WHI
REPORTS A SOLID INCREASE OF 34.22% IN NET INCOME
FOR THE THIRD QUARTER ENDED SEPTEMBER 30, 2002

Mayagüez, Puerto Rico, October 9, 2002. W HOLDING COMPANY, INC. (NYSE: "WHI"), the financial holding company of WESTERNBANK PUERTO RICO reported today results for the three and nine month periods ended September 30, 2002.

W HOLDING reported a net income of $22,675,381 or $0.30 per common share (basic and diluted) for the three-month period ended September 30, 2002, as, compared to a year-ago net income of $16,894,462 or $0.22 (split adjusted) per common share (basic and diluted), an increase of $5,780,919 or 34.22%.

The return on common stock equity (ROCE) for the quarter ended September 30, 2002, was very strong at 26.86%, compared to 28.93% in 2001, particularly in lieu of the recent offering of the Company’s Common Stock completed in August 20022. The return on assets (ROA) for the three-month period ended September 30, 2002 was 1.22% compared to 1.32% in 2001. W HOLDING achieved this ROA notwithstanding the significant increase in total assets that the Company has been experiencing year over year.

The strong increase in net income for the quarter ended September 30, 2002, was mainly related to an increase in net interest income which amounted to $42,039,012 compared to $32,220,211 for the same period in the previous year, an increase of $9,818,801 or 30.47%. Such improvement was in turn attributable to an increase of $714.7 million and $1.563 billion, respectively, during the comparable period in the average amount of loans and investment securities outstanding.

Other operating income was also very strong increasing from $5,066,543 during the third quarter of 2001 to $7,348,361 for the same period in 2002, an increase of $2,281,818 or 45.04%. Such increase is attributable to increases in service fees, charges, commissions and other fees as a result of the Company’s continued strategy to diversify and increase its fee income, principally in the areas of trust services, insurance agency commissions, fees generated by its assets-based lending operations as well as strong increases in other areas resulting from the Company’s growing volume of business.

Credit quality overall continues to be very strong in spite of the present economic environment reflecting the Company’s aggressive market penetration but conservative underwriting, being essentially a secured lender. The provision for possible loan losses amounted to $3.8 million during the quarter ended September 30, 2002, compared to $3.2 million during the same period in the previous year, an increase of $600,853 or 18.62%. The allowance for possible loan losses amounted to $46.0 million as of September 30, 2002. The increase in the provision for loan losses is attributed to management’s policy of establishing adequate and conservative reserves, principally taking into consideration the strong loan growth in the new Expresso Division, which grew to $70,378,657, during the three months ended September 30, 2002. At September 30, 2002, non-performing loans on all of the Bank’s loan portfolios were 0.57% (less than 1%), while the allowance for possible loan losses was 230.63% of total non-performing loans (reserve coverage). Moreover, the Bank’s consumer loan portfolio had a total delinquency ratio, including the categories of 60 days and over, of 0.99% (less than 1%). The Bank’s commercial loan portfolio had a total delinquency ratio, including the categories of 60 days and over of 0.84% (less than 1%); very strong ratios by any standard. 

Total operating expenses increased from $15,085,294 for the third quarter of 2001 to $19,731,281 for the same period in 2002, an increase of $4,645,987 or 30.80%, primarily as a result of the increase in the volume of operations, advertising and other expenses associated with new businesses and the inception in new markets, primarily the Expresso Division, as well as the inherent costs associated with the additional investment in human resources, technology and general infrastructure to sustain and coordinate the Bank’s expansion. The Company continues its strict cost control measures, maintaining operating expenses at adequate levels, further evidenced by its outstanding and world-class efficiency ratio of 40.87% achieved for the quarter ended September 30, 2002. W HOLDING is committed to constantly improve and maintain operating expenses at adequate levels, further improving its lean, effective and highly productive operation.

For the nine-month period ended September 30, 2002, W HOLDING reported a net income of $60,637,087 or $0.80 earnings per common share (basic and diluted), compared to the same period a year-ago net income of $45,987,340 or $0.63 (split adjusted) per common share (basic and diluted), an increase of $14,649,747 or 31.86%. The return on assets (ROA) for the nine-month period was 1.17%, compared to 1.31% in the same period of 2001, while the return on common stock equity (ROCE) was 24.47%, compared to 28.36% in the same period of 2001. These ratios are within management’s expectation considering the strong growth in assets, the additional capital infusion and the development stage of new areas of business recently commenced.

Total assets of W HOLDING amounted to $7.920 billion at September 30, 2002, as compared to $5.888 billion as of December 31, 2001, an increase of $2.032 million or 34.51%. On a year to year basis, total assets increased $2.791 billion or 54.41% when compared to $5.129 billion as of September 30, 2001. Loans receivable net, including mortgage loans held for sale, increased by $615.3 million or 21.64% to $3.459 billion at September 30, 2002, from $2.844 billion as of December 31, 2001, while total deposits increased by $686.5 million or 21.23% to $3.920 billion at September 30, 2002, from $3.234 billion as of December 31, 2001.

During the quarter ended September 30, 2002, the Company raised capital through the offering of Common Stock to support further growth in the business of Westernbank, particularly in commercial real estate, asset-based, unsecured business and construction lending, as well as its consumer loan portfolios. 

The Company contributed the net proceeds of the offering to Westernbank, to increase its regulatory capital. Pending the gradual origination of such loans, and with its ability to increase deposits and borrowings, Westernbank invested the net proceeds to fund additional investments in securities with relatively short-term maturities.

Stockholders’ equity increased to $525.1 million as of September 30, 2002 compared to $387.9 million as of December 31, 2001. The same resulted from the issuance of 6,095,000 shares of the Company’s Common Stock in August 2002, resulting in a net capital infusion of $97,875,213, plus the net income generated during the nine-month period, partially offset by dividends paid on common and preferred stock during said period. The average number of common shares outstanding increased from 62,252,550 (split adjusted) at September 30, 2001 to 63,047,703 at September 30, 2002.

Commenting on the results of W HOLDING, Frank C. Stipes, Esq., Chairman of the Board, President and Chief Executive Officer, stated: “The interest rate drop has continued throughout the year as we have seen reduced yields in the U.S. treasury and related markets, as a consequence of a stagnant economic recovery. As of this date, we are not anticipating a sustainable economic upturn or a material change in this cycle until the end of the first quarter of 2003, at the earliest, being an important element the consumer confidence as of this coming Christmas season. Our growth outlook for 2003 is still in line with our projections as the compensating balance between spreads, growth volumes and associated expenses will be key elements to our outlook, if interest rates continue to drop, and the economic upturn continues stalling. In line with these projections, we intend to expand our operations, opening new branches at the east coast of Puerto Rico where Westernbank has no presence, specifically in the Fajardo and Humacao areas and likewise expanding our presence in Caguas, therefore creating an east coast network to provide this market with the full array of its financial products and services. Together with this eastern expansion, additional standard mega branches in the metroplex, San Juan region, will be opened within 2003, strengthening our network with premises presently being negotiated at highly densed areas in Isla Verde, Condado and San Juan. Regarding the new Expresso Division within the Bank´s branch network, projections are well within target and if all continues to unfold, as it has, we expect to be clearly on target with our objectives for year end. Credit quality and efficiency of operations coupled to effective and sustainable results are key objectives to these developments and corresponding results, as they have been in and for the Trust and Asset Based Lending Division, all of which are recognized as leading operations within markets in Puerto Rico”.

Mr. Stipes warned however that “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, and not taken as carved in stone. 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.”

Westernbank Puerto Rico, the wholly-owned subsidiary of W HOLDING COMPANY, INC., is the third largest locally controlled banking entity headquartered in Puerto Rico, in term of total assets operating throughout Puerto Rico through 48 full fledged branches, including 30 in the Southwestern region of Puerto Rico, 7 in the Northeastern region, and 11 at the San Juan Metropolitan area of Puerto Rico. 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.

For further information contact: Frank C. Stipes, Chief Executive Officer or Freddy Maldonado, Chief Financial Officer of the Bank at (787) 834-8000; Internet: westernbank@wbpr.com or URL: http://www.wbpr.com.

FINANCIAL HIGHLIGHT
AND ADDITIONAL EXHIBITS

In order for you to open PDF formatted Documents (*.pdf) you need to have Adobe Acrobat Reader installed on your machine. Click on the link below to download the latest version of Acrobat Reader free of charge from Adobe.com
http://www.adobe.com/products/acrobat/readstep2.html

Remember : While using Adobe Acrobat Reader you may need to adjust the zoom tool on the Menu to view the complete document perfectly.