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Wilshire Bancorp (NASDAQ:WIBC)

Q1 2013 Earnings Call

April 23, 2013 02:00 PM ET

Executives

Edward Han - First VP of IR

Jae Whan Yoo - President and CEO

Alex Ko - EVP and CFO

Jack Choi - EVP and CCO

Analysts

Aaron Deer - Sandler O'Neill

Julianna Balicka - KBW

Gary Tenner - D.A Davidson

Don Worthington - Raymond James

Bill Steven - Steven Capital

Tom Alonzo - Macquarie

Operator

Good day ladies and gentlemen and welcome to the First Quarter 2013 Wilshire Bancorp Earnings Conference Call. My name is Brian and I will be your operator for today. At this time, all participants are in listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions). As a reminder this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today Edward Han, with Investor Relations. Please proceed Mr. Han.

Edward Han

Thank you, and good morning, everyone. We appreciate you joining us today for our first quarter 2013 conference call. Again, I am Edward Han and joining me today are J. W. Yoo, the Company's President and Chief Executive Officer; Alex Ko, our Executive Vice President and Chief Financial Officer; and Jack Choi, our Executive Vice President and Chief Credit Officer. Yesterday, Wilshire Bancorp issued its first quarter 2013 financial results, which can be accessed either through the Investors Relations tab at wilshirebank.com or from the various financial news websites. This call is being webcast and will be available and archived for one year on the Company's website.

Before we begin, I must remind you that during this call we may make certain statements concerning Wilshire's future performance or events. Any such comments constitute forward-looking statements and are subject to a number of risks and uncertainties that might cause actual results to differ materially from the stated expectations. These factors include, but are not limited to the ability to grow market share in our markets, including New York and Los Angeles, success of new branches, marketing costs, loan growth and balance sheet management, credit quality, our ability to collect on past due loans, deposit generation, net interest margin expectations, interest rate exposure, global and local economic conditions and other risks detailed in the most recent reports on Form 10-K and Form 10-Q as filed with the Securities and Exchange Commission.

Given these uncertainties, undue reliance should not be placed on such forward-looking statements. Wilshire Bancorp is under no obligation to update this information as future events or developments take place that may change these forward-looking statements.

Mr. Yoo will begin the call by providing an overview of the highlights of the quarter and Mr. Ko will review our financial results in more detail. And then Mr. Choi will discuss our asset quality. Mr. Yoo will provide some closing comments and we will then commence the question-and-answer portion of the call.

With that, I will now turn the call over to our Chief Executive Officer, Mr. Yoo?

J. W. Yoo

Thank you, Edward and thank you all for joining us today for this call. We began 2013 with a very solid quarter. We generated a net income available to common shareholders of $11.6 million or $0.16 per share. As you probably know, our result last year was positively impacted by the release of our portion of our allowance for loan losses as well as tax benefit as we diverse the valuation allowances against our deferred tax asset.

On a non-GAAP measure, pre-provision, pretax net income was $17 million for the first quarter of 2013 and increase of 5.4% compared to $16.1 million for the first quarter of 2012 and an increase of 46% compared to $11.6 million for the fourth quarter of last year. I believe our first quarter result reflect the strong core earnings power of the company.

On an annualized basis, we generated a return on average assets of 1.7% and a return on average equity of 13.3%. These underscore the progress we’ve made towards our goal of being a high performing bank.

We were able to generate revenue growth of 11% over the first quarter of last year and managing our over expenses and keeping credit cost low helped us to generate the returns we saw this quarter.

We are pleased with our performance particularly in light of the challenging environment for generating loan growth. There are number of factors that are serving to create this challenging environment. The first as you all know, the economy continues to remain relatively week which reduces overall loan demand. Second, we are seeing the main banks increased their efforts to win business in the Korean-American market which is a primarily good pricing.

Third, more Korean-American banks are coming out of from under regulatory restrictions and that they would guild up a lot of capital and liquidity that they are eager to deploy. In the last year, the market has a largely completed the refinancing cycle for commercial real estate and credit originated in 2006 and 2007 when there was a great of deal activity.

There are not as many financing opportunities with loans from 2008 and later. With these challenges it becomes even more important for us to make inroads into new lending area and to continue our approach to build out our commercial lending business. the process of building CNI relationships can take quite a long time with some quarters showing more results than others. Over the longer term however we expect to see CNI become a large component of our total loan portfolio and in the first quarter we made our most significant progress to date. We originated $55 million in commercial loans, the highest quarterly origination of commercial loans in the past several years. included in CNI originations for the first quarter was one large commercial relationship. We provided this customer with a $25 million commercial loan that has an initial disbursement of $15 million as of March 31st.

We also provided this customer with an $11 million construction loan during the first quarter of 2013, the remaining commercial loan originations were smaller loans from a variety of businesses throughout Southern California. This new commercial lending relationship also brought a large amount of demand deposit account which have helped to offset some volatility we have in our demand account. We also continued to build our residential mortgage warehouse lending business which we saw as an important contributor to both growth and diversification, our total commitment level in this business was approximately $95 million as of March 31st 2013.

Interest income and fees generated by this business has been increasing in the past few quarters as the warehouse line utilization continues to increase, in the short period of time we have been in the warehouse lending business. We have developed a good reputation for customer service and we have good systems in place that enable us to be very responsible to our mortgage banking customers. We continue to invest in this business, to improve the speed and efficiency of our system which should enable us to continue adding more mortgage banking relationships. Now let me turn over to Alex Ko, our Chief Financial Officer for the review of the first quarter financial information, Alex.

Alex Ko

Thank you J.W., and hello everyone. I will begin by discussing our income statement. Net interest income before provision for loan losses was 25.6 million in the first quarter 2013, the same level as in the fourth quarter of 2012. Our net interest margin was 4.09% in the first quarter 2013 compared with 4.33% last quarter. The decline in our net interest margin was primarily attributable to lower yields on loans, which was partially offset by a reduction in our cost of deposits as well as borrowing cost.

Loan yields continued to compress, as new loans are originated at rates that are lower than the existing portfolio. Loan yields were 5.1% in the first quarter of 2013, down from 5.54% in the prior quarter, consistent with the prevailing interest rate environment we continue to see older loss with higher rates being paid off or refinanced, while new loans are to put at lower rate than the existing portfolio. This combination is placing pressure on our loan yield and net interest margin.

On the liability side, our cost of interest-bearing deposit declined to 73 basis points in the first quarter of 2013, down from 79 basis points in the prior quarter. Our success in bringing in core deposits and the loan rate deposits from the State of California has allowed us to run off some of our higher cost time deposits, as well as reducing rates on our other deposit categories.

Going forward we may experience compressions in our net interest margin as the new loans continue to be booked at lower rate and we have fewer opportunities to reduce deposit cost.

Turning to non-interest income, we generated 8.7 million in the first quarter of 2013 compared to 6.7 million last quarter. The primary driver of this increase was higher gain on sale of loans. We had 3.5 million in net gains on this quarter compared with 1.2 million last quarter. The 3.5 million, the net gains on the sale of loans in the first quarter was comprised of 3.4 million SBA loan sales 13,000 from the sale of residential mortgage loan. We sold approximately $30 million in SBA loans in the first quarter compared with $10 million sold in the last quarter.

Our non-interest expense was $17.3 million in the first quarter compared to $20.7 million in the prior quarter. Unlike last quarter, we did not have any impairment charge against our FDIC indemnification asset which was the primary reasons for the decline in non-interest expenses in the first quarter of 2013.

Our salary and benefit expense was $8.8 million in the first quarter compared with the $7.9 million last quarter. The increase was primarily due to seasonally higher payroll taxes and the higher bonus accrual. In fact, last quarter we had a reversible bonus accrual which exaggerated the quarter to quarter increase in salaries and benefit expenses.

Looking ahead to second quarter, we have first of all salary increase of approximately 3.5% that will take effect and increase the loan rate of our salary and benefit expenses.

Moving to taxes, we have reported a provision for income taxes of $5.4 million which represents an effective tax rate of 31.7%. This is a slightly lower than our projections with the recent investment in affordable housing programs has increased amount of tax credit that we can apply. We expect that our effective tax rate will remain in these appropriate ranges for the rest of 2013.

Turning to the balance sheet, our gross loans which include both loan held for investment and loan held for sale were $2.19 billion at March 31st, 2013; compared with $2.16 billion at the end of the prior quarter. The increase primarily came in the commercial and the industrial portfolio.

Our total deposits were $2.16 billion at March 31st, 2013; down slightly from $2.17 billion at the end of the prior quarter. Within the various deposit categories, we had decreases in our higher cost accounts, notably, our non-jumbo time deposits and money market deposits which were partially offset by an increase in our non-interest bearing demand deposits and an increase in jumbo time deposits.

During the first quarter 2013, we were able to secure 30 million in additional time deposits from the State of California at a rate of just 12 basis points. We continue to be in a very strong capital position. In March 31, 2013, we had Tier 1 leverage ratio of 14.72%, a Tier 1 risk based capital ratio of 18.72%, a total risk capital ratio of 19.99% and as a common equity ratio of 12.59%.

In addition, the company’s book value per share increased to 4.96 at March 31, 2013 compared to $4.80 at the end of the prior quarter. I will now turn the call over to Jack, our Chief Credit Officer for discussion of our asset quality trend. Jack?

Jack Choi

Thank you Alex. We had another solid quarter of improvement in asset quality. In general, we are seeing a continuation of a positive trend we have experienced over the past several quarters. Most notably, we continue to see a decline in problem credits, resulting from resolutions through charge-offs, re-financings from other banks and upgrades due to the improving health of some borrowers.

At the same time, we are seeing fewer new problem credits emerge, as evidenced by the declining level of inflow into both non-accrual loans and classified loans. Our total non-accrual loans declined by approximately $2.9 million to $25.1 million at March 31, 2013, compared to December 31 2012. We had $4.5 million flow out of total non-accrual loans in the first quarter, which included $3.2 million that was charge-off and $500,000 that was paid-off. Total inflow was just $1.6 million in the first quarter down from $4.5 million last quarter.

Total loan delinquencies increased approximately $5.4 million to $9.6 million at March 31st. This is within the normal range of volatility of delinquent loan category. Approximately 77% of our total delinquencies are early stage delinquency in the 30 to 59 days past year category which are less concerning to us. Our total classified loans which are loans created as substandard, doubtful and loss declined by approximately $10.2 million to $153.8 million at March 31st. Total outflow from classified loan was $22.2 million in the first quarter down from $35.7 million last quarter.

The $22.2 million in outflow included $11.4 million that was paid off, $4.8 million that charged off and the $4.1 million that was upgraded. Inflow into classified loans was $12 million down from $27 million last quarter.

Our gross loan charge-offs were $5.6 million in the first quarter compared with $3 million in the prior quarter. The largest components of our first quarter charge-offs were $1.7 million partial charge-off of a commercial real estate loan on a golf course company and the $1.3 million partial charge-offs of a gas station loan. Even the improvement we saw in the most of our credit metrics this quarter we determined that no provision for credit losses was required.

As a result, as of March 31, 2013, we had an allowance for loan losses of $58.60 million or 2.85% of gross loans held for investment. We also had 215% coverage of our nonperforming asset. Now, I will turn the call back to our Chief Executive Officer, Mr. Yoo. Mr. Yoo.

Jae Whan Yoo

Thank you, Jack. We’ve gotten up to a good start in 2013 and we expect to continue delivery a strong level of profitability. Why we’re achieving our goal of being a high performing bank we also highly focused on growth as well and we’re continually evaluating new opportunities to gain market share or create a new revenue sources.

As I mentioned earlier, we’re pleased with the progress we’ve made in growing our warehouse lending business and that we will continue to invest mortgage sources to enable this business to make a larger contributions in the future.

As you know, we have loan production offices in California, Texas, Georgia, New Georgia, Washington, Virginia, and Colorado. And we are scrolling ways to build out our presence in those markets where we think there is some additional growth opportunities that exist. Also, I am happy to announce that just yesterday we opened a new full service branch in Palisades Park, New Jersey. This branch opening gives us a greater presence in Eastern Coastal market where there is a lot of opportunity for future growth. We also continue to be extremely well capitalized and we are constantly looking for ways to deploy that capital in ways that would create the value for our shareholders.

During the fourth quarter, our Board of Directors authorized to repurchase of up to 5% of our outstanding common shares. We believe this amount will enable us to take advantage of attractive opportunities to repurchase our shares, while also leaving us with sufficient capital to continue exploring opportunities to invest in the growth of the franchise.

Acquisitions have always played a role in the growth of Wilshire Bancorp and we expect them to continue to do so in the future. It’s certainly hard to predict when those opportunities might arise, but we are willing to be patient until we see the right type of transactions available. In the meantime, we are confident that we can create the value by continuing to execute well with our existing operations. Thank you for being with us this morning.

Edward Han

Thank you. That concludes our formal presentation and at this time we would like to open the call for questions. Operator we are ready for questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). And we will take our first question from Aaron Deer with Sandler O'Neill.

Aaron Deer - Sandler O'Neill

If you could just follow-up some of your thoughts J.W. on the share repurchases that I, what I’d be interpreting you correctly if I were to understand your comments to suggest that you will be active with the buyback absence any M&A opportunities?

Jae Whan Yoo

That is actually part of our capital deployment and growth of strategies definitely we are in a carefully exploring alternatives to in a best interest to the bank but actually at this point of time I cannot tell anything about those progresses, but as I mentioned that is part of our growth strategies.

Alex Ko

Let me add a little bit more Aaron related to our share repurchase program. As you know we are now weeks ago to purchase up to 5% of our stock and because we have a blackout period, we didn’t actually execute any of the repurchase yet since we last announced and our blackout period will go away in few days after this earnings call. So, depends on the market we probably, actively participate in repurchase of those stocks going forward.

Aaron Deer - Sandler O'Neill

And then, Alex you said a couple of quick few questions with respect to the margin. One is could you give some color on where the loan yields are on new loan originations relative to loans that are paying down?

Alex Ko

Sure, the margin actually as you see we have about 24 basis points reduction and those reduction mainly came from the decline in loan yield. Actually the impact on the net interest margin from the loan yield decrease was 26 basis point and the remaining about 4% further reduction on net interest margin came from the increase on the bank fund sold and also there was a security balance increase of about 2 basis point negative impact. And those negative impact was actually offset by the a decline in our cost of deposit empowering and that actually had about 8 basis point positive impact on our net interest margin. So, that’s a net-net is about 24 basis points reduction of our net interest margin and the new loans were originated at a lower rate at about like 4.5% ranges. So they have obviously much lower than our existing rate.

And also move on to like a net interest margin projection, we had a 4.09% this quarter we would expect continuous net interest margin compression namely coming from the further reduction on the loan yield. we would anticipate about 15 basis points reduction on the loan yield and other earning assets such as investments and FAS funds sold, depends on the type, we might come up with maybe two or single digit compression from there, so total about earning assets we would expect about 10 basis point compression of the net interest margin. On the liability side, deposit and borrowing, I don’t think we will have a substantial further reduction on the deposit costs. We will see same level or like 72 basis points of the deposit and borrowing cost. So with that we would anticipate about like 9 or 10 basis points, further reduction of the net interest margin going forward.

Aaron Deer - Sandler O'Neill

Over what kind of a time frame is that guidance?

Alex Ko

That is actually for the next quarter.

Aaron Deer - Sandler O'Neill

Okay, okay. I guess I'm a little bit curious about your thoughts on deposit costs, it seems like your interest bearing deposit costs are still relatively high relative to where the market is on CD pricing. when you look out at competitors, where do you stand kind of on a percentile ranking relative to the market and if you try to pull that down and find that you're running into runoff, why is it this can't maybe bring those deposit costs down lower.

Alex Ko

Actually a last like 2-3 years, we have decreased our deposit cost substantially. Right now our like total CD, breaking down jumbo and non-jumbo CD we have about in the second quarter, about total 341 million is expected to be mature, but that rate, current rate is about 83 basis points and I don't think there was a much lower rate we can offer because our loan to deposit ratio is reaching like a 100% and our competitors they're not too much aggressive as we have seen last two-three years, so the rate has gone down so much and considering loan to deposit ratio and also again for the CDs scheduled to mature next two to three quarters, the pricing rate will not be much lower. So I don’t anticipate again further reduction, substantial reduction. we might see like maybe less than 5 basis points further reduction, depends on the pricing. But it will be much a slower pace than what we have seen.

Operator

Thank you Aaron. We will take our next question from Julianna Balicka with KBW.

Julianna Balicka - KBW

I have a couple of questions to follow up. One, on the tax advantage investments that you are making. is there an increase to the amortization associated with the tax advantage investments in your operating expenses that we should be thinking about?

Alex Ko

Yes, our tax rate was about like 31.7% in terms of effective tax rate and that reduction, now compared to, years ago, kind of normalize at that time like at 37% or 38%, the further reduction to 32% mainly came from the additional investment for the low income tax housing credit. And we have currently about 38 million of a total low income half housing credits. And in terms of actual house benefits, we had about $4.6 million of tax benefit. And currently like 31.7% effective tax rate is for the projected effective tax rate for the entire 2013, because we believe our operation was already normalized. So that’s our expected tax rate. And going forward, two purposes of more low income tax housing credit because of low interest rate environment and the tax benefit that we, it’s a much higher. So it is a more attractive in terms of financial aspect but also we serve the community because those investments is to help low income housing areas, so that’s also kind of compliance and also helping the community perspective, it is very good investment. So we would continue to explore or expand those investments. as such we will continuously get same level or higher level of the benefit from the low income tax housing credits.

Julianna Balicka - KBW

Great, that makes sense. And then two more follow-up questions, one is a quick housekeeping question, what’s the balance of your covered loans at the end of the quarter?

Alex Ko

Sure. The breakdown, we actually take out the breakdown of the covered and non-covered because balance was not significant enough and actually total gross loan balance for a combined was at 2.19 billion out of that linear portfolio or the cover loan is only 107.9 million which represents about 4.9%.

Julianna Balicka - KBW

So out of the near, the 108 million that you have left, it has two questions A; has the runoff that you would have expected gone away so effectively this is a kind of a steady state balance of loans that you are expecting to have on an ongoing basis; and two, this quarter you didn’t have any FDIC indemnification amortization, so how should we think about that; just kind of the altered number, kind of going forward?

Alex Ko

Sure, I think your two questions is actually interlinked because if we see higher run-rate or runoff or even including charge-off; that would have impacted our impairments of the FDIC indemnification asset. So let me kind of address, first your run-rate, is that expected? Yes, it is expected rate of the loan pay down because we have like five more quarters still to go and we have a $108 million as of March 31st. So the rate of the pay down is consistent what we have anticipated.

And secondly do I expect any FDIC indemnifications further right down? No obviously we need to assess how much charge-off we will incur going forward. However, last quarter we have quite substantial amount of the impairment charge-off already and the residual FDIC indemnification asset as of March 31st is only $4.9 million and five quarters still to go. And I would not anticipate any further impairment charge off going forward. If I do anticipate any like impairment further write down it would be much smaller scale if there is any.

Julianna Balicka - KBW

Okay, that makes sense. And then the final question and I will step back. In terms of your provision expense or the lack thereof, you consistently reduced your reserves and provided a negative provision last year and with 2.85% reserve coverage is still pretty high. So can you explain to us how you went from negative provision to zero provision, kind of what drives that decision and how would that play out?

Jack Choi

Okay Julianna, this is Jack. Yes, given the trends of the last three quarters, previous to the Q1, it could be anticipated that we can have some further relief in light of our over 2.8% of the coverage. But you can see that we have on several issues that we have to address in terms of this market condition and the economic condition, also the competition driven the loan growth. So given the size of the loan growth, also the trends of the credit metrics yes we could have anticipated that we have some room for the further negative provisions. But we reviewed and assessed all the risk factors in our portfolio and we believe this is adequate level of our loans provision. And about 5 million reduction, just out of the charge-offs should be very adequate amount of the level that we can manage our (inaudible).

Operator

Thank you for your questions Julianna and we will take our next question from Gary Tenner with D.A Davidson

Gary Tenner - D.A Davidson

Good morning. Just a follow-up question on the margin you noted that the new loans being originated are in the 4.5% yield range, given the kind of acceleration of March compression last couple of quarters that to me suggest a little more churn within the loan portfolio in terms of either re-pricing or something else. I am just wondering what loans you have scheduled to mature or re-price over the next quarter or two and whether that's been serving outsized impact for the last couple of quarters on the loan yield?

Jack Choi

Yes. We can say several factors that might or may affect our loan pricing down the road. First of all, as you see that in 2007 or before the fixed rate loans had a very high level of the interest income, but those loans matured prior to 2012. After 2008, although there were some fixed rate loans, their fixed rated loans were not that much high level so even though there is some pressure, for pressure there we have to refinance those the fixed rated loans into new one if pressure is reduced.

Number two, the market competition, yes, we are kind of squeezed by two big forces, the number one is non-Korean-American banks which traditionally did not pay attention to the class B or class C properties. but nowadays they’re eager to penetrate our market share, so we have one side of the pressure there but the other side of pressure is the small-to-medium banks in our market.

Most of those banks are restricted by the regulation, their regulatory enforcement action but many banks are getting out of that enforcement action so they are ready to jump in the market. that actually happened in the last couple of quarters but because of that we have another pressure from our smaller competitors.

And thirdly when you see that the yield curve, it is very volatile but still we see that more downward pressure in recent months, so it is the combination of a market force and the financial market yield curve that we might have to see the more pressure there. But one good sign is that we are out of that peak refinancing that had carried a big portion of the higher yield fixed rated loans. So overall still is more negative than positive but the one big force of reducing the loan yield from the newly generated or refinancing loans have lessened.

Operator

Thank you and we’ll take our next question from Don Worthington with Raymond James.

Don Worthington - Raymond James

Couple of questions on the deposits like there was a reduction in the money market deposit account line. anything in particular there? was there a large deposit or change in pricing that led to that?

Alex Ko

No, money market account, actually the money market for quarter-over-quarter makes it the balance of this slightly and the rate reduced like a three basis points and our money market, I don’t believe there is few accounts that driven the changes, it is more a like a small balances consist for that changes and I do not think that is any in the future based on what we have seen I don't anticipate any big surprise on the money market account rate and the balances as well.

Don Worthington - Raymond James

Okay and then in terms of the large CDs what typically are you paying in terms of rate and then for how long?

Alex Ko

Yes we have now CD rate typically we have in-house kind of a cap which kind of forces a rate and our branch managers they use that cap as kind of their guidances. And, currently we have cap rates for the CD, it depends on typically if we have a different rate for the CD more than 100,000 or smaller than 100,000 but currently we have too much sustained rate regardless of the 100,000 threshold amount and typically we have now one year of CD has the highest balances and our cap rate that currently we offer is about 80 basis points. And if there is a very important customer so we can offer a higher than 80 basis points but that is the kind of guidance.

Don Worthington - Raymond James

Okay great and then last question in terms of the warehouse product, just kind of wondering how far you think that could grow under your current processes and procedures. it sounds like you got 95 million now inline. so where do you think you can take that?

Alex Ko

Yes we already got here some traction from the market as an active player in the warehouse line of credit provider. So, I can see that we can get continuous flow of the interest, so I don't have any concern about reducing or slowing down of the continuous development of the newer line of credit borrowers. In terms of the policies and procedures that we are well managed and we continuously get the consulting service from the warehouse or then being exploit and also we get the review from the internal audit and outside reviews too. So, we have some scalability that as we grow further that we will increase our level of monitoring and management here. But, the one caveat is that since there are many new banks who are trying to come into the market that we may see the same type of pressure in our margin too. But it is more likely the competition of service and technological assistance, so I don’t think we have any big advantage and because we always endeavor to have the state of the art technological assistance and the good training of the staffs too. This side is that, the recent change of the regulatory interpretation of the warehouse line of credit there may be some leftovers from the larger banks in case they have to change their classification of the warehouse line of credit from the secured lending to unsecured credit.

So, all in all about that we are still in the mix of the good positives and negatives, but we are strong in penetrating for the market.

Operator

And we’ll take our next question from Bill Steven with Steven Capital.

Bill Steven - Steven Capital

This is Bill Steven. Most of my questions have already been asked and answered but the one I would ask about is as outsider, can you help us a little bit look at the volume on the SBA lending on a go forward basis. obviously you guys have been very successful here just how to do the estimates from the outside? Thanks guys.

Alex Ko

Like you said that we don’t have exact numbers of at least the couple of quarters that before we get the data from the SBA but the volume has grown sustainably in our market, every quarter we can see that close to $1 billion production although there is some reduction in the first quarter of 2013 but because of the project, congressional project also that’s a very positive trend in the SBA subsidy, I don’t think that they need any more subsidy in the SBA program.

So with this strong support by the SBA and also that the larger amount of the credit up to $5 million, I think that we can see the continue trend of the increase in SBA volume production in our market.

Operator

(Operator Instruction). And we'll take our next question from Tom Alonzo with Macquarie.

Tom Alonzo - Macquarie

Good morning guys, I just wanted to follow up on your comments on the tax rate I want to make sure I heard you correctly. Did you say that this the new sort of lower rate, from the tax credits would be a good rate on a go forward basis or should we expect it to move back up in the second quarter?

Alex Ko

I don't think you would expect to have increase, above like 32%-33% will be next quarter and in fact full year 2000, effective tax rate.

Operator

Great and we have no further questions.

Alex Ko

Thank you Bryan, that concludes our quarterly conference call, on behalf of our management team and the board of directors I would like to thank everyone again for your participation and continued interest and support in Wilshire Bancorp, if you have any further questions please feel free to contact us directly, thank you.

Operator

Ladies and gentlemen that concludes today's conference, thank you for your participation, you may now disconnect, have a wonderful day.

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