WHI W Holding Company Incorporated New Common Stock ($1.00 Par Value)

MAYAGUEZ, Puerto Rico, Oct. 28 /PRNewswire-FirstCall/ -- W Holding Company, Inc. (NYSE:WHI) (the "Company"), the bank holding company of Westernbank Puerto Rico (the "Bank"), today announced that it has completed its 2008 financial statements and has filed with the Securities and Exchange Commission (the "SEC") its Annual Report on Form 10-K (the "Annual Report") for the year ended December 31, 2008. The Company also announced it intends to complete and submit its 2009 quarterly reports for the quarters ended March 31, June 30, and September 30, 2009 before year end, as it continues its efforts to become current and be in full compliance with the reporting requirements of the SEC and the New York Stock Exchange (the "NYSE"). Commenting on the Company's filing, Mr. Frank C. Stipes, Chairman, President and Chief Executive Officer of the Company, said, "With the filing of our 2008 results, the Company has taken a very important step on the path to return to timely financial reporting and be in full compliance with the reporting requirements of both the SEC and NYSE, which have been extremely cooperative and helpful in this process. As we move forward, we leave behind the most critical and difficult years we have been through in the history of this fine Company. The Company's strong management team and Board of Directors are focusing all of their energy and total commitment on what we have called the 'new beginning,' going back and adhering to the principles, guidelines, and fundamentals that made the Bank, in its 51st year of operations, the backbone of our island economy and its people. This is what we mean when we say going back to basics." Mr. Stipes continued, "The results reflect the difficult economic environment in Puerto Rico during 2008, where continued economic deterioration was experienced during the island's fourth year of economic contraction, called by some a tropical depression, that is now, we feel, receding. In response to these critical challenges, we took and will continue to take all necessary measures, which have included among others: (1) deleveraging our balance sheet, (2) reducing credit concentration, (3) reducing non-performing loans, (4) increasing and improving regulatory capital ratios, and (5) adopting strategies to provide additional sources of liquidity." Overview of Financial Condition and Results of Operations Total assets at December 31, 2008 and 2007 were $15.3 billion and $17.9 billion, respectively. The reduction in total assets was mainly driven by decreases in the Company's investment portfolio, excluding short-term money market instruments, and in the Company's overall loan portfolio. The investment portfolio, excluding short-term money market instruments, decreased $2.4 billion, from $7.1 billion at December 31, 2007 to $4.7 billion at December 31, 2008, due to the Company's decision to deleverage its balance sheet to further strengthen the Company's regulatory capital ratios. The Company's loans receivable-net decreased by $542.2 million, from $9.2 billion at December 31, 2007 to $8.7 billion at December 31, 2008, mainly due to the Company's decision to focus its lending activities in certain segments. Specifically, during 2008 the Company focused its lending activities on the small and intermediate business and residential mortgage lending segments. Total deposits reached $11.0 billion at December 31, 2008 compared to $10.5 billion at December 31, 2007. The increase is mainly attributable to the Company's decision to increase its on-balance sheet liquidity position in a prudent response to the economic and financial crisis that impacted the United States and Puerto Rico during 2008. Due to the limited availability of local deposits, more so in the southwestern region of Puerto Rico (the Bank's main market), the increase in deposits was mainly accomplished through the issuance of brokered deposits. Brokered deposits at December 31, 2008 and 2007 were $8.6 billion (78% of total deposits) and $7.9 billion (75% of total deposits), respectively. Stockholders' equity at December 31, 2008 was $915.4 million, as compared to $996.2 million at December 31, 2007 due to the combination of the Company's net loss, dividend payments, other comprehensive losses on available for sale securities recognized during the year as a result of increases in interest rates during 2008 and the cumulative effect of the adoption of Statement of Financial Accounting Standard No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, on January 1, 2008, which resulted in a credit to retained earnings of $5.3 million. However, due to the Company's decision to deleverage its balance sheet and reposition its investment portfolio, the Company's regulatory capital ratios improved at December 31, 2008 as compared to December 31, 2007. Tier-one leverage ratio at December 31, 2008 increased to 5.26% from 4.90% at December 31, 2007, while total risk based capital increased to 10.24% at December 31, 2008 from 9.06% at December 31, 2007. Net loss for the year ended December 31, 2008 was $5.5 million compared to a net loss of $68.3 million for the year ended December 31, 2007. Basic and diluted earnings (loss) per common share for the year ended December 31, 2008 amounted to $(12.84), compared to basic and diluted earnings (loss) per common share of $(31.92) for 2007. The Company's financial performance for 2008, as compared to 2007, was principally impacted by the following: -- A decrease of $210.1 million in the provision for loan losses, as a result of steps taken by the Company since the middle of 2007 to mitigate the credit crisis confronted and the underlying risks regarding its asset-based and commercial loan portfolios under the current economic environment. In addition, in connection with the preparation of the 2007 and 2008 consolidated financial statements, the Company's internal loan review department examined the entire construction and asset-based loan portfolios, and commercial loan relationships in excess of $3.0 million using current appraisals, the majority of which were done in 2007 and 2008. The Company's determination of valuation allowances was mainly based on a collateral dependent analysis, which reflects the value of the property in its present condition after appropriate deductions for selling costs. The loan loss provision for 2007 and 2008 included the incorporation of such appraisals in the calculation of the specific allowances. -- A decrease of $142.1 million in net interest income, mainly due to a decrease in net yield on interest-earning assets coupled with a decrease in the Company's average earning assets. -- An increase of $32.4 million in noninterest expenses, for the most part due to increases in deposit insurance premiums and supervisory examination, payroll expenses, municipal taxes and in the provision for claims receivable. -- An increase in the income tax benefit of $14.5 million mainly due to the reversal of tax contingencies associated with the settlement of certain issues with taxing authorities that yielded a benefit of $33.3 million in 2008, offset in part by a decrease in pre-tax losses. -- An increase of $12.9 million in noninterest income, principally as a result of an increase of $12.5 million in net gain (loss) on sale of loans, securities and other assets coupled with an increase of $1.5 million in other fees and commissions, offset in part by decreases in service and other charges on loans. During 2008, the Company sold certain real estate properties held for sale and recognized a gain on sale of $14.7 million. The decrease in service and other charges on loans was mainly due to lower volume of business due to the Company's decision to reduce certain lending activities in light of deteriorating economic conditions in Puerto Rico. For further information, you may read and obtain a copy of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008 through the SEC website, http://www.sec.gov/, or at the Company's investor relations section at the Company's website, http://www.w-holding.com/. Forward Looking Statements This press release may contain some information that constitutes "forward-looking statements." Such information can be identified by the use of forward-looking terminology such as "may," "will," "should," "expect," "anticipate," "estimate," "intend," "continue," or "believe," or the negatives or other variations of these terms or comparable terminology. Forward-looking statements with respect to future financial conditions, results of operations and businesses of the Company are always subject to various risk and market factors out of management's control which could cause future results to differ materially from current management expectations or estimates and as such should be understood. Such factors include particularly, but are not limited to, the possibility of prolonged adverse economic conditions or that an adverse interest rate environment could develop. For a discussion of these and other risks and uncertainties, please refer to Item 1A of the Company's Annual Report on Form 10-K for the most recently completed fiscal year. Except as required by applicable securities laws, the Company does not intend, and specifically disclaims any obligation, to update forward-looking statements. About the Company Westernbank Puerto Rico, a wholly-owned subsidiary of W Holding Company, Inc., is the second-largest commercial bank in Puerto Rico, based on total assets, operating through 48 full-fledged branches throughout Puerto Rico, with a fully functional banking site on the Internet. Westernbank is the largest lender and employer in the southwestern region of Puerto Rico, the second largest minority-held institution in the United States, and the largest overall commercial lender in the Island of Puerto Rico. DATASOURCE: W Holding Company, Inc. CONTACT: Vixson Baez, W Holding, +1-787-834-8000, ext. 5535, or Web site: http://www.wbpr.com/

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