Wilshire Bancorp Inc. in Los Angeles offered a glimpse of its second-quarter results Thursday, saying it expects to record a net loss of up to $5 million.
The $3.4 billion-asset company said the anticipated loss stems from an elevated provision for loan losses and an increase in chargeoffs resulting from sales of nonperforming and delinquent loans.
Joanne Kim, the company's chief executive, said in a press release that Wilshire "saw an acceleration of loans migrating to nonperforming status" in the first half of 2010, in addition to declines in underlying collateral values of problem loans.
"Due to these negative trends in credit quality, we continue to take an aggressive approach to clearing problem loans from our balance sheet," Kim said.
The company's board of directors temporarily suspended dividend payments, a move that would save roughly $6 million in capital annually, according to a research note by Aaron James Deer, an analyst with Sandler O'Neill & Partners LP. As of March 31, the company's leverage ratio was 9.8%.
Wilshire has filed a registration statement to raise up to $100 million in capital, but has said it would do so only to acquire failed banks or repay its investment under the Troubled Asset Relief Program.
"This announcement could suggest the company is getting closer to a capital raise," Deer said in the note. "But we doubt it actually signals a change in management's timing, strategy or urgency."
