W Holding Company, Inc., the Financial Holding Company of Westernbank Puerto Rico, Reports Earnings Results for the First Quarte

MAYAGUEZ, Puerto Rico, May 1  /PRNewswire-FirstCall/ -- W Holding Company, Inc. (NYSE: "WHI"), the financial holding company of Westernbank Puerto Rico, today reported its financial position and results of operations for the first quarter ended March 31, 2007.

FIRST QUARTER HIGHLIGHTS:

Net income for the first quarter ended March 31, 2007, was $28.7 million or $0.12 earnings per basic and diluted common share, when compared to $35.4 million or $0.16 earnings per basic common share ($0.15 on a diluted basis) for the same quarter in 2006, a decrease of $6.7 million or 18.85%.

The first quarter of 2007, as compared to the same quarter in 2006, was mainly impacted by the following:

  -- an increase of $3.4 million in net interest income, mainly due to
     higher average yields earned on the Company's loan portfolios.
  -- a $9.0 million increase in the provision for loan losses as a result of
     the increases in the Company's loan portfolios, net loans charged-off,
     non-performing loans and specific allowances on classified loans;
  -- and an increase of $5.6 million in non-interest expenses, principally
     attributed to the Company's continued growth and expansion in all of
     its business areas, mainly in the San Juan Metropolitan area;



On a linked quarter comparison, net income for the quarter ended March 31, 2007 increased by $10.9 million, or 60.83%, when compared to $17.9 million for the quarter ended December 31, 2006. This increase mainly resulted from a $12.0 million lower provision for loan losses as a result of a lower increase in net loans charged-off, non-performing loans and specific allowances on classified loans when compared with the quarter ended December 31, 2006. Interest income for the quarter ended December 31, 2006, included a $5.9 million prepayment fee collected on a commercial loan relationship.

Other key indicators of the Company's performance and asset quality for the first quarter of 2007 were as follows:

  -- total assets reached $17.55 billion, an increase of $394.6 million when
     compared to $17.15 billion at December 31, 2006. On a year-to-year
     basis, total assets increased $835.1 million when compared to
     $16.71 billion at March 31, 2006.
  -- loans receivable-net reached $8.93 billion, an increase of
     $291.4 million at March 31, 2007, from $8.64 billion at December 31,
     2006. On a year-to-year basis, loan production was strong, increasing
     the Company's loan portfolio-net by $909.3 million, from $8.02 billion
     at March 31, 2006;
  -- loans secured by commercial real estate and construction mortgages
     reached $5.97 billion at March 31, 2007, an increase of $305.9 million,
     from $5.67 billion at December 31, 2006. On a year-to-year basis, these
     loan portfolios increased by $1.07 billion, from $4.91 billion at March
     31, 2006;
  -- net loans charged-off to average total loans ratio improved by 9 basis
     points during the first quarter of 2007, to 0.27% (annualized) from
     0.36% for the year ended December 31, 2006.
  -- The Company's combined delinquency on all loan portfolios for the
     categories of 60 days and over at March 31, 2007 was 0.72% (less than
     1%).
  -- The delinquency ratio on the commercial real estate-mortgage and
     commercial, industrial and agricultural loan and construction loan
     portfolios (the largest component of loans receivable) for the
     categories of 60 days and over was 0.68% (less than 1%) at March 31,
     2007.
  -- The Company has maintained operating expenses at adequate levels and
     achieved an efficiency ratio of 38.04% for the first quarter of 2007.



Effective January 1, 2007, the Company adopted Financial Accounting Standards Board ("FASB") Interpretation No. 48 ("FIN No. 48"), "Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, Accounting for Income Taxes". The cumulative effect adjustment of $10.6 million was charged to retained earnings to increase the accrued liability for uncertain tax positions and the deferred income tax asset by $10.9 million and $265,000, respectively.

Overview

W Holding reported net income for the first quarter of 2007 of $28.7 million or $0.12 earnings per basic and diluted common share, when compared to $35.4 million or $0.16 earnings per basic common share ($0.15 on a diluted basis) for the same quarter in 2006, a decrease of $6.7 million or 18.85%. Net income for the first quarter of 2007 was impacted by an increase of $3.4 million in net interest income, offset by the combination of a $9.0 million increase in the provision for loan losses, an increase of $5.6 million in non-interest expenses and a decrease of $2.7 million in the provision for income taxes.

On a linked quarter comparison, net income for the quarter ended March 31, 2007 increased by $10.9 million, or 60.83%, when compared to $17.9 million for the quarter ended December 31, 2006. This increase mainly resulted from a $12.0 million lower provision for loan losses as a result of a lower increase in net loans charged-off, non-performing loans and specific allowances on classified loans when compared with the quarter ended December 31, 2006. Interest income for the quarter ended December 31, 2006, included a $5.9 million prepayment fee collected on a commercial loan relationship.

The return on assets (ROA) and the return on common stockholders' equity (ROCE) for the quarter ended March 31, 2007 were 0.66% and 11.16% (both annualized), respectively, compared to 0.60% and 9.36% reported for the year ended December 31, 2006, respectively, and compared to 0.86% and 15.57% (both annualized), reported for the first quarter of 2006, respectively.

At March 31, 2007, driven by the continued increase in the loan portfolio, total assets ended at $17.55 billion. Total assets grew $394.6 million, or 2.30%, from $17.15 billion at December 31, 2006, principally driven by the growth of $291.4 million, or 3.37% and $266.6 million, or 3.79% in the loans- net portfolio and in the investment portfolio, excluding money market instruments, respectively; partially offset by a decrease of $152.6 million or 15.70% in money market instruments. Changes between the investment portfolio and money market instruments were attributable to the reinvestment of matured money market instruments in tax exempt securities, specifically U.S. Government and agencies obligations on a short-term basis, as part of the management strategy of growing the Company's exempt interest income. Continuing management's strategy implemented in the latter part of 2004, and in light of the current interest rate scenario and a flat-to-inverted yield curve during the quarter ended March 31, 2007, the Company has continued to emphasize the growth of its loan portfolio, principally through floating rate loans, so as to lessen the impact of margin compression, while remaining on the sidelines of the investment side until investment opportunities arise.

On a year-to-year basis, total assets grew $835.1 million, or 5.00%, from $16.71 billion at March 31, 2006, almost exclusively from the growth in the Company's loan portfolio. Loans receivable-net grew by $909.3 million, or 11.33%, from $8.02 billion as of March 31, 2006, while the investment portfolio, excluding money market instruments, decreased by $111.4 million, from $7.40 billion at March 31, 2006.

Stockholders' equity increased by $3.0 million, to $1.23 billion as of March 31, 2007, when compared to December 31, 2006. Such increase principally resulted from the combination of the net income of $28.7 million generated during the quarter ended March 31, 2007 and the proceeds from the exercise of stock options of $1.2 million, almost offset by the cumulative effect of the adoption of FIN No. 48 which resulted in a charge to retained earnings of $10.6 million, as explained before, and the dividends declared during the same quarter of $7.8 million and $9.2 million on the Company's common and preferred shares, respectively.

The period-end number of common shares outstanding increased from 164,486,691 as of December 31, 2006, to 164,897,600 as of March 31, 2007, as a result of the issuance of 410,909 common shares from the exercise of stock options.

Net Interest Income

Net interest income for the first quarter ended March 31, 2007, was $81.9 million, an increase of $3.4 million or 4.29%, from $78.6 million for the same quarter in 2006. This increase in net interest income mainly resulted from higher yielding net interest-earning assets, which contributed a $7.1 million positive volume variance, which was partly offset by a $3.7 million negative rate variance. Average interest-earning assets for the first quarter of 2007 increased by $846.8 million, or 5.30%, compared to the same quarter in year 2006. The average loan portfolio increased by $804.6 million, or 10.08%, particularly in the commercial real estate collateralized and commercial, industrial and agricultural ("Commercial & C&I") and in the construction loan portfolios. The average investment portfolio, excluding mortgage-backed securities and money market instruments, increased by $64.5 million, or 0.99% (less than 1%), primarily in short-term tax-exempt securities, such as U.S. Government Agencies discount notes. Average mortgage-backed securities decreased by $39.6 million, or 6.09%, while average money market instruments increased by $17.2 million, or 2.07%. The change in the investments portfolio is attributable to the reinvestment in short-term tax-exempt securities, specifically U.S. Government Agencies discount notes, as part of management's strategy of growing the Company's tax exempt interest income.

The average yield earned on interest-earning assets increased 58 basis points, from 5.86% for the first quarter ended March 31, 2006, to 6.44% for the same quarter in 2007. The increase in the average yield for the first quarter of 2007 was mainly due to higher average yields earned on all the categories of interest-earning assets. The increase in the average yield earned on the loan portfolio was due to new higher yielding loans and the repricing of existing floating and adjustable rate Commercial and C&I loans. During the last four quarters ended March 31, 2007, the Federal Reserve has increased the Fed Funds Target Rate by 50 basis points reflected equally on the Prime Rate, the index used by the Bank to reprice most of its floating rate commercial loans.

For the quarter ended March 31, 2007, the Company's overall cost of funds increased 60 basis points, from 4.15% to 4.75%, when compared to the same quarter in 2006. This increase was due to a general increase in the cost of funding sources of the Company. The average interest rate paid on deposits increased by 76 basis points, from 3.81% for the quarter ended March 31, 2006, to 4.57% for the same quarter in 2007. Average interest rate paid on federal funds purchased and repurchase agreements increased by 43 basis points, from 4.58% for the quarter ended March 31, 2006, to 5.01% for the same quarter in 2007. The average interest rate paid on advances from the FHLB also increased by 68 basis points, from 4.95% for the quarter ended March 31, 2006, to 5.63% for the same quarter in 2007.

The growth in average interest-earning assets for the quarter ended March 31, 2007 was offset by an increase in the average interest-bearing liabilities of $938.7 million, or 6.30%, for the quarter ended March 31, 2007. Deposits grew on average by $1.09 billion, or 12.89%, during the first quarter of 2007, while other borrowings (federal funds purchased, repurchase agreements and advances from FHLB and line of credit) on average decreased by $150.4 million, or 2.34%, when compared to the same quarter in 2006. There were no outstanding lines of credit at December 31, 2006 or during the comparable quarter in year 2006.

On a linked quarter comparison, the average yield earned in interest- earning assets increased two basis points, from 6.42% for the fourth quarter of 2006 to 6.44% for the first quarter of 2007. The increase in the average yield for the first quarter of 2007 was mainly due to higher average yields earned on the investment portfolio, mortgage backed securities portfolio and money market instruments portfolio, while the average yield earned on the loan portfolio slightly decreased from 8.55% to 8.48% on a linked quarter comparison. The average yield earned on the loan portfolio for the fourth quarter of 2006 includes a $5.9 million prepayment fee collected on a commercial loan relationship. Meanwhile, the Company's overall cost of funds increased by six basis points for the first quarter of 2007, as compared to the fourth quarter of 2006. The slight increase in the overall cost of funds was principally due to an increase of 13 basis points in the average interest rate paid on deposits, from 4.44% for the fourth quarter of 2006, to 4.57% for the first quarter of 2007.

Net Interest Margin

The Company's net interest margin decreased slightly by two basis points for the first quarter of 2007 when compared to 1.99% in the first quarter of 2006. On a tax equivalent basis, the Company's net interest margin decreased by three basis points, to 2.10% for the first quarter of 2007, when compared to 2.13% for the same quarter in 2006. Although there was an improvement on the average yield earned on interest-earning assets of 58 basis points, a 60 basis points increase on the average interest rate paid on interest-bearing liabilities offset such increase. The upward repricing of the Company's interest-bearing assets during the first quarter of 2007 continues to lag behind the increase in the cost of funds of its interest-bearing liabilities. On a linked quarterly comparison, the Company's net interest margin decreased by seven basis points, from 2.04% in the fourth quarter of 2006. On a tax equivalent basis, the Company net interest margin improved by one basis point from 2.09% in the fourth quarter of 2006. The net interest margin for the fourth quarter of 2006 includes a $5.9 million prepayment fee collected on a commercial loan relationship.

Under a flat interest rate scenario for the next twelve-month period, based on the Company's asset and liability composition as of March 31, 2007, we estimate the Company's net interest margin will be within a range of 1.78% to 1.85% during said period. Assuming an instantaneous 100 basis-points decrease in the Fed Funds Target Rate, we estimate the Company's net interest margin will fluctuate within a range of 1.76% to 1.87% during said period. Under an instantaneous 200 basis-points decrease in the Fed Funds Target Rate, we estimate the Company's net interest margin will fluctuate within a range of 1.66% to 1.89%. Assuming a 100 basis-points increase in the Fed Funds Target Rate, we estimate the Company's net interest margin will fluctuate within a range of 1.48% to 1.85%. Furthermore, a 200 basis-points increase in the Fed Funds Target Rate will cause the Company's net interest margin to fluctuate between a range of 1.28% to 1.91%. The lower and higher values of such range mean the lowest and highest net interest margin for any given quarter within the said twelve-month period. These ranges are management's estimates based on instantaneous rate shocks in the Fed Funds Target Rate of 100 and 200 basis- points and their corresponding estimated impact on the market yield curve with results one year (twelve months) forward. They do not consider any asset/liability management strategy that could be undertaken given such interest rate changes during said one year period.

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.

Non-interest Income

Non-interest income increased $1.8 million, or 19.86% for the three-month period ended March 31, 2007, when compared to the same period in 2006. This is the result of an increase of $1.4 million on service fees and other fees and commissions, due to higher activity associated with the Company's overall growing volume of business, and a positive variance of $287,000 in net gain on derivative instruments, as a result of the mark to market valuation of such positions.

Non-interest Expenses

Total non-interest expenses increased $5.6 million, or 19.05% for the three-month period ended March 31, 2007, when compared to the corresponding period in 2006. Salaries and employees' benefits, the largest component of total non-interest expenses, increased $1.8 million, or 12.88% for the quarter ended March 31, 2007, when compared to the corresponding period in 2006. Such increase is mainly attributed to the increases in personnel, normal salary increases and related employees' benefits, principally related to the Company's continued expansion in all of its business areas, mainly in the San Juan Metropolitan area. In September 2006 and March 2007, the Company opened its two newest mega branches in the cities of Bayamon and Canovanas. Also, during the first quarter of year 2006, the Company established Westernbank International Trade Services ("WITS"), a division of Westernbank Puerto Rico that provides international trade products and services to customers. At March 31, 2007, the Company had 1,386 full-time employees, including its executive officers, an increase of 30 employees or 2.21% since March 31, 2006.

Deposit insurance premiums and supervisory examination expenses increased $1.1 million for the three months ended March 31, 2007, when compared to the same period in 2006. The increase was mainly due to the increase in premiums assessed by the Federal Deposit Insurance Corporation (the "FDIC") as a result of final FDIC assessment regulations adopted on November 2, 2006. The final regulations implemented certain changes to FDIC assessments, which changes became effective in 2007.

Non-interest expenses, other than salaries and employees' benefits and deposit insurance premiums and supervisory examination expenses discussed above, increased by $2.7 million or 18.51% for the quarter ended March 31, 2007, when compared to the same period in 2006. Such increase resulted primarily from the additional investment in technology and general infrastructure to sustain and coordinate the Company's growth and expansion in all of its business areas, mainly in the San Juan Metropolitan area.

The Company has maintained operating expenses at adequate levels and achieved an efficiency ratio of 38.04% for the first quarter of 2007, compared to 33.72% for the same period in 2006, respectively. The change in the efficiency ratio in 2007 was mainly due to increases in non-interest expenses.

Provision for Income Taxes

The provision for income taxes decreased $2.8 million, or 17.15% for the three-month period ended March 31, 2007, when compared to the same period in 2006. The current provision for income taxes for the first quarter of 2007 amounted to $16.7 million, a decrease of $554,000, or 3.22%, when compared to $17.2 million for the same period in 2006. Such decrease in the provision for income taxes is mainly attributed to the end of the transitory income taxes of 2% and 2.5% approved by the Government of Puerto Rico on May 13, 2006 and August 1, 2006, respectively, which ended on December 31, 2006, almost offset by the increases in the provisions for federal income tax and uncertain tax positions, when compared to the same period in 2006.

As explained before, on January 1, 2007, the Company adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109, Accounting for Income Taxes ("FIN No. 48"). FIN No. 48 clarifies the accounting for uncertainty in income taxes recognized in a company's financial statements in accordance with SFAS No. 109. FIN No. 48 also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.  FIN No. 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Under the new guidance, tax positions shall initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions shall initially and subsequently be measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and all relevant facts. FIN No. 48 also revises disclosure requirements to include an annual tabular rollforward of unrecognized tax benefits. On January 1, 2007, the cumulative effect adjustment of $10.6 million was charged to retained earnings to increase the accrued liability for uncertain tax positions and the deferred income tax asset by $10.9 million and $265,000, respectively.

The deferred credit for the quarter ended March 31, 2007, increased by $2.2 million, when compared to the same period in the prior year. Such increase is attributable to temporary differences in the recognition of certain items for tax and financial reporting purposes, principally changes in the allowance for loan losses and in the fair value of derivative instruments.

Asset Quality

W Holding's asset quality continues to be strong in spite of the Company's continued loan portfolio growth, as measured by its ratios of delinquent loans to total loans, net loan charge-offs to average total loans, provision for loan losses to net loans charged-off and reserves to total loans.

The Company's combined delinquency on all portfolios for the categories of 60 days and over was 0.72% (less than 1%) at March 31, 2007, a slight increase of six basis points when compared to 0.66% (less than 1%) at December 31, 2006. The slight increase in the combined delinquency ratio is the result of an increase in delinquent loans of the Commercial and C&I and construction loan portfolios, mainly in loans collateralized by real estate properties.

The delinquency ratio on the Commercial and C&I and construction loan portfolios for the categories of 60 days and over increased to 0.68% (less than 1%), when compared to 0.63% (less than 1%) at December 31, 2006, an increase of five basis points. The delinquency ratio on the consumer loan portfolio, including the Expresso of Westernbank loan portfolio, for the categories of 60 days and over increased by 2 basis points, to 1.54% at March 31, 2007, when compared to 1.52% at December 31, 2006. The increases in both delinquency ratios from 2006 to 2007 were principally attributable to delinquencies in Commercial and C&I loans and regular consumer loans past due over 90 days which are collateralized by real estate properties.

On a quarter-to-quarter basis, the combined delinquency on all portfolios for the categories of 60 days and over increased by seven basis points, when compared to the year-ago combined delinquency ratio of 0.65% at March 31, 2006. As explained before, the increase in the overall delinquency ratio resulted from the increase in delinquent loans of the Commercial and C&I loan portfolio, mainly in loans collateralized by real estate properties.

The delinquency ratio on the Commercial and C&I and construction loan portfolios for the categories of 60 days and over increased by 2 basis points to 0.68% (less than 1%), when compared to the year-ago ratio of 0.66% at March 31, 2006. The delinquency ratio on the consumer loan portfolio, including the Expresso of Westernbank loan portfolio, for the categories of 60 days and over increased by 21 basis points to 1.54% at March 31, 2007, from 1.33% for the comparable period in 2006. The increases in both delinquency ratios are principally attributable to Commercial and C&I loans and consumer loans past due over 60 days which are collateralized by real estate properties.

The provision for possible loan losses increased by $9.0 million, up to $16.0 million for the first quarter of 2007, when compared to the same quarter in 2006. The allowance for possible loan losses reached $136.9 million as of March 31, 2007. The increase in the provision for loan losses for the first quarter of 2007 is mainly attributable to two factors: first, the overall growth in the Company's loan portfolio, mainly those of its Commercial and C&I loans; and second, to higher non-performing loans and net loans charged-off.

Commercial and C&I loan portfolio grew to $6.48 billion at March 31, 2007, an increase of $261.5 million, or 4.20%, when compared to December 31, 2006. On a year-to-year basis, the Commercial and C&I loan portfolio grew $1.03 billion, or 18.80%, from $5.46 billion at March 31, 2006. Westernbank Business Credit loan portfolio stands at $1.41 billion at March 31, 2007, a decrease of $45.5 million, or 3.12%, when compared to December 31, 2006, and an increase of $58.4 million and 4.32%, when compared to March 31, 2006.

The provision for loan losses for the asset-based lending division increased by $3.8 million for the quarter ended March 31, 2007, when compared to the same period in 2006. Such increase is mainly attributable to two factors: first, the increase in the Division's loan portfolio from $1.35 billion at March 31, 2006, to $1.41 billion at March 31, 2007, and second, the increase in classified loans of the Division's loans portfolio. During the quarter ended March 31, 2007, the Company classified two loans of the Division's loan portfolio with outstanding principal balances of $11.4 million and $6.8 million at March 31, 2007. These loans required valuation allowances as follows: $1.9 million for the $11.4 million loan and $2.0 million for the $6.8 million loan. These loans have shortfalls in the collaterals and in the financial condition of the borrowers.

The provision for possible loan losses for the consumer loans portfolio, including the Expresso of Westernbank loan portfolio, amounted to $5.9 million for the quarter ended March 31, 2007, up from $1.8 million for the same quarter in 2006, an increase of $4.2 million. The increase is attributable to higher net loans charged-off during the first quarter of 2007, when compared to the same quarter in 2006. The provision for loan losses of the Expresso of Westernbank loan portfolio grew by $2.0 million, from $1.5 million in the first quarter of 2006, to $3.5 million in same quarter in 2007. Loans charged- off by the Expresso of Westernbank Division during the first quarter of 2007 were $2.6 million, compared to $1.7 million for the same quarter in year 2006.

Net loans charged-off in the first quarter of 2007 were $6.0 million, or 0.27% (annualized) to average loans, an increase of $2.8 million, when compared to $3.1 million, or 0.16% (annualized) to average loans for the same period in 2006. The increase in net loans charged-off when compared to same quarter in 2006 was due to the following two factors; first, an increase in consumer loans charged-off of $1.4 million, or 63.56%, and second, to a decrease in total recoveries of loans previously charged-off of $1.3 million, or 59.02%. The increase in consumer loans charged-off was primarily due to an increase of $948,000 in loans charged-off by the Expresso of Westernbank division. Loans charged-off by the Expresso of Westernbank Division during the first quarter of year 2007 were $2.6 million, compared to $1.7 million for the same quarter in year 2006.

Non-performing loans amounted to $191.8 million or 2.12% of the total loan portfolio at March 31, 2007, an increase of $26.0 million, when compared to $165.8 million, or 1.89%, of the total loan portfolio at December 31, 2006. The increase in non-performing loans is mainly due to two loans of the Company's asset based lending division, with outstanding principal balances of $11.4 million and $6.8 million at March 31, 2007. These loans have shortfalls in the collaterals and in the financial condition of the borrowers. These loans required valuation allowances at March 31, 2007 as follows: $1.9 million for the $11.4 million loan and $2.0 million for the $6.8 million loan.

At March 31, 2007, the allowance for possible loan losses was 71.35% of total non-performing loans (reserve coverage). Most of the Company's non- performing loans are collateralized with real estate properties, accounts receivable, inventories and equipment. Of the total allowance of $136.9 million, $45.0 million is the Company's specific allowance and the remaining $91.9 million is the general allowance component.

Total Loans, Investments and Deposits

Loans receivable-net grew $291.4 million, or 3.37%, to $8.93 billion at March 31, 2007, compared to $8.64 billion at December 31, 2006, and $909.3 million, or 11.33%, compared to $8.02 billion at March 31, 2006. These increases reflect the Company's emphasis on continued growth in its variable rate loan portfolio mainly through Commercial and C&I and construction loan portfolio. As a result, the commercial real estate mortgage loan portfolio increased from $4.32 billion as of March 31, 2006, to $4.95 billion as of December 31, 2006, and to $5.20 billion at March 31, 2007, an increase of $877.7 million or 20.33% on a year-to-year basis, and $249.3 million or 5.04%, when compared to December 31, 2006. The commercial, industrial and agricultural loan portfolio increased from $1.14 billion at March 31, 2006, to $1.27 billion at December 31, 2006, and to $1.29 billion at March 31, 2007, up by $148.0 million, or 13.00% on a year-to-year basis, and $12.2 million, or 0.96%, when compared to December 31, 2006. The construction loan portfolio increased from $589.0 million at March 31, 2006, to $722.8 million at December 31, 2006, and to $779.4 million as of March 31, 2007, an increase of $190.3 million, or 32.31% on a year-to-year basis, and $56.6 million, or 7.83%, when compared to December 31, 2006. Attached as Exhibit IV is a supplemental unaudited data schedule providing additional information on the Company's loan portfolio.

The Company's investment portfolio, excluding money market instruments, stands at $7.29 billion at March 31, 2007, increasing by $266.6 million in comparison to $7.03 billion at December 31, 2006. Such increase was due to a shifting between the investment securities portfolio and short-term money market instruments attributable to the reinvestment of matured money market instruments into tax exempt securities, specifically U.S. Government and agencies obligations on a short-term basis, as part of the management strategy of growing W Holding exempt interest income. The investment portfolio at March 31, 2007, had an average contractual maturity of 28 months.

The Company's interest rate risk model takes into consideration the callable feature of certain investment securities. Assuming that all call features are exercised, the investment portfolio as of March 31, 2007, had a remaining average maturity of four months.  Under the present interest rate scenario, no single security may be called.  However, no assurance can be given that such levels will be maintained in future periods.

As of March 31, 2007, total deposits reached $9.96 billion, from $9.34 billion at December 31, 2006, an increase of $622.9 million, or 6.67%, while federal funds purchased and repurchase agreements decreased by $268.4 million, to $6.05 billion at March 31, 2007, from $6.32 billion at December 31, 2006.

Forward-Looking Statements

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. For a discussion of these and other risks and uncertainties, please refer to Item 1A of the Company's Annual Report on Form 10-K for the most recently completed fiscal year. Except as required by applicable securities laws, the Company does not intend, and specifically disclaims any obligation, to update forward-looking statements.

About the Company

Westernbank Puerto Rico, a wholly owned subsidiary of W Holding Company, Inc., is the second-largest commercial bank in Puerto Rico, based on total assets, operating throughout 57 full-fledged branches (including 20 Expresso of Westernbank branches), including 33 in the southwestern region of Puerto Rico, 8 in the northeastern region, 14 in the San Juan Metropolitan area of Puerto Rico and 2 in the eastern region of Puerto Rico, and a fully functional banking site on the Internet.  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.

You may contact Mr. Vixson Frank Baez, with appropriate questions regarding this press release at [phone] ext. 5535, or via email at  or ; or visit http://www.wholding.com/.

                        W HOLDING COMPANY, INC.           EXHIBIT I
                         FINANCIAL HIGHLIGHTS
                              (UNAUDITED)

                                            Three Months Ended

                                         March 31, March, 31  Dec. 31,
                                          2007       2006        2006
                                           (Dollars in thousands,
                                           except per share data)

  Income Statement Data

   Interest income:
      Loans, including loan fees        $183,818  $149,819  $186,311
      Investment securities               66,522    64,896    65,794
      Mortgage-backed securities           6,931     7,278     6,994
      Money market instruments            10,120     8,936     9,191
        Total interest income            267,391   230,929   268,290

   Interest expense:
      Deposits                           107,506    79,478   101,049
      Federal funds purchased and
       repurchase agreements              76,224    70,830    80,390
      Advances from Federal Home Loan
       Bank                                1,455     2,061     1,516
      Line of credit                         272        --        --
        Total interest expense           185,457   152,369   182,955
   Net interest income                    81,934    78,560    85,335
   Provision for loan losses              16,000     7,000    28,000
   Net interest income after provision
       for loan losses                    65,934    71,560    57,335

   Non-interest income:
      Service and other charges on
       loans                               3,211     2,954     3,376
      Service charges on deposit
       accounts                            2,930     2,258     2,700
      Other fees and commissions           3,962     3,452     4,116
      Net gain on derivative
       instruments                           640       353       487
      Net gain (loss) on sales and
       valuation of loans,
        securities, and other assets         265       167      (590)
        Total non-interest income          11,008     9,184    10,089
   Total net interest income and
    non-interest income                    76,942    80,744    67,424

   Non-interest expenses:
      Salaries and employees' benefits    15,418    13,659    14,811
      Equipment                            3,194     2,648     3,059
      Deposit insurance premium and
       supervisory examination             1,985       893     1,011
      Occupancy                            2,199     1,974     2,240
      Advertising                          2,194     2,798     2,126
      Printing, postage, stationery,
       and supplies                          884       981       819
      Telephone                              529       523       642
      Net gain from operations of
       foreclosed real estate held for
       sale                                 (181)     (212)      (45)
      Municipal taxes                      1,833     1,276     1,833
      Other                                6,958     4,871     7,551
        Total non-interest expenses        35,013    29,411    34,047
   Income before provision for income
    taxes                                 41,929    51,333    33,377
   Provision for income taxes:
       Current                            16,669    17,223    18,434
       Deferred credit                    (3,460)   (1,280)   (2,914)
        Total provision for income
         taxes                            13,209    15,943    15,520
   Net income                             28,720    35,390    17,857
   Less dividends to preferred
    stockholders                           9,228     9,229     9,227
   Income available to common
    stockholders                         $19,492   $26,161    $8,630

   Basic earnings per common share         $0.12     $0.16     $0.05
   Diluted earnings per common share       $0.12     $0.15     $0.05

   Cash dividends declared on common
    stock                                 $7,827    $7,799    $7,814
   Cash dividends declared per common
    share (1)                              $0.05     $0.05     $0.05

   Period end number of common
       shares outstanding                164,898   164,236   164,487
   Weighted average number of
       common shares outstanding         164,703   164,144   164,487
   Weighted average number of common
       shares outstanding on a diluted
        basis                            167,550   170,176   167,844

  (1) Cash dividend amounts in the table are rounded.



                     W HOLDING COMPANY, INC.                      EXHIBIT II
                      FINANCIAL HIGHLIGHTS
                           (UNAUDITED)


                                        March 31,  December 31,   March 31,
  Balance Sheet Data                      2007         2006          2006
                                                 (In thousands)
  At Period End
      Cash and due from banks            $107,847     $105,027      $81,508
      Money market instruments:
        Federal funds sold and resell
         agreements                       809,502      950,573      776,415
        Interest-bearing deposits in
         banks                              9,540       21,060       70,042
      Trading securities, at fair
       value                                   --           --        1,613
      Investment securities available
       for sale, at fair value             21,565       20,541        3,231
      Investment securities held to
       maturity, at amortized cost      7,273,193    7,007,579    7,401,352
      Federal Home Loan Bank stock,
       at cost                             33,482       37,982       42,968
      Residential mortgage loans held
       for sale, at lower of cost or
       fair value                           4,135       11,379        1,687
      Loans-net                         8,932,413    8,641,023    8,023,162
      Accrued interest receivable         114,998      121,360      102,007
      Premises and equipment, net         125,866      124,648      118,961
      Deferred income taxes, net           54,869       51,338       42,395
      Other assets                         61,884       62,178       48,810
  Total Assets                        $17,549,294  $17,154,688  $16,714,151

  Liabilities:
      Deposits:
         Non-interest-bearing             $328,776     $373,634     $288,500
         Interest-bearing and related
          accrued interest payable      9,631,248    8,963,429    8,639,353

            Total deposits              9,960,024    9,337,063    8,927,853
      Federal fund purchased and
       repurchase agreements            6,052,049    6,320,481    6,245,713
      Advances from Federal Home Loan
       Bank                               102,000      127,000      162,000
      Line of credit                       32,500           --           --
      Mortgage note payable                35,836       35,968       36,310
      Accrued expenses and other
       liabilities                        135,994      106,289      129,885
  Total Liabilities                    16,318,403   15,926,801   15,501,761
      Stockholders' equity              1,230,891    1,227,887    1,212,390
  Total Liabilities and Stockholders'
   Equity                             $17,549,294  $17,154,688  $16,714,151


                                         Quarterly Averages (1)
  Average Balances                       March 31,    March 31,
                                          2007          2006
                                            (In thousands)

      Cash and due from banks            $106,437      $89,560
      Money market instruments:
         Federal funds sold and
          resell agreements               880,038      761,477
         Interest-bearing deposits in
          banks                            15,300       63,579
      Trading securities                       --          807
      Investment securities available
       for sale                            21,053        4,199
      Investment securities held to
       maturity                         7,140,386    7,237,689
      Federal Home Loan Bank stock         35,732       42,883
      Residential mortgage loans held
       for sale                             7,757        1,613
      Loans-net                         8,786,718    7,919,393
      Accrued interest receivable         118,179      103,945
      Premises and equipment              125,257      118,292
      Deferred income taxes, net           53,104       41,753
      Other assets                         62,031       47,818
  Total Assets                        $17,351,992  $16,433,008

  Liabilities:
      Deposits:
         Non-interest-bearing             $351,205     $282,799
         Interest-bearing and related
          accrued interest payable      9,297,339    8,368,932

            Total deposits              9,648,544    8,651,731
      Federal fund purchased and
       repurchase agreements            6,186,265    6,252,871
      Advances from Federal Home Loan
       Bank                               114,500      167,000
      Line of credit                       16,250           --
      Mortgage note payable                35,902       36,371
      Accrued expenses and other
       liabilities                        121,142      122,101
  Total Liabilities                    16,122,603   15,230,074
      Stockholders' equity              1,229,389    1,202,934
  Total Liabilities and Stockholders'
   Equity                             $17,351,992  $16,433,008

 (1) Average balances have been computed using beginning and period-end
  balances.



                         W HOLDING COMPANY, INC.            EXHIBIT III a
                     YIELDS EARNED AND RATES PAID
                          THREE MONTHS ENDED,
                              (UNAUDITED)
                                                    March 31, 2007
                                                                 Annualized
                                                        Average    Average
                                          Interest    Balance(1) Yield/Rate
                                                (Dollars in thousands)
  Normal spread:
    Interest-earning assets:
      Loans, including loan fees (2)      $183,818     $8,789,439    8.48
      Investment securities (3)             66,522      6,581,804    4.10
      Mortgage-backed securities (4)         6,931        610,355    4.61
      Money market instruments              10,120        848,853    4.84
    Total                                  267,391     16,830,451    6.44

    Interest-bearing liabilities:
      Deposits                             107,506      9,541,900    4.57
      Federal funds purchased and
         repurchase agreements              76,224      6,166,709    5.01
      Advances from FHLB                     1,455        104,777    5.63
      Line of credit                           272         18,155    6.08
    Total                                  185,457     15,831,541    4.75

    Net interest income                    $81,934
    Interest rate spread                                             1.69
    Net interest-earning assets                          $998,910
    Net yield on interest-earning
      assets (5)                                                     1.97
    Ratio of interest-earning assets
      to interest-bearing liabilities                     106.31%


  Tax equivalent spread:
    Interest-earning assets               $267,391    $16,830,451    6.44
    Tax equivalent adjustment                5,152             --    0.13
    Interest-earning assets -
      tax equivalent                       272,543    $16,830,451    6.57

    Interest-bearing liabilities           185,457    $15,831,541    4.75
    Net interest income                    $87,086

    Interest rate spread                                             1.82
    Net yield on interest -
      earning assets (5)                                             2.10

                                                  March 31, 2006

                                                                 Annualized
                                                        Average    Average
                                          Interest    Balance(1) Yield/Rate
                                                (Dollars in thousands)

  Normal spread:
    Interest-earning assets:
      Loans, including loan fees (2)      $149,819     $7,984,850    7.61
      Investment securities (3)             64,896      6,517,255    4.04
      Mortgage-backed securities (4)         7,278        649,929    4.54
      Money market instruments               8,936        831,604    4.36
    Total                                  230,929     15,983,638    5.86

    Interest-bearing liabilities:
      Deposits                              79,478      8,452,711    3.81
      Federal funds purchased and
         repurchase agreements              70,830      6,271,307    4.58
      Advances from FHLB                     2,061        168,777    4.95
      Line of credit                            --             --      --
    Total                                  152,369     14,892,795    4.15

    Net interest income                    $78,560
    Interest rate spread                                             1.71
    Net interest-earning assets                        $1,090,843
    Net yield on interest-earning
      assets (5)                                                     1.99
    Ratio of interest-earning assets
      to interest-bearing liabilities                     107.32%


  Tax equivalent spread:
    Interest-earning assets               $230,929    $15,983,638    5.86
    Tax equivalent adjustment                5,360             --    0.14
    Interest-earning assets -
      tax equivalent                       236,289    $15,983,638    6.00

    Interest-bearing liabilities           152,369    $14,892,795    4.15
    Net interest income                    $83,920

    Interest rate spread                                             1.85
    Net yield on interest -
      earning assets (5)                                             2.13

                                                  December 31, 2006

                                                                 Annualized
                                                        Average    Average
                                          Interest    Balance(1) Yield/Rate
                                                (Dollars in thousands)
  Normal spread:
    Interest-earning assets:
      Loans, including loan fees (2)      $186,311     $8,647,744    8.55
      Investment securities (3)             65,794      6,468,173    4.04
      Mortgage-backed securities (4)         6,994        666,086    4.17
      Money market instruments               9,191        793,836    4.59
    Total                                  268,290     16,575,839    6.42

    Interest-bearing liabilities:
      Deposits                             101,049      9,036,841    4.44
      Federal funds purchased and
         repurchase agreements              80,390      6,320,424    5.05
      Advances from FHLB                     1,516        106,891    5.63
      Line of credit                            --             --      --
    Total                                  182,955     15,464,156    4.69

    Net interest income                    $85,335
    Interest rate spread                                             1.73
    Net interest-earning assets                        $1,111,683
    Net yield on interest-earning
      assets (5)                                                     2.04
    Ratio of interest-earning assets
      to interest-bearing liabilities                     107.19%


  Tax equivalent spread:
    Interest-earning assets               $268,290    $16,575,839    6.42
    Tax equivalent adjustment                1,857             --    0.05
    Interest-earning assets -
      tax equivalent                       270,147    $16,575,839    6.47

    Interest-bearing liabilities           182,955    $15,464,156    4.69
    Net interest income                    $87,192

    Interest rate spread                                             1.78
    Net yield on interest -
      earning assets (5)                                             2.09


  (1) Average balance on interest-earning assets and interest-bearing
  liabilities is computed using daily monthly average balances during the
  period.
  (2) Average loans exclude non-performing loans. Loans fees, net amounted
  to $4.9 million, $3.6 million, and $4.4 million for the three-month
  periods ended March 31, 2007 and 2006 and December 31, 2006, respectively.
  (3) Includes available for sale securities.
  (4) Includes trading and available for sale securities.
  (5) Annualized net interest income divided by average interest-earning
  assets.



                                                            EXHIBIT
                      W HOLDING COMPANY, INC.                 III b
              CHANGES IN YIELDS EARNED AND RATES PAID
                            (UNAUDITED)

                                      Three Months Ended March 31,
                                              2007 vs. 2006
                                        Volume    Rate     Total
                                             (In thousands)

  Interest income:
  Loans                                 $15,906  $18,093  $33,999
  Investment securities (1)                 647      979    1,626
  Mortgage-backed securities (2)           (451)     104     (347)
  Money market instruments                  181    1,003    1,184
  Total increase in interest income      16,283   20,179   36,462
  Interest expense:
  Deposits                               11,041   16,987   28,028
  Federal funds purchased and
  repurchase agreements                  (1,157)   6,551    5,394
  Advances from FHLB                       (950)     344     (606)
  Line of credit                            272       --      272
  Total increase in interest expense      9,206   23,882   33,088
  Increase (decrease) in
  net interest income                    $7,077  $(3,703)  $3,374

  (1) Includes available for sale securities.
  (2) Includes trading and available for sale securities.



                     W HOLDING COMPANY, INC.                      EXHIBIT IV
                       LOAN RECEIVABLE-NET
                           (UNAUDITED)


                                         March 31,  December 31, March 31,
  By Collateral Type                       2007        2006        2006
                                                  (In thousands)


  Commercial real estate mortgage (1)    $5,195,214  $4,945,932  $4,317,466
  Residential real estate - mortgage (2)  1,009,200   1,014,957   1,246,447
  Construction - mortgage                   779,367     722,789     589,045
  Commercial, industrial and
   agricultural (1)                       1,286,406   1,274,236   1,138,451
  Consumer and others (3) (4)               799,112     809,953     828,035
  Total Loans                             9,069,299   8,767,867   8,119,444
  Allowance for loan losses                (136,886)   (126,844)    (96,282)

  Loans - net                            $8,932,413  $8,641,023  $8,023,162


  (1) Includes $1.41 billion, $1.46 billion and $1.35 billion of Westernbank
  Business Credit division outstanding loans at March 31, 2007, December 31,
  2006 and March 31, 2006, respectively.
  (2) Includes fixed and floating interest rate loans to two mortgage
  originator groups in Puerto Rico mainly secured by mortgages on one-to-
  four family residential properties with an outstanding principal balance
  of $914.8 million, $940.0 million and $1.08 billion at March 31, 2007,
  December 31, 2006 and March 31, 2006, respectively.
  (3) Includes $125.6 million, $129.0 million and $133.7 million of Expresso
  of Westernbank division outstanding loans at March 31, 2007, December 31,
  2006 and March 31, 2006, respectively.
  (4) Includes $488.3 million, $490.7 million and $551.9 million
  collateralized by real estate at March 31, 2007, December 31, 2006 and
  March 31, 2006, respectively.



                     W HOLDING COMPANY, INC.                     EXHIBIT V
              NON-PERFORMING LOANS AND FORECLOSED
                    REAL ESTATE HELD FOR SALE
                           (UNAUDITED)

                                        March 31,  December 31, March 31,
                                           2007        2006       2006
                                             (Dollars in thousands)

  Commercial real estate - mortgages
   and commercial,
  industrial and agricultural loans       $179,223    $154,862    $60,253
  Residential real estate mortgage and
   construction loans                        3,833       1,641      2,023
  Consumer loans                             8,785       9,309      7,659
  Total non-performing loans               191,841     165,812     69,935
  Foreclosed real estate held for sale       6,223       5,917      4,003
  Total non-performing loans and
   foreclosed real estate held for sale   $198,064    $171,729    $73,938

  Interest that would have been
   recorded if the loans had not
  been classified as non-performing        $11,371      $9,052     $4,978
  Interest recorded on non-performing
   loans                                    $1,805      $4,785     $1,453

  Total non-performing loans as a
   percentage
  of total loans at end of period            2.12%       1.89%      0.86%
  Total non-performing loans and
   foreclosed real estate
  held for sale as a percentage of
   total assets at end of period             1.13%       1.00%      0.44%



                    W HOLDING COMPANY, INC.                     EXHIBIT VI
              CHANGES IN ALLOWANCE FOR LOAN LOSSES
                          (UNAUDITED)

                                        Three Months Ended     Year Ended
                                              March 31,       December 31,
                                           2007       2006        2006

                                             (Dollars in thousands)

  Balance, beginning of year              $126,844    $92,406     $92,406
  Loans charged-off:
  Commercial real estate - mortgage and
   commercial,
  industrial and agricultural loans (1)     (3,149)    (3,121)    (22,606)
  Residential real estate-mortgage and
   construction loans                          (60)        (1)        (94)
  Consumer loans (2)                        (3,667)    (2,242)    (12,576)
  Total loans charged-off                   (6,876)    (5,364)    (35,276)

  Recoveries of loans previously
   charged-off:
  Commercial real estate - mortgage and
   commercial,
  industrial and agricultural loans            503      1,575       2,846
  Residential real estate-mortgage and
   construction loans                           20         63          66
  Consumer loans (3)                           395        602       2,252
  Total recoveries of loans previously
   charged-off                                 918      2,240       5,164
  Net loans charged-off                     (5,958)    (3,124)    (30,112)
  Provision for loan losses                 16,000      7,000      64,550
  Balance, end of period                  $136,886    $96,282    $126,844

  Ratios:
  Allowance for loan losses to total
   loans at end of period                    1.51%      1.19%       1.45%
  Provision for loan losses to net
   loans charged-off                       268.55%    224.07%     214.37%
  Recoveries of loans to loans charged-
   off in previous year (4)                 10.55%     40.99%      23.30%
  Net loans charged-off to average
   total loans (4) (5)                       0.27%      0.16%       0.36%
  Allowance for loan losses to non-
   performing loans                         71.35%    137.67%      76.50%

  (1) Includes partial charge-offs of $2.0 million and $2.3 million of
  Westernbank Business Credit Division for the three-month periods ended
  March 31, 2007 and 2006, respectively, and $15.8 million for the year
  ended December 31, 2006.
  (2) Includes $2.6 million and $1.7 million of Expresso of Westernbank
  loans charged-offs for the three-month periods ended March 31, 2007 and
  2006, respectively, and $8.9 million for the year ended December 31, 2006.
  (3) Includes $275,000 and $211,000 of Expresso of Westernbank loans
  recoveries for the three-month periods ended March 31, 2007 and 2006,
  respectively, and $1.0 million for the year ended December 31, 2006.
  (4) Net loans charged-off ratios are annualized for comparison purposes.
  (5) Average loans were computed using beginning and period-end balances.



                      W HOLDING COMPANY, INC.                    EXHIBIT VII
                     SELECTED FINANCIAL RATIOS
                            (UNAUDITED)

                                          At and for the      At and for the
                                        Three Months Ended      Years Ended
                                             March 31,          December 31,
                                         2007         2006         2006
                               (Amounts in thousands, except per share data)

  Per share data:
    Dividend payout ratio                40.15%       29.81%       49.10%
    Book value per common share           $4.25        $4.15        $4.24
    Preferred stock outstanding at
     end of period                       18,157       18,157       18,157
    Preferred stock equity at end
     of period                         $530,838     $530,838     $530,838

  Performance ratios:
    Return on assets (1)                  0.66%        0.86%        0.60%
    Return on common stockholders'
     equity (1)                          11.16%       15.57%        9.36%
    Efficiency ratio                     38.04%       33.72%       34.94%
    Operating expenses to total
     end-of-period assets                 0.80%        0.70%        0.73%

  Capital ratios:
    Total capital to risk-weighted
     assets                              12.23%       12.90%       12.51%
    Tier I capital to risk-weighted
     assets                              11.14%       12.08%       11.47%
    Tier I capital to average
     assets                               7.06%        7.41%        7.23%
    Equity-to-assets ratio (1)            7.01%        7.25%        7.27%

  Other selected data:

  Total trust assets managed           $547,270     $502,405     $542,733
  Branch offices                             57           55           56
  Number of full-time employees           1,386        1,356        1,363

  (1) The return on assets is computed by dividing annualized net income by
  average total assets for the period.
  The return on common stockholders' equity is computed by dividing
  annualized net income less preferred stock dividends by average common
  stockholders' equity for the period. The equity-to-asset ratio is computed
  by dividing average equity by average total assets. Average balances
  have been computed using beginning and period-end balances.


DATASOURCE: W Holding Company, Inc.



CONTACT:  Vixson Frank Baez, W Holding Company, [phone], ext.

5535, ,  



Web site:  http://www.wholding.com/ 

Copyright