reported on an after-tax basis as a component of other
comprehensive income. The fair market values of our held-to-maturity and
available-for-sale securities were respectively $0.4 million and $218.5 million
as of March 31, 2008
.
See
Note 3 for adoption of SFAS No. 159 and SFAS No. 157 and the fair value
measurement input disclosure for SFAS No. 157.
The
following table summarizes the book value and market value and distribution
of
our investment securities as of the dates indicated:
Investment
Securities Portfolio
(dollars
in thousands)
|
|
As
of March 31, 2008
|
|
As
of December 31, 2007
|
|
|
|
Amortized
Cost
|
|
Market
Value
|
|
Unrealized
Gain
(Loss)
|
|
Amortized
Cost
|
|
Market
Value
|
|
Unrealized
Gain
(Loss)
|
|
Held
to Maturity
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
of government
sponsored
enterprises
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
7,000
|
|
$
|
7,001
|
|
$
|
1
|
|
Collateralized
mortgage
obligation.
|
|
|
157
|
|
|
150
|
|
|
(7
|
)
|
|
164
|
|
|
151
|
|
|
(13
|
)
|
Municipal
securities
|
|
|
220
|
|
|
221
|
|
|
1
|
|
|
220
|
|
|
220
|
|
|
-
|
|
Total
held to maturity
securities
|
|
$
|
377
|
|
$
|
371
|
|
$
|
(6
|
)
|
$
|
7,384
|
|
$
|
7,372
|
|
$
|
(12
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available
for Sale
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
of government
sponsored
enterprises
|
|
$
|
44,922
|
|
$
|
45,404
|
|
$
|
482
|
|
$
|
64,932
|
|
$
|
65,175
|
|
$
|
243
|
|
Mortgage
backed
securities
|
|
|
86,056
|
|
|
86,906
|
|
|
850
|
|
|
60,470
|
|
|
60,557
|
|
|
87
|
|
Collateralized
mortgage
obligation
|
|
|
69,774
|
|
|
71,132
|
|
|
1,358
|
|
|
73,416
|
|
|
73,286
|
|
|
(130
|
)
|
Corporate
securities
|
|
|
7,072
|
|
|
7,238
|
|
|
166
|
|
|
17,390
|
|
|
17,484
|
|
|
94
|
|
Municipal
securities
|
|
|
7,725
|
|
|
7,825
|
|
|
100
|
|
|
7,725
|
|
|
7,754
|
|
|
29
|
|
Total
available for
sale
securities
|
|
$
|
215,549
|
|
$
|
218,505
|
|
$
|
2,956
|
|
$
|
223,933
|
|
$
|
224,256
|
|
$
|
323
|
|
The
following table summarizes the maturity and repricing schedule of our investment
securities at their carrying values and their weighted average yields (without
the consideration of tax effects, if any) at March 31, 2008:
Investment
Maturities and Repricing Schedule
(dollars
in thousands)
|
|
Within
One
Year
|
|
After
One But Within Five
Years
|
|
After
Five But Within Ten
Years
|
|
After
Ten
Years
|
|
Total
|
|
Held
to Maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage
backed securities
|
|
$
|
-
|
|
$
|
157
|
|
$
|
-
|
|
$
|
-
|
|
$
|
157
|
|
Municipal
securities
|
|
|
220
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
220
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available-for-sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
of government
sponsored
enterprises
|
|
|
3,036
|
|
|
25,256
|
|
|
17,112
|
|
|
-
|
|
|
45,404
|
|
Mortgage
backed securities
|
|
|
11,113
|
|
|
1,342
|
|
|
193
|
|
|
74,258
|
|
|
86,906
|
|
Collateralized
mortgage
obligation
|
|
|
4,841
|
|
|
66,291
|
|
|
-
|
|
|
-
|
|
|
71,132
|
|
Corporate
securities
|
|
|
-
|
|
|
7,238
|
|
|
-
|
|
|
-
|
|
|
7,238
|
|
Municipal
securities
|
|
|
400
|
|
|
-
|
|
|
4,682
|
|
|
2,743
|
|
|
7,825
|
|
Total
investment Securities
|
|
$
|
19,610
|
|
$
|
100,284
|
|
$
|
21,987
|
|
$
|
77,001
|
|
$
|
218,882
|
|
Our
investment securities holdings decreased by $12.8 million, or 5.5%, to $218.9
million at March 31, 2008, compared to holdings of $231.6 million at December
31, 2007. Total investment securities as a percentage of total assets were
9.7%
and 10.5% at March 31, 2008 and December 31, 2007, respectively. As of March
31,
2008, investment securities having a carrying value of $202.5 million were
pledged to secure certain deposits.
As
of
March 31, 2008, due to substantial decrease in interest rates, our
held-to-maturity securities, which are carried at their amortized costs, were
mostly called by the issuers. The investment balance decreased to $0.4 million
from $7.4 million at December 31, 2007. Similarly, available-for-sale
securities, which are stated at their fair market values, decreased to $218.5
million at March 31, 2008 from $224.3 million at December 31, 2007.
Loan
Portfolio
All
loans
are carried at face amount, less principal repayment collected, net of deferred
loan fees, and the allowance for loan losses, interest on loans is accrued
daily
on a simple interest basis. Total loans net of unearned loans and allowance
for
loan losses increased $74.0 million, or 4.1%, to $1.86 billion at March 31,
2008, as compared with $1.79 billion at December 31, 2007. Total loans net
of
unearned income as a percentage of total assets as of March 31, 2008 and
December 31, 2007 were 83.3% and 82.4%, respectively.
The
following table sets forth the amount of total loans outstanding and the
percentage distributions in each category, as of the dates
indicated:
Distribution
of Loans and Percentage Composition of Loan Portfolio
|
|
Amount
Outstanding
|
|
|
|
(dollars
in thousands)
|
|
|
|
March
31, 2008
|
|
December
31, 2007
|
|
Construction
|
|
$
|
46,047
|
|
$
|
59,443
|
|
Real
estate secured
|
|
|
1,460,695
|
|
|
1,386,622
|
|
Commercial
and industrial
|
|
|
354,911
|
|
|
335,332
|
|
Consumer
|
|
|
27,440
|
|
|
33,569
|
|
Total
loans
1
|
|
|
1,889,093
|
|
|
1,814,966
|
|
Unearned
Income
|
|
|
(5,593
|
)
|
|
(5,916
|
)
|
Gross
loans, net of unearned income
|
|
|
1,883,500
|
|
|
1,809,050
|
|
Allowance
for loan losses
|
|
|
(22,072
|
)
|
|
(21,579
|
)
|
Net
loans
|
|
$
|
1,861,428
|
|
$
|
1,787,471
|
|
|
|
|
|
|
|
|
|
Percentage
breakdown of gross loans:
|
|
|
|
|
|
|
|
Construction
|
|
|
2.4
|
%
|
|
3.3
|
%
|
Real
estate secured
|
|
|
77.3
|
%
|
|
76.4
|
%
|
Commercial
and industrial
|
|
|
18.8
|
%
|
|
18.4
|
%
|
Consumer
|
|
|
1.5
|
%
|
|
1.9
|
%
|
Total
loans
|
|
|
100.00
|
%
|
|
100.0
|
%
|
___________________________
1
Includes
loans held for sale, at the lower of cost or market, of $10.3 million and $7.9
million at March 31, 2008 and December 31, 2007, respectively
Real
estate secured loans consist primarily of commercial real estate loans and
are
extended to finance the purchase or improvement of commercial real estate or
businesses thereon. The properties may be either user owned or for investment
purposes. Loans secured by real estate equaled $1.46 billion and $1.39 billion
as of March 31, 2008 and December 31, 2007, respectively. The real estate
secured loans as a percentage of total loans were 77.3% and 76.4% at March
31,
2008 and December 31, 2007, respectively. Most of our salable loans are
transferred to the secondary market while we retain a portion on our books
as
portfolio loans. Our total home mortgage loan portfolio outstanding was only
$37.6 million at March 31, 2008 and $38.0 million at December 31, 2007, and
we
have deemed its effect on our credit risk profile to be immaterial. Due to
the
higher risk exposure of those residential mortgage loans, we limited ourselves
from originating such loans starting 2007.
Commercial
and industrial loans include revolving lines of credit as well as term business
loans. Commercial and industrial loans at March 31, 2008 increased to $354.9
million, as compared with $335.3 million at December 31, 2007. Commercial and
industrial loans as a percentage of total loans were 18.8% at March 31, 2008,
from 18.4% at December 31, 2007. Under the current economic condition, we
exercise more due diligence in acquiring new loans. Hence, we expect to see
our
loan portfolio to continue growing, but at a more controlled pace.
Consumer
loans have historically represented less than 5% of our total loan portfolio.
The majority of consumer loans are concentrated in automobile loans, which
we
provide as a service only to existing customers. As consumer loans present
a
higher risk potential compared to our loan products, especially during the
current economic condition, we have reduced our effort in consumer lending
since
2007. Hence, as of March 31, 2008, our consumer loan total was down $6.2 million
from the prior quarter level. As of March 31, 2008, the balance of consumer
loans was $27.4 million, or 1.5% of total loans, as compared to $33.6 million,
or 1.9% of total loans as of December 31, 2007. Nonetheless, consumer loans
as a
percentage of total loans have always been minimal.
Construction
loans generally have represented 5% or less of our total loan portfolio and
are
extended as a temporary financing vehicle only. Construction loans decreased
to
$46.0 million, or 2.4% of total loans, at the end of the first quarter of 2008,
as compared with $59.4 million, or 3.3% of total loans at the end of 2007.
The
$13.4 million decrease in loan production in the first quarter of 2008 was
primarily because of our stricter loan underwriting policy.
Our
loan
terms vary according to loan type. Commercial term loans have typical maturities
of three to five years and are extended to finance the purchase of business
entities, business equipment, leasehold improvements or to provide permanent
working capital. We generally limit real estate loan maturities to five to
eight
years. Lines of credit, in general, are extended on an annual basis to
businesses that need temporary working capital and/or import/export financing.
We generally seek diversification in our loan portfolio, and our borrowers
are
diverse as to industry, location, and their current and target
markets.
The
following table shows the contractual maturity distribution and repricing
intervals of the outstanding loans in our portfolio, as of March 31, 2008.
In
addition, the table shows the distribution of such loans between those with
variable or floating interest rates and those with fixed or predetermined
interest rates. The table excludes the gross amount of non-accrual loans of
$18.1 million:
Loan
Maturities and Repricing Schedule
|
|
At
March 31, 2008,
|
|
|
|
Within
One
Year
|
|
After
One
But
Within
Five
Years
|
|
After
Five
Years
|
|
Total
|
|
|
|
(dollars
in thousands)
|
|
Construction
|
|
$
|
46,047
|
|
$
|
-
|
|
$
|
-
|
|
$
|
46,047
|
|
Real
estate secured
|
|
|
879,371
|
|
|
472,503
|
|
|
97,500
|
|
|
1,449,374
|
|
Commercial
and industrial
|
|
|
327,199
|
|
|
17,682
|
|
|
3,469
|
|
|
348,350
|
|
Consumer
|
|
|
16,840
|
|
|
10,351
|
|
|
-
|
|
|
27,191
|
|
Total
loans, net of non-accrual loans
|
|
$
|
1,269,457
|
|
$
|
500,536
|
|
$
|
100,969
|
|
$
|
1,870,962
|
|
Loans
with variable (floating) interest rates
|
|
$
|
1,183,533
|
|
$
|
21,305
|
|
$
|
-
|
|
$
|
1,204,838
|
|
Loans
with predetermined (fixed) interest rates ...
|
|
$
|
85,924
|
|
$
|
479,231
|
|
$
|
100,969
|
|
$
|
666,124
|
|
The
majority of the properties taken as collateral are located in Southern
California. The loans generated by our loan production offices, which are
located outside of our main geographical market, are generally collateralized
by
properties in close proximity to those offices.
Non-performing
Assets
Non-performing
assets, or NPAs, consist of non-performing loans, or NPLs, restructured loans,
and other NPAs. NPLs are reported at their outstanding principal balances,
net
of any portion guaranteed by SBA, and consist of loans on non-accrual status
and
loans 90 days or more past due and still accruing interest. Restructured loans
are loans of which the terms of repayment have been renegotiated resulting
in a
reduction or deferral of interest or principal, Other NPAs consist of
properties, mainly other real estate owned (OREO) and repossessed vehicles,
acquired by foreclosure or similar means that management intends to offer for
sale.
The
following table provides information with respect to the components of our
non-performing assets as of the dates indicated (the figures in the table are
net of the portion guaranteed by SBA, with the total amounts adjusted and
reconciled for the SBA guarantee portion for the gross nonperforming
assets):
Non
-performing
Assets
(dollars
in thousands)
|
|
March
31, 2008
|
|
December
31, 2007
|
|
March
31, 2007
|
|
Nonaccrual
loans:
1
|
|
|
|
|
|
|
|
|
|
|
Real
estate secured
|
|
$
|
8,061
|
|
$
|
8,154
|
|
$
|
15,927
|
|
Commercial
and industrial
|
|
|
2,914
|
|
|
1,986
|
|
|
1,485
|
|
Consumer
|
|
|
250
|
|
|
154
|
|
|
235
|
|
Total
|
|
|
11,225
|
|
|
10,294
|
|
|
17,647
|
|
Loans
90 days or more past due and still accruing:
|
|
|
|
|
|
|
|
|
|
|
Real
estate secured
|
|
|
503
|
|
|
117
|
|
|
2,558
|
|
Commercial
and industrial
|
|
|
56
|
|
|
4
|
|
|
6
|
|
Consumer
|
|
|
189
|
|
|
187
|
|
|
39
|
|
Total
|
|
|
748
|
|
|
308
|
|
|
2,603
|
|
Total
nonperforming loans
|
|
|
11,973
|
|
|
10,602
|
|
|
20,250
|
|
Restructured
loans
2,
3
|
|
|
1,393
|
|
|
-
|
|
|
-
|
|
Repossessed
vehicles
|
|
|
21
|
|
|
50
|
|
|
112
|
|
Other
real estate owned
|
|
|
133
|
|
|
133
|
|
|
-
|
|
Total
nonperforming assets, net of SBA guarantee
|
|
$
|
13,520
|
|
$
|
10,785
|
|
$
|
20,362
|
|
Guaranteed
portion of nonperforming SBA loans
|
|
|
6,906
|
|
|
4,424
|
|
|
6,595
|
|
Total
gross nonperforming assets
|
|
$
|
20,426
|
|
$
|
15,209
|
|
$
|
26,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming
loans as a percentage of total loans
|
|
|
0.64
|
%
|
|
0.59
|
%
|
|
1.25
|
%
|
Nonperforming
assets as a percentage of total loans and other nonperforming
assets
|
|
|
0.72
|
%
|
|
0.60
|
%
|
|
1.26
|
%
|
Allowance
for loan losses as a percentage of nonperforming
loans
|
|
|
184.35
|
%
|
|
203.55
|
%
|
|
85.01
|
%
|
___________________________
1
During
the three months ended March 31, 2008, no interest income related to these
loans
was included in interest income. Additional interest income of approximately
$716,000 would have been recorded during the three months ended March 31, 2008,
if these loans had been paid in accordance with their original terms and had
been outstanding throughout the quarter ended March 31, 2008 or, if not
outstanding throughout the three months ended March 31, 2008, since origination.
2
A
“restructured loan” is one the terms of which were renegotiated to provide a
reduction or deferral of interest or principal because of deterioration in
the
financial position of the borrower.
3
During
the three months ended March 31, 2008, no interest income related to this loan
was included in interest income.
Additional
interest income would be negligible during the three months ended March 31,
2008, if this loan had been paid in accordance with its
original
term and had been outstanding throughout the three months ended March 31,
2008.
Loans
are
generally placed on non-accrual status when they become 90 days past due, unless
management believes the loan is adequately collateralized and in the process
of
collection. The past due loans may or may not be adequately collateralized,
but
collection efforts are continuously pursued. Loans may be restructured by
management when a borrower has experienced some changes in financial status,
causing an inability to meet the original repayment terms, and where we believe
the borrower will eventually overcome those circumstances and repay the loan
in
full.
Despite
our loan portfolio continuing to grow, our emphasis on asset quality control
enabled us to maintain a relatively low level of NPLs as of March 31, 2008.
However, the general economic condition of the United States as well as the
local economies in which we do business have shown a slowdown as the housing
sector decline and the transition to below-trend GDP growth continued. The
downward movement of the macro economic environment affected our borrowers’
strength and our NPLs, net of SBA guaranteed portion, increased to $12.0
million, or 0.64% of the total loans at the end of the first quarter of 2008,
as
compared with $10.6 million, or 0.59% of the total loans, at the end of 2007.
The $1.4 million increase of NPLs was primarily related to $0.9 million net
increase in non-accrual loans, and $0.4 million increase in delinquent loans.
Out of the $1.4 million net increase in NPLs, $0.1 million real estate related
non-accruals were paid-off subsequently.
Management
also believes that the reserve provided for non-performing loans, together
with
the tangible collateral, were adequate as of March 31, 2008. See “Allowance for
Credit and Off-Balance Sheet Losses” below for further discussion. Except as
disclosed above, as of March 31, 2008, management was not aware of any material
credit problems of borrowers that would cause it to have serious doubts about
the ability of a borrower to comply with the present loan payment terms.
In
January 2008, we have negotiated with the borrower and restructured a commercial
loan worth for a combined principal and interest accrual total of $1.4 million.
Management performed SFAS No. 114 impairment analysis and provided adequate
reserve for this restructured loan as of March 31, 2008.
Overall,
total
NPAs increased $2.7 million or 25.4%, to $13.5 million at March 31, 2008, as
compared with $10.8 million at the prior year end. However, when compared to
$20.4 million NPAs at March 31, 2007, it has decreased $6.8 million, or 33.6%.
A
llowance
for Loan and Off-Balance Sheet Losses
In
anticipation of credit risk inherent in our lending business, we set aside
allowances through charges to earnings. Such charges were not only made for
the
outstanding loan portfolio, but also for off-balance sheet items, such as
commitments to extend credit or letters of credit. Charges made for our
outstanding loan portfolio were credited to the allowance for loan losses,
whereas charges for off-balance sheet items were credited to the reserve for
off-balance sheet items, which is presented as a component of other liabilities.
The
allowance for loan losses and allowance for off-balance sheet items are
maintained at levels that are believed to be adequate by management to absorb
estimated probable loan losses inherent in the loan portfolio. The adequacy
of
the allowances is determined through periodic evaluations of the loan portfolio
and other pertinent factors, which are inherently subjective as the process
calls for various significant estimates and assumptions. Among other factors,
the estimates involve the amounts and timing of expected future cash flows
and
fair value of collateral on impaired loans, estimated losses on loans based
on
historical loss experience, various qualitative factors, and uncertainties
in
estimating losses and inherent risks in the various credit portfolios, which
may
be subject to substantial change.
On
a
quarterly basis, we utilize a classification migration model and individual
loan
review analysis as starting points for determining the adequacy of the allowance
for loan losses. Our loss migration analysis tracks a certain number of quarters
of loan loss history to determine historical losses by classification category
for each loan type, except certain loans (automobile, mortgage and credit
cards), which are analyzed as homogeneous loan pools. These calculated loss
factors are then applied to outstanding loan balances. Based on expected
utilization of unused commitments and off-balance sheet exposures, such as
letters of credit, we record allowance for off balance losses.
The
individual loan review analysis is the other part of the allowance allocation
process, applying specific monitoring policies and procedures in analyzing
the
existing loan portfolios. Further allowance assignments are made based on
general and specific economic conditions, as well as performance trends within
specific portfolio segments and individual concentrations of
credit.
We
increased our allowance for loan losses to $22.1 million at March 31, 2008,
representing an increase of 2.3%, or $0.5 million from $21.6 million at the
end
of 2007 and an increase of 28.2% or $4.9 million from $17.2 million at March
31,
2007. With the increase of our non-performing loans, our allowance requirements
have increased and we have maintained the ratio of allowance for loan losses
to
total loans at 1.17%, slightly higher than 1.07% retained at the first
quarter-end of 2007, but a bit lower than the 1.19% at the year end of 2007.
Management believes that the current ratio of 1.17% is adequate for our loan
portfolio.
In
the
first quarter of 2008, both charge-offs and loan loss provision were lowered
compared to either the fourth quarter or first quarter of
2007.
The
table
below summarizes for the end of the periods indicated, the balance of allowance
for loan losses and its percent of such loan balance for each type of
loan:
|
|
Distribution
and Percentage
Composition of Allowance for Loan Losses
|
|
|
|
(dollars
in thousands)
|
|
Balance
as of
|
|
March
31, 2008
|
|
December
31, 2007
|
|
Applicable
to:
|
|
Reserve
Amount
|
|
Total
Loans
|
|
(%)
|
|
Reserve
Amount
|
|
Total
Loans
|
|
(%)
|
|
Construction
loans
|
|
$
|
162
|
|
$
|
46,047
|
|
|
0.35
|
%
|
$
|
557
|
|
$
|
59,443
|
|
|
0.94
|
%
|
Real
estate secured
|
|
$
|
8,010
|
|
$
|
1,460,695
|
|
|
0.55
|
%
|
$
|
13,445
|
|
$
|
1,386,622
|
|
|
0.97
|
%
|
Commercial
and industrial
|
|
$
|
13,189
|
|
$
|
354,911
|
|
|
3.72
|
%
|
$
|
7,023
|
|
$
|
335,332
|
|
|
2.09
|
%
|
Consumer
|
|
$
|
711
|
|
$
|
27,440
|
|
|
2.59
|
%
|
$
|
554
|
|
$
|
33,569
|
|
|
1.65
|
%
|
Total
Allowance
|
|
$
|
22,072
|
|
$
|
1,889,093
|
|
|
1.17
|
%
|
$
|
21,579
|
|
$
|
1,814,966
|
|
|
1.19
|
%
|
The
table
below summarizes for the periods indicated, loan balances at the end of each
period, the daily averages during the period, changes in the allowance for
loan
losses arising from loans charged off, recoveries on loans previously charged
off, additions to the allowance and certain ratios related to the allowance
for
loan losses:
Allowance
for Loan and Off-Balance Sheet Losses
(dollars
in thousands)
As
of and for the quarter ended
|
|
March
31, 2008
|
|
December
31, 2007
|
|
March
31, 2007
|
|
Allowance
for loan losses:
|
|
|
|
|
|
|
|
Balances
at beginning of period
|
|
$
|
21,579
|
|
$
|
20,902
|
|
$
|
18,654
|
|
Actual
charge-offs:
|
|
|
|
|
|
|
|
|
|
|
Real
estate secured
|
|
|
3
|
|
|
523
|
|
|
163
|
|
Commercial
and industrial
|
|
|
826
|
|
|
3,368
|
|
|
1,655
|
|
Consumer
|
|
|
310
|
|
|
365
|
|
|
928
|
|
Total
charge-offs
|
|
|
1,139
|
|
|
4,256
|
|
|
2,746
|
|
Recoveries
on loans previously charged off:
|
|
|
|
|
|
|
|
|
|
|
Real
estate secured
|
|
|
1
|
|
|
-
|
|
|
-
|
|
Commercial
and industrial
|
|
|
92
|
|
|
101
|
|
|
10
|
|
Consumer
|
|
|
27
|
|
|
15
|
|
|
41
|
|
Total
recoveries
|
|
|
120
|
|
|
116
|
|
|
51
|
|
Net
loan charge-offs
|
|
|
1,019
|
|
|
4,140
|
|
|
2,695
|
|
Provision
for loan losses
|
|
|
1,512
|
|
|
4,817
|
|
|
1,255
|
|
Balances
at end of period
|
|
$
|
22,072
|
|
$
|
21,579
|
|
$
|
17,214
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance
for off-balance sheet losses:
|
|
|
|
|
|
|
|
|
|
|
Balances
at beginning of period
|
|
$
|
1,998
|
|
$
|
2,065
|
|
$
|
891
|
|
Provision
for losses in off-balance sheet items
|
|
|
(112
|
)
|
|
(67
|
)
|
|
375
|
|
Balances
at end of period
|
|
$
|
1,886
|
|
$
|
1,998
|
|
$
|
1,266
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratios:
|
|
|
|
|
|
|
|
|
|
|
Net
loan charge-offs to average total loans
|
|
|
0.06
|
%
|
|
0.23
|
%
|
|
0.17
|
%
|
Allowance
for loan losses to total loans at period-end
|
|
|
1.17
|
%
|
|
1.19
|
%
|
|
1.07
|
%
|
Net
loan charge-offs to allowance for loan losses
|
|
|
4.62
|
%
|
|
19.18
|
%
|
|
15.66
|
%
|
Net
loan charge-offs to provision for loan losses
|
|
|
72.79
|
%
|
|
87.15
|
%
|
|
165.33
|
%
|
Contractual
Obligations
The
following table represents our aggregate contractual obligations to make future
payments (principal and interest) as of March 31, 2008:
(dollars
in thousands)
|
|
One
Year
or Less
|
|
Over
One Year
To
Three Years
|
|
Over
Three Years
To
Five Years
|
|
Over
Five
Years
|
|
Total
|
|
FHLB
borrowings
|
|
$
|
117,204
|
|
$
|
134,218
|
|
$
|
-
|
|
$
|
-
|
|
$
|
251,422
|
|
Junior
subordinated debentures
|
|
|
3,653
|
|
|
4,380
|
|
|
11,550
|
|
|
77,321
|
|
|
96,904
|
|
Operating
leases
|
|
|
3,284
|
|
|
5,138
|
|
|
3,320
|
|
|
4,540
|
|
|
16,282
|
|
Time
deposits
|
|
|
981,585
|
|
|
12,966
|
|
|
-
|
|
|
10
|
|
|
994,561
|
|
Total
|
|
$
|
1,105,726
|
|
$
|
156,702
|
|
$
|
14,870
|
|
$
|
81,871
|
|
$
|
1,359,169
|
|
Off-Balance
Sheet Arrangements
During
the ordinary course of business, we provide various forms of credit lines to
meet the financing needs of our customers. These commitments, which represent
a
credit risk to us, are not represented in any form on our balance
sheets.
As
of
March 31, 2008 and December 31, 2007, we had commitments to extend credit of
$233.4 million and $284.9 million, respectively. Obligations under standby
letters of credit were $9.3 million and $10.0 million at March 31, 2008 and
December 31, 2007, respectively, and our obligations under commercial letters
of
credit were $12.6 million and $10.8 million at such dates, respectively.
In
the
normal course of business, we are involved in various legal claims. We have
reviewed all legal claims against us with counsel and have taken into
consideration the views of counsel as to the outcome of the claims. In our
opinion, the final disposition of all such claims will not have a material
adverse effect on our financial position and results of operations.
Deposits
and Other Sources of Funds
Deposits
Deposits
are our primary source of funds. Total deposits at March 31, 2008 and December
31, 2007 were $1.73 billion and $1.76 billion, respectively.
Total
core-deposit at March 31, 2008 decreased 8.8% to $758.2 million over the last
three months while time deposits increased 4.1% to $969.4 million from December
31, 2007.
Consistent
with our efforts to decrease interest expenses, we have permitted relatively
expensive time deposits to expire. The average rate paid on time deposits in
denominations of $100,000 or more for the first quarter of 2008 decreased to
4.46% from 5.28% in the same period of the prior year. See “Net Interest Income
and Net Interest Margin” for further discussion.
The
following tables summarize the distribution of average daily deposits and the
average daily rates paid
for
the
quarters indicated:
Average
Deposits
(dollars
in thousands)
For
the quarters ended:
|
|
March
31, 2008
|
|
December
31, 2007
|
|
|
|
Average
Balance
|
|
Average
Rate
|
|
Average
Balance
|
|
Average
Rate
|
|
|
|
|
|
|
|
|
|
|
|
Demand,
non-interest-bearing
|
|
$
|
300,465
|
|
|
|
|
$
|
310,502
|
|
|
|
|
Money
market
|
|
|
396,595
|
|
|
3.76
|
%
|
|
478,153
|
|
|
4.43
|
%
|
Super
NOW
|
|
|
22,520
|
|
|
1.41
|
%
|
|
24,613
|
|
|
1.65
|
%
|
Savings
|
|
|
32,617
|
|
|
3.05
|
%
|
|
31,144
|
|
|
2.80
|
%
|
Time
certificates of deposit in
denominations
of $100,000 or more
|
|
|
788,630
|
|
|
4.46
|
%
|
|
738,769
|
|
|
5.00
|
%
|
Other
time deposit
|
|
|
163,993
|
|
|
4.60
|
%
|
|
133,567
|
|
|
4.65
|
%
|
Total
deposits
|
|
$
|
1,704,820
|
|
|
3.46
|
%
|
$
|
1,716,748
|
|
|
3.82
|
%
|
The
scheduled maturities of our time deposits in denominations of $100,000 or
greater at March 31, 2008 were as follows:
Maturities
of Time Deposits of $100,000 or More, at March 31, 200
8
(dollars
in thousands)
Three
months or less
|
|
$
|
392,277
|
|
Over
three months through six months
|
|
|
238,868
|
|
Over
six months through twelve months
|
|
|
151,218
|
|
Over
twelve months
|
|
|
10,872
|
|
Total
|
|
$
|
793,235
|
|
A
number
of clients carry deposit balances of more than 1% of our total deposits, but
the
California State Treasury was the only depositor which had a deposit balance
of
more than 5% of total deposits at March 31, 2008 and December 31,
2007.
We
accept
brokered deposits on a selective basis at reasonable interest rates to augment
deposit growth. We have increased these deposits to $125.1 million at March
31,
2008 from $62.6 million at December 31, 2007 in order to limit our reliance
on
high interest rate time deposits.
FHLB
Borrowings
Although
deposits are the primary source of funds for our lending and investment
activities and for general business purposes, we may obtain advances from the
FHLB as an alternative to retail deposit funds. We have historically utilized
borrowings from the FHLB in order to take advantage of their flexibility and
comparatively low cost. See “Liquidity Management” below for details relating to
the FHLB borrowings program.
The
following table is a summary of FHLB borrowings for the quarters indicated
(dollars in thousands):
|
|
March
31, 2008
|
|
December
31, 2007
|
|
Balance
at quarter-end
|
|
$
|
240,000
|
|
$
|
150,000
|
|
Average
balance during the quarter
|
|
$
|
216,374
|
|
$
|
46,890
|
|
Maximum
amount outstanding at any month-end
|
|
$
|
240,000
|
|
$
|
155,000
|
|
Average
interest rate during the quarter
|
|
|
3.78
|
%
|
|
4.24
|
%
|
Average
interest rate at quarter-end
|
|
|
3.57
|
%
|
|
4.22
|
%
|
Asset/Liability
Management
We
seek
to ascertain optimum and stable utilization of available assets and liabilities
as a vehicle to attain our overall business plans and objectives. In this
regard, we focus on measurement and control of liquidity risk, interest rate
risk and market risk, capital adequacy, operation risk and credit risk. See
further discussion on these risks in the “Risk Factors” section of our Annual
Report on Form 10-K for the year ended December 31, 2007. Information concerning
interest rate risk management is set forth under “Item 3 - Quantitative and
Qualitative Disclosures about Market Risk.”
Liquidity
Management
Maintenance
of adequate liquidity requires that sufficient resources be available at all
times to meet our cash flow requirements. Liquidity in a banking institution
is
required primarily to provide for deposit withdrawals and the credit needs
of
its customers and to take advantage of investment opportunities as they arise.
Liquidity management involves our ability to convert assets into cash or cash
equivalents without incurring significant loss, and to raise cash or maintain
funds without incurring excessive additional cost. For this purpose, we maintain
a portion of our funds in cash and cash equivalents, deposits in other financial
institutions and loans and securities available for sale. Our liquid assets
at
March 31, 2008 and December 31, 2007 totaled approximately $326.0 million and
$324.7 million, respectively. Our liquidity levels measured as the percentage
of
liquid assets to total assets were 14.4% and 14.8% at March 31, 2008 and
December 31, 2007, respectively.
As
a
secondary source of liquidity, we rely on advances from the FHLB to supplement
our supply of lendable funds and to meet deposit withdrawal requirements.
Advances from the FHLB are typically secured by our mortgage loans and stock
issued by the FHLB. Advances are made pursuant to several different programs.
Each credit program has its own interest rate and range of maturities. Depending
on the program, limitations on the amount of advances are based either on a
fixed percentage of an institution’s net worth or on the FHLB’s assessment of
the institution’s creditworthiness. We took advantage of the lower interest rate
FHLB advances in allowing us to let expensive time deposit run off. However,
while this fund provides flexibility and low cost, we also closely monitor
the
usage against our borrowing capacity, as such borrowing does not qualify as
core
funds. As of March 31, 2008, our borrowing capacity from the FHLB was about
$476.4 million and the outstanding balance was $240.0 million, or approximately
50.4% of our borrowing capacity. As of March 31, 2008, we also maintained an
internal guideline that would allow us to purchase up to $30 million and $10
million in federal funds with Bank of the West and Union Bank of California,
respectively. Management will further emphasize on the core-deposit campaign
and
rely less on non-core deposit borrowings going into 2008, and we believe the
opening of a new California branch, and our further expansion into the New
York/New Jersey market will help us gain more client base for
deposits.
Capital
Resources and Capital Adequacy Requirements
Historically,
our primary source of capital has been internally generated operating income
through retained earnings. In order to ensure adequate levels of capital, we
conduct ongoing assessments of projected sources and uses of capital in
conjunction with projected increases in assets and level of risks. We have
considered, and we will continue to consider, additional sources of capital
as
the need arises, whether through the issuance of additional equity, debt or
hybrid securities.
We
are
subject to various regulatory capital requirements administered by federal
banking agencies. Under capital adequacy guidelines and the regulatory framework
for prompt corrective action, we must meet specific capital guidelines that
rely
on quantitative measures of our assets, liabilities and certain
off-balance-sheet items as calculated under regulatory accounting practices.
Failure
to meet minimum capital requirements can trigger regulatory actions
under
the
prompt corrective action rules
that
could have a material adverse effect on our financial condition and
operations.
Prompt
corrective action may include regulatory enforcement actions that restrict
dividend payments, require the adoption of remedial measures to increase
capital, terminate FDIC deposit insurance, and mandate the appointment of a
conservator or receiver in severe cases. In addition, failure to maintain a
well-capitalized status may adversely affect the evaluation of regulatory
applications for specific transactions and activities, including acquisitions,
continuation and expansion of existing activities, and commencement of new
activities, and could adversely affect our business relationships with our
existing and prospective clients. The aforementioned regulatory consequences
for
failing to maintain adequate ratios of Tier 1 and Tier 2 capital could have
a
material adverse effect on our financial condition and results of
operations.
Our
capital amounts and classification are also subject to qualitative judgments
by
regulators about components, risk weightings, and other factors. See Part I,
Item 1 “Description of Business -- Regulation and Supervision -- Capital
Adequacy Requirements” in our Annual Report on Form 10-K for the year ended
December 31, 2007 for additional information regarding regulatory capital
requirements.
As
of
March 31, 2008, we were qualified as a “well capitalized institution” under the
regulatory framework for prompt corrective action. The following table presents
the regulatory standards for well-capitalized institutions, compared to capital
ratios as of the dates specified for the Company and the Bank:
Wilshire
Bancorp, Inc.
|
Regulatory
Well-
Capitalized
Standards
|
|
Regulatory
Adequately-
Capitalized
Standards
|
|
Actual
ratios for the Company as of:
|
|
|
|
March
31, 2008
|
|
December
31, 2007
|
|
March
31, 2007
|
Total
capital to risk-weighted assets
|
10%
|
|
8%
|
|
14.37%
|
|
14.58%
|
|
13.80%
|
Tier
I capital to risk-weighted assets
|
6%
|
|
4%
|
|
11.75%
|
|
11.83%
|
|
12.07%
|
Tier
I capital to adjusted average assets
|
5%
|
|
4%
|
|
10.24%
|
|
10.36%
|
|
10.00%
|
Wilshire
State Bank
|
Regulatory
Well-
Capitalized
Standards
|
|
Regulatory
Adequately-
Capitalized
Standards
|
|
Actual
ratios for the Bank as of:
|
|
|
|
March
31, 2008
|
|
December
31, 2007
|
|
March
31, 2007
|
Total
capital to risk-weighted assets
|
10%
|
|
8%
|
|
13.50%
|
|
13.59%
|
|
13.71%
|
Tier
I capital to risk-weighted assets
|
6%
|
|
4%
|
|
11.73%
|
|
11.80%
|
|
11.98%
|
Tier
I capital to adjusted average assets
|
5%
|
|
4%
|
|
10.24%
|
|
10.33%
|
|
9.93%
|
The
Company adopted the 2007 stock repurchase program which permits the repurchase
of up to $10 million worth of shares of the Company’s common stock from time to
time until July 31, 2008. During the first quarter of 2008, there were no such
repurchases. As of March 31, 2008, the approximate dollar value of shares that
may yet be purchased under the plans was $8.7 million.
For
the
regulatory capital ratio computation purpose, the Junior Subordinated Debentures
of $87.3 million, which consists of $10 million issued by the Bank and $77.3
million issued by the Company in connection with the issuance of $75 million
trust preferred securities, were taken into consideration. At December 31,
2007,
Wilshire Bancorp accounted for $57.1 million of such securities as Tier 1
capital and $27.9 million as Tier 2 capital. With the improvement in loan
quality and hence the improvement in risk-weighted assets, the portion qualified
for Tier 1 capital increased to $58.5 million and the portion for Tier 2
decreased to $26.5 million at March 31, 2008. For the Bank level, only the
$10
million debenture issued by the Bank in 2002 is treated as Tier 2 capital.
Item
3.
|
Quantitative
and Qualitative Disclosures about Market
Risk
|
Market
risk is the risk of loss from adverse changes in market prices and rates. Our
market risk arises primarily from interest rate risk inherent in lending,
investing and deposit taking activities. We evaluate market risk pursuant to
policies reviewed and approved annually by our Board of Directors. The Board
delegates responsibility for market risk management to the Asset & Liability
Management Committee (“ALCO”), which reports monthly to the Board on activities
related to market risk management. As part of the management of our market
risk,
ALCO may direct changes in the mix of assets and liabilities. To that end,
we
actively monitor and manage interest rate risk exposures.
Interest
rate risk management involves development, analysis, implementation and
monitoring of earnings to provide stable earnings and capital levels during
periods of changing interest rates. In the management of interest rate risk,
we
utilize monthly gap analysis and quarterly simulation modeling to determine
the
sensitivity of net interest income and economic value sensitivity of the balance
sheet. These techniques are complementary and are used together to provide
a
more accurate measurement of interest rate risk.
Gap
analysis measures the repricing mismatches between assets and liabilities.
The
interest rate sensitivity gap is determined by subtracting the amount of
liabilities from the amount of assets that reprice in a particular time
interval. If repricing assets exceed repricing liabilities in any given time
period, we would be deemed to be “asset-sensitive” for that period. Conversely,
if repricing liabilities exceed repricing assets in a given time period, we
would be deemed to be “liability-sensitive” for that period.
The
significant balance of non-interest-bearing deposits puts us in an overall
asset-sensitive position and we strategically plan a significant three-month
positive gap to meet any unanticipated funding needs by maintaining a large
portion of funds obtained from non-interest-bearing deposits in overnight
investments and other cash equivalents. In general, based upon our mix of
deposits, loans and investments, increases in interest rates would be expected
to increase our net interest margin. Decreases in interest rates would be
expected to have the opposite effect. However, we usually seek to maintain
a
balanced position over the period of one year to ensure net interest margin
stability in times of volatile interest rates. This is accomplished by
maintaining a similar level of interest-earning assets and interest-paying
liabilities available to be repriced within one year. At March 31, 2008, our
position appeared balanced for a one-year timeframe with a negligible sensitive
cumulative gap (minus 13.4% of average interest-earning assets).
The
change in net interest income may not always follow the general expectations
of
an “asset-sensitive” or a “liability-sensitive” balance sheet during periods of
changing interest rates. This possibility results from interest rates earned
or
paid changing by differing increments and at different time intervals for each
type of interest-sensitive asset and liability. The interest rate gaps reported
in the tables arise when assets are funded with liabilities having different
repricing intervals. Since these gaps are actively managed and change daily
as
adjustments are made in interest rate views and market outlook, positions at
the
end of any period may not reflect our interest rate sensitivity in subsequent
periods. We attempt to balance longer-term economic views against prospects
for
short-term interest rate changes.
Although
the interest rate sensitivity gap is a useful measurement and contributes to
effective asset and liability management, it is difficult to predict the effect
of changing interest rates based solely on that measure. As a result, the ALCO
also regularly uses simulation modeling as a tool to measure the sensitivity
of
earnings and net portfolio value, or NPV, to interest rate changes. The NPV
is
defined as the net present value of an institution’s existing assets,
liabilities and off-balance sheet instruments. The simulation model captures
all
assets, liabilities and off-balance sheet financial instruments and accounts
for
significant variables that are believed to be affected by interest rates. These
include prepayment speeds on loans, cash flows of loans and deposits, principal
amortization, call options on securities, balance sheet growth assumptions
and
changes in rate relationships as various rate indices react differently to
market rates.
Although
the simulation measures the volatility of net interest income and net portfolio
value under immediate increase or decrease of market interest rate scenarios
in
100 basis point increments, our main concern is the negative effect of a
reasonably-possible worst scenario. The ALCO policy prescribes that for the
worst possible rate-change scenario the possible reduction of net interest
income and NPV should not exceed 20% of the base net interest income and 25%
of
the base NPV, respectively.
As
our
simulation measures indicate below, the net interest income increases
(decreases) as market interest rates rise (fall), since we were in an overall
asset-sensitive position with a 11.7% positive gap for the three-month timeframe
and 17.4% cumulative positive gap for a whole portfolios. The NPV increases
(decreases) as interest income increases (decreases) since the change in cash
flows has a greater impact on the change in the NPV than does the change in
the
discount rate. However the extent of such changes was within the tolerance
level
prescribed by our ALCO policy due partly to the near-balanced cumulative gap
for
the one-year timeframe.
Management
believes that the assumptions used to evaluate the vulnerability of our
operations to changes in interest rates approximate actual experience and
considers them reasonable; however, the interest rate sensitivity of our assets
and liabilities and the estimated effects of changes in interest rates on our
net interest income and NPV could vary substantially if different assumptions
were used or actual experience differs from the historical experience on which
they are based.
The
following table sets forth the interest rate sensitivity of our interest-earning
assets and interest-bearing liabilities as of March 31, 2008 using the interest
rate sensitivity gap ratio. For purposes of the following table, an asset or
liability is considered rate-sensitive within a specified period when it can
be
repriced or matures within its contractual terms. Actual payment patterns may
differ from contractual payment patterns:
Interest
Rate Sensitivity Analysis
(dollars
in thousands)
|
|
At
March 31, 2008
|
|
|
|
Amounts
Subject to Repricing Within
|
|
|
|
|
|
Interest-earning
assets:
|
|
0-3
months
|
|
3-12
months
|
|
Over
1 to 5 years
|
|
After
5 years
|
|
Total
|
|
Gross
loans
1
|
|
$
|
1,202,331
|
|
$
|
67,126
|
|
$
|
500,536
|
|
$
|
100,969
|
|
$
|
1,870,962
|
|
Investment
securities
|
|
|
3,379
|
|
|
16,231
|
|
|
100,284
|
|
|
98,988
|
|
|
218,882
|
|
Federal
funds sold and cash equivalents
|
|
|
20,004
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
20,004
|
|
Total
|
|
$
|
1,225,714
|
|
$
|
83,357
|
|
$
|
600,820
|
|
$
|
199,957
|
|
$
|
2,109,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings
deposits
|
|
$
|
34,740
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
34,740
|
|
Time
deposits of $100,000 or more
|
|
|
392,277
|
|
|
390,086
|
|
|
10,872
|
|
|
-
|
|
|
793,235
|
|
Other
time deposits
|
|
|
67,803
|
|
|
106,697
|
|
|
1,677
|
|
|
5
|
|
|
176,182
|
|
Other
interest-bearing deposits
|
|
|
415,393
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
415,393
|
|
FHLB
borrowings
|
|
|
-
|
|
|
110,000
|
|
|
130,000
|
|
|
-
|
|
|
240,000
|
|
Junior
Subordinated Debentures
|
|
|
71,857
|
|
|
-
|
|
|
15,464
|
|
|
-
|
|
|
87,321
|
|
Total
|
|
$
|
982,070
|
|
$
|
606,783
|
|
$
|
158,013
|
|
$
|
5
|
|
$
|
1,746,871
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
rate sensitivity gap
|
|
$
|
243,644
|
|
|
($
523,426
|
)
|
$
|
442,807
|
|
$
|
199,952
|
|
$
|
362,977
|
|
Cumulative
interest rate sensitivity gap
|
|
$
|
243,644
|
|
|
($
279,782
|
)
|
$
|
163,025
|
|
$
|
362,977
|
|
|
|
|
Cumulative
interest rate sensitivity gap ratio (based on average interest-earning
assets)
|
|
|
11.66
|
%
|
|
-13.39
|
%
|
|
7.80
|
%
|
|
17.37
|
%
|
|
|
|
___________________________
1
Excludes
the gross amount of non-accrual loans of approximately $18.1 million at March
31, 2008.
The
following table sets forth our estimated net interest income over a 12-month
period and NPV based on the indicated changes in market interest rates as of
March 31, 2008. All assets presented in this table are held-to-maturity or
available-for-sale. At March 31, 2008, we had no trading securities (dollars
in
thousand):
Change
|
|
Net
Interest Income
|
|
|
|
|
|
|
(in
basis points)
|
|
(next
twelve months)
|
|
%
Change
|
|
NPV
|
|
%
Change
|
+200
|
|
88,866
|
|
8.6%
|
|
287,384
|
|
7.5%
|
+100
|
|
85,572
|
|
4.6%
|
|
281,685
|
|
5.4%
|
0
|
|
81,818
|
|
-
|
|
267,299
|
|
-
|
-100
|
|
76,299
|
|
-6.7%
|
|
243,036
|
|
-9.1%
|
-200
|
|
71,728
|
|
-12.3%
|
|
219,073
|
|
-18.1%
|
Our
strategies in protecting both net interest income and economic value of equity
from significant movements in interest rates involve restructuring our
investment portfolio and using FHLB advances. Although our policy also permits
us to purchase rate caps and floors and interest rate swaps, we are not
currently engaged in any of these types of transactions.
Item
4.
|
Controls
and Procedures
|
As
of
March 31, 2008, we carried out an evaluation, under the supervision and with
the
participation of our management, including our chief executive officer and
chief
financial officer, regarding the effectiveness of the design and operation
of
our “disclosure controls and procedures,” as defined under Exchange Act Rules
13a-15(e) and 15d-15(e).
Based
on
this evaluation, our chief executive officer and chief financial officer
concluded that, as of March 31, 2008, such disclosure controls and procedures
were effective to ensure that information required to be disclosed by us in
the
reports we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules and
forms
of the Securities and Exchange Commission, and accumulated and communicated
to
our management, including our chief executive officer and chief financial
officer, as appropriate to allow timely decisions regarding required disclosure.
In
designing and evaluating the disclosure controls and procedures, our management
recognized that any controls and procedures, no matter how well designed and
operated, can only provide reasonable assurance in achieving the desired control
objectives and in reaching a reasonable level of assurance our management
necessarily was required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.
There
were no changes in our internal controls over financial reporting during the
quarter ended March 31, 2008 that materially affected, or are reasonably likely
to materially affect, our internal controls over financial
reporting.
Part
II.
OTHER
INFORMATION
We
are
not involved in any material legal proceedings. Our subsidiary, Wilshire State
Bank, from time to time is party to litigation that arises in the ordinary
course of business, such as claims to enforce liens, claims involving the
origination and servicing of loans, and other issues related to the business
of
the Bank. In the opinion of our management, in consultation with legal counsel,
the resolution of any such issues would not have a material adverse impact
on
our financial position, results of operations, or liquidity.
There
are
no material changes to our risk factors as presented in the Company’s 2007
Form 10-K under the heading “Item 1A. Risk Factors.”
Item 2.
|
Unregistered
Sales of Equity Securities and Use of
Proceeds
|
In
July
2007, the Company’s Board of Directors authorized a stock repurchase program to
repurchase up to $10 million of the Company’s common stock until July 31, 2008.
During first quarter of 2008, no shares have been repurchased under this program
in open-market transactions. The total approximate dollar value of shares that
may yet be purchased under the plan as of March 31, 2008 is shown below (dollars
in thousands):
Issuer
Purchases of Equity Securities
|
Period
|
(a)
Total
number of shares (or units) purchased
|
(b)
Average
price paid per share (or unit)
|
(c)
Total
number of shares (or units) purchased as part of publicly announced
plans
or programs
|
(d)
Approximate
dollar value of shares (or units) that may yet be purchased under
the
plans or programs
|
January
1, 2008 -
January
31, 2008
|
-
|
-
|
-
|
$
8,738
|
February
1, 2008 - February 29, 2008
|
-
|
-
|
-
|
8,738
|
March
1, 2008 -
March
31, 2008
|
-
|
-
|
-
|
8,738
|
Item 3.
|
Defaults
Upon Senior
Securities
|
None.
Item 4.
|
Submission
of Matters to a Vote of Security
Holders
|
None.
None.
Exhibit
Table
|
Reference
Number
|
Item
|
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
31.2
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
32
|
Certifications
of Chief Executive Officer and Chief Financial Officer Pursuant to
18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
SIGNATURES
Pursuant
to the requirement of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
|
|
|
|
WILSHIRE
BANCORP,
INC.
|
|
|
|
Date:
May 12, 2008
|
By:
|
/s/
Alex
Ko
|
|
Alex
Ko
Chief
Financial Officer
(Principal
Financial and Accounting Officer)
|
|
|
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