Western Liberty Bancorp Reports First Quarter 2012 Financial Results

Western Liberty Bancorp, Inc. (NASDAQ:WLBC), the holding company for Service1st Bank of Nevada (Service1st Bank) and Las Vegas Sunset Properties (LVSP), today reported its tangible book value per share was $5.53, down slightly from $5.60 in the preceding quarter. Western Liberty narrowed its first quarter loss to $1.1 million, or $0.08 per share, in the first quarter of 2012, compared to $2.4 million, or $0.17 per share, in the fourth quarter of 2011. Net loss for the year ago quarter was $409,000, or $0.03 per share. All financial results are unaudited.

“Our loan portfolio is beginning to stabilize. No new properties moved into classified status during the quarter, and we are receiving solid interest from investors in some of our foreclosed properties,” said William Martin, Chief Executive Officer. “During December, we moved $4 million of foreclosed real estate into our new holding company asset resolution subsidiary, Las Vegas Sunset Properties (LVSP). Then during the first quarter of 2012, we moved an additional $18 million in classified loans to LVSP. These transfers improved the Bank’s ratio of classified assets to Tier 1 capital plus reserves to 29% at March 31, 2012, down from 84% at year end. While on a consolidated basis our nonperforming assets are still higher than we would like, at the Bank level we are much closer to achieving asset quality levels mandated by our regulators.”

“Our capital levels at both Service1st Bank and Western Liberty Bancorp remain very strong. For Service1st Bank and Western Liberty Bancorp, we ended the quarter with a Tier 1 Risk based-capital of 35.61% and 71.28%, respectively,” Martin continued. “And, as an improving economy emerges in Las Vegas, we expect to be able to deploy capital and liquidity into loans as demand improves.”

“While we earned a profit at the bank level of $62,000, expenses at the holding company generated a loss of $1.1 million in the first quarter of 2012, reflecting ongoing elevated expenses for legal and professional fees, and a $117,000 impairment charge for other real estate owned at LVSP,” said Martin. “We will continue to monitor asset quality and maintain our reserves at the appropriate level, as well as work diligently to keep expenses down.”

Financial Highlights (at or for the quarter ended March 31, 2012)

  • No provision for potential loan losses needed to be recorded in the first quarter.
  • Service1st Bank has exceptionally strong capital ratios with Total Capital/Total risk-weighted assets of 36.88%.
  • Western Liberty also has exceptionally strong capital ratios with Total Capital/Total risk-weighted assets of 72.29%.
  • Tangible book value was $5.53 per share, based on 13,466,535 shares outstanding.
  • Total cash and cash equivalents held by Western Liberty is $92.9 million, of which $22.6 million is at the holding company level and $745,000 is at the holding company subsidiary LVSP.
  • Noninterest bearing deposits jumped by $9.4 million and accounted for 48% of total deposits and core deposits (excluding time certificates of $100,000 or more) are 60% of total deposits.
  • Total deposits increased $4.8 million to $126.0 million from the preceding quarter.

Nevada Economic Update

Although new reports confirm that Las Vegas continues to lag in the economic recovery, Marcus & Millichap, a national commercial real estate brokerage and advisory firm, projected the addition of 12,000 jobs locally this year and that office-using job growth will push start a recovery in the Las Vegas office market this year.

Further signs of recovery were reported by the Nevada State Department of Taxation with its April 26 report on February tax revenues. “Statewide taxable sales for February 2012 of $3.2 million represent a 10.2% increase over February 2011 and a 7.5% increase for the fiscal year. The largest increases in statewide taxable sales were realized by Food Services and Drinking Places, up 11.9%; Motor Vehicle and Parts Dealers, up 22.9%; General Merchandise Stores, up 16.9%; Merchant Wholesalers, Durable Goods, up 18.0%; and Clothing and Clothing Accessories Stores, up 11.3%.”

According to the April 5, 2012, report from the University of Nevada Las Vegas’ Center for Business and Economic Research, “CBER’s Southern Nevada Index of Coincident Economic Indicators showed significant gains for March 2012, rising by more than 2% from the previous month. The index is constructed with two measures of employment. One is collected from a survey of businesses and one collected from a survey of households (the latter as part of the U.S. Bureau of Labor Statistics Local Area Unemployment Statistics). Although both measures included in the index rose, the data from the household survey were the primary driver of the gain, increasing by over 3% from February 2012. CBER’s Southern Nevada Index of Leading Indicators also rose by 0.36% in March, continuing on its trend of a slow recovery. The local, regional, and national components all contributed to this growth and allow us to forecast continued economic growth until late summer. CBER’s other three indexes of current economic activity were mixed:

  • CBER’s Clark County Business Activity Index declined slightly in January, the result of the drop in taxable sales after the holiday season.
  • CBER’s Clark County Tourism Index grew by 0.6% in January. Increased activity at McCarran airport and Las Vegas hotels/casinos drove the growth.
  • CBER’s Clark County Construction Index rose in January, the result of a spike in residential and commercial building permits.”

Additional reports on the Nevada economy can be found at http://www.lasvegassun.com/news/2012/apr/03/new-reports-confirm-las-vegas-lagging-economic-rec/; http://tax.state.nv.us/press_release.htm; and http://cber.unlv.edu. Sources: http://business.unlv.edu/wp-content/uploads/2011/03/CBER-05Apr2012.pdf

Balance Sheet Review

Total assets were up slightly to $202.0 million at March 31, 2012, from $198.3 million at December 31, 2011, and fell 12% from $228.8 million a year ago.

Western Liberty increased its cash and cash equivalents by $3.5 million to $92.9 million, during the first quarter of 2012, while the investment securities portfolio declined by $196,000 to $2.3 million. At March 31, 2012, the investment portfolio was comprised of U.S. Government Agency securities, investment grade corporate debt securities and collateralized mortgage obligations. “We actively manage our investments for liquidity and interest rate risk and are readily able to provide liquidity for the funding of loans or deposit withdrawals,” said Martin.

Total loans were stable at $102.4 million at March 31, 2012, compared to $101.9 million at December 31, 2011, and $102.2 million at March 31, 2011. Commercial real estate loans accounted for 58% of the total loan portfolio and commercial and industrial loans comprised 30%. Construction and land development loans accounted for 2% and residential real estate loans were 10% of total loans at quarter end. Of the total loan portfolio, 69% is secured by real estate and 32% of the commercial real estate loan portfolio is owner occupied. Half of the loan portfolio is adjustable rate loans, with most of these loans indexed to the national prime rate with interest rate floors above the current prime rate index.

Western Liberty’s total deposits increased $4.8 million from the preceding quarter to $126.0 million at March 31, 2012, with 48% in noninterest bearing demand accounts. At December 31, 2011, total deposits were $121.2 million, compared to $131.8 million at March 31, 2011. “Our core deposit base continues to consist entirely of customers from our home-town, providing a stable and low cost funding source for the Bank,” said Martin. Noninterest-bearing deposits grew by $9.4 million during the first quarter, and accounted for 48 of total deposits, while certificates of deposits declined by $5.5 million. Interesting bearing deposits (NOWs, Money Market and Savings) increased marginally by $854,000.

Total shares outstanding were 13.5 million at quarter end. Shareholders’ equity was $75.1 million at the end of March compared to $76.0 million at the end of December and $93.6 at the end of March 2011. Tangible book value per share was $5.53 at quarter end compared to $5.60 in the preceding quarter and $5.78 a year ago.

Asset Quality

Nonperforming assets totaled $28.5 million, or 14.1% of total assets at March 31, 2012, compared to $28.1 million, or 14.2% of total assets at December 31, 2011, and $10.1 million, or 4.4% of total assets at March 31, 2011. Loans measured for impairment, which include nonperforming loans as well as loans that continue to perform but have some identified weakness, improved to $28.0 million, down from $29.3 million at December 31, 2011. The majority of loans measured for impairment were in the commercial real estate portfolio.

Review of Operations

Net interest income, before the provision for loan losses, was $1.6 million in the first quarter of 2012, compared to $1.8 million in the preceding quarter and $3.8 million in the first quarter of 2011. Discount accretion contributed $469,000 to first quarter interest income compared to $507,000 in the preceding quarter and $2.2 million in the year ago quarter.

Western Liberty did not need to record a provision for loan losses compared to $1.3 million for the fourth quarter of 2011, and $1.4 million in the first quarter of 2011. “We have rebuilt our allowance for loan losses during the past five quarters which now stands at $2.7 million, or 2.62% of gross loans,” said Ochal. The allowance for loan losses totaled $1.3 million, or 1.26% of total loans at March 31, 2011.

During the first quarter non-interest income increased to $219,000 up from $117,000 in the preceding quarter and $121,000 in the year ago quarter. This revenue is primarily attributable to $58,000 in OREO income from the operations of an OREO property in Southern Nevada.

Noninterest expense for the first quarter of 2012 remained flat at $2.9 million when compared to $2.9 million a year ago. In spite of this, noninterest expense included a $51,000 increase in salaries and employee benefits expense as well as a $9,000 increase in advertising and business development from the year ago quarter. However, legal and professional fees decreased $186,000, but continue to be elevated. In addition, there was a property impairment charge of $117,000 in the first quarter of 2012. Management will continue to monitor and control expenses.

About Western Liberty Bancorp

Western Liberty Bancorp is a Nevada bank holding company which conducts operations through Service1st Bank of Nevada, its wholly owned banking subsidiary, and its newly created wholly-owned subsidiary Las Vegas Sunset Properties. Service1st Bank operates as a traditional community bank and provides a full range of deposit, lending and other banking services to locally owned businesses, professional firms, individuals and other customers from its headquarters and two retail banking facilities located in the greater Las Vegas area. Services provided include basic commercial and consumer depository services, commercial working capital and equipment loans, commercial real estate loans, and other traditional commercial banking services. Primarily all of the bank’s business is generated in the Nevada market.



This release may contain “forward-looking statements” that are subject to risks and uncertainties. Readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. All statements, other than statements of historical fact, regarding our financial position, business strategy and management’s plans and objectives for future operations are forward-looking statements. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” and “intend” and words or phrases of similar meaning, as they relate to Western Liberty or management, are intended to help identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe that management’s expectations as reflected in forward-looking statements are reasonable, we cannot assure readers that those expectations will prove to be correct. Forward-looking statements are subject to various risks and uncertainties that may cause our actual results to differ materially and adversely from our expectations as indicated in the forward-looking statements. These risks and uncertainties include our ability to maintain or expand our market share or net interest margins, and to implement our marketing and growth strategies. Further, actual results may be affected by our ability to compete on price and other factors with other financial institutions; customer acceptance of new products and services; the regulatory environment in which we operate; and general trends in the local, regional and national banking industry and economy, as those factors relate to our cost of funds and return on assets. In addition, there are risks inherent in the banking industry relating to collectability of loans and changes in interest rates. Many of these risks, as well as other risks that may have a material adverse impact on our operations and business, are identified in our other filings with the SEC. However, you should be aware that these factors are not an exhaustive list, and you should not assume these are the only factors that may cause our actual results to differ from our expectations.

Consolidated Balance Sheet(Dollars in thousands, except per share data)(Unaudited)

March 31,2012 December 31,2011 March 31,2011
Cash and due from banks $ 8,525 $ 11,227 $ 8,749
Money market funds 100 100 52,206
Interest-bearing deposits in banks   84,277     78,026     29,488  
Cash and cash equivalents 92,902 89,353 90,443
Certificates of deposits - - 16,784
Securities, available for sale 300 472 1,345
Securities, held to maturity 2,007 2,031 3,737
Construction, land development and other land 2,101 3,417 4,619
Commercial real estate 58,860 58,252 53,416
Residential real estate 10,101 4,704 3,980
Commercial and industrial 31,262 35,417 40,041
Consumer 18 30 131
Plus: net deferred loan costs   31     41     20  
Total loans 102,373 101,861 102,207
Less: allowance for loan losses   (2,687 )   (2,919 )   (1,290 )
Net loans 99,686 98,942 100,917
Premises and equipment, net 742 818 1,120
Other real estate owned, net 3,891 4,008 5,444
Goodwill, net - - 5,633
Other intangibles, net 647 670 744
Accrued interest receivable and other assets   1,815     1,996     2,624  
Total assets $ 201,990   $ 198,290   $ 228,791  
Demand deposits, noninterest bearing $ 59,891 $ 50,488 $ 51,847
NOW and money market 38,002 37,306 39,721
Savings deposits 892 735 1,031
Time deposits $100,000 or more 4,631 26,479 33,335
Other time deposits   22,559     6,218     5,879  
Total deposits 125,975 121,226 131,813
Contingent consideration - - 1,816
Accrued interest and other liabilities   925     1,023     1,604  
Total liabilities 126,900 122,249 135,233
Shareholders' Equity:
Common stock 1 1 1
Additional paid-in capital 117,960 117,846 117,458
Accumulated deficit (38,778 ) (37,717 ) (23,898 )
Treasury stock (4,094 ) (4,094 ) -
Accumulated other comprehensive gain/(loss), net   1     5     (3 )

Total stockholders’ equity
  75,090     76,041     93,558  
Total liabilities and stockholders’ equity $ 201,990   $ 198,290   $ 228,791  

Consolidated Income Statement(Dollars in thousands, except per share data)(Unaudited)
  Three Months Ended   Three Months Ended


March 31,2012
December 31,2011   March 31,2011
Interest Income:  
Interest and fees on loans $ 1,643 $ 1,866 $ 3,782
Interest on securities, taxable and other   62     66       66  
Total interest and dividend income 1,705 1,932 3,848
Interest Expense:
Interest expense on deposits   115     122       112  
Net interest income 1,590 1,810 3,736
Provision for loan losses   0     1,287       1,364  
Net interest income (loss) after provision for loan losses 1,590 523 2,372
Other Operating Income:
Service charges 70 69 78
Contingent consideration recovery - 0 -
Other   149     48       43  
Total other operating income 219 117 121
Other Operating Expense:
Salaries and employee benefits 844 861 793
Occupancy, equipment and depreciation 332 377 374
Computer service charges 78 72 77
Federal deposit insurance 134 132 152
Legal and professional fees 750 837 936
Advertising and business development 29 12 20
Insurance 72 73 71
Telephone 18 19 26
Printing and supplies 27 24 142
Director fees 56 76 49
Stock-based compensation 114 119 141
Provision for unfunded commitments 0 31 (133 )
Oreo property impairment 117 111 -
Goodwill impairment - 0 -
Other   299     252       254  
Total other operating expense   2,870     2,996       2,902  
Net loss $ (1,061 ) $ (2,356 )   $ (409 )
Basic EPS $ (0.08 ) $ (0.17 ) $ (0.03 )
Diluted EPS $ (0.08 ) $ (0.17 ) $ (0.03 )
Average basic shares 13,466,535 14,278,467 15,088,023
Average diluted shares 13,466,535 14,278,467 15,088,023

Selected Consolidated Financial Highlights(Dollars in thousands, except per share data)(Unaudited)



March 31,2012

December 31,2011

March 31,2011
Per Share data:
Book Value $ 5.58 $ 5.65 $ 6.21
Tangible Book Value $ 5.53 $ 5.60 $ 5.78
Selected Balance Sheet Data:
Total Assets $ 201,990 $ 198,290 $ 228,791
Cash and cash equivalents 92,902 89,353 90,443
Gross loans, including net deferred loan costs 102,373 101,861 102,207
Allowance for loan losses 2,687 2,919 1,290
Deposits 125,975 121,226 131,813
Stockholders' equity 75,090 76,041 93,558
Asset Quality:
Nonperforming loans $ 24,598 $ 24,054 $ 4,665
Other Real Estate Owned   3,891     4,008     5,444  
Nonperforming assets $ 28,489 $ 28,062 $ 10,109

Allowance for loan losses as a percentage of nonperforming loans
10.92 % 12.14 % 27.65 %

Allowance for loan losses as a percentage of portfolio loans
2.62 % 2.87 % 1.26 %

Nonperforming loans as a percentage of total portfolio loans
24.03 % 23.61 % 4.56 %
Nonperforming assets as a percentage of total assets 14.10 % 14.15 % 4.42 %
Net charge-offs to average portfolio loans 0.22 % 5.66 % 0.11 %
Capital Ratios:
Tier 1 equity to average assets 37.08 % 34.77 % 33.00 %
Tier 1 Risk-Based Capital ratio 71.28 % 70.36 % 70.60 %
Total Risk-Based Capital ratio 72.29 % 71.58 % 71.70 %

Copyright Business Wire 2010

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