Wilshire Bancorp Inc Q1 2010 Earnings Call Transcript

Wilshire Bancorp Inc Q1 2010 Earnings Call Transcript
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Wilshire Bancorp Inc. (WIBC)

Q1 2010 Earnings Call

April 23, 2010; 2:00 pm ET

Executives

Joanne Kim – President & Chief Executive Officer

Alex Ko – Senior Vice President & Chief Financial Officer

Edward Han – First Vice President of Investor Relations

Analysts

Aaron Deer – Sandler O’Neill & Partners

Julianna Balicka – Keefe Bruyette & Woods

Don Worthington – Howe Barnes Hoefer & Arnett

Kurt Batinich – D. A. Davidson

Tim Coffey – FIG Partners

Joe Steven [ph] - Steven Capital [ph]

Presentation

Operator

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Good day ladies and gentlemen and welcome to the first quarter of 2010 Wilshire Bancorp, Incorporated Earnings Conference Call. My name is Shanelle and I'll be your coordinator for today. At this time, all lines are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference.

(Operator instructions). As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today’s call, Mr. Edward Han, First Vice President Investor Relations.

Edward Han

Thank you, and good morning, everyone. We appreciate you joining us today for our first quarter 2010 earnings conference call. Again, my name is Edward Han and joining me are Joanne Kim, company's President and Chief Executive Officer, and Alex Ko, Executive Vice President and Chief Financial Officer.

Earlier this morning, Wilshire Bancorp issued its first quarter 2010 earnings results, which can be accessed either through the Investors Relations tab at wilshirebank.com or from the various financial news websites. This call is being webcast and will be available in archive for one year on the company's website.

Before we begin, I must remind you that during this call, we may make certain statements concerning Wilshire's future performance or events. Any such comments constitute forward-looking statements and are subject to a number of risks and uncertainties that might cause actual results to differ materially from stated expectations.

These factors include, but are not limited to, the ability to grow market share in our markets, including New York and Los Angeles, success of new branches, marketing costs, loan growth and balance sheet management, credit quality, our ability to collect on past due loans, deposit generation, net interest margin expectations, interest rate exposure, global and local economic conditions, and other risks detailed in the most recent reports on Form 10-K and Form 10-Q as filed with the Securities and Exchange Commission.

Given these uncertainties, undue reliance should not be placed on such forward-looking statements. Wilshire Bancorp is under no obligation to update this information as future events or developments take place that may change these forward-looking statements.

First, Ms. Kim will provide an overview of our principal operations as well as an update on the loan portfolio. Following that, Mr. Ko will review our financial results. Following his remarks, Ms. Kim, will provide additional perspectives and closing comments. We will then commence the question-and-answer portion of the call.

With that, I will now turn the call over to Joanne.

Joanne Kim

Thank you, Edward. Thank you all for joining us today for our call. We are pleased to report another profitable quarter despite the continued weak economic conditions. We recorded a net income of $2.4 million or $0.08 per common share in the first quarter of 2010 compared to a net income with $2.1 million or $0.07 per share in the same period last year.

We continue to see elevated credit cost, but the core earning power of the company is strong enough to absorb these costs and still generate a healthy profit for our shareholders. We continue to benefit from the increased profile we have built in the market and the growing recognition of Wilshire State Bank as a leading bank in the community we serve.

This is seen most notably in our continued growth in core deposits. During the first quarter, we increased core deposits by more than 7% compare to the fourth quarter of 2009. The improving deposit mix has enabled us to decrease our cost of funds and further strengthen our earnings power.

We did see an increase in nonaccrual loans in the first quarter which was largely the result of the migration of loans that had previously been delinquent. Our total nonaccrual loans were $105 million at the end of first quarter 2010 compared to $69.4 million at the end of fourth quarter '09.

These were essentially borrowers that have been on our watch list for some time and have experienced additional deterioration in their financial condition given the continuing weakness in the economy. There were very few additions to nonaccrual loan this quarter that weren’t past due or at least classified at the end of previous quarter.

It is worth noting that the loan portfolio acquires from Mirae Bank continues to generally perform in line with our expectations. The new inflows into nonaccrual loans during the first quarter included 26commercial real estate loans totaling $35.1 million of which eight loans totaling $5.5 million were covered loans. These new nonaccrual loans were primarily concentrated in three retail shopping centers, four hotels and four gas station loans. The average loan to value ratio at originations of these loans were 64.6%, and the average decline in appraisal value has been 36.3% based upon current appraisal report.

The value decline is concentrated in gas stations and hotels properties since the current appraisal report totally excluded embedded business values in their valuation. We have set aside specific allowances to cover the collateral deficiencies in all of our impaired loans and we believe our specific allowance is adequate at this time.

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