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Wilshire Bancorp Tanks on Poor Outlook

Stocks in this article: WIBC NARA CLFC PFBC

LOS ANGELES ( TheStreet) -- Shares of Wilshire Bancorp (WIBC) fell on heavy volume Friday after the bank warned of a surprise loss for the second quarter and temporarily suspended the five-cent dividend on its common stock because of souring loans.

The stock was off 85 cents, or 10%, to $7.70 in midday trades. Volume of roughly 620,000 was nearly five times the issue's trailing three-month daily average of around 126,000.

In a statement early Friday, Wilshire said it expects its net loss for the second quarter won't be greater than $5 million, or 17 cents a share. The bank, whose total assets stood at $3.46 billion as of March 31, cited an "elevated provision for loan losses and an increase in net loan charge-offs" for the loss view.

The average estimate of analysts polled by Thomson Reuters was for Wilshire to report a profit of 11 cents a share in the June quarter. Of the nine analysts covering the stock, seven rate it at hold.

Friday's press release followed an announcement shortly after Thursday's closing bell where Wilshire said it expected a loss for the quarter and announced the dividend suspension, but didn't provide a specific outlook.

"During the first half of 2010, we saw an acceleration of loans migrating to non-performing status and additional declines in underlying collateral values of our problem loans," said Ms. Joanne Kim, President and CEO of Wilshire Bancorp, said in Thursday's statement. In announcing the dividend suspension, the bank cited an expectation that "credit costs will remain elevated for the foreseeable future."

Wilshire attributed the higher net loan charge-offs in the second quarter to writedowns stemming from its sale of $49 million in nonperforming loans during in the period at a 17% discount to their carrying values. The sale, however, will result in a sequential decline in the company's level of non-performing loans in the latest quarter, Wilshire said. The company's non-performing loans totaled $105 million as of March 31.

Banks with total assets ranging from $1 billion to $5 billion that compete with Wilshire in the Los Angeles area include Nara Bancorp (NARA), Center Financial (CLFC) and Preferred Bank (PFBC). All of those stocks were trading marginally lower on Friday.

Excluding the $903,000 in dividends and expenses on preferred shares held by the government in exchange for $62 million in bailout money received in December 2008 via the Troubled Assets Relief Program, Wilshire reported a first-quarter profit on April 22 of $2.4 million, or 8 cents a share, a performance that came in a penny ahead of Wall Street expectations.

Through Thursday's closing bell, Wilshire shares had been up about 4% so far in 2010. At Friday's session-low of $7.54, the stock was down roughly 8% year-to-date.

-- Written by Philip van Doorn in Jupiter, Fla.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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