Wilshire Announces First Quarter 2004 Earnings.Business Editors CALABASAS, Calif.--(BUSINESS WIRE)--May 14, 2004 Wilshire Not to be confused with Wiltshire. Wilshire may refer to:
Please [ improve this article] or discuss the issue on the talk page. Group Inc. (Nasdaq:WFSG WFSG Wilshire Financial Services Group, Inc ) (the "Company") reported net income for the quarter ended March 31, 2004 of $2.1 million, or $0.10 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with $1.6 million, or $0.08 per diluted share, for the quarter ended March 31, 2003. On April 30, 2004, the Company completed the sale of its wholly-owned loan servicing Loan servicing is the process by which a mortgage bank or subservicing firm collects the timely payment of interest and principal from borrowers. The level of service varies depending on the type loan and the terms negotiated between the firm and the investor seeking their services. subsidiary, Wilshire Credit Corporation ("WCC WCC n abbr (= World Council of Churches) → COE m (Conseil œcuménique des Églises) WCC n abbr (= World Council of Churches) → Weltkirchenrat m "), to Merrill Lynch Merrill Lynch & Co., Inc. (NYSE: MER TYO: 8675 ), through its subsidiaries and affiliates, provides capital markets services, investment banking and advisory services, wealth management, asset management, insurance, banking and related products and services on a global basis. Mortgage Capital Inc. ("Merrill Lynch"), a division of Merrill Lynch & Co., New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , NY. The Company realized net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). on the sale of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $48.8 million, and recorded a gain of $19.1 million before taxes. The final sales proceeds are subject to adjustment based on WCC's final net asset value as determined by WFSG and Merrill Lynch. As a result of the sale of WCC, the Company has presented the operating results of WCC as "Income from operations of subsidiary held for sale," separate and apart from "Income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the " in the Company's consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: statements of operations for the quarterly periods presented. WFSG's income from continuing operations for the quarter ended March 31, 2004 was approximately $1.9 million, or $0.09 per diluted share, compared with $1.1 million, or $0.05 per diluted share, for the quarter ended March 31, 2003. Pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta income from continuing operations was $3.4 million for the first quarter of 2004, compared with $1.9 million for the first quarter of 2003. WCC's net income was approximately $0.2 million for the quarter ended March 31, 2004, compared with $0.5 million for the quarter ended March 31, 2003. WFSG's consolidated stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. increased by $5.0 million during the quarter ended March 31, 2004 to $130.5 million, or $6.08 per diluted share. This increase reflects the Company's net income for the quarter, after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. unrealized gains Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. of $0.6 million on its portfolio of available-for-sale securities and hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. instruments, and the sale of additional shares of common stock pursuant to the exercise of stock options. WFSG's increase in stockholders' equity for the quarter ended March 31, 2004 does not reflect the Company's utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be of its net operating loss carryforwards Net operating loss carryforwards Application of losses to offset earnings in future years. . Beginning with the year ending December December: see month. 31, 2004, the Company will determine its utilization of loss carryforwards Loss Carryforward An accounting technique with which a company applies net operating losses of the current year to future year's profits in order to reduce tax liability. Notes: on an annual, rather than quarterly, basis. The increase in WFSG's income from continuing operations for the first quarter of 2004 as compared with the first quarter of 2003 was due primarily to a $1.25 million increase in consolidated net interest income, reflecting significant loan origination The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. activity at the Company's banking subsidiary. In addition, consolidated other income increased by $0.4 million, primarily as a result of gains on sales of investment securities. These increases in income were partially offset by slight increases in other operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and provision for loan losses. Other significant activity was as follows: - The Company's banking subsidiary, First Bank of Beverly Hills Beverly Hills, city (1990 pop. 31,971), Los Angeles co., S Calif., completely surrounded by the city of Los Angeles; inc. 1914. The largely residential city is home to many motion-picture and television personalities. , F.S.B. (the "Bank"), recorded pre-tax income of $4.3 million for the quarter ended March 31, 2004, compared with $2.6 million for the quarter ended March 31, 2003. The Bank's net interest income was $6.5 million for the quarter ended March 31, 2004, an increase of approximately $1.7 million over the first quarter 2003. Net interest margin increased by 28 basis points, from 2.52% for the first quarter of 2003 to 2.80% for the first quarter of 2004, as the decline in interest rates impacted the Bank's interest-bearing Adj. 1. interest-bearing - of financial obligations on which interest is paid liabilities to a greater extent than its interest-earning assets. During the first quarter of 2004, the Bank originated and purchased an aggregate of $184.5 million in new commercial and income property loans and purchased approximately $105.2 million of government agency mortgage-backed Mortgage-backed may refer to:
Bank requirement that there be a minimum ratio of estimated total capital to estimated risk-weighted asset. was 11.4%, exceeding the 10.0% ratio required to be categorized cat·e·go·rize tr.v. cat·e·go·rized, cat·e·go·riz·ing, cat·e·go·riz·es To put into a category or categories; classify. cat as "well capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. " by regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. standards. - Wilshire Funding Corporation ("WFC WFC Wi-Fi Connection (Nintendo gaming service) WFC Wide-Field Camera WFC World Financial Center (New York) WFC Workforce Center WFC World Federation of Chiropractic WFC World Food Council "), the Company's mortgage investment subsidiary, recorded pre-tax income of $0.3 million for the quarter ended March 31, 2004, compared with $0.6 million for the quarter ended March 31, 2003. WFC's net interest income decreased by approximately $0.5 million from the first quarter of 2003, due primarily to prepayments Prepayments Payments made in excess of scheduled mortgage principal repayments. of loans securing its portfolio of mortgage-backed securities Mortgage-backed securities (MSBs) Securities backed by a pool of mortgage loans. . - Wilshire Credit Corporation ("WCC"), WFSG's loan servicing subsidiary which the Company sold to Merrill Lynch on April 30, 2004, recorded pre-tax income of $0.3 million for the quarter ended March 31, 2004, compared with approximately $0.8 million for the quarter ended March 31, 2003. WCC's net servicing income for the first quarter of 2004 totaled $8.3 million, an increase of $0.5 million over the first quarter of 2003. This increase reflects the continuing growth in the volume of WCC's serviced loans portfolio as a result of contractual flow agreements and new servicing rights acquisitions. At March 31, 2004, WCC's unpaid principal balance of serviced loans totaled $6.0 billion, compared with $5.1 billion at March 31, 2003. The increase in WCC's servicing income was offset by a $1.0 million increase in compensation expense, primarily as a result of a higher employee head count. As discussed above, the proceeds from the sale of WCC are subject to adjustment based upon WCC's final net asset value as determined by WFSG and Merrill Lynch. - Holding company expenses include defense costs of former management and interest expense on trust preferred subordinated debentures subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before , which together accounted for approximately $0.6 million of expenses. For further information, please see our website (www.fbbh.com) for our 10-Q Report and related communications (available on or before May 17, 2004). This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. including financial projections, statements as to the plans and objectives of management for future operations, and statements as to the Company's future economic performance, financial condition and results of operations. These forward-looking statements are not historical facts but rather are based on current expectations, estimates, and projections about our industry, our beliefs and our assumptions. Words such as "may," "will," "anticipates," "expects," "intends," "plans," "believes," "seeks" and "estimates" and variations of these words and similar expressions are intended to identify forward-looking statements. The Company's actual results may differ materially from those projected in these forward-looking statements as a result of a number of factors, including, but not limited to, the condition of the real estate market, the availability and conditions of financing for loan pool acquisitions, mortgage-backed securities, mortgage loan servicing rights and other financial assets Financial assets Claims on real assets. as well as interest rates. Readers of this release are cautioned not to place undue reliance on these forward-looking statements.
WILSHIRE FINANCIAL SERVICES GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
(Dollars in thousands, except share data)
March 31, December 31,
2004 2003
--------- ------------
ASSETS
Cash and cash equivalents $29,607 $18,739
Government agency mortgage-backed securities
available for sale, at fair value 184,497 161,083
AAA mortgage-backed securities available for
sale, at fair value 115,087 62,160
Other mortgage-backed securities available for
sale, at fair value 756 1,069
Investment securities available for sale, at fair
value 11,964 22,086
Investment securities held to maturity, at
amortized cost (fair value of $9,752 and $9,754) 9,619 9,607
Loans, net of allowance for loan losses of $6,741
and $6,735 753,996 610,807
Discounted loans, net of allowance for loan
losses of $31,787 and $32,041 3,174 3,817
Stock in Federal Home Loan Bank of San Francisco,
at cost 15,867 12,767
Real estate owned, net 2,029 267
Leasehold improvements and equipment, net 515 554
Accrued interest receivable 4,908 4,215
Deferred tax asset, net 17,629 18,054
Purchased mortgage servicing rights, net 203 250
Receivables from loan servicers 375 770
Intangible assets, net 3,377 3,442
Prepaid expenses and other assets 3,006 2,897
Assets of subsidiary held for sale 43,296 42,698
----------- ---------
TOTAL $1,199,905 $975,282
=========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Noninterest-bearing deposits $3,582 $4,175
Interest-bearing deposits 632,544 469,234
Short-term borrowings 75,000 88,000
Accounts payable and other liabilities 5,310 3,690
FHLB advances 317,337 249,337
Long-term investment financing 638 681
Junior subordinated notes payable to trust 20,619 20,619
Investor participation liability 1,008 1,169
Liabilities of subsidiary held for sale 13,344 12,894
----------- ---------
Total liabilities 1,069,382 849,799
----------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.01 par value, 10,000,000
shares authorized, 0 shares outstanding -- --
Common stock, $0.01 par value, 90,000,000
shares authorized, 26,144,199
and 24,491,703 shares issued (including
treasury shares of 5,626,212) 138,690 136,363
Treasury stock, 5,626,212 shares, at cost (15,106) (15,106)
Retained earnings 5,921 3,791
Accumulated other comprehensive income, net 1,018 435
----------- ---------
Total stockholders' equity 130,523 125,483
----------- ---------
TOTAL $1,199,905 $975,282
=========== =========
WILSHIRE FINANCIAL SERVICES GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except share data)
Quarter Ended
March 31,
----------------------
2004 2003
----------------------
INTEREST INCOME:
Loans $9,696 $8,427
Mortgage-backed securities 2,620 3,467
Securities and federal funds sold 306 172
----------------------
Total interest income 12,622 12,066
----------------------
INTEREST EXPENSE:
Deposits 3,113 3,213
Borrowings 2,726 3,322
----------------------
Total interest expense 5,839 6,535
----------------------
NET INTEREST INCOME 6,783 5,531
PROVISION FOR LOSSES ON LOANS 114 30
----------------------
NET INTEREST INCOME AFTER PROVISION FOR LOSSES
ON LOANS 6,669 5,501
----------------------
OTHER INCOME:
Servicing income 209 46
Loan fees and charges 98 23
Real estate owned, net 58 25
Gain on sale of loans 47 5
Gain on sale of securities 273 --
Investor participation interest (90) (66)
Other, net 65 204
----------------------
Total other income 660 237
----------------------
OTHER EXPENSES:
Compensation and employee benefits 1,822 1,661
Professional services 820 928
Occupancy 185 192
FDIC insurance premiums 108 108
Data processing 144 64
Communication 62 42
Insurance 118 169
Depreciation 90 245
Amortization of intangibles 65 65
Other general and administrative expenses 550 386
----------------------
Total other expenses 3,964 3,860
----------------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES 3,365 1,878
INCOME TAX PROVISION 1,396 804
----------------------
INCOME FROM CONTINUING OPERATIONS 1,969 1,074
INCOME FROM OPERATIONS OF SUBSIDIARY HELD FOR
SALE, NET OF INCOME TAX PROVISION OF $114
(2004) AND $264 (2003) 161 490
----------------------
NET INCOME $2,130 $1,564
======================
Earnings per share - Basic:
Income from continuing operations $0.10 $0.06
Discontinued operations 0.01 0.03
----------------------
Net income $0.11 $0.09
======================
Earnings per share - Diluted:
Income from continuing operations $0.09 $0.05
Discontinued operations 0.01 0.03
----------------------
Net income $0.10 $0.08
======================
Weighted average shares outstanding - basic 20,022,989 18,223,698
Weighted average shares outstanding - diluted 21,288,258 20,236,356
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