W Holding Company, Inc., the Financial Holding Company of
Westernbank Puerto Rico, Reports an Increase in Net Income of
20.87% for the Fourth Quarter and 51.67% for the Year Ended
December 31, 2004 MAYAGUEZ, Puerto Rico, Jan. 24
/PRNewswire-FirstCall/ -- W Holding Company, Inc. (NYSE: "WHI"),
the financial holding company of Westernbank Puerto Rico, reported
today its results for the fourth quarter and year ended December
31, 2004. W Holding reported a net income of $46.1 million or $0.24
earnings per basic common share ($0.23 on a diluted basis) for the
quarter ended December 31, 2004, as compared to a net income of
$38.1 million or $0.19 earnings per basic and diluted common share
for the same period in 2003, after giving effect to the
three-for-two (3x2) stock split and a two percent (2%) stock
dividend declared on December 6, 2004, and December 13, 2004,
respectively, and distributed both on January 10, 2005. This is an
increase of $8.0 million or 20.87% over the prior year quarter. For
the year ended December 31, 2004, W Holding reported a net income
of $171.9 million or $0.89 earnings per basic common share ($0.86
on a diluted basis), as compared to a net income of $113.3 million
or $0.57 earnings per basic common share ($0.55 on a diluted basis)
(as adjusted) for the same period in 2003, an increase of $58.6
million or 51.67%. The $113.3 million net income reported for the
year ended December 31, 2003, was affected by a loss of $22.7
million ($17.0 million net of tax) on valuation and disposition of
the Company's investment in CBO's and CLO's, as previously
reported. The return on assets (ROA) and the return on common
stockholders' equity (ROCE) for the quarter ended December 31,
2004, were 1.33% and 28.31%, respectively, as compared to 1.37% and
29.44% reported for the same quarter in 2003. For the year ended
December 31, 2004, the ROA and the ROCE were 1.33% and 28.55%,
respectively, compared to 1.15% and 22.79%, for the same period in
prior year. The ratios for the comparable year ended December 31,
2003, were affected by the loss referred to in the previous
paragraph. At December 31, 2004, driven by strong increases in W
Holding activities, total assets ended at $14.3 billion, surpassing
our year end goal of reaching $14.0 billion in total assets. Total
assets grew $2.8 billion or 24.46%, from $11.5 billion at December
31, 2003. Loans receivable-net, grew by $1.3 billion or 26.86%,
from $4.7 billion at December 31, 2003, as a result of the
Company's continued strategy of growing its loan portfolio through
commercial real estate, construction and land acquisition,
asset-based and other commercial loans. The investment portfolio,
excluding short-term money market instruments, grew by $1.2 billion
or 19.91%, from $5.8 billion at December 31, 2003, to $6.9 billion
at December 31, 2004. Stockholders' equity increased to $1.1
billion as of December 31, 2004, compared to $828.5 million as of
December 31, 2003. Such increase resulted principally from the
combination of the issuance of 2,675,500 shares of the Company's
Series H Preferred Stocks completed on December 21, 2004, providing
a net capital infusion of $129.3 million, plus the net income of
$171.9 million generated during the year ended December 31, 2004,
partially offset by dividends paid during the year of $23.5 million
and $27.2 million on our common and preferred shares, respectively,
and a decrease of $721,000 in other comprehensive loss, net of tax,
on the mark to market of our portfolio of investment securities
available for sale at December 31, 2004, when compared to December
31, 2003. The period-end number of common shares outstanding
increased from 106,290,294 as of December 31, 2003, to 163,918,835
as of December 31, 2004, as a result of the issuance of 56,781,960
common shares for the stock split and stock dividend declared in
December 2004 and distriuted both on January 10, 2005, the
conversion of 276,994 shares of the Company's convertible preferred
stock series A, into 631,831 shares of the Company's common stock,
and the issuance of 214,750 common shares from the exercise of
stock options. Net Interest Income Net interest income for the
fourth quarter ended December 31, 2004, was $76.7 million, an
increase of $5.4 million or 7.63%, from $71.3 million for the same
period of last year. This increase mainly resulted from the net
interest-earning assets of $786.1 million, which contributed a
$15.1 million positive volume variance, which was partially offset
by a $9.6 million negative rate variance. Average interest-earning
assets for the fourth quarter of 2004 increased by $2.8 billion or
25.89%, compared to the same quarter in previous year, mainly
driven by increases in the average loan portfolio of $1.2 billion,
particularly in the commercial real estate, construction and land
acquisition, asset-based and other commercial loan portfolios, and
in the average investment portfolio, excluding short-term money
market instruments, which increased also by $1.2 billion. The
increase in the investment portfolio, excluding short-term money
market instruments, was primarily in tax exempt securities, such as
U.S. Government and agencies obligations. For the year ended
December 31, 2004, net interest income increased from $239.3
million in 2003, to $299.5 million, an increase of $60.2 million or
25.17%. This increase mainly resulted from the net interest-earning
assets of $734.1 million, which contributed a $66.4 million
positive volume variance, which was partially offset by a $6.1
million negative rate variance. Average interest-earning assets
increased by $3.1 billion or 33.06%. This increase in average
interest-earning assets was driven by increases in the average loan
portfolio of $1.1 billion, mainly in the commercial real estate,
construction and land acquisition, asset-based and other commercial
loan portfolios, and in the average investment portfolio, excluding
short-term money market instruments, of $1.8 billion, primarily in
tax exempt securities, such as U.S. Government and agencies
obligations. The average yield earned in interest- earning assets
decreased from 4.87% to 4.85% and from 4.92% to 4.74%, for the
quarter and year ended December 31, 2004, respectively, when
compared to prior year periods. The decrease in the average yield
was mainly due to a lower average yield earned on the loans
portfolio, due to a higher volume of commercial real estate loans
and other commercial loans with floating rates. The decrease in the
average yield earned on the loans portfolio was partially offset by
higher reinvestment rates on matured and called securities and
higher yields earned in money market instruments. Reinvestment
rates for new securities were higher when compared to the previous
periods, except for the last quarter of 2004, as the U.S. Treasury
yield curve initially steepened ahead of the reaction by the
Federal Reserve, which started to increase interest rates in the
second week of August 2004. As a result of this lagging factor,
yields earned on floating rate loans were not adjusted as fast as
on investment securities since the Prime Rate (an index used by the
Bank to re- price most of its loans) was raised at a slower pace
following the Federal Reserve action. More recently, during last
quarter of 2004, reinvestment rates decreased, primarily due to the
flattening of the U.S. Treasury yield curve. Our overall cost of
rates paid increased 35 basis points, from 2.39% to 2.74%, for the
quarter ended December 31, 2004, when compared to the prior year
quarter. The increase on the overall cost of rates paid was
primarily due to increases of 40 and 33 basis points on the average
interest rate paid on deposits and on federal funds purchased and
repurchase agreements, respectively. Average interest paid on
deposits increased from 2.25% for the quarter ended December 31,
2003, to 2.65% for the same period in 2004, while average interest
rate paid on federal funds purchased and repurchase agreements
increased from 2.48% for the quarter ended December 31, 2003, to
2.81% for the same period in 2004. The increase in the overall cost
of rates paid was partially offset by lower cost of rates in
advances from the Federal Home Loan Bank, which decreased 44 basis
points from 4.11% for the quarter ended December 31, 2003, to 3.67%
for the same period in 2004. On a year to year comparison, the
overall cost of rates paid decreased 5 basis points from 2.53% for
the year ended December 31, 2003, to 2.48% for the year ended
December 31, 2004. Average interest rates paid on federal funds
purchased and repurchase agreements decreased 12 basis points from
2.61% for the year ended December 31, 2003, to 2.49% for the year
ended December 31, 2004, while the average interest rate paid on
advances from the Federal Home Loan Bank decreased 38 basis points
from 4.38% for the year ended December 31, 2003, to 4.00% for the
year ended December 31, 2004. The decrease of 5 basis points on a
year to year comparison is mainly due to certain liabilities that
became due during the current year that were of longer terms and
higher costs. These liabilities were part of the strategy in
previous periods of increasing the maturities of a portion of the
Bank's liabilities in anticipation of rising interest rates. As
explained in the preceding paragraph, cost of rates for deposits
adjusted immediately as the LIBOR rate (an index used by the Bank
to re-price its deposits) increased by market conditions following
the change in the U.S. Treasury yield curve. The strong growth in
average interest-earning assets between both periods was in part
offset by increases in the average interest-bearing liabilities of
$2.7 billion or 26.84%, and $2.9 billion or 33.49%, for the quarter
and year ended December 31, 2004, respectively. Deposits grew on
average by $1.2 billion and $1.1 billion, during the quarter and
the year ended December 31, 2004, while other borrowings (federal
funds purchased, repurchase agreements, advances from FHLB and
other borrowings) on average rose by $1.5 billion and $1.8 billion
for the same periods, respectively. Net Interest Margin Our net
interest margin decreased 38 basis points during the fourth quarter
of 2004, to 2.26% from 2.64% in the fourth quarter of 2003. On a
tax equivalent basis our net interest margin also decreased 30
basis points, from 2.96% to 2.66% for the same period. The decrease
in our net interest margin obeyed to a decrease in our loan
portfolio average yield, coupled with an increase in the cost of
rates for deposits and other borrowings, as previously explained.
We attribute this contraction primarily to the flattening of the
yield curve, whereby the 10-year U.S. Treasury yield remained
relatively flat, while the short end of the curve increased. On a
linked quarterly comparison, our net interest margin decreased by
14 basis points, from 2.40% in the third quarter of 2004. On a tax
equivalent basis, our net interest margin also decreased 18 basis
points, from 2.84% in the third quarter of 2004. For the year ended
December 31, 2004, our net interest margin decreased 15 basis
points, and on a tax equivalent basis, decreased by 6 basis point,
when compared to the year ended December 31, 2003. The decrease in
the net interest margin was mainly attributed to a decrease in our
loan portfolio yield and an increase in the rate paid in our
deposits. This decrease was partially offset by an increase in the
investment securities yield and a decrease in the rate paid in our
borrowings, as previously explained. Under a flat interest rate
scenario for the next twelve month period, based on our asset and
liability composition as of December 31, 2004, we estimate our net
interest margin will be approximately 2.26% during said period.
Assuming an instantaneous 100 basis points decrease in the fed
funds rate, we estimate our net interest margin will fluctuate
within a range of 2.11% to 2.24% during said period. Assuming a 100
basis points increase in the fed funds rate, we estimate our net
interest margin will fluctuate within a range of 1.98% to 2.26%.
Furthermore, a 200 basis points increase in the fed funds rate will
cause our net interest margin to fluctuate between a range of 1.74%
to 2.30%. Accordingly, the repricing of the Bank's deposits and
other borrowings coupled to the flattening of the yield curve could
contract the net interest margin for year 2005. The lower and
higher values of such range meaning the lowest and highest net
interest margin for any given quarter within the said twelve month
period. These ranges are management's estimates based on
instantaneous rate shocks of 100 and 200 basis points and does not
consider any asset/liability management strategy it could undertake
given such interest rate changes. Attached as Exhibits IIIa, IIIb
and IIIc are supplemental unaudited data schedules providing
additional information on the net interest margin including average
balances and average rates for both interest-earning assets and
interest-bearing liabilities, as well as changes in volumes and
rates for the periods presented. Noninterest Income Noninterest
income increased $1.8 million for the three month period ended
December 31, 2004, when compared to the same period in 2003. This
increase was mainly the result of an increase of $1.7 million on
the net gain on sales and valuation of loans, securities and other
assets. The increase on the net gain on sales and valuation of
loans, securities and other assets was primarily due to realized
gains of $525,000 on investment securities and $1.2 million on
loans securitized or sold in the secondary market. For the year
ended December 31, 2004, noninterest income increased $24.6
million, when compared to the same period in 2003. The increase was
mainly due to the net loss of $22.7 million recorded during the
same period in 2003, relating to our investment in CBO's and CLO's,
and included in loss on sales and valuation of loans, securities
and other assets, as previously reported. Noninterest Expenses
Total noninterest expenses increased $1.9 million or 8.11% for the
three- month period ended December 31, 2004, and $15.3 million or
18.04% for the year ended December 31, 2004, when compared to the
corresponding periods in 2003. Salaries and employees' benefits,
which is the largest component of total noninterest expenses,
increased $1.4 million or 15.93% for the fourth quarter of year
2004, and $4.5 million or 13.23% for the year ended December 31,
2004, as compared to the corresponding periods in 2003. Such
increases are attributed to the continued expansion of the Company,
including increases in personnel, normal salary increases and
related employees' benefits, principally attributed to our
continued expansion in the San Juan Metropolitan area. At December
31, 2004, the Company had 1,252 full-time employees, including its
executive officers, an increase of 160 employees or 14.65%, since
December 31, 2003. Advertising expense decreased by $102,000 or
5.95% for the three months ended December 31, 2004, and increased
$3.8 million or 56.88% for the year ended December 31, 2004, when
compared to the same periods in 2003. The increase for the full
year is principally due to various radio, newspaper and television
campaigns promoting Westernbank's institutional image and
positioning the Company for its strategy in the San Juan
Metropolitan area, as well as 2004 promotional campaigns for
several Bank's products. The decrease during the three months ended
December 31, 2004, is attributed to fewer promotional efforts
during the election period. Noninterest expenses, other than
salaries and employees' benefits, and advertising discussed above,
increased $610,000 or 4.61% for the fourth quarter of 2004, and
$7.0 million or 15.85% for the year ended December 31, 2004,
resulting primarily from costs associated with the Company's growth
and expansion. Despite such increases in noninterest expenses, the
Company maintained the same at adequate levels, and achieved an
efficiency ratio of 30.90% for the fourth quarter of year 2004, and
30.51% for the year ended December 31, 2004. Provision for Income
Taxes The current provision for Puerto Rico income taxes for the
three month and the year ended December 31, 2004, amounted to $8.3
million and $28.2 million, compared to $9.0 million and $29.3
million in the same periods of 2003, respectively. The increase in
the income before the provision for income taxes includes a
significant increase in the Company's exempt interest income
derived from the investment in tax exempt securities, primarily in
U.S. Government and Agencies Obligations, as previously explained.
The deferred income tax credit decreased in 2004 when compared to
2003, since in 2003 the Company recorded a deferred income tax
asset related to a capital loss carryforward on the liquidation of
the Company's CBO's and CLO's portfolio which is available to
offset capital gains in future years. The change in the deferred
provision for the quarter ended December 31, 2004, when compared to
the prior year quarter, is attributable to other timing differences
in the recognition of certain items for tax and books, principally
changes in the allowance for loan losses. Therefore, the Company's
effective tax rate is substantially below the statutory rate. Asset
Quality W Holding's asset quality continues to be strong, in spite
of the Company's continued aggressive loan portfolio growth, as
measured by our reserves to total loans, non-performing loans as a
percentage of total loans and net charge-offs to average loans. W
Holding is essentially a secured lender having 83% of its loan
portfolio as of December 31, 2004, secured by real estate. Our
combined delinquency on all portfolios for the categories of 60
days and over continues to be below our benchmark of 1% for both
periods, being 0.57% at December 31, 2004, and 0.74% at December
31, 2003, an improvement of 17 basis points from the prior year.
The delinquency ratio on the commercial loan portfolio for the
categories of 60 days and over, also improved 29 basis points to
0.55% (less than 1%), when compared to 0.84% reported for the year
ago period, our lowest delinquency ratio since year 2000. The
delinquency ratio on the consumer loan portfolio, including the
Expresso of Westernbank loan portfolio, for the categories of 60
days and over increased 14 basis points, to 1.03% at December 31,
2004, when compared to 0.89% for the comparable period last year.
Such increase was mainly due to regular consumer loans past due
over 90 days which are collateralized by real estate properties.
The provision for possible loan losses amounted to $6.6 million for
the quarter ended December 31, 2004, slightly up from $6.3 million
for the same period in the previous year, an increase of $220,000
or 3.47%. Even though the loan portfolio grew between periods, this
slight increase was attributed to lower net charge offs during the
2004 fourth quarter. For the year ended December 31, 2004, the
provision for possible loan losses amounted to $36.7 million, up
from $27.0 million for the year ended December 31, 2003, an
increase of $9.6 million or 35.65% The allowance for possible loan
losses reached $80.1 million as of December 31, 2004. The increase
in the provision for loan losses is attributable to the overall
growth in the Company's loan portfolio, particularly those of its
commercial real estate loans portfolio, the loan portfolio of its
asset-based lending division, Westernbank Business Credit, and the
provision associated with the loan portfolio of the Expresso of
Westernbank. The commercial real estate loan portfolio grew to $3.2
billion at December 31, 2004, an increase of $893.2 million or
39.50%, when compared to December 31, 2003. Westernbank Business
Credit loan portfolio grew to $831.1 million at December 31, 2004,
an increase of $192.5 million or 30.15%, when compared to December
31, 2003. The Expresso of Westernbank loan portfolio decreased from
$150.4 million at December 31, 2003, to $144.0 million at December
31, 2004, a decrease of $6.5 million or 4.30%. The decrease in the
Expresso of Westernbank loan portfolio was mainly due to
management's strategy of stabilizing charge-offs as the division
portfolio matures and average yields continue to increase. The
average yields of Westernbank Business Credit and the Expresso of
Westernbank loan portfolios were 6.21% and 20.34%, respectively,
for the year ended December 31, 2004. Non-performing loans stand at
$34.3 million or 0.57% (less than 1%) of Westernbank's loan
portfolio at December 31, 2004, an improvement of 9 basis points
when compared to 0.66% reported at December 31, 2003. In absolute
amounts, non-performing loans increased by $3.0 million, from $31.2
million as of December 31, 2003. The increase in non-performing
loans primarily comes from the Company's commercial and regular
consumer loan portfolios. Non- performing loans on the commercial
loan portfolio increased by $1.3 million, when compared to December
31, 2003. This increase is mostly attributed to one commercial loan
with a principal balance of $1.5 million, collateralized by real
estate. At December 31, 2004, this loan did not require a valuation
allowance. At December 31, 2004, the allowance for possible loan
losses was 233.64% of total non-performing loans (reserve
coverage), compared to the 197.17% reported at December 31, 2003.
Moreover, of the total allowance of $80.1 million, $8.9 million is
for our specific allowance and the remaining $71.2 million is for
our general allowance. Net loans charge-off in the fourth quarter
of 2004 were $3.1 million or 0.21% (annualized) to average loans,
compared to $3.9 million or 0.33% to average loans for the same
period in 2003, an decrease of $792,000. For the year ended
December 31, 2004, net charge-offs amounted to $18.2 million or
0.34% to average loans, an increase of $5.7 million, when compared
to $12.6 million or 0.29% to average loans in 2003. The decrease in
net loans charge-off for the fourth quarter of 2004 when compared
to the same quarter in 2003, is principally attributed to lower net
charge-offs of consumer loans. The increase for the full year is
primarily due to loans charged-off in the ordinary course of
business, mainly in our consumer loan portfolio. The increase in
consumer loans charged-off for the year ended December 31, 2004,
was principally due to loans charged-off by the Expresso of
Westernbank division, which amounted to $12.4 million for the year
ended December 31, 2004, when compared to $7.9 million for the year
ago period. On a linked quarter comparison, loans charged-off by
the Expresso of Westernbank division continued its decreasing trend
from $3.2 million for the third quarter of 2004, to $2.5 million
for the fourth quarter of 2004. The delinquency ratio of the
Expresso of Westernbank division portfolio at December 31, 2004,
was 1.88% for the categories of 60 days and over. This ratio is
slightly above management's estimate and accordingly, management is
emphasizing an increase in the overall yield charged on such loans,
continuously revising its underwriting policies, as well as
increasing the level of collateralized loans, to compensate for
such higher delinquency. Efforts in this regard have resulted in a
decreasing trend in net charge offs during the last three quarters
as measures begins to yield positive results. Also, the loan
portfolio of Expresso of Westernbank collateralized by real estate
at December 31, 2004, accounts for 12% of the outstanding balance,
attaining our goal of having at least 10% of the Expresso loan
portfolio collateralized by real estate. Total Loans, Investments
and Deposits Loans receivable-net, grew $1.3 billion or 26.86%, to
$5.9 billion at December 31, 2004, compared to $4.7 billion at
December 31, 2003. This increase reflects the Company's emphasis on
continued growth in its loan portfolio through commercial real
estate, other commercial asset-based, consumer and construction
lending. As a result, the portfolio of real estate loans secured by
first mortgages, increased from $3.4 billion as of December 31,
2003, to $4.4 billion as of December 31, 2004, up by $1.0 billion
or 30.60%. Commercial real estate loans secured by first mortgages
increased from $2.3 billion as of December 31, 2003, to $3.2
billion as of December 31, 2004, an increase of $893.2 million or
39.50%. Other loans portfolio, including commercial loans not
collateralized by real estate, consumer loans (including the
Expresso of Westernbank loans portfolio), loans on deposits and
credit cards, increased from $1.4 billion as of December 31, 2003,
to $1.6 billion as of December 31, 2004, up by $248.8 million or
17.95%. The unsecured portion of the Expresso of Westernbank loan
portfolio remained relatively unchanged increasing by $3.1 million
or 2.40%, from $128.9 million at December 31, 2003, to $132.0
million at December 31, 2004, as management has sought to stabilize
charge offs as the portfolio matures and average yields continue to
increase. Attached as Exhibit IV is a supplemental unaudited data
schedule providing additional information on W Holding loan
portfolio. W Holding investment portfolio, excluding short-term
money market instruments, stands at $6.9 billion at December 31,
2004, growing $1.2 billion or 19.91% in comparison to December 31,
2003. Such growth is focused principally on tax-exempt securities
guaranteed by the United States Government and agencies, accounting
for 98.75% of our investment portfolio as of December 31, 2004. The
investment portfolio at December 31, 2004, had an average
contractual maturity of 53 months. The Company's interest rate risk
model, takes into consideration the callable feature of certain
investment securities. Taking into consideration the callable
features of these securities, the investment portfolio as of
December 31, 2004, had a remaining average maturity of 10 months.
However, no assurance can be given that such levels will be
maintained in future periods. As of December 31, 2004, total
deposits reached $6.2 billion, from $5.4 billion at December 31,
2003, representing an increase of $845.7 million or 15.70%, while
federal funds purchased and repurchase agreements increased to $6.7
billion, from $5.0 billion at December 31, 2003, an increase of
$1.6 billion or 32.45%, mainly to fund W Holding strong loans
portfolio growth of 26.86% and investments growth, excluding
short-term money market instruments, of 19.91%. Commenting on the
financial results of the Company, and more specifically those of
its main subsidiary, Westernbank, Mr. Frank C. Stipes, Esq.,
Chairman of the Board, President and Chief Executive Officer of
both companies, stated, "We are very pleased with our results for
2004 with an excellent combination of continued growth coupled with
very strong asset quality. We were able to surpass our goal of $14
billion in total assets at December 31, 2004, achieved our goal of
reaching $170 million in net income for the year and above all, we
were able to produce such outstanding asset quality with an overall
delinquency ratio of 0.57%. Furthermore, our commercial loan
portfolio delinquency ratio was an outstanding 0.55% down from the
year ago ratio of 0.84% and our lowest delinquency ratio since year
2000. Our consumer loan delinquency continued at an outstanding
1.03% even including our Expresso loans. These numbers are
definitely the results of our dedicated, talented and very hard
working employees' group and further sustain our view that we can
grow at a fast pace while at the same time producing quality growth
above our peers both in Puerto Rico and abroad. We have said it
before and we are very proud to produce such outstanding results."
Mr. Stipes continued saying: "We believe Westernbank is in a
position to continue gaining market share in Puerto Rico as it
builds out its branch network in the San Juan Metroplex and east
coast regions. These plans include the opening in February 2005 of
a new mega-branch in Humacao, where it has no presence, and
likewise another new mega-branch in the Condado area within the
next 120 to 150 days. Concurrently, we will be building five more
mega- branches in Hato Rey, Isla Verde, Cupey, Rexville and in
Ponce. As we have recently expressed, we also intend to expand and
extend our success story into the continental United States in the
next 18 to 30 months, where we will be soliciting authorization to
conduct business specifically in the states of New York,
Massachusetts, Georgia and Florida." Referring to the Company's
continued success, Mr. Freddy Maldonado, Chief Financial Officer
and Vice President of Finance and Investment of the Company,
indicated: "Our Company has had the largest organic loan market
share gain in Puerto Rico over the past five years. Year 2004 was
not the exception and we intend to keep gaining market share over
the coming years. Our consistent level of growth, evidenced by the
results reported herewith, is further confirmed by the most recent
statistics provided by the Office of the Commissioner of Financial
Institutions of Puerto Rico. Westernbank is by far the largest real
estate commercial lender in Puerto Rico with an overall market
dominance of 38.84%. In regard to overall lending activities, we
are the dominant market leader in what is called the NORTHWESTERN
region of Puerto Rico, which includes the cities of Mayaguez and
Aguadilla, among others, holding 59% of the market; and in the
SOUTHWESTERN region, which includes the cities of Ponce and Yauco,
among others, holding 51% of the market. In the San Juan metroplex
market, which is unquestionably Puerto Rico's richest and most
populated, we hold a market share of 8.20%, with enormous growth
potential". 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. 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 52
full-fledged branches, including 33 in the Southwestern region of
Puerto Rico, 7 in the Northeastern region, and 12 in the San Juan
Metropolitan area of Puerto Rico, and a fully functional banking
site on the Internet. W Holding Company, Inc. also owns Westernbank
Insurance Corp., a general insurance agent placing property,
casualty, life and disability insurance, whose results of
operations and financial condition are reported on a consolidated
basis. Messrs. Frank C. Stipes, Chief Executive Officer, and Freddy
Maldonado, Chief Financial Officer, are available to answer
appropriate questions regarding this press release. You may contact
any of the above officers at (787) 834-8000; or e-mail , or the web
http://www.w-holding.com/. W HOLDING COMPANY, INC. EXHIBIT I
FINANCIAL HIGHLIGHTS (UNAUDITED) Three Months Ended December 31,
Year Ended December 31, 2004 2003 2004 2003 (Dollars in thousands,
except share data) Income Statement and Share Data Interest income:
Loans, including loan fees $89,454 $72,626 $322,164 $275,848
Investment securities 58,672 44,946 212,213 134,273 Mortgage and
asset-backed securities 8,829 11,003 37,489 40,140 Money market
instruments 7,453 3,028 19,510 11,633 Total interest income 164,408
131,603 591,376 461,894 Interest expense: Deposits 41,578 28,769
143,860 114,755 Federal funds purchased and repurchase agreements
44,164 30,040 141,414 101,652 Advances from FHLB 1,947 1,513 6,568
6,037 Other borrowings -- -- -- 142 Total interest expense 87,689
60,322 291,842 222,586 Net interest income 76,719 71,281 299,534
239,308 Provision for loan losses 6,550 6,330 36,691 27,048 Net
interest income after provision for loan losses 70,169 64,951
262,843 212,260 Noninterest income: Service charges on deposit
accounts 1,996 1,769 7,969 7,053 Other fees and commissions 5,209
5,465 20,642 20,778 Loss on derivative instruments (20) (82) (7)
(236) Net gain (loss) on sales and valuation of loans, securities,
and other assets 1,762 35 2,629 (20,949) Total noninterest income
8,947 7,187 31,233 6,646 Total net interest income and noninterest
income 79,116 72,138 294,076 218,906 Noninterest expenses: Salaries
and employees' benefits 10,470 9,032 38,317 33,840 Equipment 2,464
2,330 9,445 9,044 Deposit insurance premium and supervisory
examination 795 665 2,907 2,392 Occupancy 1,812 1,680 6,694 6,603
Advertising 1,613 1,715 10,508 6,698 Printing, postage, stationery,
and supplies 716 727 3,206 3,253 Telephone 551 572 2,315 2,279
Municipal taxes 1,078 900 3,953 3,600 Other 6,431 6,363 22,780
17,112 Total noninterest expenses 25,930 23,984 100,125 84,821
Income before provision for income taxes 53,186 48,154 193,951
134,085 Provision for income taxes: Current 8,321 8,995 28,182
29,346 Deferred (1,240) 1,016 (6,096) (8,575) Total provision for
income taxes 7,081 10,011 22,086 20,771 Net income $46,105 $38,143
$171,865 $113,314 Net income attributable to common stockholders
$39,198 $31,318 $144,707 $91,721 Basic earnings per common share
$0.24 $0.19(1) $0.89 $0.57(1) Diluted earnings per common share
$0.23 $0.19(1) $0.86 $0.55(1) Cash dividends declared per common
share (2) $0.04(1) $0.03(1) $0.14(1) $0.11(1) Period end number of
common shares outstanding 163,918,835 162,624,150(1) 163,918,835
162,624,150(1) Weighted average number of common shares outstanding
163,743,684 161,821,918(1) 163,347,939 160,734,184(1) Weighted
average number of common shares outstanding on a diluted basis
171,035,485 169,905,083(1) 170,443,393 165,329,870(1) Cash
dividends declared on: Common stock $5,891 $4,727 $23,502 $18,322
Preferred stock $6,907 $6,825 $27,158 $21,593 (1) Adjusted to
reflect the three-for-two stock split and a 2% stock dividend on
our common stock declared on December 6, 2004 and December 13,
2004, respectively, and distributed both on January 10, 2005. (2)
Cash dividend amounts in the table are rounded. W HOLDING COMPANY,
INC. EXHIBIT II FINANCIAL HIGHLIGHTS (UNAUDITED) Dec. 31, Dec. 31,
Balance Sheet Data 2004 2003 (In thousands) At Period End Cash and
due from banks $77,752 $92,811 Money market instruments: Federal
funds sold and resell agreements 1,017,303 649,852 Interest-bearing
deposits in banks 49,476 37,767 Investment securities available for
sale, at fair value 7,881 55,080 Investment securities held to
maturity, at amortized cost 6,921,379 5,723,710 FHLB stock, at cost
52,195 39,750 Mortgage loans held for sale, at lower of cost or
fair value 1,633 2,555 Loans - net 5,941,233 4,683,118 Accrued
interest receivable 88,285 75,567 Premises and equipment, net
110,051 103,370 Deferred income taxes, net 31,027 24,910 Other
assets 38,447 30,950 Total Assets $14,336,662 $11,519,440 Deposits:
Noninterest-bearing $249,368 $192,760 Interest-bearing 5,981,843
5,192,716 Total deposits 6,231,211 5,385,476 Federal funds
purchased and repurchase agreements 6,683,527 5,046,045 Advances
from FHLB 211,000 146,000 Mortgage note 36,858 37,234 Accrued
expenses and other liabilities 92,387 76,176 Total Liabilities
13,254,983 10,690,931 Stockholders' equity 1,081,679 828,509 Total
Liabilities and Stockholders' Equity $14,336,662 $11,519,440
Quarter to Date Averages (1) Year to Date Averages (1) Dec. 31,
Dec. 31, Dec. 31, Dec. 31, Average Balances 2004 2003 2004 2003 (In
thousands) Cash and due from banks $83,623 $90,803 $85,281 $84,446
Federal funds sold and resell agreements 848,691 556,565 833,577
554,500 Interest-bearing deposits in banks 50,638 49,585 43,621
27,613 Trading securities -- 1,317 -- -- Investment securities
available for sale 10,053 68,461 31,481 107,983 Investment
securities held to maturity 6,767,229 5,512,320 6,322,545 4,612,384
FHLB stock 54,650 39,750 45,973 41,536 Due from brokers -- 8,291 --
-- Mortgage loans held for sale 1,673 4,130 2,094 5,000 Loans - net
5,829,082 4,608,498 5,312,175 4,218,738 Accrued interest receivable
83,363 67,407 81,926 61,110 Premises and equipment, net 109,196
102,839 106,711 99,789 Deferred income taxes, net 30,407 25,423
27,968 20,618 Other assets 39,155 30,863 34,699 28,542 Total Assets
$13,907,760 $11,166,252 $12,928,051 $9,862,259 Deposits:
Noninterest- bearing $245,104 $205,274 $221,064 $174,451
Interest-bearing 5,986,814 4,987,887 5,587,280 4,667,659 Total
deposits 6,231,918 5,193,161 5,808,344 4,842,110 Federal funds
purchased and repurchase agreements 6,347,631 4,900,791 5,864,786
4,071,693 Advances from FHLB 211,000 146,000 178,500 133,000
Mortgage note 36,909 37,285 37,046 37,528 Securities purchased but
not yet received 2,510 -- -- -- Accrued expenses and other
liabilities 77,558 75,886 84,281 71,299 Total Liabilities
12,907,526 10,353,123 11,972,957 9,155,630 Stockholders' equity
1,000,234 813,129 955,094 706,629 Total Liabilities and
Stockholders' Equity $13,907,760 $11,166,252 $12,928,051 $9,862,259
(1) Average balances have been computed using beginning and
period-end balances. W HOLDING COMPANY, INC. EXHIBIT III a YIELDS
EARNED AND RATES PAID THREE MONTHS ENDED DECEMBER 31, (UNAUDITED)
2004 Annualized Average Average Interest Balance(1) Yield/ Rate
(Dollars in thousands) Normal spread: Interest-earning assets:
Loans, including loan fees (2) $89,454 $5,859,661 6.07% Investment
securities (3) 58,672 5,889,373 3.96% Mortgage and asset- backed
securities (3) 8,829 864,226 4.06% Money market instruments 7,453
883,192 3.36% Total 164,408 13,496,452 4.85% Interest-bearing
liabilities: Deposits 41,578 6,241,345 2.65% Federal funds
purchased and repurchase agreements 44,164 6,258,052 2.81% Advances
from FHLB 1,947 211,000 3.67% Total 87,689 12,710,397 2.74% Net
interest income $76,719 Interest rate spread 2.11% Net
interest-earning assets $786,055 Net yield on interest-earning
assets (4) 2.26% Interest-earning assets to interest-bearing
liabilities ratio 106.18% Tax equivalent spread: Interest-earning
assets $164,408 $13,496,452 4.85% Tax equivalent adjustment 13,662
-- 0.40% Interest-earning assets - tax equivalent 178,070
13,496,452 5.25% Interest-bearing liabilities 87,689 $12,710,397
2.74% Net interest income $90,381 Interest rate spread 2.51% Net
yield on interest - earning assets (4) 2.66% 2003 Annualized
Average Average Interest Balance(1) Yield/ Rate (Dollars in
thousands) Normal spread: Interest-earning assets: Loans, including
loan fees (2) $72,626 $4,614,269 6.24% Investment securities (3)
44,946 4,436,079 4.02% Mortgage and asset- backed securities (3)
11,003 1,122,153 3.89% Money market instruments 3,028 548,181 2.19%
Total 131,603 10,720,682 4.87% Interest-bearing liabilities:
Deposits 28,769 5,075,144 2.25% Federal funds purchased and
repurchase agreements 30,040 4,799,717 2.48% Advances from FHLB
1,513 146,000 4.11% Total 60,322 10,020,861 2.39% Net interest
income $71,281 Interest rate spread 2.48% Net interest-earning
assets $699,821 Net yield on interest-earning assets (4) 2.64%
Interest-earning assets to interest-bearing liabilities ratio
106.98% Tax equivalent spread: Interest-earning assets $131,603
$10,720,682 4.87% Tax equivalent adjustment 8,769 -- 0.32%
Interest-earning assets - tax equivalent 140,372 10,720,682 5.19%
Interest-bearing liabilities 60,322 $10,020,861 2.39% Net interest
income $80,050 Interest rate spread 2.80% Net yield on interest -
earning assets (4) 2.96% (1) Average balance on interest-earning
assets and interest-bearing liabilities is computed using daily
monthly average balances during the periods. (2) Average loans
exclude non-performing loans. Loan fees amounted to $2.5 million
and $2.4 million for the three-months ended December 31, 2004, and
2003, respectively. (3) Includes trading and available for sale
securities. (4) Annualized net interest income divided by average
interest-earning assets. W HOLDING COMPANY, INC. EXHIBIT III b
YIELDS EARNED AND RATES PAID YEARS ENDED DECEMBER 31, (UNAUDITED)
2004 Average Average Interest Balance(1) Yield/Rate (Dollars in
thousands) Normal spread: Interest-earning assets: Loans, including
loan fees (2) $322,164 $5,401,955 5.96% Investment securities (3)
212,213 5,400,997 3.93% Mortgage and asset- backed securities (3)
37,489 935,421 4.01% Money market instruments 19,510 745,828 2.62%
Total 591,376 12,484,201 4.74% Interest-bearing liabilities:
Deposits 143,860 5,909,274 2.43% Federal funds purchased and
repurchase agreements 141,414 5,676,595 2.49% Advances from FHLB
6,568 164,245 4.00% Other borrowings -- -- -- Total 291,842
11,750,114 2.48% Net interest income $299,534 Interest rate spread
2.26% Net interest-earning assets $734,087 Net yield on
interest-earning assets (4) 2.40% Interest-earning assets to
interest-bearing liabilities ratio 106.25% Tax equivalent spread:
Interest-earning assets $591,376 $12,484,201 4.74% Tax equivalent
adjustment 53,555 -- 0.43% Interest-earning assets - tax equivalent
644,931 12,484,201 5.17% Interest-bearing liabilities 291,842
$11,750,114 2.48% Net interest income $353,089 Interest rate spread
2.69% Net yield on interest - earning assets (4) 2.83% 2003 Average
Average Interest Balance(1) Yield/ Rate (Dollars in thousands)
Normal spread: Interest-earning assets: Loans, including loan fees
(2) $275,848 $4,278,468 6.45% Investment securities (3) 134,273
3,571,299 3.76% Mortgage and asset- backed securities (3) 40,140
998,257 4.02% Money market instruments 11,633 534,444 2.18% Total
461,894 9,382,468 4.92% Interest-bearing liabilities: Deposits
114,755 4,768,490 2.41% Federal funds purchased and repurchase
agreements 101,652 3,891,972 2.61% Advances from FHLB 6,037 137,838
4.38% Other borrowings 142 3,698 3.85% Total 222,586 8,801,998
2.53% Net interest income $239,308 Interest rate spread 2.39% Net
interest-earning assets $580,470 Net yield on interest-earning
assets (4) 2.55% Interest-earning assets to interest-bearing
liabilities ratio 106.59% Tax equivalent spread: Interest-earning
assets $461,894 $9,382,468 4.92% Tax equivalent adjustment 31,522
-- 0.34% Interest-earning assets - tax equivalent 493,416 9,382,468
5.26% Interest-bearing liabilities 222,586 $8,801,998 2.53% Net
interest income $270,830 Interest rate spread 2.73% Net yield on
interest - earning assets (4) 2.89% (1) Average balance on
interest-earning assets and interest-bearing liabilities is
computed using daily monthly average balances during the periods.
(2) Average loans exclude non-performing loans. Loan fees amounted
to $10.9 million and $8.7 million for the years ended December 31,
2004 and 2003, respectively. (3) Includes trading and available for
sale securities. (4) Net interest income divided by average
interest-earning assets. W HOLDING COMPANY, INC. EXHIBIT III c
CHANGES IN YIELDS EARNED AND RATES PAID (UNAUDITED) Three Months
Ended December 31, 2004 vs. 2003 Volume Rate Total (In thousands)
Interest income: Loans $18,731 $(1,903) $16,828 Investment
securities (1) 14,341 (615) 13,726 Mortgage and asset-backed
securities (1) (2,700) 526 (2,174) Money market instruments 2,366
2,059 4,425 Total increase (decrease) in interest income 32,738 67
32,805 Interest expense: Deposits 7,211 5,598 12,809 Federal funds
purchased and repurchase agreements 9,877 4,247 14,124 Advances
from FHLB 572 (138) 434 Other borrowings -- -- -- Total increase
(decrease) in interest expense 17,660 9,707 27,367 Increase
(decrease) in net interest income $15,078 $(9,640) $5,438 Year
Ended December 31, 2004 vs. 2003 Volume Rate Total Interest income:
Loans $64,831 $(18,515) $46,316 Investment securities (1) 71,641
6,299 77,940 Mortgage and asset-backed securities (1) (2,519) (132)
(2,651) Money market instruments 5,216 2,661 7,877 Total increase
(decrease) in interest income 139,169 (9,687) 129,482 Interest
expense: Deposits 27,757 1,348 29,105 Federal funds purchased and
repurchase agreements 44,217 (4,455) 39,762 Advances from FHLB 972
(441) 531 Other borrowings (142) -- (142) Total increase (decrease)
in interest expense 72,804 (3,548) 69,256 Increase (decrease) in
net interest income $66,365 $(6,139) $60,226 (1) Includes trading
and available for sale securities. W HOLDING COMPANY, INC. EXHIBIT
IV LOANS RECEIVABLE-NET (UNAUDITED) Dec. 31, Dec. 31, 2004 2003 (In
thousands) REAL ESTATE LOANS SECURED BY FIRST MORTGAGES: Commercial
real estate $3,167,439 $2,269,380 Residential real estate, mainly
one-to-four family residences 903,967 894,695 Construction and land
acquisition 331,221 207,593 Total 4,402,627 3,371,668 Plus (less):
Undisbursed portion of loans in process (3,076) (4,993) Premium on
loans purchased 690 1,016 Deferred loan fees - net (14,480) (9,615)
Total (16,866) (13,592) Real estate loans - net 4,385,761 3,358,076
OTHER LOANS: Commercial loans 768,845 526,105 Consumer loans: Loans
on deposits 29,587 30,805 Credit cards 53,268 54,832 Other 789,095
777,573 Plus (less): Premium on loans purchased 1,337 2,281
Deferred loan fees - net (6,594) (4,946) Other loans - net
1,635,538 1,386,650 TOTAL LOANS 6,021,299 4,744,726 ALLOWANCE FOR
LOAN LOSSES (80,066) (61,608) LOANS - NET $5,941,233 $4,683,118 W
HOLDING COMPANY, INC. EXHIBIT V NON-PERFORMING LOANS AND FORECLOSED
REAL ESTATE HELD FOR SALE (UNAUDITED) December December 31, 2004
31, 2003 (Dollars in thousands) Commercial, industrial and
agricultural loans $25,417 $24,142 Consumer loans 7,122 4,845
Residential real estate mortgage and construction loans 1,730 2,259
Total non-performing loans 34,269 31,246 Foreclosed real estate
held for sale 3,811 4,082 Total non-performing loans and foreclosed
real estate held for sale $38,080 $35,328 Interest that would have
been recorded if the loans had not been classified as
non-performing $3,557 $2,500 Interest recorded on non-performing
loans $243 $583 Total non-performing loans as a percentage of total
loans at end of period 0.57% 0.66% Total non-performing loans and
foreclosed real estate held for sale as a percentage of total
assets at end of period 0.27% 0.31% W HOLDING COMPANY, INC. EXHIBIT
VI CHANGE IN ALLOWANCE FOR LOAN LOSSES (UNAUDITED) December
December 31, 2004 31, 2003 (Dollars in thousands) Balance,
beginning of year $61,608 $47,114 Loans charged-off: Consumer loans
(1) (16,473) (12,203) Commercial, industrial and agricultural loans
(5,433) (2,479) Real estate-mortgage and construction loans (297)
(184) Total loans charged-off (22,203) (14,866) Recoveries of loans
previously charged-off: Consumer loans (2) 1,920 799 Commercial,
industrial and agricultural loans 1,844 1,141 Real estate-mortgage
and construction loans 206 372 Total recoveries of loans previously
charged-off 3,970 2,312 Net loans charged-off (18,233) (12,554)
Provision for loan losses 36,691 27,048 Balance, end of period
$80,066 $61,608 Ratios: Allowance for loan losses to total loans at
end of period 1.33% 1.30% Provision for loan losses to net loans
charged-off 201.23% 215.45% Recoveries of loans to loans charged-
off in previous period 26.71% 29.03% Net loans charged-off to
average total loans (3) 0.34% 0.29% Allowance for loan losses to
non-performing loans 233.64% 197.17% (1) Includes $12.4 million and
$7.9 million of Expresso of Westernbank loans charged-offs for the
years ended December 31, 2004 and 2003, respectively. (2) Includes
$1.0 million and $17,000 of Expresso of Westernbank recoveries for
the years ended December 31, 2004 and 2003, respectively. (3)
Average loans were computed using beginning and period-end
balances. W HOLDING COMPANY, INC. EXHIBIT VII SELECTED FINANCIAL
RATIOS (UNAUDITED) Three Months Ended Year Ended December 31,
December 31, 2004 2003 2004 2003 (Dollars in thousands, except
share data) Per share data: Dividend payout ratio 15.03% 15.09%
16.24% 19.97% Book value per common share $3.48 $2.73 (2) $3.48
$2.73 (2) Preferred stock outstanding at end of period 17,794,251
15,395,745 17,794,251 15,395,745 Preferred stock equity at end of
period $511,744 $384,894 $511,744 $384,894 Performance ratios:
Return on average assets (1) 1.33% 1.37% 1.33% 1.15% Return on
average common stockholders ' equity (1) 28.31% 29.44% 28.55%
22.79% Efficiency ratio 30.90% 30.55% 30.51% 31.75% Operating
expenses to end-of- period assets 0.72% 0.83% 0.70% 0.74% Capital
ratios: Total capital to risk- weighted assets 15.70% 14.87% 15.70%
14.87% Tier I capital to risk- weighted assets 14.78% 13.98% 14.78%
13.98% Tier I capital to average assets 7.72% 7.22% 7.72% 7.22%
Equity-to- assets ratio 7.54% 7.19% 7.54% 7.19% Other selected
data: Total trust assets managed $398,709 $326,527 $398,709
$326,527 Branch offices 52 51 52 51 Number of employees 1,252 1,092
1,252 1,092 (1) The return on average assets is computed by
dividing net income by average total assets for the period. The
return on average common stockholders' equity is computed by
dividing net income less preferred stock dividends by average
common stockholders' equity. Average balance have been computed
using beginning and period-end balances. (2) Adjusted to reflect
the three-for-two stock split and a 2% stock dividend on our common
stock declared on December 6, 2004 and December 13, 2004,
respectively, and distributed both on January 10, 2005. DATASOURCE:
W Holding Company, Inc. CONTACT: Frank C. Stipes, Chief Executive
Officer, or Freddy Maldonado, Chief Financial Officer, both of W
Holding Company, Inc., +1-787-834-8000 Web site:
http://www.wbpr.com/
Copyright