- Diluted earnings per share of $.17 increased by $.04 from first quarter 2008 and declined from $.50 in the second quarter of 2007. - Provision for credit losses of $6.0 million declined $2.7 million from first quarter 2008 and increased $2.5 million from second quarter 2007.
LAKE OSWEGO, Ore., July 21 /PRNewswire-FirstCall/ -- West Coast Bancorp
(Nasdaq: WCBO) today announced quarterly earnings of $2.7 million or $.17 per
diluted share for the second quarter of 2008, compared to second quarter 2007
earnings of $8.1 million or $.50 per diluted share.
Three months ended Three months ended
(Dollars in thousands, June 30, March 31,
except per share data) 20082007Change 2008Change
Net income $2,684 $8,135-67% $2,00034%
Diluted Earnings Per Share $0.17 $0.50-66% $0.1331%
Return On Average Equity 5.2% 15.5% -10.3%3.8% 1.4%
Return On Average Equity,
Tangible*5.7% 16.9% -11.2%4.3% 1.5%
Tier 1 capital ratio 9.45% 9.57% -0.12% 9.32% 0.13%
Total capital ratio 10.71% 10.65% 0.06% 10.57% 0.14%
Leverage ratio 8.90% 9.35% -0.45% 8.84% 0.06%
Total Period End Loans $2,153,716 $2,140,942 1% $2,194,311-2%
Total Period End
Deposits $2,078,250 $2,045,153 2% $2,061,847 1%
* Return on Average Equity, Tangible is a non-GAAP measure that we define
and calculate as net income excluding intangible asset amortization, net
of tax, divided by average equity less average intangible assets. See
financial tables for a reconciliation to the GAAP measure.
"The financial markets continue to create uncertainty for our economy and
the financial services industry," said Robert D. Sznewajs, President and Chief
Executive Officer. "Consistent with industry trends, the residential
construction portfolio and our borrowers with significant ties to the
residential housing sector are experiencing the most difficulty at this time.
Positively, our term commercial real estate, commercial and industrial, home
equity, and commercial construction portfolios have been relatively unaffected
up to this point. The Company is very focused on managing through the
challenges created in this environment while remaining committed to our core
businesses that have been less affected by the current economic conditions.
We have also consistently maintained our capital position in 'well
capitalized' status under regulatory guidelines," said Sznewajs.
Financial Results:
Total loan balances increased to $2.154 billion at June 30, 2008, a modest
1% increase over the balance at June 30, 2007. Excluding two-step loan
balances, year-over-year loan growth was $123 million, or nearly 7%, with
growth concentrated in the commercial real estate and residential mortgage
loan categories. Outstanding two-step loan balances at June 30, 2008, were
$146 million, a decline of $111 million or 43% since June 30, 2007, and at
quarter end represented less than 7% of total loans down from approximately
12% a year ago. Total credit remaining available on two-step commitments has
fallen to less than $13 million. Second quarter 2008 average total deposits
of $2.046 billion grew 1% or $29 million from the second quarter of 2007, with
the majority of the increase in interest bearing demand deposit and
certificate of deposit categories.
The second quarter 2008 net interest income of $23.7 million declined $5.0
million or 17% from the same quarter last year due to the substantial 96 basis
point compression in the net interest margin. The net interest margin
declined as a result of the lower value of non-interest bearing demand
deposits and a 61 basis point contraction in the net interest spread. The
combination of interest reversals on two-step loans and cost of carrying the
nonaccrual two-step loan balances reduced the spread by approximately 37 basis
points. The remaining 24 basis point contraction in the spread resulted from
competitive pressures for interest bearing deposits, lower construction loan
fees and the aggressive decrease in the Federal Funds Rate in early 2008,
which negatively affected our loan yields.
As shown in the following table, interest reversals related to two-step
loans have had a significant adverse effect on the net interest margin in
2008. Excluding the effects of two-step loan interest reversals, the net
interest margin would have been approximately 4.19% and 4.61% in the two most
recent quarters, respectively. Compared to first quarter 2008, the net
interest margin after adjustments for interest reversals relating to the
two-step program contracted 42 basis points with approximately equal impact
from lower value of non-interest bearing demand deposits and deposit rate
lagging the decline in the market interest rates and loan yields.
The following table reconciles the net interest margin for the periods
shown to the net interest margin excluding the effect of interest reversals
relating to two-step loans.
Net interest margin reconciliations(1)
For the three
months ended
June June March
30,30,31,
(Unaudited) 2008 2007 Change 2008 Change
Net interest margin 3.94% 4.90% -0.96% 3.92% 0.02%
Add: impact of two-step loan
interest reversals 0.25% 0.00% 0.25% 0.69% -0.44%
Net interest margin excluding impact
of loan interest reversals 4.19% 4.90% -0.71% 4.61% -0.42%
(1) Management uses this net interest margin data internally and has
disclosed it to investors based on its belief it makes
it easier to compare the Company's performance across the periods
shown by highlighting the impact from material factors.
Second quarter 2008 non-interest income of $9.0 million increased
$.3 million or 4% from the same period in 2007. Both payment system and
deposit service charge revenues showed excellent growth. Payment systems
revenues increased $.3 million or 16% over the second quarter of 2007, with
particularly solid growth in card-related revenues. Total deposit service
charge revenues grew $.7 million or 24% over the same period, primarily
attributable to the 8% combined growth in consumer and business transaction
accounts, higher transaction volumes, and lower earnings credit rates on
business analysis accounts. Gain on sales of loans declined 20% or $.2
million in the current quarter as a result of reduced activity in the
residential mortgage market. The uncertainty surrounding the economy
generally and equity markets in particular negatively affected trust and
investment revenues, which declined $.1 million or 7% from the same quarter
2007. Additionally, in the most recent quarter we recognized a $.2 million
gain on sales of investment securities and recorded a negative valuation
adjustment of $.3 million related to our other real estate owned ("OREO")
properties. Compared to the first quarter of 2008, total non-interest income
declined $1.2 million in the current quarter due to the first quarter VISA IPO
gain of $.7 million and $.4 million higher gain on sale of securities.
Second quarter 2008 total non-interest expense of $23.3 million increased
$1.8 million or 9% from the same period of 2007. Our personnel expense
increased slightly; lower performance-related pay nearly offset annual merit
increases, additional team members, and materially lower deferred construction
loan origination costs. Other significant variances from the second quarter
of 2007 included a $.5 million increase in legal expense, the majority of
which relates to the two-step program, an increase in FDIC insurance premium
expense of $.5 million, and $.5 million growth in expenses associated with the
portfolio of OREO properties related to the two-step program. Compared to
first quarter 2008, our total non-interest expense grew $1.1 million due to
higher legal, FDIC insurance premium, and OREO expenses together with
increased personnel and marketing expenses.
As a result of materially lower pre-tax income, the second quarter 2008
provision for income taxes as a percentage of pre-tax net income was 21.2%,
down from 34.5% during the same quarter in 2007.
Credit Quality:
The Company recorded a second quarter 2008 provision for credit losses of
$6.0 million, up $2.5 million from the same quarter in 2007, and a decline of
$2.7 million from the first quarter 2008. The provision related to the
two-step portfolio was $1.9 million in the most recent second quarter. The
Company continues to believe that the assumptions made in establishing the
allowance for credit losses for the two-step portfolio at December 31, 2007,
have generally proven sound to date based on information currently available
to it, including data acquired from 10 pending sales and 27 sales that had
been completed as of June 30, 2008. The provision associated with loans other
than two-step loans was $4.1 million. In the second quarter, the combination
of risk rating changes, net charge-offs, and increases in our general
valuation percentages in our allowance model contributed to this provision
expense.
Total net charge-offs in the second quarter of 2008 were $11.4 million, of
which $8.5 million related to the two-step portfolio. The charge-offs
associated with the two-step portfolio in the second quarter were
substantially applied against the allowance for credit losses for the
portfolio established at year end 2007. The second quarter 2008 net
charge-offs for loans other than two-step loans were $2.9 million, or .54%
(annualized) of average total loans, up from $1.5 million and .28%,
respectively, in the second quarter of 2007.
At June 30, 2008, the total allowance for credit losses was $37.1 million,
including $5.3 million associated with the two-step loan portfolio and $31.8
million related to the remainder of the loan portfolio. The allowance for
credit losses in the two-step portfolio at June 30, 2008, was 8.9% of total
two-step commitments associated with two-step loans on accruing status as of
June 30, 2008, as compared to 9.7% at year-end 2007 and 7.5% at March 31,
2008. The following table provides additional two-step loan and allowance for
credit losses information.
Additional information regarding the two-step loan portfolio
(Dollars in thousands, unaudited)
Nonperforming AccruingTotal accruing
Total two- two-step two-step two-step loan
Period ended step loans loans loanscommitments
12/31/2007 $262,952 $20,545 $242,407$320,991
3/31/2008 211,406 88,784122,622 156,823
6/30/2008 145,703 98,728 46,975 59,603
Allowance forAllowance for
credit losses on credit losses on
Allowance for two-step loans as two-step loans as
Period ended credit losses on a % of accruinga % of total accruing
two-step loans two-step loans two-step loan commitments
12/31/2007 $31,065 12.8% 9.7%
3/31/2008 11,8129.6% 7.5%
6/30/20085,280 11.2% 8.9%
The allowance for credit losses associated with loans other than two-step
loans was 1.58% of such outstanding loan balances at June 30, 2008, up from
1.25% at December 31, 2007 and 1.55% at March 31, 2008.
Total non-performing assets were $147 million or 5.6% of total assets at
June 30, 2008, up from $30 million and 1.1%, respectively, as of December 31,
2007 and $105 million and 4.0% as of March 31, 2008. Non-performing assets
related to the two-step loan portfolio were $125 million or 4.8% of total
assets, up from $24 million and .9% at year-end 2007 and $94 million and 3.6%
at March 31, 2008. As of June 30, 2008, $21 million in charge-offs had been
taken against the nonaccrual two-step loans. The current two-step nonaccrual
balance of $98.7 million reflects these charge-offs. Within the nonaccrual
two-step loan balance, $9.1 million in loans were current on loan payments and
$27.8 million were 30-89 days past due, and the remainder were over 90 days
past due. At June 30, 2008, there were $22.2 million of non-performing assets
other than in the two-step portfolio or .84% of total assets, up from $5.9
million and .22% at December 31, 2007 and $10.3 million and .39% at March 31,
2008. The nonaccrual balances in the residential builder construction and
non-standard mortgage segments each grew $4 million during the second quarter.
These additional nonaccruals were measured for impairment and written down to
estimated fair value net of selling costs. Total delinquent loans were $14.9
million or .69% of total loans at end of the second quarter 2008, down from
$44.5 million and 2.05% at year end 2007, and $27.1 million and 1.23% at March
31, 2008. The decrease was primarily due to lower delinquencies within the
two-step, residential builder construction, and commercial portfolios. For
more detailed credit quality information, see tables 4 through 9.
Capital:
The Company remains well capitalized. At June 30, 2008, the total capital
ratio for West Coast Bank was approximately 10.71%, up from 10.57% at March
31, 2008, and 10.65% at June 30, 2007. West Coast Bank's tier 1 capital ratio
at 9.45% and leverage ratio of 8.90% are above the well capitalized regulatory
threshold by a significant level. The following table shows the Company's
risk-based capital ratios for the indicated periods.
Risk based capital ratios
(Unaudited)
06/30/08 06/30/07 03/31/08
Excess
Well over well
capitalized capitalzed
West Coast Bancorp Ratio minimum minimum Ratio Ratio
Tier 1 capital ratio 9.99%6.00% 3.99% 10.25% 9.96%
Total capital ratio 11.24% 10.00% 1.24% 11.33%11.22%
Leverage ratio 9.46%5.00% 4.46% 10.03% 9.49%
West Coast Bank
Tier 1 capital ratio 9.45%6.00% 3.45%9.57% 9.32%
Total capital ratio 10.71% 10.00% 0.71% 10.65%10.57%
Leverage ratio 8.90%5.00% 3.90%9.35% 8.84%
Other:
The Company will hold a Webcast conference call Monday, July 21, 2008, at
11:00 a.m. Pacific Time, during which the Company will discuss second quarter
2008 results and key activities. To access the conference call via a live
Webcast, go to http://www.wcb.comand click on Investor Relations and the "2nd
Quarter 2008 Earnings Conference Call" tab. The conference call may also be
accessed by dialing (877) 604-2074. Conference ID#: 51095353 a few minutes
prior to 11:00 a.m. PDT. The call will be available for replay by accessing
the Company's website at http://www.wcb.com and following the same
instructions.
West Coast Bancorp, one of Oregon Business Magazine's 100 Best Companies
to Work For, is a Northwest bank holding company with $2.6 billion in assets,
and 64 offices in Oregon and Washington. The Company combines the
sophisticated products and expertise of larger banks with the local decision
making, market knowledge and customer service of a community bank. For more
information, visit the Company's web site at http://www.wcb.com.
Forward Looking Statements:
Statements in this release regarding future events, performance or results
are "forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 ("PSLRA") and are made pursuant to the safe
harbors of the PSLRA. Actual results could be quite different from those
expressed or implied by the forward-looking statements. Do not unduly rely on
forward-looking statements. They give our expectations about the future and
are not guarantees. Forward-looking statements speak only as of the date they
are made, and we do not undertake any obligation to update them to reflect
changes that occur after that date.
A number of factors could cause results to differ significantly from our
expectations, including, among others, factors identified in our Annual Report
on Form 10-K for the year ended December 31, 2007, including under the heading
"Forward Looking Statement Disclosure" and in Item 1A, all as updated in our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2008.
West Coast Bancorp
Consolidated Statements of Income
(Unaudited) Three months ended Six months ended
(Dollars and shares in
thousands, except per share
data) June 30, March 31, June 30,
2008 2007 2008 2008 2007
Net interest income
Interest and fees on loans $32,826 $42,637 $35,073 $67,899 $82,548
Interest on investment
securities 2,7793,3973,0985,8777,139
Other interest income 140 114 141 281 233
Total interest income 35,745 46,148 38,312 74,057 89,920
Interest expense on deposit
accounts 9,064 13,524 11,613 20,677 26,511
Interest on borrowings and
subordinated debentures 2,9683,9003,1226,0906,800
Total interest expense12,032 17,424 14,735 26,767 33,311
Net interest income 23,713 28,724 23,577 47,290 56,609
Provision for credit losses6,0003,5008,725 14,7256,300
Non-interest income
Service charges on deposit
accounts3,8833,1363,6357,5186,021
Payment systems related
revenue 2,3402,0122,1314,4713,690
Trust and investment
services revenues 1,5341,6491,5853,1193,141
Gains on sales of loans769 967 8601,6292,271
Other 325 8451,4101,7351,519
Gains on sales of
securities187 96 590 777 96
Total non-interest income 9,0388,705 10,211 19,249 16,738
Non-interest expense
Salaries and employee
benefits 12,645 12,544 12,355 25,000 25,057
Equipment1,7651,5741,7513,5163,100
Occupancy2,2972,1582,3754,6724,207
Payment systems related
expense 892 825 8431,7351,490
Professional fees 948 545 8001,748 966
Postage, printing and
office supplies 1,000 969 9661,9661,845
Marketing1,006 870 7951,8011,994
Communications 427 354 402 829 787
Other non-interest expense 2,3661,6611,9344,3003,093
Total non-interest expense23,346 21,500 22,221 45,567 42,539
Income before income taxes 3,405 12,4292,8426,247 24,508
Provision for income taxes 7214,294 8421,5638,509
Net income$2,684 $8,135 $2,000 $4,684 $15,999
Basic earnings per share $0.17$0.52$0.13$0.30$1.03
Diluted earnings per
share $0.17$0.50$0.13$0.30$0.99
Weighted average common
shares 15,467 15,567 15,445 15,456 15,525
Weighted average diluted
shares 15,540 16,143 15,589 15,572 16,136
Tax equivalent net interest
income $24,162 $29,121 $24,027 $48,189 $57,404
West Coast Bancorp
Consolidated Balance Sheets
(Dollars and shares in thousands,June 30,June 30,March 31,
unaudited)200820072008
Assets:
Cash and cash equivalents$101,767 $82,414 $88,205
Investments 248,954 267,614 242,163
Total loans 2,153,716 2,140,942 2,194,311
Allowance for loan losses (35,723)(26,496)(39,602)
Loans, net 2,117,993 2,114,446 2,154,709
Goodwill and other intangibles 14,253 14,730 14,372
Other assets 149,959 105,195 121,445
Total assets $2,632,926 $2,584,399 $2,620,894
Liabilities and Stockholders' Equity:
Demand $500,189$482,698$472,116
Savings and interest-bearing demand 349,950 347,028 366,267
Money market 693,801 668,373 652,559
Time deposits 534,310 547,054 570,905
Total deposits 2,078,250 2,045,153 2,061,847
Borrowings and subordinated debentures322,378 296,727 306,052
Reserve for unfunded commitments1,322 2,852
Other liabilities 25,468 28,656 42,206
Total liabilities 2,427,418 2,370,536 2,412,957
Stockholders' equity 205,508 213,863 207,937
Total liabilities and
stockholders' equity $2,632,926 $2,584,399 $2,620,894
Common shares outstanding period end 15,702 15,748 15,580
Book value per common share$13.09 $13.58 $13.35
Tangible book value per common share $12.18 $12.65 $12.42
West Coast Bancorp
Period End Loan Portfolio By Category
(Dollars in thousands,% of % of
unaudited) June 30, total June 30, totalChange
2008loans 2007loansAmount%
Commercial loans$512,689 24%$515,590 24%$(2,901) -1%
Real estate
construction loans(1) 392,724 18% 503,414 24% (110,690) -22%
Real estate mortgage
loans 377,771 18% 294,447 14% 83,324 28%
Commercial real
estate loans847,430 39% 803,155 37% 44,2756%
Installment and other
consumer loans 23,1021% 24,3361% (1,234) -5%
Total loans $2,153,716 100% $2,140,942 100%$12,7741%
(1)Two-step
residential
construction
loans $145,7037%$256,332 12% $(110,629) -43%
Total loans other
than two-step loans 2,008,013 93% 1,884,610 88%123,4037%
Total loans $2,153,716 100% $2,140,942 100%$12,7741%
West Coast Bancorp
Period End Loan Portfolio By Category
March 31, Change
(Dollars in thousands, unaudited) 2008%
Commercial loans $529,519-3%
Real estate construction loans(1) 464,028 -15%
Real estate mortgage loans356,185 6%
Commercial real estate loans 819,586 3%
Installment and other consumer loans 24,993-8%
Total loans $2,194,311-2%
(1)Two-step residential construction
loans$211,406 -31%
Total loans other than two-step loans 1,982,905 1%
Total loans $2,194,311-2%
The following table reconciles return on average equity to return on
average equity, tangible.
Table 1 West Coast Bancorp
Return on average equity tangible
reconciliation(1)
For the three months For the six months
ended June 30, ended June 30,
(Dollars in thousands, unaudited) 2008 2007 2008 2007
Net income $2,684$8,135$4,684 $15,999
Add: intangible asset
amortization, net of tax* 7798 154 196
Net income, tangible $2,761$8,233$4,838 $16,195
Average shareholders' equity $207,871 $210,349 $209,540 $206,889
Less: average intangibles (14,311) (14,803) (14,370) (14,878)
Average shareholders' equity,
tangible $193,560 $195,546 $195,170 $192,011
*Federal income tax provision
applied at 35%.
Return on average equity 5.2% 15.5% 4.5% 15.6%
Return on average equity, tangible 5.7% 16.9% 5.0% 17.0%
(1) Management uses return on equity, tangible internally and has
disclosed it to investors based on its belief that the figure makes
it easier to compare the Company's performance to other financial
institutions that do not have merger-related intangible assets
and is commonly used in the industry. Ratios have been annualized
where appropriate.
Table 2 West Coast Bancorp
Financial Information
(Dollars in thousands except for per
share data, unaudited) Second Second First
(all rates have been annualized where Quarter Quarter Quarter
appropriate) 200820072008
PERFORMANCE RATIOS
- Return on average assets 0.41% 1.29% 0.31%
- Return on average common equity 5.19% 15.51% 3.81%
- Return on average tangible equity5.69% 16.89% 4.25%
- Non-interest income to average
assets1.39% 1.38% 1.58%
- Non-interest expense to average
assets 3.60% 3.41% 3.44%
- Efficiency ratio, tax equivalent 70.7% 57.0% 66.0%
NET INTEREST MARGIN
- Yield on interest-earning assets 5.91% 7.84% 6.33%
- Rate on interest-bearing
liabilities 2.52% 3.84% 3.14%
- Net interest spread 3.39% 4.00% 3.19%
- Net interest margin 3.94% 4.90% 3.92%
AVERAGE ASSETS
- Investment securities $247,189$285,156$265,304
- Commercial loans 527,781 502,749 508,566
- Real estate construction loans 432,398 474,660 501,459
- Real estate mortgage loans 366,997 289,812 342,315
- Commercial real estate loans 834,069 790,372 800,350
- Installment and other consumer
loans 24,367 25,967 24,245
- Total loans 2,185,612 2,083,560 2,176,935
- Total interest earning assets2,465,147 2,381,652 2,464,280
- Other assets 144,807 144,857 132,456
- Total assets$2,609,954 $2,526,509 $2,596,736
AVERAGE LIABILITIES & EQUITY
- Demand deposits $467,664$470,622$464,088
- Savings and Interest bearing demand357,664 348,086 358,986
- Money market 662,962 659,817 662,508
- Time deposits 558,087 538,713 579,157
- Total deposits 2,046,377 2,017,238 2,064,739
- Borrowings and subordinated
debentures341,578 274,093 285,138
- Total interest bearing liabilities 1,920,292 1,820,709 1,885,789
- Other liabilities 481,791 495,451 499,741
- Total liabilities2,402,083 2,316,160 2,385,530
- Average common equity 207,871 210,349 211,206
- Total average liabilities and
common equity $2,609,954 $2,526,509 $2,596,736
AVERAGE ASSET/LIABILITY RATIOS
- Average stockholders' equity to
average assets 7.96% 8.33% 8.13%
- Average int. earning assets to int.
bearing liabilities128.4% 130.8% 130.7%
- Average loans to average assets 83.7% 82.5% 83.8%
- Interest bearing deposits to assets 60.5% 61.2% 59.0%
Table 2West Coast Bancorp
Financial Information
(Dollars in thousands except for per
share data, unaudited)
(all rates have been annualized where Year to dateYear to date
appropriate) 2008 2007
PERFORMANCE RATIOS
- Return on average assets 0.36% 1.30%
- Return on average common equity 4.50%15.59%
- Return on average tangible equity 4.96%17.01%
- Non-interest income to average
assets 1.49% 1.36%
- Non-interest expense to average
assets 3.52% 3.45%
- Efficiency ratio, tax equivalent 68.4% 57.5%
NET INTEREST MARGIN
- Yield on interest-earning assets 6.12% 7.81%
- Rate on interest-bearing
liabilities 2.83% 3.76%
- Net interest spread 3.29% 4.05%
- Net interest margin 3.93% 4.94%
AVERAGE ASSETS
- Investment securities $256,246 $298,891
- Commercial loans518,173 485,261
- Real estate construction loans 466,929 437,098
- Real estate mortgage loans 354,656 286,240
- Commercial real estate loans817,209 794,948
- Installment and other consumer
loans 24,30625,871
- Total loans 2,181,273 2,029,418
- Total interest earning assets 2,464,713 2,341,431
- Other assets138,633 143,472
- Total assets $2,603,346$2,484,903
AVERAGE LIABILITIES & EQUITY
- Demand deposits$465,876 $466,945
- Savings and Interest bearing
demand 358,326 348,566
- Money market662,735 651,384
- Time deposits 568,622 538,510
- Total deposits2,055,559 2,005,405
- Borrowings and subordinated
debentures 313,358 247,461
- Total interest bearing liabilities1,903,041 1,785,921
- Other liabilities 490,765 492,093
- Total liabilities 2,393,806 2,278,014
- Average common equity 209,540 206,889
- Total average liabilities and
common equity $2,603,346$2,484,903
AVERAGE ASSET/LIABILITY RATIOS
- Average stockholders' equity to
average assets 8.05% 8.33%
- Average int. earning assets to
int. bearing liabilities129.5%131.1%
- Average loans to average assets 83.8% 81.7%
- Interest bearing deposits to
assets 61.1% 61.9%
The following table presents information with respect to the change in the
Company's total allowance for credit losses.
Table 3 West Coast Bancorp
Total Loan Portfolio
Allowance For Credit Losses and Net
Charge-offs
Quarter QuarterQuarter
ended ended ended
June 30,June 30, March 31,
(Dollars in thousands, unaudited) 200820072008
Allowance for credit losses,
beginning of period $42,454 $24,464 $54,903
Provision for credit losses6,000 3,500 8,725
Charge-offs 12,753 1,567 21,393
Recoveries 1,344 99 219
Net charge-offs 11,409 1,468 21,174
Total allowance for credit losses$37,045 $26,496 $42,454
Components of allowance for credit
losses
Allowance for loan losses $35,723 $26,496 $39,602
Reserve for unfunded commitments 1,322 - 2,852
Total allowance for credit losses$37,045 $26,496 $42,454
Net loan charge-offs to average loans
(annualized) 2.10% 0.28% 3.91%
Allowance for loan losses to total
loans 1.66% 1.24% 1.80%
Allowance for credit losses to total
loans 1.72% 1.24% 1.93%
Allowance for loan losses to non-
performing loans30%433% 40%
Allowance for loan losses to non-
performing assets 24%433% 38%
Year to date Year to date
June 30,June 30,
(Dollars in thousands, unaudited) 20082007
Allowance for credit losses,
beginning of period $54,903 $23,017
Provision for credit losses 14,725 6,300
Charge-offs 34,146 3,087
Recoveries 1,563 266
Net Charge-offs 32,583 2,821
Total allowance for credit losses$37,045 $26,496
Components of allowance for credit
losses
Allowance for loan losses $35,723 $26,496
Reserve for unfunded commitments 1,322 -
Total allowance for credit losses$37,045 $26,496
Net loan charge-offs to average loans
(annualized) 3.00% 0.28%
The following table presents information about the Company's total
non-performing assets and delinquent loans.
Table 4 West Coast Bancorp
Total Loan Portfolio
Non-performing Assets and
Delinquencies
June 30,June 30,March 31,
(Dollars in thousands, unaudited) 20082007 2008
Non-accruing loans $119,529 $6,116 $99,038
90 day past and accruing interest - --
Total non-performing loans 119,529 6,116 99,038
Other real estate owned27,892- 5,688
Total non-performing assets $147,421 $6,116 $104,726
Non-performing loans to total loans 5.55% 0.29%4.51%
Non-performing assets to total assets 5.60% 0.24%4.00%
Total Loan Portfolio
Delinquent loans 30-89 days past due
as a % of loan category
June 30,June 30, March 31,
(Dollars in thousands, unaudited) 200820072008
Commercial loans 0.19% 0.18% 0.47%
Real estate construction loans (1) 1.92% 2.60% 4.06%
Real estate mortgage loans 1.42% 0.02% 1.43%
Commercial real estate loans 0.10% 0.03% 0.07%
Installment and other consumer loans 0.90% 0.32% 0.39%
(1)Two-step residential construction
loan balances$5,462 $6,931 $14,269
Total loans other than two-step loans 9,432 7,409 12,826
Total delinquent loans 30-89 days
past due, not in nonaccrual status $14,894 $14,340 $27,095
Delinquent loans to total loans0.69% 0.67% 1.23%
The following table presents information about the Company's activity in
other real estate owned.
Table 5 West Coast Bancorp
Other real estate owned ("OREO") activity
Three months Three months Three months
ended endedended
June 30, June 30, March 31,
(Dollars in thousands, unaudited) 20082007 2008
Beginning balance $5,688$- $3,255
Additions to OREO including
capitalized costs 25,390 - 2,707
Disposition of OREO (2,941)- (274)
Valuation adjustments to OREO (245) -
Ending balance $27,892$- $5,688
The following table presents information with respect to the change in the
Company's allowance for credit losses in the two-step residential construction
loan portfolio.
Table 6 West Coast Bancorp
Two-Step Loan Portfolio
Allowance For Credit Losses and Net
Charge-offs Two-Step Portfolio
Quarter Quarter Quarter
ended endedended
June 30,June 30, March 31,
(Dollars in thousands, unaudited)20082007 2008
Allowance for credit losses,
beginning of period $11,812 $3,242 $31,065
Provision for credit losses1,947 729 780
Charge-offs9,718 -20,099
Recoveries 1,239 -66
Net charge-offs 8,479 -20,033
Total allowance for credit losses $5,280 $3,971 $11,812
Components of allowance for credit
losses
Allowance for loan losses $4,858 $3,971 $9,991
Reserve for unfunded commitments 422 - 1,821
Total allowance for credit losses $5,280 $3,971 $11,812
Net loan charge-offs to average total
loans (annualized) 1.56% 0.00%3.70%
Allowance for two-step loan losses to
nonperforming two-step loans(1)5% 91% 11%
Allowance for two-step credit losses
to total two-step loans 3.62% 1.55%5.59%
Allowance for two-step loan losses to
total two-step loans3.33% 1.55%4.73%
Allowance for two-step loan losses to
nonperforming two-step assets 4% 91% 11%
(1) Two-step nonaccrual loans are net of chargeoffs taken against the
balance.
Year to date Year to date
June 30,June 30,
(Dollars in thousands, unaudited)20082007
Allowance for credit losses,
beginning of period $31,065 $2,618
Provision for credit losses2,727 1,353
Charge-offs 29,817 -
Recoveries 1,305 -
Net Charge-offs 28,512 -
Total allowance for credit losses $5,280 $3,971
Components of allowance for credit
losses
Allowance for loan losses $4,858 $3,971
Reserve for unfunded commitments 422 -
Total allowance for credit losses $5,280 $3,971
Net loan charge-offs to average total
loans (annualized) 2.63% 0.00%
The following table presents information about the Company's
non-performing assets and delinquencies in the two-step residential
construction loan portfolio.
Table 7 West Coast Bancorp
Two-Step Residential Construction Loans
Non-performing Assets and Delinquencies
June 30, June 30, March 31,
(Dollars in thousands, unaudited) 2008 20072008
Nonaccrual two-step loans $98,728 $4,375 $88,784
90 day past due and accruing interest - - -
Total nonperforming two-step loans 98,728 4,375 88,784
Other real estate owned two-step 26,460- 5,688
Total nonperforming two-step assets $125,188 $4,375 $94,472
Delinquent two-step loans 30-89 days
past due, not in nonaccrual status$5,462 $6,931 $14,269
Non-performing two-step loans to
total two-step loans 67.76% 1.71% 42.00%
Non-performing two-step assets to
total assets 4.75% 0.17% 3.60%
Delinquent two-step loans to total
two-step loans 3.75% 2.70% 6.75%
The following table presents information with respect to the change in the
Company's allowance for credit losses for the loans other than two-step
residential construction loans.
Table 8 West Coast Bancorp
Loans Other than Two-Step Loans
Allowance For Credit Losses and Net
Charge-offs loans other than
two-step loans
Quarter Quarter Quarter
ended ended ended
June 30,June 30, March 31,
(Dollars in thousands, unaudited)200820072008
Allowance for credit losses,
beginning of period $30,642 $21,222 $23,838
Provision for credit losses4,053 2,771 7,945
Charge-offs3,035 1,567 1,294
Recoveries 105 99 153
Net charge-offs 2,930 1,468 1,141
Total allowance for credit losses $31,765 $22,525 $30,642
Components of allowance for credit
losses
Allowance for loan losses$30,865 $22,525 $29,611
Reserve for unfunded commitments 900 - 1,031
Total allowance for credit losses $31,765 $22,525 $30,642
Net loan charge-offs to average total
loans (annualized) 0.54% 0.28% 0.21%
Allowance for non two-step loan
losses to total non two-step loans 1.54% 1.20% 1.49%
Allowance for non two-step credit
losses to total non two-step loans 1.58% 1.20% 1.55%
Allowance for non two-step loan
losses to non-performing non two-
step loans 148% 1294%289%
Allowance for non two-step loan
losses to non-performing non two-
step assets 139% 1294%289%
Year to date Year to date
June 30, June 30,
(Dollars in thousands, unaudited) 2008 2007
Allowance for credit losses,
beginning of period $23,838 $20,399
Provision for credit losses 11,998 4,947
Charge-offs4,329 3,087
Recoveries 258 266
Net Charge-offs 4,071 2,821
Total allowance for credit losses $31,765 $22,525
Components of allowance for credit
losses
Allowance for loan losses$30,865 $22,525
Reserve for unfunded commitments 900 -
Total allowance for credit losses $31,765 $22,525
Net loan charge-offs to average total
loans (annualized) 0.38% 0.28%
The following table presents information about the Company's
non-performing assets and delinquencies in the loan portfolio excluding
two-step residential construction loans.
Table 9 West Coast Bancorp
Loans Other than Two-Step Loans
Non-performing Assets and
Delinquencies
June 30, June 30, March 31,
(Dollars in thousands, unaudited) 2008 20072008
Non-accruing non two-step loans $20,801 $1,741 $10,254
90 day past and accruing interest- - -
Total non-performing non-step loans 20,801 1,741 10,254
Other real estate owned non two-step 1,432- -
Total non-performing non two-step
assets $22,233 $1,741 $10,254
Delinquent non two-step loans 30-89
days past due, not in nonaccrual
status $9,432 $7,409 $12,826
Non-performing non two-step loans to
total non two-step loans 1.04% 0.09% 0.52%
Non-performing non two-step assets to
total assets 0.84% 0.07% 0.39%
Delinquent non two-step loans to
total non two-step loans 0.47% 0.39% 0.65%
SOURCE West Coast Bancorp
