09:48 ET WIBC Expects Q2 Loss; Temporarily Suspends Dividend
After the close yesterday, Wilshire Bancorp (WIBC 7.80 -0.75) announced that it expects to record a net loss for the second quarter of 2010.
The net loss is primarily attributable to an elevated provision for loan losses and an increase in net loan charge-offs. Net loan charge-offs increased in Q2 of 2010 due to write-downs that resulted from sales of non-performing and delinquent loans.
In light of the net loss expected for the second quarter and the expectation that credit costs will remain elevated for the foreseeable future, the Board of Directors of Wilshire Bancorp approved the temporary suspension of the company's common stock dividend, effective immediately.
DMAN Reports Q1 Loss, Below Consensus
Demandtec (DMAN 6.99 +0.33) reported first quarter results of ($0.09) per share, excluding non-recurring items, $0.02 worse than the Thomson Reuters consensus of ($0.07).
On the top line, revenues fell 7.7% year-over-year to $18 million, above the $17.6 million consensus.
The Labor Sector is Trending in the Wrong Direction
The momentum in the labor sector is trending in the wrong direction.
Total nonfarm employment fell 125,000 in June, 25,000 worse than the Briefing.com consensus expected, after rising 433,000 in May. However, the drop in total payrolls was due to a 225,000 decline in temporary workers hired by the Census Bureau. Excluding those workers, total payrolls increased by 100,000.
The major disappointment came in the private sector.
After posting a surprising 241,000 gain in April, private payrolls showed gains in May and June of only 33,000 and 83,000, respectively. These last two months of private payroll growth are indicative of a jobless recovery scenario.
To make things even worse, those that still had jobs witnessed a 0.4% drop in weakly earnings as hourly wages declined 0.1% while the number of hours worked dropped from 34.2 to 34.1.
The drop in hours may be a bigger cause of concern than the weak payroll growth numbers. We anticipated that consumer demand would remain strong through at least the end of the year and firms would need to increase production in order to meet that growth. The drop in hours suggests that firms are producing beyond current demand requirements, and, as a result, inventories may be stockpiling too quickly. The weakness in the earnings data may be a precursor to further declines in retail sales over the coming months.
The unemployment rate declined from 9.7% to 9.5%, beating the consensus expectation calling for an increase to 9.8%. However, believing that the rise in the unemployment rate is a sign of strength is a misnomer.The unemployment rate only decreased because there was another step down in the labor participation rate. The number of discouraged workers continued to rise and the labor force shrunk by 652,000 to its lowest level since February.
If these workers had remained in the labor force, the unemployment rate would have actually increased to 10.1% and matched its recent peak.
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