Wilshire Bancorp, Inc Q2 2010 Earnings Call July 27, 2010; 02:00 pm ET Executives Joanne Kim - President and Chief Executive Officer Alex Ko - Executive Vice President and Chief Financial Officer Edward Han - First Vice President of Investor Relations Analysts Aaron Deer - Sandler O’Neill & Partners Tim Coffey - FIG Partners Jonathan Elmy - McGwire Don Worthington - Howe Barnes Hoefer & Arnett Inc Presentation Operator
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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 perspective 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. Joanne Kim Thank you, Edward. And thank you all for joining us today for our call. During the second quarter, we showed further evidence of the increasing earnings power of the bank with strong recurring revenue trends and stable expense management. However, our net loss of $4.6 million or $0.15 per share reflects the increasing impact of the weak economy on our commercial real estate portfolio and our aggressive actions to reduce problem assets. I’d like to start out with a discussion of our asset quality. Most of the weakness we’re seeing in the portfolio is related to carwash, gas station and hotel loans located outside of the metro areas of Southern California and we are making a concerted effort to reduce our exposure to these markets. During the quarter, we sold approximately $48 million in nonperforming and delinquent loans primarily secured by gas station, carwashes, hotels and multifamily property in Las Vegas at an average discount of 16% to their carrying value.
Earlier this year, as we recognize that some of our CRE followers were beginning to demonstrate more signs of stress. We began developing more aggressive trends to manage the increasing problem assets.One of the strategies we put out in place was the development of a database of potential buyers that own or operate similar properties as sold under the most stress and we contact them directly to determine their level of input in loans we are considering selling. We believe these individuals have a better sense of the true value of these properties than institutional buyers. Given their familiarity, they are in a good position to be able to quickly make changes to the property and increase its net operating income. As a result, they are comfortable paying a higher price than we would get from an institutional buyer. We believe this is the reason why we were able to obtain good pricing for our loan sales in the second quarter as well as the conservative mark we had already taken on these credits. We intend to continue looking at all possible avenues for disclosing our problem credits, but our preference would be to continue to use this systematic approach to selling additional loans in the future. These loan sales helped to reduce our total nonaccrual loans to $83.1 million at June 30, 2010 from $105 million at the end of the first quarter of 2010. The new inflows into nonaccrual loans during the second quarter were $10.7 million, while the first quarter inflows were $45.6 million. For the $10.7 million of inflows to nonaccrual, only $3.7 million remain on our balance sheet. These loans are primarily concentrated in gas station loans. Read the rest of this transcript for free on seekingalpha.com