MAYAGUEZ, Puerto Rico, Oct. 21 /PRNewswire-FirstCall/ -- W HOLDING
COMPANY, INC. (NYSE: "WHI"), the financial holding company of
WESTERNBANK PUERTO RICO and WESTERNBANK INSURANCE CORP., today
reported its financial position and results of operations for the
three and nine month periods ended September 30, 2005. Following
are some financial highlights: THIRD QUARTER HIGHLIGHTS: -- Net
income for the third quarter ended September 30, 2005 was $40.0
million or $0.19 earnings per basic common share ($0.18 on a
diluted basis), compared to $44.2 million or $0.23 earnings per
basic common share ($0.22 on a diluted basis) for the same quarter
in 2004, a reduction of $4.2 million or 9.55%. Earnings per common
share for 2004 were adjusted to give effect to the three-for-two
(3x2) stock split and a two percent (2%) stock dividend declared in
December 2004 and both distributed on January 10, 2005. -- However,
for the nine months ended September 30, 2005, W Holding reported a
net income of $134.4 million or $0.65 earnings per basic common
share ($0.63 on a diluted basis). This is an increase of $8.6
million or 6.85%, when compared to a net income of $125.8 million
or $0.65 earnings per basic common share ($0.62 on a diluted basis)
(as adjusted) for the same period in 2004. -- Loans receivable-net,
grew by $1.5 billion or a healthy 24.61%, from $5.9 billion at
December 31, 2004. This is a net growth of more than 115% in just 9
months of the net growth achieved during the full year 2004. -- Net
interest income for the third quarter ended September 30, 2005 was
$80.7 million, an increase of $3.6 million or 4.71%, from $77.0
million for the same period of last year. -- The increase of $3.6
million in net interest income and a $4.4 million lower provision
for loan losses was offset by a significant increase in the
provision for income taxes of $10.0 million, when compared to the
prior year quarter. -- Commercial real estate loans increased by
$710.3 million or 22.51%, from $3.2 billion as of December 31,
2004, to $3.9 billion as of September 30, 2005. -- W Holding's
combined delinquency on all portfolios for the categories of 60
days and over improved 8 basis points to 0.74% at September 30,
2005, below our benchmark of 1%, compared to 0.82% at September 30,
2004. -- The delinquency ratio on the commercial loan portfolio for
the categories of 60 days and over, was 0.80% (less than 1%),
compared to 0.75% reported for the year ago period. -- The
delinquency ratio on the consumer loan portfolio, including the
Expresso of Westernbank loan portfolio, for the categories of 60
days and over improved by 9 basis points, to 1.53% at September 30,
2005, from 1.62% for the comparable period last year. -- Net loans
charged-off in the third quarter of 2005 were $3.8 million or 0.21%
(annualized) to average loans, a significant improvement when
compared to $6.2 million or 0.44% (annualized) to average loans for
the same period in 2004, a decrease of $2.4 million or 37.95%. --
Non-performing loans stand at $51.7 million or 0.69% (less than 1%)
of Westernbank's loan portfolio at September 30, 2005. --
Stockholders' equity increased by $103.9 million or 9.61%, to $1.2
billion as of September 30, 2005, compared to December 31, 2004. --
Margin pressures continued as a result of the flattening of the
yield curve, while short-term rates continued to rise during the
quarter. On a linked quarter basis, our net interest margin
decreased 10 basis points. On a year to year basis, our net
interest margin decreased 28 basis points, from 2.40% in the third
quarter of 2004, to 2.12% for the third quarter of 2005. -- At
September 30, 2005, total assets stand at $15.7 billion, an
increase of $1.4 billion or 9.59% when compared to December 31,
2004. Commenting on the financial results of the Company for the
quarter and the nine months ended September 30, 2005, Mr. Frank C.
Stipes, Esq., Chairman of the Board and Chief Executive Officer of
W Holding Company, Inc., stated to be extremely satisfied with the
overall performance and results of the Company year to date and
this third quarter of 2005: "The Company is increasing its lead in
the commercial sector, specifically in the new regions where it has
branches, where it has become the most important and significant
lender with a growth of 34% and total net loans of 30% as compared
to the equivalent for 2004." Mr. Freddy Maldonado, President and
Chief Investments Officer of W Holding Company stated: "We continue
actively managing our interest rate risk in light of the continued
rising interest rate scenario. Even though our margins contracted
by 10 basis points on a linked quarter basis, this was anticipated
and within our previously informed range due to the continued
flattening of the yield curve, while short-term rates continued to
rise during the quarter. We will continue to manage and adjust our
asset/liability mix accordingly to operate under this challenging
environment without placing ourselves in a position that we cannot
react to the ever changing conditions of the market." Mr. Ricardo
Hernandez, Chief Financial Officer, commented: "As previously
highlighted, our bottom line results for the quarter include a
significantly higher current provision for income taxes compared to
prior periods. Our effective income tax rate rose to 28% for the
quarter compared to just 11% for the prior year quarter or almost
$10 million more when compared to the prior year period. This is
the combined effect of the recently enacted additional 2.5%
transitional two-year surtax on taxable income that hit our
operations by $2.5 million in additional taxes, of which $1.6
million is the retroactive effect for the first six months, coupled
with the increase in the effective income tax rate as a result of
our current strategy of growing the loan portfolio through variable
rate loans, while remaining on the sideline on our investments side
resulting in a higher proportion of taxable to exempt income."
Also, commenting on the financial results of the Company for the
quarter and the nine months ended September 30, 2005, Mr. Jose M.
Biaggi, Esq., who recently joined the Company as President and
Chief Executive Officer of Westernbank Puerto Rico added: "Our
results of operations and growth for the quarter and nine month
periods are within our expectations considering the tough interest
rate environment that we are operating in. What is truly important
to comprehend is that our earnings come from pure, core operational
results. They are a direct consequence of our spread, net interest
income and banking-related activities and in no way dependent or
pumped up by non- recurring gains or profits produced by sales of
loans, assets or securities." "Our net interest margin, although it
further compressed during the quarter, came out on the high end of
our projection. At the end of the previous quarter we projected
that under a flat interest rate scenario our net interest margin
would fluctuate within a range of 2.06% to 2.14%. Further, under a
100 basis point rise our projection indicated that our net interest
margin would fluctuate within a range of 1.89% to 2.08%. Even
though the Fed rose twice the discount rate by 25 basis points at
each meeting during this quarter, our net interest margin came out
at 2.12%, on the high side of our projected range." "The
asset-liability scenario has been proactively managed by Mr. Freddy
Maldonado. Since the beginning of the year 2004, he has been able
to effectively control the funding costs of the Bank by limiting
the repricing of the interest bearing liabilities to 115 basis
points or 41.82% of the 275 basis points rise in Fed Funds or
39.38% of the 292 basis points rise in the three-month LIBOR for
the same period. Specifically, total deposits (core and non-core)
have repriced 94 basis points or 34.18% and 32.19%, respectively,
of the increases in Fed Funds and LIBOR rates, while repurchase
agreements have repriced 145 basis points or 52.73% and 49.66%,
again respectively of said increases." "Our new management
structure will continue to allow us to focus on aggressively
growing our loan portfolio while maintaining our excellent client
service and accessibility that characterizes and sets us apart from
the other players in the market. As I was already familiar with the
operations and clients of the Bank, I have dedicated very little
time to my transition and all my efforts are and will continue to
be focused on building our loan portfolio and strengthening our
client relations. We grew our loan portfolio by almost $300 million
net during the quarter and by almost $1.5 billion net in just nine
months since the beginning of this year 2005. We have already
surpassed our year end projection in regards to the growth of our
loan portfolio and we feel very optimistic in sustaining our growth
throughout the remaining period and for the future, an
accomplishment which, as always, is accompanied by the lowest
delinquency levels in the industry, and at the same time generated
with the highest efficiency ratio." Mr. Biaggi concluded by saying:
"This Company has a tradition of focusing in long term value and
solid core growth, rather than tailoring its operations towards
short term speculation; a tradition that time and our results have
proven correct, and that I intend to maintain." Overview W Holding
reported net income for the third quarter 2005 of $40.0 million or
$0.19 earnings per basic common share ($0.18 on a diluted basis),
compared to $44.2 million or $0.23 earnings per basic common share
($0.22 on a diluted basis) (as adjusted) for the same quarter in
2004, a decrease of $4.2 million or 9.55%. For the nine months
ended September 30, 2005, W Holding reported a net income of $134.4
million or $0.65 earnings per basic common share ($0.63 on a
diluted basis). This is an increase of $8.6 million or 6.85%, when
compared to a net income of $125.8 million or $0.65 earnings per
basic common share ($0.62 on a diluted basis) (as adjusted) for the
same period in 2004. The return on assets (ROA) and the return on
common stockholders' equity (ROCE) for the quarter ended September
30, 2005, were 1.03% and 19.15%, respectively, compared to 1.33%
and 28.81% reported for the same quarter in 2004. For the nine
months ended September 30, 2005, the ROA and the ROCE were 1.19%
and 23.22%, respectively, compared to 1.34% and 28.67%, for the
same period in prior year. At September 30, 2005, driven by strong
increases in W Holding's loan portfolio, total assets ended at
$15.7 billion. Total assets grew $1.4 billion or 9.59%, from $14.3
billion at December 31, 2004, driven by the growth in the loan
portfolio, partially offset by decreases in short-term money market
instruments. Continuing management's strategy implemented in the
latter part of 2004 and throughout the year 2005, in light of the
current rising interest rate scenario and the flattening of the
yield curve, the Company has continued to emphasize the growth of
its loan portfolio, principally through variable rate loans, while
remaining on the sideline on the investment side until investment
opportunities arise. Loans receivable-net, grew by $1.5 billion or
24.61%, from $5.9 billion at December 31, 2004, as a result of the
Company's continued strategy of growing its loan portfolio through
commercial real estate, residential real estate, construction and
land acquisition, asset-based and other commercial loans. The
investment portfolio, excluding short-term money market
instruments, increased slightly by $58.4 million or 0.84%, to reach
$7.0 billion at September 30, 2005, while short-term money market
instruments decreased $168.4 million or 15.79%, from $1.1 billion
at December 31, 2004, to $898.4 million at September 30, 2005.
Changes in both portfolios are attributable to approximately $150.0
million previously invested in money market instruments that were
reinvested during the quarter into $150.0 million on tax exempt
securities, specifically U.S. Government and agencies obligations
on a short-term basis, as part of the management strategy of
growing W Holding exempt interest income. The Company has continued
to shift and reposition its balance sheet by placing emphasis on
growing its floating rate loans, so as to lessen the impact of
contracting margins on the investment side. On a year-to-year
basis, total assets grew $2.2 billion or 16.56%, from $13.5 billion
at September 30, 2004, principally from the growth in the Company's
loan portfolio. Loans receivable-net, grew by $1.7 billion or
29.50%, from $5.7 billion as of September 30, 2004, while the
investment portfolio, excluding short-term money market
instruments, increased $362.4 million or 5.47%, from $6.6 billion
at September 30, 2004. Stockholders' equity increased by $103.9
million or 9.61%, to $1.2 billion as of September 30, 2005,
compared to December 31, 2004. Such increase resulted principally
from the combination of the issuance of 401,300 shares of the
Company's Series H Preferred Stock completed on January 3, 2005,
providing a net capital infusion of $19.4 million, plus the net
income of $134.4 million generated during the nine months ended
September 30, 2005. This was partially offset by dividends paid
during 2005 of $22.8 million and $27.8 million on our common and
preferred shares, respectively. The period-end number of common
shares outstanding increased from 163,918,835 as of December 31,
2004, to 164,066,058 as of September 30, 2005, as a result of the
conversion of 32,092 shares of the Company's convertible preferred
stock Series A, into 112,110 shares of the Company's common stock,
and the issuance of 35,113 common shares from the exercise of stock
options. Net Interest Income Net interest income for the third
quarter ended September 30, 2005 was $80.7 million, an increase of
$3.6 million or 4.71%, from $77.0 million for the same period of
last year. This increase mainly resulted from an increase in the
average net interest-earning assets of $246.7 million, which
contributed a $19.6 million positive volume variance, partially
offset by a $16.0 million negative rate variance. Average
interest-earning assets for the third quarter of 2005 increased by
$2.4 billion or 18.68%, compared to the same quarter in previous
year. The average loan portfolio increased by $1.7 billion or
29.85%, particularly in the commercial real estate, commercial
business and other loans, including asset-based, and residential
real estate. The average investment portfolio, excluding short-term
money market instruments, increased by $534.5 million or 8.19%,
primarily in tax-exempt securities, such as U.S. Government and
agencies obligations bought during the fourth quarter of 2004, as
explained before. Average money market instruments increased by
$184.6 million or 28.34%. For the nine months ended September 30,
2005, net interest income increased from $222.8 million, to $243.9
million, an increase of $21.1 million or 9.47%. This increase
mainly resulted from an increase in the average net
interest-earning assets of $267.2 million, which contributed a
$56.0 million positive volume variance, partially offset by a $34.9
million negative rate variance. Average interest-earning assets
increased by $2.7 billion or 22.04%. The average loan portfolio
increased by $1.5 billion or 29.02%, particularly in the commercial
real estate, commercial business and other loans, including
asset-based, and residential real estate. The average investment
portfolio, excluding short-term money market instruments, increased
by $885.3 million or 14.35%, primarily in tax exempt securities,
such as U.S. Government and agencies obligations as a result of the
securities bought during the latter part of 2004, as explained
before. Average money market instruments increased by $258.7
million or 38.01%. The average yield earned in interest-earning
assets increased 66 basis points from 4.73% to 5.39%, and 52 basis
points from 4.72% to 5.24%, for the quarter and nine months ended
September 30, 2005, respectively, when compared to periods in prior
year. The increase in the average yield was mainly due to higher
average yields earned on the loan portfolio, mortgage-backed
securities and money market instruments, while the investment
portfolio yield remained relatively flat. The increase in the
average yield earned on the loan portfolio was due to higher
volumes of commercial real estate loans, residential real estate
and commercial business and other loans at floating rates, coupled
with the repricing of floating rate loans. During the last three
months of 2004 and the nine months ended September 30, 2005, the
Federal Reserve has increased the discount rate by an additional
200 basis points reflected equally on the Prime Rate, an index used
by the Bank to re-price most of its floating rate loans. At
September 30, 2005, approximately 80% of the loan portfolio carries
a floating rate. For the quarter ended September 30, 2005, our
overall cost of rates paid increased 103 basis points, from 2.47%
to 3.50%, when compared to the prior year quarter. The increase in
the overall cost of rates paid was due to a general increase in the
cost of funding sources of W Holding. The average interest rate
paid on deposits increased by 83 basis points, from 2.42% for the
quarter ended September 30, 2004, to 3.25% for the same period in
2005, while the average interest rate paid on federal funds
purchased and repurchase agreements also increased by 131 basis
points, from 2.48% for the quarter ended September 30, 2004, to
3.79% for the same period in 2005. The average interest rate paid
on Advances from FHLB increased by 57 basis points, from 3.74% for
the quarter ended September 30, 2004, to 4.31% for the same period
in 2005. For the nine months ended September 30, 2005, the overall
cost of rates paid increased 84 basis points, from 2.40% for the
nine months ended September 30, 2004, to 3.24% for the same period
in 2005. The average interest rate paid on deposits increased 66
basis points, from 2.36% for the nine month ended September 20,
2004, to 3.02% for the same period in 2005, while, the average
interest rates paid on federal funds purchased and repurchase
agreements increased 108 basis points, from 2.39% for the nine
months ended September 30, 2004, to 3.47% for the nine months ended
September 30, 2005. Such increases were partially offset by a
decrease in the average interest rate paid on advances from the
Federal Home Loan Bank of 12 basis points, from 4.16% for the nine
months ended September 30, 2004, to 4.04% for the nine months ended
September 30, 2005. As explained in the preceding paragraphs,
during the last three months of 2004 and first nine months of 2005,
short-term interest rates continued rising with the libor rate, the
rate used by the Company to reprice most of the Company's
liabilities, increasing 209 basis points from September 30, 2004.
This pattern was reflected in the cost of the Bank's liabilities as
explained herein. However, in light of the current rising interest
rate scenario, the Bank has continued to extend a portion of its
liabilities to lock-in the rates for a period of three years. The
strong growth in average interest-earning assets between both
periods was in part offset by increases in the average
interest-bearing liabilities of $2.1 billion or 17.81%, and $2.4
billion or 21.07%, for the quarter and nine months ended September
30, 2005, respectively. Deposits grew on average by $1.6 billion
and $1.4 billion, during the quarter and nine months ended
September 30, 2005, respectively, while other borrowings (federal
funds purchased, repurchase agreements and advances from FHLB) in
average rose by $571.2 million and $1.0 billion for the same
periods, respectively. Net Interest Margin Our net interest margin
decreased 28 basis points during the third quarter of 2005 to
2.12%, from 2.40% in the third quarter of 2004. For the nine months
ended September 30, 2005, our net interest margin decreased 25
basis points. On a linked quarterly comparison, our net interest
margin decreased by ten basis point, from 2.22% for the second
quarter of 2005. The decrease in our net interest margin obeyed to
an increase in the general cost of funding of W Holding, at a
faster pace than the increase in our yield on interest earning
assets. This contraction is primarily due to the flattening of the
yield curve, whereby the 10-year U.S. Treasury yield remained
relatively flat, while the short end of the curve increased. Under
a flat interest rate scenario for the next twelve month period,
based on our asset and liability composition as of September 30,
2005, we estimate our net interest margin will be within a range of
1.89% to 1.98% during said period. Assuming an instantaneous 100
basis points decrease in the fed funds rate, we estimate our net
interest margin will fluctuate within a range of 2.05% to 2.13%
during said period. Assuming a 100 basis points increase in the fed
funds rate, we estimate our net interest margin will fluctuate
within a range of 1.72% to 1.90%. Furthermore, a 200 basis points
increase in the fed funds rate will cause our net interest margin
to fluctuate between a range of 1.57% to 1.86%. The lower and
higher values of such range mean the lowest and highest net
interest margin for any given quarter within the said twelve month
period. These ranges are management's estimates based on
instantaneous rate shocks of 100 and 200 basis points with results
one year (twelve months) forward. They do not consider any
asset/liability management strategy that could be undertaken given
such interest rate changes during said one year period, such as
those already implemented during late 2004 and in 2005 in order to
lessen the sensitivity and projected impact of a continued rising
interest rate environment. Attached as Exhibits IIIa, IIIb and IIIc
are supplemental unaudited data schedules providing additional
information on the net interest margin including average balances
and average rates for both, interest-earning assets and
interest-bearing liabilities, as well as changes in volumes and
rates for the periods presented. Noninterest Income Noninterest
income decreased $66,000 or 0.79% for the three month period ended
September 30, 2005, when compared to the same period in 2004. This
decrease was mainly the result of a decrease of $494,000 on net
gain on sales and valuation of loans, securities, and other assets,
due to a realized gain of $525,000 of an investment security during
the third quarter of 2004, and a negative variance of $437,000 in
loss on derivative instruments as a result of fluctuations in the
mark to market of such positions. These decreases were partially
offset by an increase of $865,000 or 11.49% in service and other
charges on loans, deposits and other fees and commissions due to
higher activity and fees resulting from the Company's overall
growing volume of business and other fees generated by our
asset-based lending operation. For the nine month period ended
September 30, 2005, noninterest income increased $1.4 million or
6.50%, when compared to the same period in 2004. This increase was
mainly the result of an increase of $2.0 million or 9.52% in
service and other charges on loans, deposits and other fees and
commissions. Such increase was partially offset by a decrease of
$453,000 on net gain on sales and valuation of loans securities,
and others assets for the reason explained in the preceding
paragraph and a negative variance of $136,000 on gain (loss) on
derivates instruments. Noninterest Expenses Total noninterest
expenses increased $2.3 million or 8.99% for the three-month period
ended September 30, 2005, and $5.2 million or 6.99% for the nine
months ended September 30, 2005, when compared to the corresponding
periods in 2004. Salaries and employees' benefits, which is the
largest component of total noninterest expenses, increased $2.2
million or 22.32% for the third quarter of year 2005, and $6.2
million or 22.26% for the nine months ended September 30, 2005,
compared to the corresponding periods in 2004. Such increases are
attributed to the increases in personnel, normal salary increases
and related employees' benefits, principally attributed to our
continued expansion in the San Juan Metropolitan area and our
entrance to the east coast of Puerto Rico. On October 22, 2004 we
opened our flagship mega branch in Old San Juan, and on March 16,
2005, we opened our new state of the art mega branch in Humacao. At
September 30, 2005, the Company had 1,266 full-time employees,
including its executive officers, an increase of 125 employees or
10.95% since September 30, 2004. Advertising expense decreased by
$1.1 million or 36.49% for the three months ended September 30,
2005, and $2.2 million or 24.19% for the nine months ended
September 30, 2005, when compared to the same periods in 2004, as
the Company concluded its radio, newspaper and television campaign
promoting Westernbank's institutional image and positioning the
Company for its strategy in the San Juan Metropolitan area that was
in effect during most of the year 2004. Noninterest expenses, other
than salaries and employees' benefits, and advertising discussed
above, increased by $1.2 million or 9.68% for the third quarter of
2005, and by $1.1 million or 3.04% for the nine months ended
September 30, 2005, as a result of the Company's continued
expansion in the San Juan Metropolitan area and our entrance to the
east coast of Puerto Rico. The Company has maintained operating
expenses at adequate levels, and achieved an efficiency ratio of
29.69% for the nine months ended September 30, 2005 and 30.97% for
the third quarter of year 2005, compared to 30.38% and 29.92% for
the same periods of 2004, respectively. Provision for Income Taxes
The current provision for Puerto Rico income taxes for the nine
months ended September 30, 2005, amounted to $39.6 million,
significantly higher when compared to $19.9 million in the same
period of 2004. The increase in the current provision for income
taxes is attributed to two factors. First, on August 1, 2005, the
Governor of Puerto Rico signed Law No. 41 which imposes a
transitory additional surtax of 2.5% over net taxable income. This
transitory additional tax will be in effect for taxable years 2005
and 2006 and had a retroactive effect to January 1, 2005.
Accordingly, the Company recorded an additional current income tax
provision of $2.5 million during the quarter ended September 30,
2005, of which $1.6 million corresponds to the retroactive effect
of this bill for the first six months of year 2005. Second, the
increase in the income before the provision for income taxes was
primarily due to the significant increase in the Company's taxable
income derived from increases in the loans portfolio; changing the
proportion between exempt and taxable income, increasing the
Company's effective tax rate. The decrease of $2.2 million in the
deferred credit for the nine months ended September 30, 2005, when
compared to the prior year period, is attributable to temporary
differences in the recognition of certain items for tax and books,
principally changes in the allowance for loan losses. Even though
the Company's effective tax rate increased, it continues to be
substantially below the statutory rate. Early in August 2005, the
Governor of Puerto Rico resubmitted to the Puerto Rico Legislature
a draft of a bill to impose an additional transitory income tax of
4% on net interest income, as defined, applicable to Puerto Rico
financial institutions. This transitory additional tax, if
approved, is expected to be also in effect for two years. The
proposal excludes from the definition of net interest income,
exempt interest earned from obligations of the United States, of
any state or territory of the United States or political
subdivision, the District of Columbia, the Commonwealth of Puerto
Rico or any instrumentality or political subdivision; including all
interest expense allocable to exempt income. There is no assurance
that this proposal will not be approved or significant changes made
before it is signed into law. The final impact of this proposal
will depend on the final bill, if approved, and the actual
distribution of taxable and exempt income in each applicable year.
Asset Quality W Holding's asset quality continues to be very strong
as evidenced by our key asset quality performance indicators in
spite of the Company's continued aggressive loan portfolio growth.
Net loans charged-offs to average loans, improved over the prior
year comparable quarter and remain very in line with our year end
performance even thought seasonal factors usually result in
intra-year fluctuations in our delinquency ratios. W Holding is
essentially a secured lender having 83% of its loan portfolio as of
September 30, 2005 secured by real estate. Our combined delinquency
on all portfolios for the categories of 60 days and over continues
to be below our benchmark of 1% for both periods. This combined
delinquency was 0.74% at September 30, 2005, an improvement of 8
basis points when compared to an already excellent ratio of 0.82%
at September 30, 2004. The delinquency ratio on the commercial loan
portfolio for the categories of 60 days and over, increased
slightly by 5 basis points to a still excellent 0.80% (less than
1%), when compared to 0.75% reported for the year ago period. The
delinquency ratio on the consumer loan portfolio, including the
Expresso of Westernbank loan portfolio, for the categories of 60
days and over improved by 9 basis points, to 1.53% at September 30,
2005, when compared to 1.62% for the comparable period last year.
On a linked quarter comparison, our combined delinquency on all
portfolios for the categories of 60 days and over increased by 9
basis points, from 0.65% at June 30, 2005. The increase in the
overall delinquency ratio resulted from increases in the
delinquency levels of the commercial and consumer loan portfolios,
mainly in loans collateralized by real estate properties. The
delinquency ratio on the commercial loan portfolio for the
categories of 60 days and over, increased 13 basis points from
0.67% at June 30, 2005. The increase in the delinquency ratio of
the commercial loan portfolio was principally due to one commercial
loan with a principal balance of $2.5 million. This loan is
collateralized with real estate and did not require any valuation
allowance. The delinquency ratio on the consumer loan portfolio,
including the Expresso of Westernbank loan portfolio, for the
categories of 60 days and over increased 18 basis points from 1.35%
at June 30, 2005. The increase in the regular consumer loans
delinquency ratio on a linked quarter comparison is also
principally attributable to regular consumer loans past due over 90
days which are collateralized by real estate properties. The
provision for possible loan losses amounted to $6.0 million for the
quarter ended September 30, 2005, down $4.4 million or 42.19%, from
$10.4 million for the same period in the previous year. Even though
the loan portfolio grew between periods, the decrease was
attributed to the strong asset quality as evidenced by lower net
charge offs and relatively stable delinquencies in our commercial
and consumer loan portfolios during the third quarter of year 2005,
when compared to the same period in 2004, as explained before. For
the nine months ended September 30, 2005, the provision for
possible loan losses amounted to $17.0 million, down from $30.1
million for the nine months ended September 30, 2004, a decrease of
$13.1 million or 43.60%. The allowance for possible loan losses
reached $86.6 million as of September 30, 2005. Net loans
charged-off in the third quarter of 2005 were $3.8 million or 0.21%
(annualized) to average loans, a significant improvement when
compared to $6.2 million or 0.44% (annualized) to average loans for
the same period in 2004, a decrease of $2.4 million or 37.95%. For
the nine months ended September 30, 2005, net charge-offs amounted
to $10.5 million or 0.21% (annualized) to average loans, also a
decrease of $4.7 million, when compared to $15.2 million or 0.38%
(annualized) to average loans in 2004. The decrease in net loans
charged-off for the third quarter of 2005 when compared to the same
quarter in 2004, is principally attributed to lower net charge-offs
of consumer loans. Loans charged-off by the Expresso of Westernbank
division, the principal component of the consumer loans
charged-off, decreased from $3.2 million during the third quarter
of 2004, to $2.4 million for the third quarter of 2005, a decrease
of $821,000 or 25.31%. On a linked quarter comparison, loans
charged-off by the Expresso of Westernbank division have stabilized
at lower levels when compared to the higher write-off experienced
in the first half of 2004, being $2.5 million in the fourth quarter
of 2004, $2.1 million in the first quarter of 2005, $2.4 million in
the second quarter of 2005, and $2.4 million in the third quarter
of 2005. Management strategy of stabilizing charge offs and
increasing the yield of the Expresso loan portfolio by continuously
revising its underwriting policies, increasing the level of
collateralized loans, and increasing the overall rates charged has
resulted in lower levels in net charge offs and a higher yield. The
average yield of the Expresso of Westernbank loan portfolio was
22.89% at September 30, 2005. Also, the loan portfolio of Expresso
of Westernbank collateralized by real estate at September 30, 2005,
already accounts for 14% of the outstanding balance. Non-performing
loans stand at $51.7 million or 0.69% (less than 1%) of
Westernbank's loan portfolio at September 30, 2005, an increase of
$17.5 million, when compared to $ 34.3 million at December 31,
2004. The increase in non-performing loans mainly comes from the
Company's commercial loans portfolio. Non-performing loans on the
commercial loan portfolio increased by $ 14.1 million, when
compared to December 31, 2004. The increase is mainly attributed to
one borrower with four loans with an aggregate principal balance of
$ 8.4 million and two additional loans with principal balances of
$1.5 million and $1.1 million, respectively. All loans are fully
collateralized by real estate properties and did not require any
valuation allowance. At September 30, 2005, none of the additional
non-performing loans exceeded $1.0 million in outstanding principal
balance. At September 30, 2005, the allowance for possible loan
losses was 167.41% of total non-performing loans (reserve
coverage). Moreover, of the total allowance of $86.6 million, $11.1
million is for our specific allowance and the remaining $75.5
million is for our general allowance. Total Loans, Investments and
Deposits Loans receivable-net, grew $1.5 billion or 24.61%, to $7.4
billion at September 30, 2005, compared to $5.9 billion at December
31, 2004, and $1.7 billion or 29.50% compared to $5.7 billion at
September 30, 2004. These increases reflect the Company's emphasis
on continued growth in its variable rate loan portfolio mainly
through commercial real estate and commercial business and others,
including asset-based and residential real estate. As a result,
commercial real estate loans increased from $3.0 billion as of
September 30, 2004, to $3.2 billion as of December 31, 2004, and to
$3.9 billion as of September 30, 2005, an increase of $913.5
million or 30.95% on a year to year basis, and $710.3 million or
22.51%, when compared to December 31, 2004. Other commercial loans
not collateralized by real estate, increased from $741.5 million at
September 30, 2004, to $768.6 million at December 31, 2004, and to
$989.2 million at September 30, 2005, up by $247.7 million or
33.40% on a year to year basis, and $220.6 million or 28.70%, when
compared to December 31, 2004. Residential real estate mortgage
loans portfolio increased from $902.9 million at December 31, 2004,
to $1.3 billion at September 30, 2005, an increase of $445.7
million or 49.36%. This increase is mainly due to the purchase
during the first two quarters of 2005 of residential mortgage loans
on a floating rate basis from other mortgage originators in Puerto
Rico, as part of the management strategy of emphasizing in growing
its variable rate loans, in light of the current rising interest
rate scenario. No such purchase was made during the quarter ended
September 30, 2005. Attached as Exhibit IV is a supplemental
unaudited data schedule providing additional information on W
Holding loan portfolio. W Holding's investment portfolio, excluding
short-term money market instruments, stands at $7.0 billion at
September 30, 2005, increasing slightly by $58.4 million or 0.84%
in comparison to December 31, 2004. The change in the investment
portfolio is attributable to approximately $150.0 million
previously invested in money market instruments that were
reinvested into $150.0 million of U.S. Government and agencies
obligations on a short-term basis. In light of the current rising
interest rate scenario, the Company's strategy has shifted to
reposition its balance sheet by continuing the emphasis on growing
its floating rate loans, while remaining on the sideline on the
investment side until new investment opportunities arise. The
investment portfolio at September 30, 2005, had an average
contractual maturity of 47 months. The Company's interest rate risk
model takes into consideration the callable feature of certain
investment securities. Assuming that all call features are
exercised, the investment portfolio as of September 30, 2005, had a
remaining average maturity of 6 months. However, no assurance can
be given that such levels will be maintained in future periods. As
of September 30, 2005, total deposits reached $7.9 billion, from
$6.2 billion at December 31, 2004, an increase of $1.7 billion or
26.54%, while federal funds purchased and repurchase agreements
decreased to $6.3 billion, from $6.7 billion at December 31, 2004,
a decrease of $366.8 million or 5.49%. During the nine months ended
September 30, 2005, the Bank has continued extending a portion of
its liabilities to lock-in the rate for a period of up to three
years. This strategy is part of the process adopted by the Bank in
mid 2004, whereby similar transactions were executed during the
third and fourth quarter of 2004. 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. Except as required by applicable law, the Company does not
intend, and specifically disclaims any obligation, to update
forward-looking statements. 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
throughout 53 full fledged branches, including 33 in the
Southwestern region of Puerto Rico, 7 in the Northeastern region,
12 at the San Juan Metropolitan area of Puerto Rico and one in the
Eastern region of Puerto Rico, and a fully functional banking site
on the Internet. W HOLDING COMPANY, INC. also owns Westernbank
Insurance Corp., a general insurance agent placing property,
casualty, life and disability insurance, whose results of
operations and financial condition are reported on a consolidated
basis. Messrs. Frank C. Stipes, Esq., Chairman of the Board and
Chief Executive Officer of W Holding Company, Inc., Freddy
Maldonado, President of W Holding Company, Inc., Jose M. Biaggi,
Esq. President and Chief Executive Officer of Westernbank Puerto
Rico, Ricardo Hernandez, Chief Financial Officer and Carmen T.
Casellas, Investor Relations, are available to answer appropriate
questions regarding this press release. You may contact any of the
above officers at (787) 834-8000; or via internet at or URL:
http://www.w-holding.com/ . W HOLDING COMPANY, INC. EXHIBIT I
FINANCIAL HIGHLIGHTS (UNAUDITED) Three Months Ended Nine Months
Ended September 30, September 30, 2005 2004 2005 2004 (Amounts in
thousands, except per share data) Income Statement Data Interest
income: Loans, including loan fees $ 126,690 $ 82,645 $ 341,258 $
232,710 Investment securities 62,433 55,159 184,425 153,542
Mortgage- backed securities 7,741 9,162 25,006 28,660 Money market
instruments 8,483 4,579 27,369 12,056 Total interest income 205,347
151,545 578,058 426,968 Interest expense: Deposits 62,367 36,858
161,340 102,282 Federal funds purchased and repurchase agreements
60,437 35,874 167,113 97,250 Advances from Federal Home Loan Bank
1,870 1,767 5,693 4,621 Total interest expense 124,674 74,499
334,146 204,153 Net interest income 80,673 77,046 243,912 222,815
Provision for loan losses 6,000 10,379 17,000 30,141 Net interest
income after provision for loan losses 74,673 66,667 226,912
192,674 Noninterest income: Service and other charges on loans
2,916 2,546 7,599 7,344 Service charges on deposit accounts 2,153
2,054 6,303 5,974 Other fees and commissions 3,326 2,930 9,542
8,089 Net gain on sales and valuation of loans, securities, and
other assets 100 594 414 867 Gain (loss) on derivative instruments
(188) 249 (124) 12 Total noninterest income 8,307 8,373 23,734
22,286 Total net interest income and noninterest income 82,980
75,040 250,646 214,960 Noninterest expenses: Salaries and
employees' benefits 11,866 9,701 34,045 27,846 Equipment 2,488
2,179 7,051 6,981 Deposit insurance premium and supervisory
examination 843 753 2,468 2,112 Occupancy 1,976 1,536 5,611 4,882
Advertising 1,925 3,031 6,743 8,895 Printing, postage, stationery,
and supplies 730 817 2,328 2,490 Telephone 457 577 1,512 1,764 Net
(gain) loss from operations of foreclosed real estate held for sale
(80) (58) (287) 515 Municipal taxes 1,276 1,078 3,432 2,875 Other
6,103 5,694 16,476 15,835 Total noninterest expenses 27,584 25,308
79,379 74,195 Income before provision for income taxes 55,396
49,732 171,267 140,765 Provision for income taxes: Current 16,258
6,308 39,557 19,861 Deferred (878) (819) (2,670) (4,856) Total
provision for income taxes 15,380 5,489 36,887 15,005 Net income $
40,016 $ 44,243 $ 134,380 $ 125,760 Net income available to common
stockholders $ 30,784 $ 37,510 $ 106,625 $ 105,509 Basic earnings
per common share $ 0.19 $ 0.23 (1) $ 0.65 $ 0.65 (1) Diluted
earnings per common share $ 0.18 $ 0.22 (1) $ 0.63 $ 0.62 (1) Cash
dividends declared per common share (2) $ 0.05 $ 0.04 (1) $ 0.14 $
0.11 (1) Period end number of common shares outstanding 164,066
163,477 (1) 164,066 163,477 (1) Weighted average number of common
shares outstanding 164,057 163,397 (1) 164,010 163,215 (1) Weighted
average number of common shares outstanding on a diluted basis
170,706 170,816 (1) 170,747 170,669 (1) Cash dividends declared on:
Common stock $ 7,793 $ 5,875 $ 22,781 $ 17,611 Preferred stock $
9,232 $ 6,733 $ 27,755 $ 20,251 (1) Adjusted to reflect the
three-for-two stock split and a 2% stock dividend on our common
stock declared in December 2004 and both distributed on January 10,
2005. (2) Cash dividend amounts in the table are rounded. W HOLDING
COMPANY, INC. EXHIBIT II FINANCIAL HIGHLIGHTS (UNAUDITED) Balance
Sheet Data September 30, December 31, September 30, 2005 2004 2004
(In thousands) At Period End Cash and due from banks $ 95,583 $
77,752 $ 89,495 Money market instruments: Federal funds sold and
resell agreements 792,741 1,017,303 680,078 Interest-bearing
deposits in banks 105,613 49,476 51,799 Investment securities
available for sale, at fair value 680 7,881 12,226 Investment
securities held to maturity, at amortized cost 6,987,013 6,921,379
6,613,078 Federal Home Loan Bank stock, at cost 35,300 52,195
57,105 Residential mortgage loans held for sale, at lower of cost
or fair value 1,483 1,633 1,714 Loans -- net 7,403,514 5,941,233
5,716,931 Accrued interest receivable 96,264 88,285 78,442 Premises
and equipment, net 114,656 110,051 108,340 Deferred income taxes,
net 33,697 31,027 29,787 Other assets 44,958 38,447 39,863 Total
Assets $15,711,502 $14,336,662 $13,478,858 Liabilities: Deposits:
Noninterest- bearing $ 288,929 $ 249,368 $ 240,841 Interest-bearing
and related accrued interest payable 7,596,237 5,981,843 5,991,784
Total deposits 7,885,166 6,231,211 6,232,625 Federal funds
purchased and repurchase agreements 6,316,767 6,683,527 6,011,735
Advances from Federal Home Loan Bank 172,000 211,000 211,000
Mortgage note payable 36,544 36,858 36,960 Securities purchased but
not yet received - - 5,020 Accrued expenses and other liabilities
115,398 92,387 62,729 Total Liabilities 14,525,875 13,254,983
12,560,069 Stockholders' equity 1,185,627 1,081,679 918,789 Total
Liabilities and Stockholders' Equity $ 15,711,502 $ 14,336,662 $
13,478,858 Quarter to Date Averages (1) Year to Date Averages (1)
Average Balances September 30, September 30, September 30,
September 30, 2005 2004 2005 2004 (In thousands) Cash and due from
banks $ 100,638 $ 83,591 $ 86,668 $ 91,153 Money market
instruments: Federal funds sold and resell agreements 775,161
633,802 905,022 664,965 Interest- bearing deposits in banks 80,215
61,509 77,545 44,783 Trading securities - 1,291 - - Investment
securities available for sale 1,436 67,588 4,281 33,653 Investment
securities held to maturity 6,945,921 6,567,005 6,954,196 6,168,394
Federal Home Loan Bank stock 35,300 49,178 43,748 48,428
Residential mortgage loans held for sale 1,560 1,185 1,558 2,135
Loans -- net 7,259,457 5,557,402 6,672,374 5,200,025 Accrued
interest receivable 97,503 81,345 92,275 77,004 Premises and
equipment, net 113,224 107,712 112,354 105,855 Deferred income
taxes, net 33,259 29,374 32,362 27,348 Other assets 48,103 41,662
41,703 35,408 Total Assets $15,491,777 $13,282,644 $15,024,086
$12,499,151 Liabilities: Deposits: Noninterest- bearing $ 291,597 $
257,345 $ 269,149 $ 216,801 Interest- bearing and related accrued
interest payable 7,402,111 5,897,064 6,789,040 5,592,250 Total
deposits 7,693,708 6,154,409 7,058,189 5,809,051 Federal funds
purchased and repurchase agreements 6,303,087 5,927,527 6,500,147
5,528,891 Advances from Federal Home Loan Bank 172,000 193,500
191,500 178,500 Mortgage note payable 36,595 37,006 36,701 37,097
Securities purchased but not yet received - 2,510 - 2,510 Accrued
expenses and other liabilities 112,356 65,107 103,896 69,453 Total
Liabilities 14,317,746 12,380,059 13,890,433 11,625,502
Stockholders' equity 1,174,031 902,585 1,133,653 873,649 Total
Liabilities and Stockholders' Equity $15,491,777 $13,282,644
$15,024,086 $12,499,151 (1) Average balances have been computed
using beginning and period-end balances. W HOLDING COMPANY, INC.
EXHIBIT III a YIELDS EARNED AND RATES PAID THREE MONTHS ENDED
SEPTEMBER 30, (UNAUDITED) 2005 Annualized Average Average Interest
Balance (1) Yield/Rate (Dollars in thousands) Normal spread:
Interest-earning assets: Loans, including loan fees (2) $ 126,690
$7,226,415 6.96 % Investment securities (3) 62,433 6,332,947 3.91
Mortgage-backed securities (3) 7,741 731,220 4.20 Money market
instruments 8,483 835,937 4.03 Total 205,347 15,126,519 5.39
Interest-bearing liabilities: Deposits 62,367 7,609,348 3.25
Federal funds purchased and repurchase agreements 60,437 6,330,813
3.79 Advances from FHLB 1,870 172,000 4.31 Total 124,674 14,112,161
3.50 Net interest income $ 80,673 Interest rate spread 1.89 % Net
interest-earning assets $1,014,358 Net yield on interest-earning
assets (4) 2.12 % Ratio of interest-earning assets to
interest-bearing liabilities 107.19% Tax equivalent spread:
Interest-earning assets $205,347 $15,126,519 5.39 % Tax equivalent
adjustment 7,609 - 0.20 Interest-earning assets -- tax equivalent
212,956 $15,126,519 5.59 Interest-bearing liabilities 124,674
$14,112,161 3.50 Net interest income $ 88,282 Interest rate spread
2.09 % Net yield on interest -- earning assets (4) 2.32 % 2004
Annualized Average Average Interest Balance (1) Yield/Rate Normal
spread: Interest-earning assets: Loans, including loan fees (2) $
82,645 $ 5,565,089 5.91 % Investment securities (3) 55,159
5,618,796 3.91 Mortgage-backed securities (3) 9,162 910,848 4.00
Money market instruments 4,579 651,355 2.80 Total 151,545
12,746,088 4.73 Interest-bearing liabilities: Deposits 36,858
6,046,809 2.42 Federal funds purchased and repurchase agreements
35,874 5,743,827 2.48 Advances from FHLB 1,767 187,747 3.74 Total
74,499 11,978,383 2.47 Net interest income $ 77,046 Interest rate
spread 2.26 % Net interest-earning assets $ 767,705 Net yield on
interest-earning assets (4) 2.40 % Ratio of interest-earning assets
to interest-bearing liabilities 106.41% Tax equivalent spread:
Interest-earning assets $ 151,545 $12,746,088 4.73 % Tax equivalent
adjustment 13,907 - 0.43 Interest-earning assets -- tax equivalent
165,452 $12,746,088 5.16 Interest-bearing liabilities 74,499
$11,978,383 2.47 Net interest income $ 90,953 Interest rate spread
2.69 % Net yield on interest -- earning assets (4) 2.84 % (1)
Average balances on interest-earning assets and on interest-bearing
liabilities are computed using daily monthly average balances
during the period. (2) Average loans exclude non-performing loans.
Loan fees, net amounted to $5.2 million and $3.1 million for the
three-month periods ended September 30, 2005 and 2004,
respectively. (3) Includes trading and available for sale
securities. (4) Annualized net interest income divided by average
interest-earning assets. W HOLDING COMPANY, INC. EXHIBIT III b
YIELDS EARNED AND RATES PAID NINE MONTHS ENDED SEPTEMBER 30,
(UNAUDITED) 2005 Annualized Average Average Interest Balance (1)
Yield/Rate (Dollars in thousands) Normal spread: Interest-earning
assets: Loans, including loan fees (2) $ 341,258 $6,757,577 6.75 %
Investment securities (3) 184,425 6,273,567 3.93 Mortgage-backed
securities (3) 25,006 779,106 4.29 Money market instruments 27,369
939,062 3.90 Total 578,058 14,749,312 5.24 Interest-bearing
liabilities: Deposits 161,340 7,142,636 3.02 Federal funds
purchased and repurchase agreements 167,113 6,439,478 3.47 Advances
from FHLB 5,693 188,249 4.04 Total 334,146 13,770,363 3.24 Net
interest income $ 243,912 Interest rate spread 2.00 % Net
interest-earning assets $ 978,949 Net yield on interest-earning
assets (4) 2.21 % Ratio of interest-earning assets to
interest-bearing liabilities 107.11% Tax equivalent spread:
Interest-earning assets $ 578,058 $14,749,312 5.24 % Tax equivalent
adjustment 34,189 - 0.31 Interest-earning assets -- tax equivalent
612,247 $14,749,312 5.55 Interest-bearing liabilities 334,146
$13,770,363 3.24 Net interest income $ 278,101 Interest rate spread
2.31 % Net yield on interest -- earning assets (4) 2.52 % 2004
Annualized Average Average Interest Balance (1) Yield/Rate Normal
spread: Interest-earning assets: Loans, including loan fees (2) $
232,710 $ 5,237,517 5.93 % Investment securities (3) 153,542
5,206,047 3.94 Mortgage-backed securities (3) 28,660 961,326 3.98
Money market instruments 12,056 680,406 2.37 Total 426,968
12,085,296 4.72 Interest-bearing liabilities: Deposits 102,282
5,791,741 2.36 Federal funds purchased and repurchase agreements
97,250 5,433,281 2.39 Advances from FHLB 4,621 148,547 4.16 Total
204,153 11,373,569 2.40 Net interest income $ 222,815 Interest rate
spread 2.32 % Net interest-earning assets $ 711,727 Net yield on
interest-earning assets (4) 2.46 % Ratio of interest-earning assets
to interest-bearing liabilities 106.26% Tax equivalent spread:
Interest-earning assets $ 426,968 $12,085,296 4.72 % Tax equivalent
adjustment 39,893 - 0.44 Interest-earning assets -- tax equivalent
466,861 $12,085,296 5.16 Interest-bearing liabilities 204,153
$11,373,569 2.40 Net interest income $ 262,708 Interest rate spread
2.76 % Net yield on interest -- earning assets (4) 2.90 % (1)
Average balances on interest-earning assets and on interest-bearing
liabilities are computed using daily monthly average balances
during the period. (2) Average loans exclude non-performing loans.
Loan fees, net amounted to $14.8 million and $8.3 million for the
nine-month periods ended September 30, 2005 and 2004, respectively.
(3) Includes trading and available for sale securities. (4)
Annualized net interest income divided by average interest-earning
assets. W HOLDING COMPANY, INC. EXHIBIT III c CHANGES IN YIELDS
EARNED AND RATES PAID (UNAUDITED) Three Months Ended Nine Months
Ended September 30, September 30, 2005 vs. 2004 2005 vs. 2004
Volume Rate Total Volume Rate Total (In thousands) Interest income:
Loans $27,633 $ 16,412 $44,045 $73,631 $34,917 $108,548 Investment
securities (1) 7,190 84 7,274 31,238 (355) 30,883 Mortgage-backed
securities (1) (1,898) 477 (1,421) (6,185) 2,531 (3,654) Money
market instruments 1,530 2,374 3,904 5,671 9,642 15,313 Total
increase in interest income 34,455 19,347 53,802 104,355 46,735
151,090 Interest expense: Deposits 10,998 14,511 25,509 26,826
32,232 59,058 Federal funds purchased and repurchase agreements
4,007 20,556 24,563 20,330 49,533 69,863 Advances from FHLB (127)
230 103 1,192 (120) 1,072 Total increase in interest expense 14,878
35,297 50,175 48,348 81,645 129,993 Increase (decrease) in net
interest income $19,577 $(15,950) $ 3,627 $56,007 $(34,910) $
21,097 (1) Includes trading and available for sale securities. W
HOLDING COMPANY, INC. EXHIBIT IV LOAN RECEIVABLE-NET (UNAUDITED)
September December September 30, 31, 30, 2005 2004 2004 (In
thousands) Residential real estate: Mortgage $1,348,630 $ 902,937 $
938,637 Construction 449,156 328,145 294,916 Commercial, industrial
and agricultural (1): Real estate 3,864,933 3,154,679 2,951,446
Business and others 989,179 768,604 741,518 Consumer and others (2)
838,212 866,934 867,002 Total Loans 7,490,110 6,021,299 5,793,519
Allowance for loan losses (86,596) (80,066) (76,588) Loans -- net
$7,403,514 $5,941,233 $5,716,931 (1) Includes $1.2 billion, $831.1
million and $795.5 million of Westernbank Business Credit division
outstanding loans at September 30, 2005, December 31, 2004 and
September 30, 2004, respectively. (2) Includes $135.9 million,
$144.0 million and $144.6 million of Expresso of Westernbank
division outstanding loans at September 30, 2005, December 31, 2004
and September 30, 2004, respectively. W HOLDING COMPANY, INC.
EXHIBIT V NON-PERFORMING LOANS AND FORECLOSED REAL ESTATE HELD FOR
SALE (UNAUDITED) September December September 30, 2005 31, 2004 30,
2004 (Dollars in thousands) Commercial, industrial and agricultural
loans $ 39,480 $ 25,417 $ 28,187 Consumer loans 8,616 7,122 8,309
Residential real estate mortgage and construction loans 3,631 1,730
2,217 Total non-performing loans 51,727 34,269 38,713 Foreclosed
real estate held for sale 4,096 3,811 4,444 Total non-performing
loans and foreclosed real estate held for sale $ 55,823 $ 38,080 $
43,157 Interest that would have been recorded if the loans had not
been classified as non-performing $ 4,195 $ 3,557 $ 3,062 Interest
recorded on non-performing loans $ 733 $ 243 $ 206 Total
non-performing loans as a percentage of total loans at end of
period 0.69% 0.57% 0.67% Total non-performing loans and foreclosed
real estate held for sale as a percentage of total assets at end of
period 0.36% 0.27% 0.32% W HOLDING COMPANY, INC. EXHIBIT VI CHANGES
IN ALLOWANCE FOR LOAN LOSSES (UNAUDITED) September December
September 30, 31, 30, 2005 2004 2004 (Dollars in thousands)
Balance, beginning of year $ 80,066 $ 61,608 $ 61,608 Loans
charged-off: Consumer loans (1) (9,608) (16,473) (12,889)
Commercial, industrial and agricultural loans (2,784) (5,433)
(4,658) Real estate-mortgage and construction loans (63) (297)
(197) Total loans charged-off (12,455) (22,203) (17,744) Recoveries
of loans previously charged-off: Consumer loans (2) 1,366 1,920
1,409 Commercial, industrial and agricultural loans 443 1,844 1,102
Real estate-mortgage and construction loans 176 206 72 Total
recoveries of loans previously charged-off 1,985 3,970 2,583 Net
loans charged-off (10,470) (18,233) (15,161) Provision for loan
losses 17,000 36,691 30,141 Balance, end of period $ 86,596 $
80,066 $ 76,588 Ratios: Allowance for loan losses to total loans at
end of period 1.16% 1.33% 1.32% Provision for loan losses to net
loans charged-off 162.37% 201.23% 198.81% Recoveries of loans to
loans charged-off in previous period 11.95% (3) 26.71% 23.18% (3)
Net loans charged-off to average total loans (4) 0.21% (3) 0.34%
0.38% (3) Allowance for loan losses to non-performing loans 167.41%
233.64% 197.84% (1) Includes $6.9 million and $9.9 million of
Expresso of Westernbank loans charged-offs for the nine-month
periods ended September 30, 2005 and September 30, 2004,
respectively, and $12.4 million for the year ended December 31,
2004. (2) Includes $712,000 and $683,000 of Expresso of Westernbank
loans recoveries for the nine-month periods ended September 30,
2005 and September 30, 2004, respectively, and $1.0 million for the
year ended December 31, 2004. (3) Net loans charged-off ratios are
annualized for comparison purposes. (4) Average loans were computed
using beginning and period-end balances. W HOLDING COMPANY, INC.
EXHIBIT VII SELECTED FINANCIAL RATIOS (UNAUDITED) Three Months
Ended Nine Months Ended September 30, September 30, 2005 2004 2005
2004 (Dollars and share data in thousands, except per share data)
Per share data: Dividend payout ratio 25.32% 15.66% 21.37% 16.69%
Book value per common share $ 3.99 $ 3.29 (2) $ 3.99 $ 3.29 (2)
Preferred stock outstanding at end of period 18,163 15,245 18,163
15,245 Preferred stock equity at end of period $531,006 $381,136
$531,006 $381,136 Performance ratios: Return on assets (1) 1.03%
1.33% 1.19% 1.34% Return on common stockholders' equity (1) 19.15%
28.81% 23.22% 28.67% Efficiency ratio 30.97% 29.92% 29.69% 30.38%
Operating expenses to total end-of-period assets 0.70% 0.75% 0.67%
0.73% Capital ratios: Total capital to risk- weighted assets 14.58%
14.09% 14.58% 14.09% Tier I capital to risk- weighted assets 13.72%
13.15% 13.72% 13.15% Tier I capital to average assets 7.64% 7.00%
7.64% 7.00% Equity-to-assets ratio (1) 7.58% 6.82% 7.55% 6.82%
Other selected data: Total trust assets managed $479,734 $388,932
$479,734 $388,932 Branch offices 53 51 53 51 Number of employees
1,266 1,141 1,266 1,141 Year Ended December 31, 2004 Per share
data: Dividend payout ratio 16.24% Book value per common share $
3.48 Preferred stock outstanding at end of period 17,794 Preferred
stock equity at end of period $511,744 Performance ratios: Return
on assets (1) 1.33% Return on common stockholders' equity (1)
28.55% Efficiency ratio 30.51% Operating expenses to total
end-of-period assets 0.70% Capital ratios: Total capital to
risk-weighted assets 15.70% Tier I capital to risk-weighted assets
14.78% Tier I capital to average assets 7.72% Equity-to-assets
ratio (1) 7.39% Other selected data: Total trust assets managed
$398,709 Branch offices 52 Number of employees 1,175 (1) The return
on assets is computed by dividing annualized net income by average
total assets for the period. The return on common stockholders'
equity is computed by dividing annualized net income less preferred
stock dividends by average common stockholders' equity for the
period. The equity-to-asset ratio is computed by dividing average
equity by average total assets. Average balances have been computed
using beginning and period-end balances. (2) Adjusted to reflect
the three-for-two stock split and a 2% stock dividend on our common
stock declared in December 2004 and both distributed on January 10,
2005. DATASOURCE: W Holding Company, Inc. CONTACT: W Holding
Company, Inc., +1-787-834-8000, or Web site: http://www.wbpr.com/
http://www.w-holding.com/
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