Pacific West Bank (OTCBB:PWBO) reported a net loss of $1.4
million and diluted loss per share of $1.88 for the quarter ended
March 31, 2010 compared with net loss of $49,000 and diluted loss
per share of $0.06 for the quarter ended March 31, 2009.
The first quarter loss was primarily attributed to a provision
for loan losses of $1.3 million, compared with $85,000 for the
first quarter of the prior year, reflecting prolonged difficult
economic conditions which have resulted in elevated levels of
actual and estimated losses in the loan portfolio. Bank President
and CEO Steve Gray states, “We believe we are at or near the bottom
of this economic downturn. Led by recently-hired Chief Credit
Officer Greg Froman, we are more actively monitoring our loan
portfolio and we believe we have identified and adequately reserved
for credit issues, barring further market deterioration.”
During the first quarter, the Bank also experienced a decline in
net interest margin, as well as an increase in noninterest expense.
The decline in net interest margin, to 3.12% for the first quarter
compared with 3.84% for the first quarter of the prior year, is
primarily attributed to higher levels of nonperforming assets and a
shift in the asset mix to highly liquid, lower-yielding
instruments. The year-over-year increase in noninterest expense is
primarily due to increased costs associated with other real estate
owned and significantly higher FDIC deposit insurance
assessments.
Liquidity
The Bank maintained a strong liquidity position, with
asset-based liquidity ending the first quarter at 15.9% of assets,
down from 20.0% as of December 31, 2009. The decline in asset-based
liquidity during the first quarter is due to the repayment of $5.3
million of wholesale deposits.
Asset Quality
The provision for loan losses of $1.3 million, offset by charged
off loans totaling $1.1 million, resulted in a $217,000 net
increase in the allowance for loan losses. The allowance for loan
losses stands at $1.5 million or 2.62% of loans, net of deferred
fees, as of March 31, 2010, up from $1.3 million or 2.28% of loans,
net of deferred fees, as of December 31, 2009.
Nonperforming assets (consisting of loans 90 days or more past
due, loans on nonaccrual and other real estate owned) totaled $6.3
million or 8.5% of total assets as of March 31, 2010, slightly down
from $6.7 million or 8.6% of total assets as of December 31, 2009.
Chief Credit Officer Froman states, “The level of our nonperforming
assets is unacceptable. Through aggressive collection and
liquidation efforts, we are determined to reduce our nonperforming
assets and redeploy the proceeds as earning assets.”
Deposits
Continued customer deposit growth has allowed the Bank to
significantly reduce its usage of noncore funding, defined as
wholesale deposits and borrowed funds. With the first quarter
repayment of $5.3 million of wholesale deposits, noncore funding
has been reduced to 16.9% of total assets as of March 31, 2010
compared with 22.9% as of December 31, 2009. Gray commented, “We
plan to further reduce our noncore funding over the next two
quarters with the repayment of maturing wholesale deposits. In
addition to reducing a noncore funding source, such repayments will
lower our overall cost of funds as the maturing wholesale deposits
have relatively high interest rates.”
Capital
As indicated in the table below, as of March 31, 2010 the Bank
is “well capitalized” in two of the three regulatory standards and
“adequately capitalized” in the third standard. The Bank intends to
initiate a stock offering within the next 60 days, the proceeds
from which should increase the total risk-based capital ratio to a
level above the regulatory minimum for “well capitalized.”
Pacific West Bank
Regulatory Minimum to be
“Adequately Capitalized”
Regulatory Minimum to be “Well
Capitalized”
Leverage ratio 6.39% ≥4.00% ≥5.00% Tier 1 risk-based capital ratio
7.99% ≥4.00% ≥6.00% Total risk-based capital ratio 9.25% ≥8.00%
≥10.00%
About Pacific West Bank:
Pacific West Bank, a community bank, commenced operations in
November 2004. The Bank, headquartered in West Linn, Oregon, opened
its second branch in Lake Oswego, Oregon in 2008. Pacific West Bank
provides not only highly personalized deposit and loan services to
individuals and small-to-medium sized businesses but also financial
and volunteer support to a variety of community, civic and
charitable organizations. For more information about Pacific West
Bank, please call 503-905-2222 or visit www.bankpacificwest.com.
Information about the Bank's stock may be obtained through the Over
the Counter Bulletin Board at www.otcbb.com. Pacific West Bank's
stock symbol is PWBO.
Forward-looking Statements:
This press release, as well as other written communications made
from time to time by the Bank and oral communications made from
time to time by authorized officers of the Bank, may contain
statements relating to the future results of the Bank (including
certain projections and business trends) that are considered
“forward-looking statements” as defined in the Private Securities
Litigation Reform Act of 1995 (the “PSLRA”). Such forward-looking
statements may be identified by the use of such words as “believe,”
“expect,” “anticipate,” “should,” “planned,” “estimated,” “intend”
and “potential.” For these statements, the Bank claims the
protection of the safe harbor for forward-looking statements
contained in the PSLRA.
The Bank cautions that a number of important factors could cause
actual results to differ materially from those currently
anticipated in any forward-looking statement. Such factors include,
but are not limited to: prevailing economic and geopolitical
conditions; changes in interest rates, loan demand and real estate
values; changes in accounting principles, policies and guidelines;
changes in any applicable law, rule, regulation or practice with
respect to tax or legal issues; the results of regulatory
examinations and directives; and other economic, competitive,
governmental, regulatory and technological factors affecting the
Bank’s operations, pricing, products and services. The
forward-looking statements are made as of the date of this release,
and, except as may be required by applicable law or regulation, the
Bank assumes no obligation to update the forward-looking statements
or to update the reasons why actual results could differ from those
projected in the forward-looking statements.
PACIFIC WEST BANK BALANCE SHEETS (in
thousands) (unaudited) 3/31/10 12/31/09
Cash and due from banks $ 10,978 $ 15,541 Loans, net of
deferred fees 58,124 57,157 Allowance for loan losses (1,522 )
(1,305 ) Premises and equipment, net 3,112 3,150 Other real estate
owned 2,072 2,462 Other assets 933 883
Total assets $ 73,697 $ 77,888
Noninterest-bearing deposits $ 6,363 $ 5,665 Interest-bearing
deposits 56,523 60,029 Borrowed funds 5,500 5,500 Other liabilities
394 354 Total liabilities 68,780
71,548 Common stock 7,713 7,705 Accumulated
deficit (2,796 ) (1,365 ) Shareholders' equity
4,917 6,340 Total liabilities and
shareholders' equity $ 73,697 $ 77,888
STATEMENTS OF OPERATIONS (in thousands, except loss per
share) (unaudited) Three Months Ended 3/31/10
3/31/09 Interest and fee income $ 901 $ 1,001
Interest expense 347 405 Net interest
income 554 596 Provision for loan losses 1,305
85 Net interest income (loss) after provision for loan
losses (751 ) 511 Noninterest income
15 9 Salaries and employee
benefits 338 331 Other real estate owned 79 13 Occupancy 76 89 FDIC
assessment 50 20 Data processing 33 48 Other noninterest expense
119 100 Total noninterest expense
695 601 Loss before income taxes
(1,431 ) (81 ) Income tax benefit - (32 ) Net
loss $ (1,431 ) $ (49 ) Loss per share - diluted $
(1.88 ) $ (0.06 )
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