Skip navigation

Breaking News

Western Liberty Bancorp Reports 1Q11 Financial Results; Losses Narrow to $0.03 per Share and Tangible Book Value Totals $5.78 per Share

12:18 EDT Friday, April 29, 2011

LAS VEGAS, April 29, 2011 (GLOBE NEWSWIRE) -- Western Liberty Bancorp, Inc. (Nasdaq:WLBC), the holding company for Service1st Bank of Nevada (Service1st Bank), today reported exceptionally strong capital ratios, strong core deposits and narrowing losses. This quarter was Western Liberty's first full quarter of operations following its merger with Service1st Bank last year. Western Liberty recorded a loss of $409,000, or $0.03 per share, in the first quarter, compared to a loss of $1.8 million or $0.16 per share in the first quarter a year ago when it was solely a shell company. All results in this news release are unaudited. Comparisons for financial results in the first quarter of 2010 generally are not meaningful, because before the acquisition of Service1st Bank on October 28, 2010, Western Liberty had no operating entity. Consequently, comparisons for prior periods are primarily for the fourth quarter of 2010, which included only two months of operations of Service1st Bank.

"Western Liberty and Service1st Bank continue to be one of the best capitalized community banks in the nation, with a total capital to risk weighted assets ratio at 71.7% for the holding company," said William Martin, Chief Executive Officer. "With more than $38 million in cash and equivalents at the Bank we have an abundance of liquidity to see us through the remainder of the downturn in the greater Las Vegas economy. While still posting a loss in the first quarter, the improvement in our financial results reflects the reduction in 2010 merger related costs, as well as discount accretion on our loan portfolio as a result of the fair value adjustments recorded at the date of acquisition. We continue to believe we are well positioned to benefit from any improvements in the greater Las Vegas economy." 

"We have had several large loan resolutions in the quarter which have paid off, or were sold for a price above the fair valuation established last year," said George Rosenbaum. "Of the $3.8 million in interest income, $2.2 million was primarily from interest accretion for these loans."

Financial Highlights (at or for the quarter ended March 31, 2011)

  • Service1st Bank has exceptionally strong capital ratios with Tier 1 Capital/risk-adjusted assets of 32.5%
  • Western Liberty also has exceptionally strong capital with Tier 1 Capital/risk-adjusted assets of 70.6%
  • Book value was $6.21 per share and tangible book value was $5.78 per share, based on 15,088,023 shares outstanding.
  • Total cash and cash equivalents held by Western Liberty was $90.4 million, of which $52.2 million is at the holding company level. 
  • Noninterest bearing deposits accounted for 39% of total deposits and core deposits (excluding time certificates over $100,000) were 75% of total deposits.
  • Goodwill and core deposit intangible assets recorded as a result of the merger totaled $6.4 million.
  • Service1st Bank generated a net profit for the first quarter of 2011 of $745,000 which was offset at the holding company level by on-going compliance expenses. 
  • Legal and professional fees at the holding company level totaled $643,000, bringing the total cost for the consolidated company to $936,000.

"The capital infusion from the merger has allowed us to fulfill the most difficult requirement our regulators imposed after their last regularly scheduled annual exam that was in the second quarter last year,"  said Martin. "While this major requirement is now more than satisfied, we still have more work to do to meet the needs of our regulators, including improving asset quality and reducing classified assets. We are focused on our goal to return the balance sheet to health and to improve operating performance this year." 

Nevada Economic Update

"Trailing the national economy, the Southern Nevada economy is finally showing its own signs of recovery," said Stephen P. A. Brown, PhD, Director, Center for Business and Economic Research at the University of Nevada, Las Vegas in the "Quarterly Indicators Southern Nevada Business Confidence Index" for the second quarter of 2011.  "In the second half of 2010 and early 2011, gaming revenue, visitor volume and taxable sales were up over a year earlier. The Las Vegas unemployment rate fell to 13.7% in January and held there in February, although a decline in labor force participation accounted for most of the improvement. The Center for Business and Economic Research (CBER) Southern Nevada Index of Leading Economic Indicators adds to the sense of improvement in the Southern Nevada employment picture.  The index grew by 1.02% in January (the most recent month for which data are available). The increase, driven mainly by gains in travel and tourism, is one of the highest one-month increases in the 30-year history of the series."

Also, on April 15 the Associated Press reported that airport data showed that almost 3.6 million travelers used McCarran airport in March, up 2.2% from the nearly 3.5 million arriving and departing passengers in March 2010. The figures showed March was the busiest month this year.

There are a number of excellent reports on the Las Vegas and Nevada economic outlook on the CBER website, which can be found at http://cber.unlv.edu/snecon.html.

Balance Sheet Review

Western Liberty had $228.8 million in total assets at March 31, 2011, down 11% from $257.5 million at December 31, 2010. The decline in assets reflects a 12% reduction in cash and equivalents and a 4% reduction in gross loans.

Commercial real estate loans accounted for 52.2% of the loan portfolio and commercial loans comprised 39.2% of the loan portfolio. Construction and land development loans accounted for 4.5% of the loan portfolio and residential real estate loans were 3.9% of total loans at the end of March. Of the total loan portfolio, 61% is secured by real estate and 41% of the commercial real estate loan portfolio is owner occupied. The loan portfolio includes fair value adjustments as of October 28, 2010, as a result of the acquisition. The majority, or 63%, of the loan portfolio is adjustable rate loans, with most of these loans indexed to the national prime rate. In addition, most of these loans have interest rate minimums which are above the current prime rate index. 

Western Liberty had $131.8 million in total deposits, with 39% in non-interest bearing demand accounts. Deposits declined 18% from $160.3 million at year end primarily due to a single large account that transferred from the bank. "This $23.5 million deposit was required to be removed from the Bank based on our regulatory agreement. Our core deposit base is almost completely local deposits with no brokered or internet funding in the mix," said Martin. 

Total shares outstanding were 15.1 million at quarter end and there are 200,000 restricted stock units convertible into common shares on a one-for-one basis.

Asset Quality

Nonperforming assets totaled $10.1 million, or 4.42% of total assets at March 31, 2011.  "Due to accounting requirements, the loan loss allowance established by Service1st prior to the merger did not transfer to Western Liberty. During the first quarter, provisions for loan losses were made as a result of additional credit deterioration on loans acquired, which occurred after the acquisition, as well as for new loan originations. Consequently, the provision for loan losses increased to $1.4 million, well above the $110,000 net charge-offs in the quarter," Rosenbaum added. 

Classified loans, which include nonperforming loans as well as loans that continue to perform but have some identified weakness, totaled $17.1 million, or 17% of the loan portfolio. "We continue to work with borrowers to reduce our level of classified assets and are exploring a number of financial alternatives. We believe with the classified and nonperforming assets marked-to-market, we have flexibility in resolving the issues associated with these assets," Rosenbaum noted. 

Review of Operations

In the first quarter, net interest income, before the provision for loan losses, was $3.7 million up from $1.4 million in the first quarter a year ago. Discount accretion contributed $2.2 million to interest income in the first quarter of 2011 compared to $436,000 in the fourth quarter of 2010.

The provision for loan losses totaled $1.4 million in the first quarter compared to $36,000 in the fourth quarter of 2010. In the year ago quarter, Service1st Bank recorded  a provision for loan losses of $1.5 million. "Despite the successful resolution of several large loans that contributed to revenue, certain other loans in the portfolio are showing deterioration in the quarter from the values established in the fair value analysis. Consequently, we recorded a $1.4 million provision for loan losses which more than offset the $110,000 in net charge-offs," said Rosenbaum. Due to the accounting requirements, the loan loss allowance established by Service1st prior to the merger did not transfer to Western Liberty. Thus the allowance for loan losses was $1.3 million at the end of the first quarter, up from $36,000 at December 31, 2010.

Reflecting continuing elevated professional and legal fees, non-interest expense was $2.9 million in the first quarter, compared to $6.3 million in the fourth quarter of 2010. First quarter activities that contributed to higher administrative costs included audit fees for the year ended December 31, 2010 of the combined company, as well as audits for the predecessor entity and preparation and filing costs associated with the S-1A filed in April, which updates the original registration documentation. 

About Western Liberty Bancorp

Western Liberty Bancorp is a Nevada bank holding company which conducts operations through Service1st Bank of Nevada, its wholly owned banking subsidiary. Service1st Bank operates as a traditional community bank and provides a full range of deposit, lending and other banking services to locally-owned businesses, professional firms, individuals and other customers from its headquarters and two retail banking facilities located in the greater Las Vegas area. Services provided include: basic commercial and consumer depository services, commercial working capital and equipment loans, commercial real estate loans, and other traditional commercial banking services. Primarily all of the bank's business is generated in the Nevada market.

www.westernlibertybank.com

Sources: Nevada economy   http://cber.unlv.edu/cond.html

(http://www.therepublic.com/view/story/80531e17b0fa409fb2a4440aa9595e1f/NV--Vegas-Airport-Traffic/)

FORWARD LOOKING STATEMENTS

This release may contain "forward-looking statements" that are subject to risks and uncertainties. Readers should not place undue reliance on forward-looking statements, which reflect management's views only as of the date hereof. All statements, other than statements of historical fact, regarding our financial position, business strategy and management's plans and objectives for future operations are forward-looking statements.  When used in this report, the words "anticipate," "believe," "estimate," "expect," and "intend" and words or phrases of similar meaning, as they relate to Western Liberty or management, are intended to help identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Although we believe that management's expectations as reflected in forward-looking statements are reasonable, we cannot assure readers that those expectations will prove to be correct.  Forward-looking statements are subject to various risks and uncertainties that may cause our actual results to differ materially and adversely from our expectations as indicated in the forward-looking statements.  These risks and uncertainties include our ability to maintain or expand our market share or net interest margins, and to implement our marketing and growth strategies.  Further, actual results may be affected by our ability to compete on price and other factors with other financial institutions; customer acceptance of new products and services; the regulatory environment in which we operate; and general trends in the local, regional and national banking industry and economy as those factors relate to our cost of funds and return on assets.  In addition, there are risks inherent in the banking industry relating to collectability of loans and changes in interest rates.  Many of these risks, as well as other risks that may have a material adverse impact on our operations and business, are identified in our other filings with the SEC.  However, you should be aware that these factors are not an exhaustive list, and you should not assume these are the only factors that may cause our actual results to differ from our expectations.

 

Consolidated Income Statement    
(Dollars in thousands, except per share data) Three Months Ended 
(Unaudited) March 31, 
  2011 2010
Interest Income:    
Interest and fees on loans  $ 3,782  $ -- 
Interest on securities, taxable and other  66  2
Total interest and dividend income  3,848  2
Interest Expense:    
Interest expense on deposits 112  -- 
Net interest income 3,736 2
Provision for loan losses 1,364  -- 
Net interest income after provision for loan losses 2,372 2
     
Other Operating Income:    
Service charges 78  -- 
Other  43  -- 
Total other operating income 121  -- 
     
Other Operating Expense:    
Salaries and employee benefits 793  75
Occupancy, equipment and depreciation 374  -- 
Computer service charges 77  -- 
Federal deposit insurance 152  -- 
Legal and professional fees 936 855
Advertising and business development 20  -- 
Insurance 71 74
Telephone 26  -- 
Printing and supplies 142  105
Stock-based compensation 141  631
Provision for unfunded commitments (133)  -- 
Other 303  16
Total other operating expense 2,902 1,756
Net loss  $ (409)  $ (1,754)
     
Basic EPS  $ (0.03)  $ (0.16)
Diluted EPS  $ (0.03)  $ (0.16)
Average basic shares 15,088,023 10,959,169
Average diluted shares 15,088,023 10,959,169
     
Consolidated Balance Sheet    
(Dollars in thousands, except per share data)  
(Unaudited) March 31,  December 31,
  2011 2010
     
Assets:    
Cash and due from banks  $ 8,749  $ 11,675
Money market funds  52,206  52,206
Interest-bearing deposits in banks  29,488  39,346
Cash and cash equivalents  90,443  103,227
     
 Certificates of deposits  16,784  26,889
 Securities, available for sale  1,345  1,819
 Securities, held to maturity  3,737  5,314
Loans:    
Construction, land development and other land  4,619  5,923
Commercial real estate  53,416  54,975
Residential real estate  3,980  9,247
Commercial and industrial  40,041  35,946
Consumer 131 131
Plus: net deferred loan costs  20  37
Total loans  102,207  106,259
Less: allowance for loan losses  (1,290)  (36)
Net loans  100,917  106,223
Premises and equipment, net  1,120  1,228
 Other real estate owned, net  5,444  3,406
 Goodwill, net  5,633  5,633
 Other intangibles, net  744  768
 Accrued interest receivable and other assets  2,624  3,039
Total assets  $ 228,791  $ 257,546
     
Liabilities:    
Demand deposits, noninterest bearing  $ 51,847  $ 67,087
NOW and money market  39,721  56,509
Savings deposits  1,031  1,273
Time deposits $100,000 or more  33,335  30,498
Other time deposits  5,879  4,919
Total deposits  131,813  160,286
Contingent consideration  1,816  1,816
Accrued interest and other liabilities  1,604  1,615
Total liabilities  135,233  163,717
     
Shareholders' Equity:    
Common stock  1  1
Additional paid-in capital  117,458  117,317
Accumulated deficit  (23,898)  (23,489)
Accumulated other comprehensive loss, net  (3)  --
 Total stockholders' equity  93,558  93,829
 Total liabilities and stockholders' equity  $ 228,791  $ 257,546
     
Selected Consolidated Financial Highlights     
(Dollars in thousands, except per share data) March 31, December 31, 
(Unaudited) 2011 2010
Per Share data:    
Book Value   $ 6.21  $ 6.22
Tangible Book Value   $ 5.78  $ 5.79
     
Selected Balance Sheet Data:    
Total Assets  $ 228,791  $ 257,546
Cash and cash equivalents  90,443  103,227
Gross loans, including net deferred loan costs  102,207  106,259
Allowance for loan losses  1,290  36
Deposits  131,813  160,286
Stockholders' equity  93,558  93,829
     
Asset Quality:    
Nonperforming loans  $ 4,665  $ 10,426
Other Real Estate Owned  5,444  3,406
Nonperforming assets   $ 10,109  $ 13,832
Allowance for loan losses as a percentage    
 of nonperforming loans 12.76% 0.35%
Allowance for loan losses as a percentage    
 of portfolio loans 1.26% 0.03%
Nonperforming loans as a percentage of    
 total portfolio loans 4.56% 9.81%
Nonperforming assets as a percentage of total assets 4.42% 5.37%
Net charge-offs to average portfolio loans  0.11% 0.00%
     
Capital Ratios:    
Tier 1 equity to average assets 33.00% 30.50%
Tier 1 Risk-Based Capital ratio 70.60% 68.40%
Total Risk-Based Capital ratio 71.70%  68.80%
CONTACT: George Rosenbaum, Chief Financial Officer
         (702) 966-7400




Back to top