W Holding: Management, Auditors Mull 'Going Concern Qualification'

W Holding Co. Inc. (WHI), struggling with soured real-estate loans, said Thursday its management and auditors would seek additional time to consider whether the bank could remain in business.

W Holding's main subsidiary, Westernbank, already operates under increased regulatory scrutiny, and the company warned in a Securities and Exchance Commission filing Thursday that its regulators may take additional action, including possibly assuming control of the bank.

"Management and its auditors need additional time to consider whether a going concern qualification is appropriate," the filing said.

The Mayaguez, Puerto Rico, bank also said it "has engaged financial advisors to assist in our efforts to raise additional capital and explore strategic alternatives to address our current and expected liquidity and capital needs."

W Holding has struggled with a rising number of troubled real-estate loans and losses caused by such loans. It said it has "sufficient liquid assets to meet all of its obligations for" about the next 12 months.

However, if it is placed into Federal Deposit Insurance Corp. receivership, it is "highly likely" the bank would end its business and eventually liquidate.

"We do not believe that there would be any assets available to the holders of common stock," the bank said.

W Holding posted a $14.6 million loss for 2009 in its earnings filing with the Federal Reserve and said in its Thursday filing that audited operating results for its earnings report with the SEC "will likely be significantly affected" by the money it had to set aside for bad loans.

Westernbank's loan-loss reserve, foreclosed real estate held for sale, deferred income tax asset and accrued income-tax liability, and its income statement are "still being reviewed by the Company's management and are subject to change."

W Holding said would be unable to file its annual report on time, citing "resource constraints and the volume of audit matters."

The bank submitted a list of improvements demanded by regulators, including a plan to reduce loans, augment capital, reduce risk, enhance compliance and maintain the capital levels regulators demand.

The cease-and-desist order with the FDIC and its Puerto Rican bank regulator last year requires the bank to obtain waivers to roll over deposits it gets through brokers rather than from its banking customers. W Holding said in its filing, "the FDIC granted the Bank's request to roll over a portion of the Bank's brokered deposits... until April 30."

-By Matthias Rieker, Dow Jones Newswires; 212-416-2471; [e-mail]