<PAGE>
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
JULY 13, 1999
-------------
Date of Report (Date of Earliest Event Reported)
WESTERN BANCORP
---------------
(Exact Name of Registrant As Specified In Its Charter)
CALIFORNIA
----------
(State or Other Jurisdiction of Incorporation)
0-13551 95-3863296
------- ----------
(Commission File Number) (IRS Employer Identification No.)
4100 NEWPORT PLACE, SUITE 900
NEWPORT BEACH, CALIFORNIA 92660
-------------------------------
(Address of Principal Executive Offices)(Zip Code)
(949) 863-2444
--------------
(Registrant's Telephone Number, including Area Code)
<PAGE>
ITEM 5. Other Events.
On July 13, 1999 Western Bancorp (the "Company") announced that it has
resolved its differences with Financial Institution Partners, L.P. and Hovde
Capital, Inc. A copy of the press release making such announcement is attached
hereto as Exhibit 99.1 and is incorporated herein in its entirety by this
reference.
On July 15, 1999 the Company announced the scheduled meting date for
its annual shareholders meeting. A copy of the press release making such
announcement is attached hereto as Exhibit 99.2 and is incorporated herein in
its entirety by this reference.
Also on July 15, 1999, the Company announced financial results for the
second quarter of 1999. A copy of the press release making such announcement is
attached hereto as Exhibit 99.3 and is incorporated herein in its entirety by
this reference.
ITEM 7. Financial Statements and Exhibits.
(c) Exhibits.
The following exhibits are filed with this Current Report on Form 8-K:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
99.1 Press Release of Western Bancorp dated July 13, 1999.
99.2 Press Release of Western Bancorp dated July 15, 1999.
99.3 Press Release of Western Bancorp dated July 15, 1999.
</TABLE>
2
<PAGE>
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: July 20, 1999
WESTERN BANCORP
By: /s/ Arnold C. Hahn
---------------------------------
Name: Arnold C. Hahn
Title: Executive Vice President
and Chief Financial Officer
3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
99.1 Press Release of Western Bancorp dated July 13, 1999.
99.2 Press Release of Western Bancorp dated July 15, 1999.
99.3 Press Release of Western Bancorp dated July 15, 1999.
</TABLE>
4
<PAGE>
EXHIBIT 99.1
[LOGO]
WESTERN BANCORP
- -----------------------------------------------------------------------------
PRESS RELEASE
- -----------------------------------------------------------------------------
Western Bancorp (NASDAQ: WEBC)
4100 Newport Place, Suite 900
Newport Beach, California 92660
Contacts: Julius G. Christensen
Executive Vice President,
General Counsel and Secretary
Phone: 949/863-2459
Fax: 949/757-5844
FOR IMMEDIATE RELEASE
WESTERN BANCORP AND FINANCIAL INSTITUTION PARTNERS, L.P. RESOLVE DISPUTE
July 13,1999
Western Bancorp announced today that it has resolved its differences with
Financial Institution Partners, L.P. and Hovde Capital, Inc. on mutually
acceptable terms as of June 30, 1999, and that the lawsuit captioned
FINANCIAL INSTITUTION PARTNERS, L.P. AND HOVDE CAPITAL, INC. V. CALIFORNIA
COMMERCIAL BANKSHARES, ET AL. has been dismissed. As a part of such
resolution, the parties have agreed to make certain charitable contributions
to support multiple sclerosis research.
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.
1
<PAGE>
EXHIBIT 99.2
[LOGO]
WESTERN BANCORP
- -----------------------------------------------------------------------------
PRESS RELEASE
- -----------------------------------------------------------------------------
Western Bancorp (NASDAQ: WEBC)
4100 Newport Place, Suite 900
Newport Beach, California 92660
Contact: Julius G. Christensen
Executive Vice President,
General Counsel and Secretary
Phone: 949/863-2459
Fax: 949/757-5844
FOR IMMEDIATE RELEASE
WESTERN BANCORP SETS ANNUAL MEETING FOR SEPTEMBER 29, 1999
July 15, 1999
Western Bancorp ("Western") today announced that its annual meeting
has been scheduled for September 29, 1999, at which meeting Western's
shareholders will consider, among other things, the principal terms of the
proposed merger of Western with U.S. Bancorp. Western must receive
shareholder proposals by July 26, 1999 in order for the proposal to be
included in the proxy materials that will be mailed to Western shareholders.
Western expects to mail proxy materials to its shareholders by the end of
August 1999.
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, among
other things, Western's ability to obtain all requisite approvals and
otherwise complete the merger with U.S. Bancorp.
1
<PAGE>
EXHIBIT 99.3
[LOGO]
WESTERN BANCORP
- ------------------------------------------------------------------------------
PRESS RELEASE
- ------------------------------------------------------------------------------
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: 310/208-6610 949/863-2351
Fax: 310/208-7958 949/757-5844
FOR IMMEDIATE RELEASE
WESTERN BANCORP ANNOUNCES RECORD OPERATING EARNINGS FOR THE SECOND QUARTER
OF 1999
July 15, 1999
Newport Beach, California . . . Western Bancorp ("Western") today announced it
had record consolidated operating earnings (net income before goodwill
amortization and after-tax litigation costs) for the quarter ended June 30, 1999
of $12,735,000 or $0.60 per diluted share. This compares with consolidated
operating earnings of $11,910,000, or $0.56 per diluted share, for the quarter
ended June 30, 1998. Before the one time cost of settling the FIP litigation,
consolidated net income for the quarter ended June 30, 1999 was $9,997,000, or
$0.47 per diluted share, a growth of 9.3% over diluted earnings per share of
$0.43 for the same period in 1998. Reported consolidated net income for the
three month periods in 1999 and 1998 was $8,924,000 and $9,106,000,
respectively, or $0.42 and $0.43 per diluted share, respectively.
1
<PAGE>
Consolidated operating earnings (net income before goodwill amortization and
after-tax litigation costs) for the six months ended June 30, 1999 were
$24,493,000 or $1.15 per diluted share. This compares with consolidated
operating earnings of $21,932,000 or $1.09 per diluted share, for the six months
ended June 30, 1998. Before the one time cost of settling the FIP litigation,
consolidated net income for the six months ended June 30, 1999 was $19,017,000,
or $0.89 per diluted share versus $17,134,000 and $0.85 per diluted share in the
same period in 1998, a growth of 4.7% in diluted earnings per share. Reported
consolidated net income for the same six month periods in 1999 and 1998 was
$17,944,000 and $17,055,000, respectively, or $0.84 and $0.85 per diluted share,
respectively.
As Santa Monica Bank was acquired on January 27, 1998 using the purchase method
of accounting, its operating results are included only since February of the
1998 period.
During the second quarter of 1999, the Western Board of Directors approved a
quarterly dividend of $0.225 per common share which was paid on June 25, 1999 to
shareholders of record on June 4, 1999.
Western's operating earnings to average tangible assets was 2.19% in the second
quarter of 1999 versus 1.98% in the second quarter of 1998 and 2.01% in the
first quarter of 1999.
On May 19, 1999 Western signed a definitive agreement to be acquired by U.S.
Bancorp, subject to customary conditions for similar acquisitions. In the
proposed transaction, each share of Western common stock will be exchanged for
1.2915 shares of U.S. Bancorp common stock. The transaction is expected to close
by October 1999.
Matthew P. Wagner, President and Chief Executive Officer of Western, stated:
"The decision by U.S. Bancorp to acquire Western is a result of the attractive
franchise built by all of our employees through hard work and determination.
During the process of an acquisition it is easy to lose focus, but as our second
quarter results indicate, we continue to vigorously pursue our goal of building
value for our shareholders:
- Loans held for investment grew approximately 2.4% in the second
quarter, even after substantial pay-offs.
- Western's operating efficiency ratio (operating expenses to revenues)
continues to improve from 52.8% in the first quarter to 50.1% in the
second quarter. Operating expenses declined by approximately $726,000
from the first quarter as the operations of the former PNB Financial
Group were integrated into the Western operating platform.
- Due to the increase in interest rates, business at PNB Mortgage, a
division of Southern California Bank, declined during the quarter with
originations of $349 million down from approximately $386 million in
the first quarter of 1999 and $391 million in the second quarter of
1998. This was offset by an 16 basis point increase in the yield on
average earning assets over the first quarter.
2
<PAGE>
- Except for one large commercial loan being placed on nonaccrual, key
credit quality indicators continued to improve during the second
quarter of 1999. (See the credit discussion later in this document.)
- The trust business at Santa Monica Bank remains strong with
approximately $789 million in assets under administration, an increase
from $784 million in assets under administration at the end of the
first quarter and $755 million in assets under administration at the
end of the second quarter in 1998.
- With the previously announced settlement of the FIP litigation, we can
continue to focus on those tasks that add value.
- Capital ratios remain strong with tangible capital at 9.3% as of June
30, 1999."
As of June 30, 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.
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, the progress of integrating
Santa Monica Bank, Western Bank, Southern California Bank, the Bank of Los
Angeles and Pacific National Bank, and the completion of Western's acquisition
by U.S. Bancorp.
3
<PAGE>
WESTERN BANCORP
UNAUDITED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
----------- -----------
(In thousands, except per share data)
<S> <C> <C>
ASSETS:
Cash and due from banks $ 129,495 $ 131,787
Federal funds sold 173,249 92,752
----------- -----------
TOTAL CASH AND CASH EQUIVALENTS 302,744 224,539
FRB and FHLB stock 18,136 9,760
Securities:
Securities held to maturity - -
Securities available for sale 242,890 355,324
----------- -----------
TOTAL SECURITIES 261,026 365,084
Loans and leases held for investment, net 1,692,793 1,642,211
Loans held for sale, net 73,235 130,255
Premises and equipment 32,330 33,536
Other real estate owned 3,677 4,361
Goodwill 140,038 145,514
Other assets 44,050 40,380
----------- -----------
TOTAL ASSETS $ 2,549,893 $ 2,585,880
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
LIABILITIES:
Noninterest-bearing deposits $ 830,967 $ 868,965
Interest-bearing deposits 1,289,815 1,303,304
----------- -----------
TOTAL DEPOSITS 2,120,782 2,172,269
Borrowings 29,616 23,722
Accrued interest payable and other liabilities 37,795 37,814
----------- -----------
TOTAL LIABILITIES 2,188,193 2,233,805
SHAREHOLDERS' EQUITY:
Preferred stock - -
Common stock 327,243 322,566
Retained earnings 37,336 28,856
Accumulated other comprehensive income -
unrealized net gains (losses) on securities
available for sale, net of tax (2,879) 653
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 361,700 352,075
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,549,893 $ 2,585,880
=========== ===========
Number of common shares outstanding 21,167.4 20,858.5
Common shareholders' equity per share $ 17.09 $ 16.88
Tangible common shareholders' equity per share $ 10.47 $ 9.90
</TABLE>
4
<PAGE>
WESTERN BANCORP
UNAUDITED CONDENSED INCOME STATEMENTS (a)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
----------------------- ------------------------
1999 1998 1999 1998
--------- --------- ---------- ---------
(In thousands, except per share data)
<S> <C> <C> <C> <C>
INTEREST INCOME:
$00,000.0
Interest and fees on loans and leases $ 77,448 $ 73,735 $ 39,142 $ 38,610
Interest on investment securities 7,776 9,288 4,127 4,563
Interest on federal funds sold 3,029 6,184 1,420 3,418
--------- --------- ---------- ---------
TOTAL INTEREST INCOME 88,253 89,207 44,689 46,591
INTEREST EXPENSE:
Interest expense on deposits 19,800 23,062 9,798 11,857
Interest expense on borrowed funds 690 991 360 544
--------- --------- ---------- ---------
TOTAL INTEREST EXPENSE 20,490 24,053 10,158 12,401
--------- --------- ---------- ---------
NET INTEREST INCOME: 67,763 65,154 34,531 34,190
Less: provision for loan and lease losses 1,350 650 675 350
--------- --------- ---------- ---------
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND
LEASE LOSSES 66,413 64,504 33,856 33,840
NONINTEREST INCOME:
Service charges and fees on deposit accounts 4,792 4,979 2,347 2,545
Trust fees 2,288 1,615 1,193 978
Escrow fees 488 532 273 273
Mortgage related fees and commissions 4,106 3,577 1,875 1,960
Other fees and commissions 2,196 1,754 1,133 1,024
Gain on sale of loans 6,695 7,141 3,162 3,908
Securities gains - 200 - 76
Other income 789 462 490 337
--------- --------- ---------- ---------
TOTAL NONINTEREST INCOME 21,354 20,260 10,473 11,101
NONINTEREST EXPENSE:
Salaries and benefits 27,730 27,772 13,478 14,439
Occupancy, furniture and equipment 6,688 7,528 3,370 3,999
Advertising and business development 920 885 455 456
Other real estate owned (340) (156) 28 (354)
Professional services 1,430 2,118 670 835
Telephone, stationery and supplies 2,663 2,088 1,276 1,045
Goodwill amortization 5,476 4,798 2,738 2,725
Data processing 1,215 1,126 655 568
Customer services cost 1,621 1,706 744 989
Litigation settlement costs 1,850 - 1,850 -
Merger costs - 79 - 79
Other 3,931 4,865 1,890 2,930
--------- --------- ---------- ---------
TOTAL NONINTEREST EXPENSE 53,184 52,809 27,154 27,711
--------- --------- ---------- ---------
Income before income taxes 34,583 31,955 17,175 17,230
Income taxes 16,639 14,900 8,251 8,124
--------- --------- ---------- ---------
NET INCOME $ 17,944 $ 17,055 $ 8,924 $ 9,106
========= ========= ========== =========
Weighted average common shares outstanding:
Basic 20,985.5 19,515.4 21,081.4 20,451.9
Diluted 21,268.5 20,165.8 21,321.5 21,127.2
Net income (loss) per share:
Basic $ 0.86 $ 0.87 $ 0.42 $ 0.45
Diluted $ 0.84 $ 0.85 $ 0.42 $ 0.43
</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.
5
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
----------------------- ----------------------------
1999 1998 1999 1998
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
PER SHARE INFORMATION:
Number of shares (weighted average, in thousands) 20,985.5 19,515.4 21,081.4 20,451.9
Diluted shares (weighted average, in thousands) 21,268.5 20,165.8 21,321.5 21,127.2
Basic income per share $ 0.86 $ 0.87 $ 0.42 $ 0.45
Diluted income per share $ 0.84 $ 0.85 $ 0.42 $ 0.43
BEFORE AFTER-TAX MERGER AND LITIGATION SETTLEMENT COSTS
Basic income per share $ 0.91 $ 0.88 $ 0.47 $ 0.45
Diluted income per share $ 0.89 $ 0.85 $ 0.47 $ 0.43
BEFORE AFTER-TAX MERGER AND LITIGATION SETTLEMENT
COSTS AND GOODWILL AMORTIZATION
Basic income per share $ 1.17 $ 1.12 $ 0.60 $ 0.58
Diluted income per share $ 1.15 $ 1.09 $ 0.60 $ 0.56
PROFITABILITY MEASURES:
Return on average assets 1.45% 1.40% 1.45% 1.42%
Return on average equity 10.0% 10.8% 9.9% 10.4%
BEFORE AFTER-TAX MERGER AND LITIGATION SETTLEMENT
COSTS AND GOODWILL AMORTIZATION
Return on average tangible assets 2.10% 1.91% 2.19% 1.98%
Return on average equity 13.7% 13.9% 14.1% 13.7%
Efficiency ratio 51.5% 56.1% 50.1% 55.0%
ADJUSTMENTS TO NET INCOME (IN THOUSANDS):
Net income $ 17,944 $ 17,055 $ 8,924 $ 9,106
Litigation settlement costs 1,850 - 1,850 -
Merger costs - 79 - 79
Tax benefits 777 - 777 -
---------- ---------- ---------- ----------
After tax merger costs and litigation 1,073 79 1,073 79
---------- ---------- ---------- ----------
settlement costs
19,017 17,134 9,997 9,185
Goodwill amortization 5,476 4,798 2,738 2,725
---------- ---------- ---------- ----------
OPERATING EARNINGS $ 24,493 $ 21,932 $ 12,735 $ 11,910
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
REVENUES (IN THOUSANDS):
Net interest income $ 67,763 $ 65,154 $ 34,531 $ 34,190
Noninterest income 21,354 20,260 10,473 11,101
---------- ---------- ---------- ----------
REVENUES $ 89,117 $ 85,414 $ 45,004 $ 45,291
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
ADJUSTMENTS TO EXPENSES (IN THOUSANDS):
Noninterest expense $ 53,184 $ 52,809 $ 27,154 $ 27,711
Litigation settlement costs (1,850) - (1,850) -
Merger costs - (79) - (79)
Goodwill amortization (5,476) (4,798) (2,738) (2,725)
---------- ---------- ---------- ----------
OPERATING EXPENSES $ 45,858 $ 47,932 $ 22,566 $ 24,907
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
-------------------------- --------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
AVERAGE BALANCE SHEETS
(In thousands)
AVERAGE ASSETS:
<S> <C> <C> <C> <C>
Loans and leases, net of deferred fees
and costs $1,679,177 $1,463,115 $1,685,233 $1,536,087
Mortgage loans held for sale 98,017 90,167 91,169 90,041
Investments 275,771 326,426 295,472 321,070
Federal funds sold 126,896 227,547 102,310 251,681
---------- ---------- ---------- ----------
AVERAGE EARNING ASSETS 2,179,861 2,107,255 2,174,184 2,198,879
Goodwill 142,594 133,025 141,227 152,020
Other assets 169,827 213,439 157,086 215,426
---------- ---------- ---------- ----------
AVERAGE TOTAL ASSETS $2,492,282 $2,453,719 $2,472,497 $2,566,325
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
AVERAGE LIABILITIES AND SHAREHOLDERS' EQUITY:
Noninterest-bearing deposits $ 788,303 $ 753,653 $ 790,540 $ 791,040
Interest-bearing deposits 1,288,409 1,328,286 1,279,441 1,372,970
---------- ---------- ---------- ----------
AVERAGE DEPOSITS 2,076,712 2,081,939 2,069,981 2,164,010
Other interest-bearing liabilities 21,848 28,807 18,596 29,685
Other liabilities 32,996 25,079 20,590 22,837
---------- ---------- ---------- ----------
AVERAGE LIABILITIES 2,131,556 2,135,825 2,109,167 2,216,532
---------- ---------- ---------- ----------
Shareholders' equity 360,726 317,894 363,330 349,793
---------- ---------- ---------- ----------
AVERAGE LIABILITIES AND SHAREHOLDERS' $2,492,282 $2,453,719 $2,472,497 $2,566,325
EQUITY ---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
YIELD ANALYSIS:
(Dollars in millions)
Average earning assets $ 2,179.9 $ 2,107.3 $ 2,174.2 $ 2,198.9
Yield 8.16% 8.54% 8.24% 8.50%
Average interest-bearing deposits $ 1,288.4 $ 1,328.3 $ 1,279.4 $ 1,373.0
Cost 3.10% 3.50% 3.07% 3.46%
Average deposits $ 2,076.7 $ 2,081.9 $ 2,070.0 $ 2,164.0
Cost 1.92% 2.23% 1.90% 2.20%
Average interest-bearing liabilities $ 1,310.3 $ 1,357.1 $ 1,298.0 $ 1,402.7
Cost 3.15% 3.57% 3.14% 3.55%
Interest spread 5.01% 4.97% 5.10% 4.95%
Net interest margin 6.27% 6.24% 6.37% 6.24%
</TABLE>
7
<PAGE>
CREDIT QUALITY MEASURES
(Dollars in thousands)
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------------------
30-JUN 31-MAR 31-DEC 30-SEP 30-JUN 31-DEC
1999 1999 1998 1998 1998 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Loans past due 90 days or more and $ - $ 250 $ 1,007 $ 937 $ 3,389 $ 363
still accruing
Nonaccrual loans and leases 19,846 15,474 14,929 16,099 17,332 12,990
Other real estate owned 3,677 4,140 4,361 6,010 7,584 8,212
-------- ------- ------- ------- --------- -------
NONPERFORMING ASSETS 23,523 19,614 19,290 22,109 24,916 21,202
Impaired loans gross 30,542 25,236 23,874 16,353 20,416 20,347
Allocated reserves 2,701 3,883 3,254 1,515 2,886 1,418
-------- ------- ------- ------- --------- -------
NET INVESTMENT IN IMPAIRED LOANS 27,841 21,353 20,620 14,838 17,530 18,929
Charge-offs 1,610 693 1,243 4,488 827 1,641
Recoveries 812 1,734 2,062 580 350 684
-------- ------- ------- ------- --------- -------
NET CHARGE-OFFS (RECOVERIES) 798 (1,041) (819) 3,908 477 957
Allowance for loan and lease losses 28,336 28,459 26,743 25,624 29,157 20,271
("ALLL")
Loans and leases, net of deferred 1,721,129 1,680,789 1,668,954 1,604,474 1,554,796 1,141,192
fees and costs
Average loans and leases for the 1,685,233 1,673,054 1,609,542 1,571,254 1,536,087 1,097,521
quarter,
net of deferred fees and costs
ALLL to loans and leases 1.65% 1.69% 1.60% 1.60% 1.88% 1.78%
ALLL to nonaccrual loans and leases 142.8% 183.9% 179.1% 159.2% 168.2% 156.1%
ALLL to nonperforming assets 120.5% 145.1% 138.6% 115.9% 117.0% 95.6%
Nonperforming assets to loans, leases 1.36% 1.16% 1.15% 1.37% 1.59% 1.84%
and OREO
Annualized net charge-offs 0.19% (0.25%) (0.20%) 0.99% 0.12% 0.35%
(recoveries)
to average loans and leases
Full year net charge-offs to average 0.23% 0.46%
loans and leases
</TABLE>
Note: Loan and lease totals include only loans held for investment.
The percentage of allowance for loan and lease losses to total loans and
leases was 1.65% at June 30, 1999, an increase from 1.60% at December 31,
1998. Nonaccrual loans increased by $4,372,000 during the quarter, from .92%
to 1.15% of total loans and leases, due mainly to one loan which, although
current in its payment of principal and interest, has incurred substantial
losses, was placed on nonaccrual. Net OREO decreased by $463,000 during the
quarter. Total nonperforming assets increased by $3,909,000 during the
quarter, increasing from 1.16% to 1.36% of total loans, leases and OREO at
June 30, 1999. Western had net recoveries of $243,000 in the six months ended
June 30, 1999 represented by net recoveries during the first quarter of
$1,041,000 and net charge-offs of $798,000 during the second quarter of 1999.
With the provision for loan and lease losses of $1,350,000 and net recoveries
of $243,000, the allowance for loan and lease losses increased $1,593,000
from $26,743,000 at December 31, 1998 to $28,336,000 at June 30, 1999. The
allowance as a percentage of nonperforming assets decreased from 138.6% at
December 31, 1998 to 120.5% at June 30, 1999 due to the increase in
nonperforming assets. Management believes that the allowance for loan and
lease losses at June 30, 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.
8