Wilshire Bancorp Earnings Call NUGGETS: Loan Originations, Non-Interest Expenses
On Tuesday, Wilshire Bancorp, Inc. (NASDAQ:WIBC) reported its second quarter earnings and discussed the following topics in its earnings conference call. Take a look.
Joe Gladue – B. Riley: I wanted to dig in a little bit to the increase in loan originations if we could, maybe talk about – I know it’s still a competitive environment out there and just wondered if you could talk about – a little more detail about some of the drivers and how you are doing that despite the tough competition?
Jae Whan (J.W.) Yoo – President and CEO: Joe, as I mentioned at the beginning at the last quarter earning conference I mentioned that we are going to (reinforce) our marketing forces, particularly in the branch level by recruiting some branch managers with more lending background and also we opened couple of new loan production offices. That is one of the major driving factors, and I think Jack is going to (give) some more color on that.
Jack Choi – EVP and CCO: Yes, the loan growth was really tough in 2011, but towards end of 2011 we see some demand pickup in the market. Overall the whole California market also from other states and we try to capitalize on those market demand and picked up all the OREOs not confirmed as a permanent trend, but the trend has continued for the last six months, along with our loan staff and the loan production office increase (indiscernible) you mentioned that loan demand is blending in, in our opportunity to grow our loan. So overall we have a better staff and more staff for the lending or loan production. Also we see there’s some signal that market is getting a little bit of a wakeup call for the loan demand.
Joe Gladue – B. Riley: Could you touch maybe on how the pipeline looks this quarter as opposed to what you had going into second quarter?
Jae Whan (J.W.) Yoo – President and CEO: Yes, the pipeline as of July, it is not much different from that of June. We continue to see the trend is kind of fortifying itself into more of the pattern in this market and in our bank. So, I can see that there’s not much significant difference in the pipeline and the loan originations in this third quarter.
Joe Gladue – B. Riley: I guess, lastly I’ll ask about – I guess you did a little bit of loan sales of non-SBA loans. Will there be more of those going forward or is that – that was just sort of one-time things?
Jae Whan (J.W.) Yoo – President and CEO: You mean that the loans sales were other than SBA loans?
Joe Gladue – B. Riley: Yes.
Jae Whan (J.W.) Yoo – President and CEO: Yes, like I said in the earnings release conference today that we are very selective in selling the non-SBA loans. So our main loan sales are occurring in the SBA loans and warehouse line of credit mortgaging loans. Other than that, we can say that we are very selective in hedging our note.
Jack Choi – EVP and CCO: If I may add a little bit more color, the three component of loan sale in August came from SBA loans and the regular CRE loans sales. That’s only like the $4 million – $6.9 million of our full loans, and the remaining about $25 million was a home mortgage loan sale. We expect to continuously originate both SBA and home mortgage loans, we expect to sell. Obviously, the SBA loan it is in conjunction with a premium. The last premium that it recognized was about 10.7% which we believe is a very good rate. So, if that premium continues and our loan production the SBA continues, we expect to sell going forward.
Aaron Deer – Sandler O’Neill & Partners: May be if I can just follow-up on Joe’s final question with respect to the growth that came in past quarter, can you talk about the average size of the loans that you’re booking also with the – maybe the largest loan or commitment size wise as well as the how those are underwritten with respect to (LPVs and is that service covered?)
Jack Choi – EVP and CCO: I don’t have the exact number with me. We can get back to you with that number. In the mean time you can have another question.
Aaron Deer – Sandler O’Neill & Partners: In the earlier comments, you talked about the write-down on maybe some loans. So, I was wondering if I could get a breakout, what’s (indiscernible) probably in the other expense line. I was wondering, if you could break out, what all is in the other expenses in terms of OREO cost, how that would break out between write-down versus maybe ongoing kind of maintenance cost or tax or kind or that kind of stuff that would be in the that line item?
Alex Ko – EVP and CFO: Yeah. Sure, we have other non-interest expenses. We had a substantial actual increase. The total non-interest expense prior quarter was $14.7 million and in the current quarter it increased to $20.3 million. One of the main reason for that is other non-interest expenses and that includes mainly the OREO expenses and legal expenses and also low income housing tax credit valuation, and the quarter-over-quarter kind of a change for that was in the OREO about $850,000 increase and the legal fee increased about $1.2 million and lower income tax housing credit valuation increased $350,000, and lastly operating losses we experienced about $20,000. So, those are the main reasons for the increases on other non-interest expenses.
Jack Choi – EVP and CCO: Aaron, going back to your first question about the loan production portfolio characteristics, I can say that the CRE loans, most of the loans are between $1 million and $8 million range, median number should be around $2.5 million to $3 million. The C&I is about $0.5 million to $4 million and median is about $2 million credit and the mortgage mostly they are the (component) loss. We can say that it’s about $300,000 to $400,000 range.