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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
APRIL 15, 1999
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Date of Report (Date of Earliest Event Reported)
WESTERN BANCORP
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(Exact Name of Registrant As Specified In Its Charter)
CALIFORNIA
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(State or Other Jurisdiction of Incorporation)
0-13551 95-3863296
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(Commission File Number) (IRS Employer Identification No.)
4100 NEWPORT PLACE, SUITE 900
NEWPORT BEACH, CALIFORNIA 92660
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(Address of Principal Executive Offices)(Zip Code)
(949) 863-2444
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(Registrant's Telephone Number, including Area Code)
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Item 5. Other Events.
On April 15, 1999 Western Bancorp (the "Company") issued a Press
Release announcing certain financial results for the first quarter of 1999, a
copy of which is attached hereto as Exhibit 99.1 and is incorporated herein in
its entirety by this reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
The following exhibit is filed with this Current Report on Form 8-K:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
<S> <C>
99.1 Press Release of Western Bancorp dated April 15, 1999.
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Dated: April 27, 1999
WESTERN BANCORP
By: /s/ Arnold C. Hahn
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Name: Arnold C. Hahn
Title: Executive Vice President
and Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
<S> <C>
99.1 Press Release of Western Bancorp dated February 15, 1999.
</TABLE>
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EXHIBIT 99.1
[LOGO]
WESTERN BANCORP
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- --------------------------------------------------------------------------------
PRESS RELEASE
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- --------------------------------------------------------------------------------
Western Bancorp (NASDAQ: WEBC)
4100 Newport Place, Suite 900
Newport Beach, California 92660
Contacts: Matthew P. Wagner Arnold C. Hahn
President & Chief Financial Officer
Chief Executive Officer
Phone: 310/477-2402 x 134 949/863-2351
Fax: 310/231-0321 949/757-5844
FOR IMMEDIATE RELEASE
WESTERN BANCORP ANNOUNCES FIRST QUARTER 1999 EARNINGS
April 15, 1999
Newport Beach, California . . . Western Bancorp ("Western") today announced it
had consolidated net income for the quarter ended March 31, 1999 of $9,020,000
or $0.43 per diluted share. This compares with consolidated net income of
$7,949,000 or $0.41 per diluted share, for the quarter ended March 31, 1998. On
an operating basis, before the amortization of goodwill, consolidated net income
for the three month periods was $11,746,000 and $10,022,000 in 1999 and 1998,
respectively, or $0.55 and $0.52 per diluted share, respectively.
As Santa Monica Bank was acquired on January 27, 1998 using the purchase method
of accounting, operating results are included only since February of the 1998
period.
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During the first quarter of 1999, the Western Board of Directors also approved a
quarterly dividend of $0.225 per common share which was paid on March 26, 1999
to shareholders of record on March 5, 1999.
Western's operating return on average tangible assets was 2.01% in the first
quarter of 1999 versus 1.83% in the first quarter of 1998 and 1.88% in the
fourth quarter of 1998.
Matthew P. Wagner, President and Chief Executive Officer of Western, stated, "We
continue to make progress towards our goal of making Western Bancorp one of the
premier banks in California. Much was accomplished in the first quarter of 1999
including:"
- On December 30, 1998, Western consummated the acquisition of PNB
Financial Group ("PNB") through the merger of PNB with and into
Western. The merger was accounted for as a pooling-of-interests. At
the end of February, Pacific National Bank was merged into Southern
California Bank both legally and operationally.
- As a result of the integration of Bank of Los Angeles at the end of
last year, our operating efficiency ratio improved from 55.0% in the
fourth quarter of 1998 to 52.8% in the first quarter of 1999. With the
integration of Pacific National Bank, we expect continued improvement
in the remainder of the year.
- Loans held for investment grew approximately 1% in the first quarter,
even after substantial pay offs.
- Business at PNB Mortgage, a division of Southern California Bank,
remained strong in the quarter with originations of approximately
$386 million.
- Key credit quality indicators continued to improve during the first
quarter of 1999. (See the credit discussion later in this document.)
- The trust business at Santa Monica Bank remains strong with
approximately $784 million in assets under administration.
- Capital ratios remain strong with tangible capital at 9.06% as of
March 31, 1999."
As of March 31, 1999, Western had approximately $2.5 billion in assets in its
two wholly-owned subsidiaries: Southern California Bank and Santa Monica Bank.
Southern California Bank serves southern Los Angeles, Orange and San Diego
Counties with fifteen branches and with its specialized escrow services and
asset based lending. In addition, PNB Mortgage, a division of Southern
California Bank, is a residential mortgage origination business with offices in
Irvine, Santa Ana, Dublin and San Diego, in California and offices in Arizona,
Washington and Hawaii. PNB Mortgage sells substantially all of its mortgage
loans in the secondary market with servicing released and therefore does not
have servicing assets. Santa Monica Bank serves its clients in Santa Monica,
Westwood, Malibu, Marina del Rey, Beverly Hills, Century City, Encino, Culver
City, West Hollywood, and Glendale with sixteen branches and its specialized
trust and investment management services.
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WESTERN BANCORP
UNAUDITED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
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(In thousands, except per share data)
<S> <C> <C>
ASSETS:
Cash and due from banks $ 109,249 $ 131,787
Federal funds sold 108,393 92,752
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TOTAL CASH AND CASH EQUIVALENTS 217,642 224,539
FRB and FHLB stock 9,870 9,760
Securities:
Securities available for sale 295,178 355,324
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TOTAL SECURITIES 305,048 365,084
Loans and leases held for investment, net 1,652,330 1,642,211
Loans and leases available for sale, net 99,157 130,255
Premises and equipment 32,940 33,536
Other real estate owned 4,140 4,361
Goodwill 142,776 145,514
Other assets 42,204 40,380
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TOTAL ASSETS $ 2,496,237 $ 2,585,880
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LIABILITIES AND SHAREHOLDERS' EQUITY:
LIABILITIES:
Non-interest bearing deposits $ 804,438 $ 868,965
Interest bearing deposits 1,279,509 1,303,304
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TOTAL DEPOSITS 2,083,947 2,172,269
Borrowings 24,079 23,722
Accrued interest payable and other liabilities 33,221 37,814
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TOTAL LIABILITIES 2,141,247 2,233,805
SHAREHOLDERS' EQUITY:
Preferred stock - -
Common stock 322,884 322,566
Retained earnings 33,172 28,856
Accumulated other comprehensive income -
unrealized net gains (losses) on securities
available for sale, net of tax (1,066) 653
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TOTAL SHAREHOLDERS' EQUITY 354,990 352,075
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,496,237 $ 2,585,880
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Number of common shares outstanding 20,903.8 20,858.5
Common shareholders' equity per share $ 16.98 $ 16.88
Tangible common shareholders' equity per share $ 10.15 $ 9.90
Tangible capital ratio 9.06% 8.44%
</TABLE>
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WESTERN BANCORP
UNAUDITED CONDENSED INCOME STATEMENTS (A)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
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1999 1998
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(In thousands, except per share data)
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans and leases $ 38,306 $ 35,149
Interest on investment securities 3,649 4,701
Interest on federal funds sold 1,609 2,766
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TOTAL INTEREST INCOME 43,564 42,616
INTEREST EXPENSE:
Interest expense on deposits 10,002 11,205
Interest expense on borrowed funds 330 447
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TOTAL INTEREST EXPENSE 10,332 11,652
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NET INTEREST INCOME: 33,232 30,964
Less: provision for loan and lease losses 675 300
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NET INTEREST INCOME AFTER PROVISION FOR LOAN AND
LEASE LOSSES 32,557 30,664
NON-INTEREST INCOME:
Service charges and fees on deposit accounts 2,445 2,434
Trust fees 1,095 637
Escrow fees
Mortgage related fees and commissions 1,636 2,231
Other fees and charges 1,063 741
Gain on sale of loans 3,533 3,233
Net securities gains - 124
Other income 299 95
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TOTAL NON-INTEREST INCOME 10,881 9,159
NON-INTEREST EXPENSE:
Salaries and benefits 14,252 13,333
Occupancy, furniture and equipment 3,318 3,529
Advertising and business development 465 429
Other real estate owned (368) 198
Professional services 760 1,283
Telephone, stationery and supplies 1,387 1,043
Goodwill amortization 2,726 2,073
Data processing 560 558
Customer services cost 877 717
Other 2,053 1,935
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TOTAL NON-INTEREST EXPENSE 26,030 25,098
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Income before income taxes 17,408 14,725
Income taxes 8,388 6,776
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NET INCOME $ 9,020 $ 7,949
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TOTAL COMPREHENSIVE INCOME $ 7,301 $ 8,023
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Weighted average common shares outstanding:
Basic 20,888.6 18,568.6
Diluted 21,167.6 19,232.6
Net income (loss) per share:
Basic $ 0.43 $ 0.43
Diluted $ 0.43 $ 0.41
</TABLE>
a) Santa Monica Bank was acquired on January 27, 1998. Accordingly, Santa
Monica Bank's operating results are included only since February of the
1998 period. Due to the relatively large size of the acquisition of Santa
Monica Bank, any comparison of data for the period ended March 31, 1998 to
data for the current period may not be meaningful.
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<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1999 1998
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<S> <C> <C>
PER SHARE INFORMATION:
Number of shares (weighted average, in thousands) 20,888.6 18,568.6
Diluted shares (weighted average, in thousands) 21,167.6 19,232.6
Basic income per share $ 0.43 $ 0.43
Diluted income per share $ 0.43 $ 0.41
BEFORE GOODWILL AMORTIZATION
Basic income per share $ 0.56 $ 0.54
Diluted income per share $ 0.55 $ 0.52
PROFITABILITY MEASURES:
Return on average assets 1.46% 1.38%
Return on average equity 10.2% 11.3%
BEFORE GOODWILL AMORTIZATION
Return on average tangible assets 2.01% 1.83%
Return on average equity 13.3% 14.2%
Efficiency ratio 52.8% 57.4%
ADJUSTMENTS TO NET INCOME (IN THOUSANDS):
Net income $ 9,020 $ 7,949
Goodwill amortization 2,726 2,073
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ADJUSTED NET INCOME $ 11,746 $ 10,022
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REVENUES (IN THOUSANDS):
Net interest income $ 33,232 $ 30,964
Non-interest income 10,881 9,159
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REVENUES $ 44,113 $ 40,123
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ADJUSTMENTS TO EXPENSES (IN THOUSANDS):
Non-interest expense $ 26,030 $ 25,098
Goodwill amortization (2,726) (2,073)
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ADJUSTED EXPENSES $ 23,304 $ 23,025
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</TABLE>
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<TABLE>
<CAPTION>
Three Months Ended
March 31,
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1999 1998
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<S> <C> <C>
AVERAGE BALANCE SHEETS
(In thousands)
AVERAGE ASSETS:
Loans and leases, net of deferred fees and costs $ 1,673,054 $ 1,389,332
Mortgage loans held for sale 104,941 90,295
Investments 255,851 331,842
Federal funds sold 151,755 203,146
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AVERAGE EARNING ASSETS 2,185,601 2,014,615
Goodwill 143,976 113,819
Other assets (including the allowance for loan and lease loss) 182,710 211,430
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AVERAGE TOTAL ASSETS $ 2,512,287 $ 2,339,864
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AVERAGE LIABILITIES AND SHAREHOLDERS' EQUITY:
Noninterest bearing deposits $ 786,041 $ 715,851
Interest bearing deposits 1,297,477 1,283,105
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AVERAGE DEPOSITS 2,083,518 1,998,956
Other interest bearing liabilities 37,395 27,919
Other liabilities 33,281 27,348
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AVERAGE LIABILITIES 2,154,194 2,054,223
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Shareholders' equity 358,093 285,641
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AVERAGE LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,512,287 $ 2,339,864
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YIELD ANALYSIS:
(Dollars in millions)
Average earning assets $ 2,195.4 $ 2,014.6
Yield 8.08% 8.58%
Average interest bearing deposits $ 1,297.5 $ 1,283.1
Cost 3.13% 3.54%
Average deposits $ 2,083.5 $ 1,999.0
Cost 1.95% 2.27%
Average interest bearing liabilities $ 1,344.7 $ 1,311.0
Cost 3.14% 3.60%
Interest spread 4.94% 4.98%
Net interest margin 6.17% 6.23%
</TABLE>
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CREDIT QUALITY MEASURES
(Dollars in thousands)
<TABLE>
<CAPTION>
QUARTER ENDED
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31-MAR 31-DEC 30-SEP 30-JUN 31-MAR 31-DEC
1999 1998 1998 1998 1998 1997
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<S> <C> <C> <C> <C> <C> <C>
Loans past due 90 days or more and still accruing $ 250 $ 1,007 $ 937 $ 3,389 $ 1,285 $ 363
Nonaccrual loans and leases 15,474 14,929 16,099 17,332 15,441 12,990
Other real estate owned 4,140 4,361 6,010 7,584 10,525 8,212
--------- ---------- ---------- ---------- ---------- ---------
NONPERFORMING ASSETS 19,614 19,290 22,109 24,916 25,966 21,202
Impaired loans gross 25,236 23,874 16,353 20,416 22,083 20,347
Allocated reserves 3,883 3,254 1,515 2,886 1,363 1,418
--------- ---------- ---------- ---------- ---------- ---------
NET INVESTMENT IN IMPAIRED LOANS 21,353 20,620 14,838 17,530 20,720 18,929
Charge-offs 693 1,243 4,488 827 653 1,641
Recoveries 1,734 2,062 580 350 709 684
--------- ---------- ---------- ---------- ---------- ---------
NET CHARGE-OFFS (RECOVERIES) (1,041) (819) 3,908 477 (56) 957
Allowance for loan and lease losses ("ALLL") 28,459 26,743 25,624 29,157 29,284 20,271
Loans and leases, net of deferred fees
and costs (1) 1,680,789 1,668,953 1,604,474 1,554,796 1,520,065 1,141,192
Average loans and leases for the quarter,
net of deferred fees and costs 1,673,054 1,609,542 1,571,254 1,536,087 1,389,332 1,097,521
ALLL to loans and leases 1.69% 1.60% 1.60% 1.88% 1.93% 1.78%
ALLL to nonaccrual loans and leases 183.9% 179.1% 159.2% 168.2% 189.7% 156.1%
ALLL to nonperforming assets 145.1% 138.6% 115.9% 117.0% 112.8% 95.6%
Nonperforming assets to loans, leases
and OREO 1.16% 1.15% 1.37% 1.59% 1.70% 1.84%
Annualized net charge-offs (recoveries)
to average loans and leases (0.25%) (0.20%) 0.99% 0.12% (0.02%) 0.35%
Full year net charge-offs to average
loans and leases 0.23% 0.46%
Average loans and leases for the year,
net of deferred fees and costs 1,527,243 1,051,588
</TABLE>
(1) Loan and lease totals include only loans held for investment.
The percentage of allowance for loan and lease losses to loans and
leases was 1.69% at March 31, 1999, an increase from 1.60 % at the end
of 1998. Nonperforming assets essentially remained steady from the end
of 1998 at $19,290,000 or 1.15% of total loans, leases and OREO versus
$19,614,000 at March 31, 1999 or 1.16% of total loans, leases and OREO.
Western had net recoveries during the first quarter of 1999 of
$1,041,000 representing an annualized net recovery rate of 0.25% of
average loans. With the provision for loan and lease losses of $675,000
for the first quarter of 1999 and net recoveries, the allowance for loan
and lease losses increased $1,716,000 from $26,743,000 at December 31,
1998 to $28,459,000 at March 31, 1999. The allowance as a percentage of
nonperforming assets increased to 145.1% at March 31, 1999 from 138.6%
at December 31, 1998. Management believes that the allowance for loan
and lease losses of $28,459,000 at March 31, 1999, is adequate based on
Western's quarterly migration analysis of loan and lease losses,
improved economic conditions and continued adherence to established
credit policies.
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FORWARD-LOOKING STATEMENTS
This press release includes forward-looking statements that involve inherent
risks and uncertainties. Western Bancorp cautions readers that a number of
important factors could cause actual results to differ materially from those in
the forward-looking statements. These factors include economic conditions and
competition in the geographic and business areas in which Western Bancorp and
its subsidiaries operate, inflation or deflation, fluctuations in interest
rates, legislation and governmental regulation and the progress of integrating
Santa Monica Bank, Western Bank, Southern California Bank, the Bank of Los
Angeles and Pacific National Bank.
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