THE FINANCIAL HOLDING COMPANY OF
WESTERNBANK PUERTO RICO
REPORTS A VERY STRONG INCREASE OF 52% IN NET INCOME
FOR THE FIRST QUARTER ENDED MARCH 31, 2004

Mayagüez, Puerto Rico, April 20, 2004. W HOLDING COMPANY, INC. (NYSE: "WHI"), the financial holding company of WESTERNBANK PUERTO RICO, reported today very strong results for the first quarter ended March 31, 2004.

W Holding reported a net income of $40.5 million or $0.32 earnings per basic common share ($0.31 on a diluted basis) for the first quarter ended March 31, 2004, as compared to a net income of $14.9 million or $0.10 earnings per basic and diluted common share for the same quarter in 2003, after giving effect to the three-for-two (3x2) stock split in the form of a stock dividend and a two percent (2%) stock dividend declared on November 4, 2003 and November 11, 2003, respectively, and distributed both on December 10, 2003. This is a very strong increase of $25.6 million or 172.16% over the prior year quarter. However, the $14.9 million net income reported for the three months ended March 31, 2003, was affected by a $15.7 million ($11.8 million net of tax) other-than-temporary charge to adjust to its fair value the Company’s investment in CBO’s and CLO’s as previously reported. Excluding this $15.7 million special charge ($11.8 million net of tax) for a more meaningful comparison against the 2004 first quarter results, net income for the first quarter of 2003 would have been $26.7 million or $0.21 earnings per basic and diluted common share (as adjusted), which when compared to the net income of $40.5 million for the first quarter of 2004 represents an increase of $13.8 million or a very strong 52% over the adjusted comparable quarter of 2003.

The return on assets (ROA) and the return on common stockholders’ equity (ROCE) for the first quarter ended March 31, 2004, were 1.37% and 29.36%, as compared to 0.70% and 11.87% reported for the same period in 2003, which were affected by the special charge referred to above. W Holding achieved this strong ROA notwithstanding the continued increase in total assets that the Company attained during the first quarter of 2004.

At March 31, 2004, driven by very strong increases in W Holding activities, total assets ended at $12.1 billion. Total assets grew $626.5 million or 5.44%, up from $11.5 billion at December 31, 2003. Loans receivable-net, grew by $270.7 million or 5.78%, resulting from the Company’s continued strategy of growing its loan portfolio through commercial real estate, asset-based and other commercial loans, as well as its consumer loan portfolios. Our investment portfolio, excluding short-term money market instruments, increased $201.0 million or 3.48%, from $5.8 billion at December 31, 2003, to $6.0 billion at March 31, 2004.

On a year to year basis, total assets grew $3.3 billion or 37.30% from $8.8 billion at March 31, 2003. Loans receivable-net, grew by $981.4 million or 24.71% from $4.0 billion as of March 31, 2003, while the investment portfolio, excluding short-term money market instruments, increased $1.8 billion or 43.85% from $4.1 billion for the same period.

Stockholders’ equity increased to $858.3 million as of March 31, 2004, compared to $828.5 million as of December 31, 2003. Such increase resulted from the net income of $40.5 million generated during the quarter ended March 31, 2004, partially offset by dividends paid during the quarter of $5.9 million and $6.8 million on our common and preferred stock, respectively, and a decrease of $700,000 in other comprehensive loss as a result of an improvement in the mark to market position of our portfolio of investment securities available for sale at March 31, 2004, when compared to December 31, 2003. The period-end number of common shares outstanding increased from 106,290,294 as of December 31, 2003 to 106,666,275 as of March 31, 2004, as a result of the conversion of 70,289 shares of the Company’s convertible preferred stock series A, into 160,507 shares of the Company’s common stock, and the issuance of 214,750 common shares from the exercise of stock options.

Commenting on the financial results of the Company, and more specifically those of its main subsidiary, Westernbank, Mr. Frank C. Stipes, Esq., Chairman of the Board, President and Chief Executive Officer of both companies, indicated to feel extremely satisfied with the results for the first quarter, as they are clearly indicative of the Bank’s strong and consistent performance in line with the forecasts for 2004, whereby the range of net income and the total asset base by year-end will be met as a consequence of the Company’s growth in market share, mainly as a consequence of the new branches and overall operations in the San Juan metroplex area. He anticipated the second quarter to be a stronger one as two of the Bank’s most important mega-branches are bound to be open, both in the core of the metroplex area of San Juan, averaging in size 9,000 square feet.

Mr. Stipes also mentioned to feel extremely proud and honored by the results published in the Wall Street Journal (Bryan-Low, Cassell. “Triumph of the Speculators.” 8 Mar. 2004, Sec. R1), whereby the Company was ranked among the “TOP GUNS” meaning the 20 best publicly-held performing companies to the benefit of their stockholders and investors, being the only Bank in such TOP GUNS listing and in what he called the “TITANS”, for being included in the strongest of all categories, that of 10 years of consecutive and accumulated benefits of its stockholders with an average of 50.1% per year in a decade, positioning the Company, or better said, the Bank as the best Company in its field that most benefits, value, and market appreciation has provided among all to its stockholders for well over a decade.

Net Interest Income

Net interest income for the first quarter ended March 31, 2004 was $71.2 million, a very solid increase of $21.6 million or 43.45%, from $49.6 million for the same period of last year. Average interest-earning assets for the first quarter of 2004 increased by $3.4 billion, compared to the same quarter in previous year, mainly driven by increases in the average loan portfolio of $977.0 million, particularly in the commercial real estate loans, other commercial loans and the consumer loan portfolios, and in the average investment portfolio which increased by $2.4 billion, primarily U.S. Government and agencies obligations. The average yield in interest-earning assets decreased from 5.16% for the three months ended March 31, 2003 to 4.74% for the comparable period of 2004. The decrease in the average yield was primarily due to a continued low interest rate environment affecting our loan repricing, primarily our commercial loan portfolio with floating rates and the reinvestment rates on matured and called securities, and lower rates on purchased securities. However, this decrease was more than offset by a decrease in our cost of funds during the period resulting in an increase in our net interest margin of 3 basis points.

We continue to administer our liability costs effectively, decreasing the overall cost of rates paid from 2.86% to 2.40% for the quarter ended March 31, 2004, when compared to the same period in 2003, while continuing to offer competitive rates completely offsetting our decrease in the yield of our interest earning assets. The strong growth in average interest-earning assets between both quarters was in part offset by an increase in the average interest-bearing liabilities of $3.1 billion or 40.45% from the year ago average. Interest-bearing deposits grew in average by $1.1 billion, while other borrowings in average (mainly federal funds bought and securities sold under agreements to repurchase) rose by $2.0 billion.

Net Interest Margin

Our net interest margin increased 3 basis points during the first quarter of 2004 to 2.51% from 2.48% in the first quarter of 2003 or an increase of 22 basis points on a tax equivalent basis from 2.74% to 2.96% for each period. On a linked quarterly comparison to the three months ended December 31, 2003, our net interest margin decreased by 13 basis points from 2.64% in the fourth quarter of 2003 to 2.51% in the first quarter of 2004, however, our net interest margin on a tax equivalent basis remained unchanged at 2.96% for both periods. The 13 basis points decrease in the linked quarter comparison before any tax effect is attributed to the Company’s increase in tax exempt securities in its investment portfolio.

Under a flat interest rate scenario for the next twelve month period, based on our asset and liability composition as of March 31, 2004, we estimate our net interest margin will remain relatively stable within a range of 2.52% to 2.58% during said period. Assuming an instantaneous 50 basis points decrease in the fed funds rate, we estimate our net interest margin will fluctuate within a range of 2.50% to 2.60% during said period. Assuming a 50 basis points increase in the fed funds rate, we estimate our net interest margin will fall slightly within a range of 2.43% to 2.49%. Furthermore, a 100 basis points increase in the fed funds rate will cause our net interest margin to decrease between a range of 2.32% to 2.48%. The lower and higher values of such range meaning the lowest and highest net interest margin for any given quarter within the said twelve month period, which on its own we see as unconsequential to our strong earnings forecast for 2004 and another example of the Company’s prudent asset/liability management and long term planning criteria.

Attached as Exhibits IIIa and IIIb are supplemental unaudited data schedules providing additional information on the net interest margin including average balances and average rates for both interest-earning assets and interest-bearing liabilities, as well as changes in volumes and rates for the periods presented.

Other Income

Other income increased $15.2 million for the three month period ended March 31, 2004, when compared to the same period in 2003. The primary reason for the increase was the $15.7 million other-than-temporary impairment charge recorded in the quarter ended March 31, 2003 to adjust to its fair value all the Company’s investment in CBO’s and CLO’s. Service charges on deposits accounts and other fees increased by $681,000 or 11.17%. The increase was mainly due to higher activity associated with charges on deposits accounts, other fees generated by our asset-based lending operation, insurance commissions earned by Westernbank Insurance Corp., a wholly-owned subsidiary of W Holding Company, Inc., and increases in other areas resulting from the Company’s overall growing volume of business.

Operating Expenses

Total operating expenses increased $4.4 million or 23.17% for the three-month period ended March 31, 2004, when compared to the corresponding period in 2003. Salaries and employees' benefits, which is the largest component of total operating expenses, increased $789,000 or 9.44% for the first quarter of year 2004, as compared to the corresponding period in 2003. Such increase is attributed to the continued expansion of the Company, including increases in personnel, normal salary increases and related employee benefits. At March 31, 2004, the Company had 1,133 full-time employees, including its executive officers, an increase of 65 employees or 6.09%, since March 31, 2003.

Advertising expense increased by $1.2 million for the three months ended March 31, 2004, when compared to the same period in 2003. This increase is principally due to a new radio, newspaper and television campaign promoting Westernbank’s institutional image.

Operating expenses, other than the salaries and employees’ benefits, and advertising discussed above, increased $2.4 million or 25.19% for the first quarter of 2004, resulting primarily from costs associated with the Company’s strong growth and expansion in all of its business areas.

The Company continued its strict cost control measures, maintaining operating expenses at adequate levels, further evidenced by its efficiency ratio of 30.32% achieved for the first quarter of year 2004, compared to 34.73% achieved for the first quarter of 2003, well below management’s long term target of 40% to 42%.

Asset Quality

W Holding asset quality continues to be strong and well over its peer group, as measured by our reserves to total loans, non-performing loans as a percentage of total loans and net-charge-offs to average loans. Also, credit quality overall continues to be very strong in spite of the present economic environment. Notwithstanding the Company’s aggressive market penetration, it continues to exercise conservative underwriting and sound, prudent and highly skilled management. W Holding is essentially a secured lender having 81% of its loan portfolio as of March 31, 2004 secured by real estate. The consumer loan portfolio, including the Expresso of Westernbank loan portfolio, had a total delinquency ratio, including the categories of 60 days and over of 1.10% at March 31, 2004, when compared to 1.06% for the comparable period in previous year. The commercial loan portfolio had a total delinquency ratio, including the categories of 60 days and over of 0.87% (less than 1%), when compared to 0.61% reported for the year ago period, very strong ratios by any standard. Our combined delinquency on all portfolios, including the categories of 60 days and over, continues to be below our benchmark of 1% for both periods, being 0.77% at March 31, 2004 and 0.76% at March 31, 2003.

The provision for possible loan losses amounted to $8.9 million for the quarter ended March 31, 2004, up from $6.2 million for the same period in the previous year, an increase of $2.7 million or 43.56%. The allowance for possible loan losses amounted to $66.7 million as of March 31, 2004. The increase in the provision for loan losses is attributable to the overall growth in the Company’s loan portfolio, particularly those of its commercial real estate loans portfolio and the loan portfolio of its asset-based lending division, Westernbank Business Credit, and the additional provision to cover the write-off experience of the loan portfolio of the Expresso of Westernbank division. On a year to year basis, the commercial real estate loan portfolio grew from $1.8 billion at March 31, 2003, to $2.4 billion at March 31, 2004, an increase of $585.6 million or 32.18%. Westernbank Business Credit loan portfolio grew to $703.3 million at March 31, 2004, an increase of $62.3 million or 9.71%, when compared to December 31, 2003, or an increase of $148.0 million or 26.60%, when compared to March 31, 2003. The Expresso of Westernbank loan portfolio decreased from $155.6 million at December 31, 2003 to $147.4 million at March 31, 2004, a decrease of $8.2 million or 5.27%. The decrease in the Expresso of Westernbank loan portfolio was mainly due to management’s strategy of stabilizing charge-offs as the division portfolio matures and average yields continue to increase. On a year to year basis, the Expresso of Westernbank loan portfolio increased by $9.2 million from $138.2 million at March 31, 2003 to $147.4 million at March 31, 2004. The average yields of Westernbank Business Credit and the Expresso of Westernbank loan portfolios were 5.00% and 18.77%, respectively, at March 31, 2004.

Non-performing loans stand at $33.1 million or 0.66% (less than 1%) of the Bank’s loan portfolio at March 31, 2004, unchanged on a percentage basis from the 0.66% reported at December 31, 2003. In absolute amounts, non-performing loans only increased by $2.0 million, from $31.2 million as of December 31, 2003. Excluding real estate loans, these ratios were 0.04% and 0.03% at March 31, 2004 and December 31, 2003, respectively. This slight increase in non-performing loans primarily comes from the Company’s commercial and regular consumer loan portfolios. Non-performing loans on the commercial loan portfolio increased by $1.1 million, when compared to December 31, 2003. This increase is mostly attributed to one commercial loan with a principal balance of $2.4 million, which is collateralized by real estate. At March 31, 2004, this loan had a specific valuation allowance of $1.5 million. At March 31, 2004, the allowance for possible loan losses was 201.24% of total non-performing loans (reserve coverage), an improvement from the 197.17% reported at December 31, 2003. This is translated into $2.01 in reserves for every non-performing dollar in our books, a two to one ratio. Moreover, of the total allowance of $66.7 million, $8.2 million is our estimated allowance for specific reserved loans and the remaining $58.4 million is for our general and unallocated reserves.

Net charge-offs in the first quarter of 2004 were $3.9 million or 0.32% (annualized) to average loans, compared to $1.9 million or 0.19% to average loans for the same period in 2003, an increase of $2.0 million, when compared to the same period in 2003, but still very low charge-off ratios for both periods compared to our peers. The increase was primarily due to loans charged-off in the ordinary course of business in our consumer loan portfolio. The increase in consumer loans charged-off for the quarter ended March 31, 2004, was principally due, as we expected, to loans charged-off by the Expresso of Westernbank division, which amounted to $3.4 million for the three months ended March 31, 2004. The delinquency ratio on the Expresso of Westernbank division portfolio at March 31, 2004, was 2.01%, including the categories of 60 days and over. These ratios are slightly above management’s estimates and accordingly, management is further emphasizing an increase in the overall yield charged for such loans, continuously revising its underwriting policies as well as increasing the level of collateralized loans, to compensate for such higher delinquencies. The loan portfolio of Expresso of Westernbank collateralized by real estate at March 31, 2004, account for 9% of the outstanding balance. The objective is to have approximately 10% of the Expresso loan portfolio collateralized by real estate, and is soon to be achieved.

Total Loans, Investments and Deposits

Loans receivable-net, grew 5.78% to $5.0 billion at March 31, 2004, compared to $4.7 billion at December 31, 2003, and 24.71% compared to $4.0 billion at March 31, 2003. These increases reflect the Company’s emphasis on continued growth in its loan portfolio through commercial real estate, asset-based, consumer and construction lending. As a result, the portfolio of real estate loans secured by first mortgages, increased from $2.8 billion as of March 31, 2003, to $3.4 billion as of December 31, 2003, further increasing to $3.5 billion as of March 31, 2004, an increase of $699.6 million or 24.78% on a year to year basis and $165.0 million or 4.91%, when compared to December 31, 2003. Commercial real estate loans secured by first mortgages increased from $1.8 billion as of March 31, 2003, to $2.3 billion as of December 31, 2003, to $2.4 billion as of March 31, 2004, an increase of $586.5 million or 32.18% on a year to year basis and $136.0 million or 5.99%, when compared to December 31, 2003. Other loans portfolio, including commercial loans not collateralized by real estate, consumer loans (including the Expresso of Westernbank loans portfolio), loans on deposits and credit cards, increased from $1.2 billion as of March 31, 2003, to $1.4 billion as of December 31, 2003, further increasing to $1.5 billion as of March 31, 2004, an increase of $297.1 million or 24.74% on a year to year basis and $111.0 million or 8.00%, when compared to December 31, 2003. The unsecured portion of the Expresso of Westernbank loan portfolio decreased slightly from $128.9 million to $126.6 million as management has sought to stabilize charge offs as the portfolio matures and average yields continue to increase. Attached as Exhibit IV is a supplemented unaudited data schedule providing additional information on W Holding loan portfolio.

W Holding investment portfolio, excluding short-term money market instruments, stands at $6.0 billion at March 31, 2004, growing $201.0 million or 3.48% in comparison to December 31, 2003. Such growth is primarily focused on securities guaranteed by the United States Government, accounting for 80.28% of our investment portfolio as of March 31, 2004. The investment portfolio at March 31, 2004, had an average contractual maturity of 62 months. The Company’s interest rate risk model, takes into consideration the callable feature of certain investment securities. Given the present interest rate scenario, and taking into consideration the callable features of these securities, the investment portfolio as of March 31, 2004, had a remaining average maturity of 9 months. However, no assurance can be given that such levels will be maintained in future periods.

As of March 31, 2004, total deposits reached $5.7 billion, from $5.4 billion at December 31, 2003, representing an increase of $331.1 million or 6.15%, while federal funds bought and securities sold under agreements to repurchase increased to $5.3 billion from $5.0 billion at December 31, 2003, an increase of $275.1 million or 5.45%, in order to fund W Holding strong loans-net growth of 5.78%, investments growth of 3.48%, and total assets growth of 5.44%.

This press release may contain some information that constitutes “forward-looking statements.” Such information can be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “intend,” “continue,” or “believe” or the negatives or other variations of these terms or comparable terminology. 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. 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.

W HOLDING COMPANY, INC. is one of the three largest public financial holding companies and banks headquartered in Puerto Rico, based on total assets. WESTERNBANK PUERTO RICO, operates throughout Puerto Rico 51 full fledged branches, including 33 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.

FINANCIAL HIGHLIGHT
AND ADDITIONAL EXHIBITS

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