WCBO West Coast Bancorp (MM)

West Coast Bancorp Reports Record Fourth Quarter and Full Year 2004 Earnings - Earnings per diluted share of $.38, up 19% over fourth quarter 2003 LAKE OSWEGO, Ore., Jan. 18 /PRNewswire-FirstCall/ -- West Coast Bancorp (NASDAQ:WCBO) today announced quarterly earnings of $5.8 million or $0.38 per diluted share for the fourth quarter of 2004, compared to earnings of $5.0 million or $0.32 per diluted share in the fourth quarter of 2003. This represents a 19% increase in earnings per diluted share from the same quarter in 2003. Three Months Ended Twelve Months Ended (# in 000's except per December 31, December 31, share data) 2004 2003 2004 2003 Earnings per Diluted Share $.38 $.32 $1.42 $1.26 Net Income $5,843 $5,034 $22,008 $19,797 Return on Average Equity 15.9% 14.4% 15.5% 14.5% Book Value per Share $9.94 $9.29 Total Period End Loans $1,427,994 $1,220,881 Total Period End Deposits $1,470,709 $1,404,859 West Coast Bancorp also announced earnings of $22.0 million for the year ended December 31, 2004, compared to earnings of $19.8 million for the same period in 2003. For the full year 2004, earnings per diluted share of $1.42 increased 12.7% from $1.26 earnings per diluted share in 2003. "The record operating results by the Company in the fourth quarter and for the full year 2004, are attributed to not only the successful implementation of our strategic plan over the past several years, but also to the ability of our people to flawlessly execute the strategy," says Robert D. Sznewajs, President and Chief Executive Officer. "Since we now hold the largest deposit market share of any community bank in Portland/Vancouver and Salem -- the two largest deposit market areas in Oregon -- the foundation is solidly in place to take advantage of current and future market opportunities," continued Sznewajs. Financial Results: Total loans increased 17% or $207 million during 2004. Excluding commercial real estate loans, loans grew a strong 27% since year end 2003. (See Period End Loan Portfolio by Category) Reflecting the Company's strategy and investments, commercial and home equity loan balances expanded 51% and 16%, respectively, from December 31, 2003. First quarter 2004 total average loans climbed $162 million or 13% compared to the fourth quarter of 2003, while total average deposits increased by $84 million or 6% over the same time period. The Company also generated excellent growth in low cost average demand, including interest bearing demand, deposit balances, which in the most recent quarter expanded $110 million or more than 20% since the same quarter last year. For the quarter ended December 31, 2004, net interest income was $19.5 million-an increase of nearly 10% or $1.7 million compared with the fourth quarter of 2003. Higher loan balances outstanding augmented by an improved deposit mix and lagging funding costs contributed to higher net interest income. The net interest margin widened to 4.71% from 4.60% despite a $.6 million expense related to prepayment of $20 million in Federal Home Loan Bank long term debt, which reduced the net interest margin by 16 basis points in the quarter. Full year net interest income grew over 8% or $5.8 million from 2003. The provision for loan losses in the fourth quarter 2004 declined by $1.1 million from the same quarter last year and by $1.5 million for the full year 2004 due to lower net charge-offs and improved asset quality measures. Fourth quarter 2004 total non-interest income increased by less than $.1 million from the same period a year ago. Trust, investment sales, and payment systems-related revenue continued to generate strong growth, rising 26%, 13%, and 35% respectively, with lower merchant bankcard and Bank-owned life insurance income substantially offsetting this growth. Total non-interest income in 2004 increased $.4 million compared to 2003, despite gains on sales of mortgages declining $1.5 million or 36%. Total non-interest expense increased $1.9 million or 13% in the fourth quarter of 2004 from the same quarter in 2003. Personnel expense grew $1.1 million, with nearly half of the increase caused by the four recent branch openings in Portland-Vancouver (three) and Salem, and the hiring of new commercial lenders. The remaining non-interest expense grew less than 6% and was spread fairly evenly across the remaining categories. For the full year 2004, total non-interest expense was up $5.2 million from 2003, an increase of 9%. Annualized net charge-offs were 0.17% of average loans or $.6 million in the fourth quarter 2004, compared to annualized net charge-offs of 0.37% or $1.1 million in the same period last year. At December 31, 2004, the allowance for loan losses was 1.33% of total loans, compared to 1.49% at year end 2003. Due to improved credit quality, non-performing assets at December 31, 2004, were $2.2 million or 0.12% of total assets, down from $4.4 million or 0.27% at December 31, 2003. The allowance for loan losses was 867% of total non-performing assets at year end 2004, versus 411% at the same time last year. During the last quarter of 2004, and consistent with its capital plan and pursuant to its corporate repurchase program, the Company repurchased 32,000 shares at an average cost of $24.90 per share. The Company repurchased 484,000 shares or 3.3% of its outstanding shares at an average cost of $21.73 per share in 2004. At December 31, 2004, approximately 840,000 shares remained available for future repurchases under the program. Other: The Company will hold a webcast conference call Wednesday, January 19, 2005, at 8:30 a.m. Pacific Time, during which the Company will discuss fourth quarter and full year 2004 results, review its strategic progress, and provide management's current earnings expectations for the full year 2005. To access the conference call via a live webcast, go to http://www.wcb.com/ and click on Investor Relations/Conference Call/West Coast Bancorp Webcast. The conference call may also be accessed by dialing 877-604-2074 a few minutes prior to 8:30 a.m. PST. The call will be available for replay by accessing the Company's website at http://www.wcb.comand/ clicking on Investor Relations/Conference Call/Archived Conference Call (Replay). West Coast Bancorp is a Northwest bank holding company with $1.8 billion in assets, operating 52 offices in Oregon and Washington. West Coast Bancorp, the parent company of West Coast Bank and West Coast Trust, is headquartered in Oregon. West Coast Bank serves clients who seek the resources, sophisticated products and expertise of larger financial institutions, along with the local decision making, market knowledge, and customer service orientation of a community bank. The Company offers a broad range of banking, investment, fiduciary and trust services. For more information, please visit the Company 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. Factors that could cause results to differ from forward-looking statements include, among others: general economic and banking business conditions; evolving banking industry standards; competitive factors, including pricing pressures on Bancorp's loan yield and rates paid on deposits; changing customer investment, deposit and lending behaviors; changing interest rate environments, including the shape and the level of the yield curve, which could decrease net interest income and fee income, including lower gains on sales of loans; vendor service quality; changes in laws and other legal developments; changes in government funding of Small Business Administration ("SBA") loans; and changes in technology or required investments in technology. Furthermore, the forward-looking statements are subject to risks related to the Company's ability to: attract and retain lending officers and other key personnel; close loans in the pipeline; generate loan and deposit balances at projected spreads; sustain fee generation; maintain asset quality; control the level of net charge-offs; generate retail investments; retain customers of greatest value; create revenue growth from investments in new team members and branches, control expenses; monitor and manage the Company's internal control environments, including disclosure and financial reporting controls, and other matters. Readers are cautioned not to place undue reliance on the forward-looking statements which reflect management's analysis only as of the date of the statements. Readers should carefully review the disclosures we file from time to time with the Securities and Exchange Commission ("SEC"). Bancorp undertakes no obligation to publicly review or update forward-looking statements to reflect events or circumstances that arise after the date of this report. West Coast Bancorp Consolidated Income Statements Twelve (Unaudited) Three months ended months ended (Dollars and shares in Dec. 31, Sept. 30, Dec. 31, thousands) 2004 2003 2004 2004 2003 Net interest income Interest and fees on loans $21,710 $18,915 $20,086 $79,903 $77,321 Interest on investment securities 2,926 3,416 3,198 12,889 12,148 Other interest income 75 68 89 196 209 Total interest income 24,711 22,399 23,373 92,988 89,678 Interest expense on deposit accounts 3,093 3,300 2,734 11,214 15,131 Interest on borrowings including subordinated debentures 2,136 1,327 1,776 6,901 5,508 Total interest expense 5,229 4,627 4,510 18,115 20,639 Net interest income 19,482 17,772 18,863 74,873 69,039 Provision for loan loss 135 1,225 225 2,260 3,800 Non-interest income Service charges on deposit accounts 1,861 1,771 1,934 7,474 6,960 Other service charges, commissions and fees 1,929 1,724 1,941 7,515 6,577 Trust revenues 602 477 546 2,184 1,776 Gains on sales of loans 913 878 962 3,906 5,124 Other 292 579 295 1,404 1,417 Gains (losses) on sales of securities (95) -- -- (20) 192 Total non-interest income 5,502 5,429 5,678 22,463 22,046 Non-interest expense Salaries and employee benefits 9,352 8,276 9,444 36,297 32,487 Equipment 1,457 1,415 1,378 5,442 5,139 Occupancy 1,368 1,285 1,467 5,722 4,901 Check and other transaction processing 719 640 658 2,671 2,778 Professional fees 883 586 513 2,314 2,314 Postage, printing and office supplies 667 571 646 2,616 2,590 Marketing 638 569 633 2,402 2,047 Communications 314 278 301 1,182 1,166 Other non-interest expense 1,342 1,172 1,102 4,725 4,728 Total non-interest expense 16,740 14,792 16,142 63,371 58,150 Income before income taxes 8,109 7,184 8,174 31,705 29,135 Provision for income taxes 2,266 2,150 2,462 9,697 9,338 Net income $5,843 $5,034 $5,712 $22,008 $19,797 Basic earnings per share $0.40 $0.34 $0.39 $1.48 $1.31 Diluted earnings per share $0.38 $0.32 $0.37 $1.42 $1.26 Weighted average common shares 14,768 15,021 14,798 14,849 15,077 Weighted average diluted shares 15,476 15,732 15,382 15,526 15,674 Tax equivalent net interest income $19,887 $18,200 $19,276 $76,526 $70,793 West Coast Bancorp Consolidated Balance Sheets (Dollars and shares in thousands, Dec. 31, Dec. 31, Sept. 30, unaudited) 2004 2003 2004 Assets: Cash and cash equivalents $40,854 $63,504 $67,184 Investments 266,262 321,970 302,602 Total loans 1,427,994 1,220,881 1,319,696 Allowance for loan losses (18,971) (18,131) (19,421) Loans, net 1,409,023 1,202,750 1,300,275 Other assets 74,780 74,658 74,174 Total assets $1,790,919 $1,662,882 $1,744,235 Liabilities and Stockholders' Equity: Demand $391,746 $316,611 $395,833 Savings and interest bearing demand 738,402 742,280 736,699 Certificates of deposits 342,561 345,968 337,395 Total deposits 1,472,709 1,404,859 1,469,927 Borrowings and subordinated debentures 153,282 103,027 114,000 Other liabilities 17,074 14,943 15,460 Total liabilities 1,643,065 1,522,829 1,599,387 Stockholders' equity 147,854 140,053 144,848 Total liabilities and stockholders' equity $1,790,919 $1,662,882 $1,744,235 Common shares outstanding period end 14,872 15,076 14,857 Book value per common share $9.94 $9.29 $9.75 Tangible book value per common share $9.91 $9.23 $9.71 West Coast Bancorp Period End Loan Portfolio By Category (Dollars in thousands, Dec. 31, Dec. 31, Change Sept. 30, unaudited) 2004 2003 Amount % 2004 Commercial loans $357,776 $236,949 $120,827 51% $288,668 Real estate construction loans 116,974 112,732 4,242 4% 111,299 Real estate mortgage loans 212,959 179,331 33,628 19% 206,739 Real estate commercial loans 704,390 652,882 51,508 8% 677,274 Installment and other consumer loans 35,895 38,987 (3,092) -8% 35,716 Total loans $1,427,994 $1,220,881 $207,113 17% $1,319,696 (Reconciliation to GAAP financial measures)* Total loans excluding real estate commercial loans $723,604 $567,999 $155,605 27% $642,422 Real estate commercial loans 704,390 652,882 51,508 8% 677,274 Total loans $1,427,994 $1,220,881 $207,113 17% $1,319,696 * Management uses this non-GAAP information internally, and has disclosed it to investors, based on its belief that the information provides additional, valuable information relating to its operating results in light of its business strategies. West Coast Bancorp Financial Information (Dollars in thousands except for per share data, unaudited) Fourth Fourth Third (all rates have been annualized where Quarter Quarter Quarter appropriate) 2004 2003 2004 PERFORMANCE RATIOS - Return on average assets 1.31% 1.20% 1.31% - Return on average common equity 15.90% 14.39% 16.04% - Non-interest income to average assets 1.23% 1.30% 1.31% - Non-interest expense to average assets 3.75% 3.54% 3.71% - Efficiency ratio, tax equivalent 65.7% 62.6% 64.7% NET INTEREST MARGIN - Yield on interest-earning assets 5.95% 5.77% 5.80% - Rate on interest-bearing liabilities 1.71% 1.54% 1.49% - Net interest spread 4.24% 4.23% 4.31% - Net interest margin 4.71% 4.60% 4.70% AVERAGE ASSETS - Investment securities $283,748 $323,210 $297,544 - Commercial loans $321,152 $238,575 $278,362 - Real estate construction loans 112,230 115,696 117,341 - Real estate mortgage loans 210,072 174,889 202,999 - Real estate commercial loans 695,326 645,078 669,679 - Installment and other consumer loans 36,637 39,248 35,976 - Total loans $1,375,419 $1,213,486 $1,304,357 - Total interest earning assets $1,679,300 $1,569,079 $1,631,183 - Other assets 98,445 89,983 98,420 - Total assets $1,777,745 $1,659,062 $1,729,603 AVERAGE LIABILITIES & EQUITY - Demand deposits $396,102 $312,837 $372,280 - Interest bearing demand, savings, and money market 745,705 731,220 736,897 - Certificates of deposits 343,068 356,911 341,330 - Total deposits $1,484,875 $1,400,968 $1,450,507 - Borrowings and subordinated debentures $130,244 $106,014 $124,728 - Total interest bearing liabilities $1,219,017 $1,194,144 $1,202,955 - Other liabilities 412,484 326,151 385,014 - Total liabilities $1,631,501 $1,520,295 $1,587,969 - Average common equity 146,244 138,767 141,634 - Total average liabilities and common equity $1,777,745 $1,659,062 $1,729,603 AVERAGE ASSET/LIABILITY RATIOS - Average stockholders' equity to average assets 8.23% 8.36% 8.19% - Average int. earning assets to int. bearing liabilities 137.8% 131.4% 135.6% - Average loans to average assets 77.4% 73.1% 75.4% - Interest bearing deposits to assets 61.2% 65.6% 62.3% West Coast Bancorp Financial Information (Dollars in thousands except for per share data, unaudited) Year Year (all rates have been annualized where to date to date appropriate) 2004 2003 PERFORMANCE RATIOS - Return on average assets 1.28% 1.24% - Return on average common equity 15.45% 14.52% - Non-interest income to average assets 1.31% 1.39% - Non-interest expense to average assets 3.69% 3.66% - Efficiency ratio, tax equivalent 64.0% 62.8% NET INTEREST MARGIN - Yield on interest-earning assets 5.84% 6.08% - Rate on interest-bearing liabilities 1.50% 1.78% - Net interest spread 4.34% 4.29% - Net interest margin 4.72% 4.70% AVERAGE ASSETS - Investment securities $302,200 $280,028 - Commercial loans $277,882 $234,720 - Real estate construction loans 117,413 116,820 - Real estate mortgage loans 196,698 163,505 - Real estate commercial loans 672,295 640,349 - Installment and other consumer loans 37,159 41,568 - Total loans $1,301,447 $1,196,962 - Total interest earning assets $1,621,683 $1,504,949 - Other assets 95,999 85,293 - Total assets $1,717,682 $1,590,242 AVERAGE LIABILITIES & EQUITY - Demand deposits $351,432 $283,504 - Interest bearing demand, savings, and money market 737,409 669,689 - Certificates of deposits 336,623 371,534 - Total deposits $1,425,464 $1,324,727 - Borrowings and subordinated debentures $136,259 $117,533 - Total interest bearing liabilities $1,210,290 $1,158,755 - Other liabilities 364,965 295,170 - Total liabilities $1,575,255 $1,453,925 - Average common equity 142,427 136,317 - Total average liabilities and common equity $1,717,682 $1,590,242 AVERAGE ASSET/LIABILITY RATIOS - Average stockholders' equity to average assets 8.29% 8.57% - Average int. earning assets to int. bearing liabilities 134.0% 129.9% - Average loans to average assets 75.8% 75.3% - Interest bearing deposits to assets 62.5% 65.5% West Coast Bancorp Allowance For Loan Losses and Net Charge-offs Quarter Quarter Quarter ended ended ended Dec. 31, Dec. 31, Sept 30, (Dollars in thousands, unaudited) 2004 2003 2004 Allowance for loan losses, beginning of period $19,421 $18,049 $19,123 Provision for loan loss 135 1,225 225 Charge-offs 784 1,215 276 Recoveries 199 72 349 Net charge-offs 585 1,143 (73) Total allowance for loan losses $18,971 $18,131 $19,421 Net loan charge-offs to average loans (annualized) 0.17% 0.37% -0.02% Year to date Year to date December 31, December 31, (Dollars in thousands, unaudited) 2004 2003 Allowance for loan losses, beginning of period $18,131 $16,838 Provision for loan loss 2,260 3,800 Charge-offs 2,374 3,098 Recoveries 954 591 Net Charge-offs 1,420 2,507 Total allowance for loan losses $18,971 $18,131 Net loan charge-offs to average loans 0.11% 0.21% West Coast Bancorp Non-performing Assets Dec. 31, Dec. 31, Sept. 30, (Dollars in thousands, unaudited) 2004 2003 2004 Non-accruing loans $1,803 $2,669 $3,679 90 day delinquencies -- -- -- Total non-performing loans 1,803 2,669 3,679 Other real estate owned 384 1,741 1,182 Total non-performing assets $2,187 $4,410 $4,861 Allowance for loan losses to total loans 1.33% 1.49% 1.47% Non-performing loans to total loans 0.13% 0.22% 0.28% Allowance for loan losses to non- performing loans 1052% 679% 528% Non-performing assets to total assets 0.12% 0.27% 0.28% Allowance for loan losses to non- performing assets 867% 411% 400% DATASOURCE: West Coast Bancorp CONTACT: Robert D. Sznewajs, President & CEO, +1-503-598-3243, or Anders Giltvedt, Executive Vice President & CFO, +1-503-598-3250, both of West Coast Bancorp Web site: http://www.wcb.com/

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