Loan woes sock shares of Wilshire Bancorp
Shareholders of Los Angeles-based Wilshire Bancorp Inc. got a jolt Thursday after the community banking firm reported a jump in problem loans in the first quarter.
The company’s stock plunged $1.34, or 9.2%, to $13.21, nearly a two-year low -- even though bank officers sought to assure investors that the loan troubles weren’t the start of a trend.
Wilshire, the parent of Wilshire State Bank, focuses on the Korean community and other minority markets. Most of its 18 branches are in Los Angeles and Orange counties. The bank has $2 billion in assets.
The company said net income in the quarter ended March 31 fell to $7.3 million, or 25 cents a share, from $7.8 million, or 27 cents, a year earlier.
The bank blamed a “substantial rise” in non-performing loans, meaning those that aren’t current on interest payments. Total non-performing loans rose to $20.3 million as of March 31, or 1.25% of total loans, from $6.8 million at the end of December and $2.2 million a year earlier.
But in a conference call with analysts, Wilshire portrayed the troubled loans as anomalies. Four large loans accounted for the bulk of the total. In one case, the bank said, a borrower’s building had burned in a fire and the borrower had yet to collect from its insurance company.
Brian Cho, chief financial officer, said the bank didn’t believe that the loans “reflect a trend or the overall quality of our loan portfolio.”
Soo Bong Min, Wilshire’s chief executive, said the company didn’t expect “meaningful principal losses” from the troubled loans. “We expect profits to return to more normalized levels in the near future,” he said.
Another Southland community bank, Cathay General Bancorp, on Thursday reported first-quarter net income of $30 million, or 57 cents a share, up from $27.3 million, or 54 cents, a year earlier.
Los Angeles-based Cathay, which has $8.7 billion in assets, said its non-performing assets totaled $37.2 million as of March 31, or 0.63% of total loans, up from $35.6 million in December.
Cathay shares slipped 22 cents to $33.68 before the earnings were announced.
