W Holding Company, Inc., the Bank Holding Company of Westernbank Puerto Rico, Completes its Audited Financial Statements and Files Form 10-K for the Year Ended December 31, 2008
MAYAGUEZ, Puerto Rico, Oct. 28 /PRNewswire-FirstCall/ -- W Holding
Company, Inc. (NYSE: WHI) (the "Company"), the bank holding company of
Westernbank Puerto Rico (the "Bank"), today announced that it has completed
its 2008 financial statements and has filed with the Securities and Exchange
Commission (the "SEC") its Annual Report on Form 10-K (the "Annual Report")
for the year ended December 31, 2008. The Company also announced it intends
to complete and submit its 2009 quarterly reports for the quarters ended March
31, June 30, and September 30, 2009 before year end, as it continues its
efforts to become current and be in full compliance with the reporting
requirements of the SEC and the New York Stock Exchange (the "NYSE").
Commenting on the Company's filing, Mr. Frank C. Stipes, Chairman,
President and Chief Executive Officer of the Company, said, "With the filing
of our 2008 results, the Company has taken a very important step on the path
to return to timely financial reporting and be in full compliance with the
reporting requirements of both the SEC and NYSE, which have been extremely
cooperative and helpful in this process. As we move forward, we leave behind
the most critical and difficult years we have been through in the history of
this fine Company. The Company's strong management team and Board of
Directors are focusing all of their energy and total commitment on what we
have called the 'new beginning,' going back and adhering to the principles,
guidelines, and fundamentals that made the Bank, in its 51st year of
operations, the backbone of our island economy and its people. This is what
we mean when we say going back to basics."
Mr. Stipes continued, "The results reflect the difficult economic
environment in Puerto Rico during 2008, where continued economic deterioration
was experienced during the island's fourth year of economic contraction,
called by some a tropical depression, that is now, we feel, receding. In
response to these critical challenges, we took and will continue to take all
necessary measures, which have included among others: (1) deleveraging our
balance sheet, (2) reducing credit concentration, (3) reducing non-performing
loans, (4) increasing and improving regulatory capital ratios, and
(5) adopting strategies to provide additional sources of liquidity."
Overview of Financial Condition and Results of Operations
Total assets at December 31, 2008 and 2007 were $15.3 billion and
$17.9 billion, respectively. The reduction in total assets was mainly driven
by decreases in the Company's investment portfolio, excluding short-term money
market instruments, and in the Company's overall loan portfolio. The
investment portfolio, excluding short-term money market instruments, decreased
$2.4 billion, from $7.1 billion at December 31, 2007 to $4.7 billion at
December 31, 2008, due to the Company's decision to deleverage its balance
sheet to further strengthen the Company's regulatory capital ratios. The
Company's loans receivable-net decreased by $542.2 million, from $9.2 billion
at December 31, 2007 to $8.7 billion at December 31, 2008, mainly due to the
Company's decision to focus its lending activities in certain segments.
Specifically, during 2008 the Company focused its lending activities on the
small and intermediate business and residential mortgage lending segments.
Total deposits reached $11.0 billion at December 31, 2008 compared to
$10.5 billion at December 31, 2007. The increase is mainly attributable to the
Company's decision to increase its on-balance sheet liquidity position in a
prudent response to the economic and financial crisis that impacted the United
States and Puerto Rico during 2008. Due to the limited availability of local
deposits, more so in the southwestern region of Puerto Rico (the Bank's main
market), the increase in deposits was mainly accomplished through the issuance
of brokered deposits. Brokered deposits at December 31, 2008 and 2007 were
$8.6 billion (78% of total deposits) and $7.9 billion (75% of total deposits),
respectively.
Stockholders' equity at December 31, 2008 was $915.4 million, as compared
to $996.2 million at December 31, 2007 due to the combination of the Company's
net loss, dividend payments, other comprehensive losses on available for sale
securities recognized during the year as a result of increases in interest
rates during 2008 and the cumulative effect of the adoption of Statement of
Financial Accounting Standard No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities, on January 1, 2008, which resulted in a
credit to retained earnings of $5.3 million. However, due to the Company's
decision to deleverage its balance sheet and reposition its investment
portfolio, the Company's regulatory capital ratios improved at December 31,
2008 as compared to December 31, 2007. Tier-one leverage ratio at December
31, 2008 increased to 5.26% from 4.90% at December 31, 2007, while total risk
based capital increased to 10.24% at December 31, 2008 from 9.06% at December
31, 2007.
Net loss for the year ended December 31, 2008 was $5.5 million compared to
a net loss of $68.3 million for the year ended December 31, 2007. Basic and
diluted earnings (loss) per common share for the year ended December 31, 2008
amounted to $(12.84), compared to basic and diluted earnings (loss) per common
share of $(31.92) for 2007. The Company's financial performance for 2008, as
compared to 2007, was principally impacted by the following:
-- A decrease of $210.1 million in the provision for loan losses, as a
result of steps taken by the Company since the middle of 2007 to mitigate the
credit crisis confronted and the underlying risks regarding its asset-based
and commercial loan portfolios under the current economic environment. In
addition, in connection with the preparation of the 2007 and 2008 consolidated
financial statements, the Company's internal loan review department examined
the entire construction and asset-based loan portfolios, and commercial loan
relationships in excess of $3.0 million using current appraisals, the majority
of which were done in 2007 and 2008. The Company's determination of valuation
allowances was mainly based on a collateral dependent analysis, which reflects
the value of the property in its present condition after appropriate
deductions for selling costs. The loan loss provision for 2007 and 2008
included the incorporation of such appraisals in the calculation of the
specific allowances.
-- A decrease of $142.1 million in net interest income, mainly due to a
decrease in net yield on interest-earning assets coupled with a decrease in
the Company's average earning assets.
-- An increase of $32.4 million in noninterest expenses, for the most part
due to increases in deposit insurance premiums and supervisory examination,
payroll expenses, municipal taxes and in the provision for claims receivable.
-- An increase in the income tax benefit of $14.5 million mainly due to
the reversal of tax contingencies associated with the settlement of certain
issues with taxing authorities that yielded a benefit of $33.3 million in
2008, offset in part by a decrease in pre-tax losses.
-- An increase of $12.9 million in noninterest income, principally as a
result of an increase of $12.5 million in net gain (loss) on sale of loans,
securities and other assets coupled with an increase of $1.5 million in other
fees and commissions, offset in part by decreases in service and other charges
on loans. During 2008, the Company sold certain real estate properties held
for sale and recognized a gain on sale of $14.7 million. The decrease in
service and other charges on loans was mainly due to lower volume of business
due to the Company's decision to reduce certain lending activities in light of
deteriorating economic conditions in Puerto Rico.
For further information, you may read and obtain a copy of the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2008 through
the SEC website, http://www.sec.gov, or at the Company's investor relations
section at the Company's website, http://www.w-holding.com.
Forward Looking Statements
This press release may contain some information that constitutes
"forward-looking statements." Such information can be identified by the use of
forward-looking terminology such as "may," "will," "should," "expect,"
"anticipate," "estimate," "intend," "continue," or "believe," or the negatives
or other variations of these terms or comparable terminology. Forward-looking
statements with respect to future financial conditions, results of operations
and businesses of the Company are always subject to various risk and market
factors out of management's control which could cause future results to differ
materially from current management expectations or estimates and as such
should be understood. Such factors include particularly, but are not limited
to, the possibility of prolonged adverse economic conditions or that an
adverse interest rate environment could develop. For a discussion of these and
other risks and uncertainties, please refer to Item 1A of the Company's Annual
Report on Form 10-K for the most recently completed fiscal year. Except as
required by applicable securities laws, the Company does not intend, and
specifically disclaims any obligation, to update forward-looking statements.
About the Company
Westernbank Puerto Rico, a wholly-owned subsidiary of W Holding Company,
Inc., is the second-largest commercial bank in Puerto Rico, based on total
assets, operating through 48 full-fledged branches throughout Puerto Rico,
with a fully functional banking site on the Internet. Westernbank is the
largest lender and employer in the southwestern region of Puerto Rico, the
second largest minority-held institution in the United States, and the largest
overall commercial lender in the Island of Puerto Rico.
SOURCE W Holding Company, Inc.
