WCBO West Coast Bancorp (MM)

West Coast Bancorp Reports Record First Quarter 2005 Operating Earnings - Operating earnings continue to meet analyst expectations LAKE OSWEGO, Ore., April 19 /PRNewswire-FirstCall/ -- West Coast Bancorp (NASDAQ:WCBO) today announced record quarterly operating earnings of $5.8 million or $0.38 per diluted share for the first quarter of 2005, compared to operating earnings of $5.2 million or $0.33 per diluted share in the first quarter of 2004.* This represents more than a 15% increase in operating earnings per diluted share from the same quarter in 2004. Net income was $5.0 million or $0.33 per diluted share for the first quarter of 2005, compared to net income of $5.2 million or $0.33 per diluted share in the first quarter of 2004. Operating earnings is a non-GAAP (Generally Accepted Accounting Principles) financial measure that is derived by adjusting the Company's net income to exclude the April 4, 2005, announced first quarter recording of an other-than-temporary, non-cash impairment charge of approximately $.8 million after tax or $.05 per diluted share related to its $5 million investment in Freddie Mac preferred stock. This security, which was purchased in November 1999, resets its coupon to the five-year treasury note rate every five years. The following table reconciles net income to operating earnings, including per-share figures: (Dollars in thousands, Three months ended March 31, except per share data) 2005 2004 Net income $5,030 $5,171 Add back: Impairment charge on securities, net of tax 803 -- Operating earnings $5,833 $5,171 Earnings per Diluted Share Net income $0.33 $0.33 Operating earnings $0.38 $0.33 Return on Average Equity Net income 13.8% 14.8% Operating earnings 16.0% 14.8% Book Value per Share $9.97 $9.52 Total Period End Loans $1,432,446 $1,260,771 Total Period End Deposits $1,509,288 $1,380,120 * 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 earnings as compared to prior periods. "The Company's record operating earnings for the first quarter of 2005 continue to meet analyst consensus expectations consistent with the trend of the past several years," said Robert D. Sznewajs, President and CEO. "Strong year-over-year loan and deposit growth, combined with an improving net interest margin and solid credit quality contributed to the record operating earnings performance for the quarter." Financial Results: Resulting from the Company's strategy, sales efforts, and the loan purchase from Washington Mutual in the fourth quarter of 2004, period end total loans increased 14% over the same period last year. Commercial loan balances expanded 39% from March 31, 2004. Excluding commercial real estate loans, period end loans grew a solid 22% since March 31, 2004. (See reconciliation to GAAP financial measures, page 5.) First quarter 2005 total average loans climbed $182 million or nearly 15% compared to the first quarter of 2004, and total average deposits increased by $118 million or almost 9% over the same time period. The Company generated excellent growth in average non-interest bearing demand deposits, which in the most recent quarter grew $78 million or over 25% since the same quarter last year. For the quarter ended March 31, 2005, net interest income was $19.9 million, an increase of 9% or $1.6 million compared with the first quarter of 2004. Higher loan balances outstanding, augmented by improved earning asset and deposit mixes, contributed to the higher net interest income. The net interest margin widened slightly to 4.84% from 4.78% in the first quarter of 2004, mainly due to a shift in earning asset mix towards loans and higher loan volume indexed to the prime rate. With net loan recovery and stable asset quality measures, there was no provision for loan losses in the first quarter 2005 compared to $.9 million the same quarter last year. First quarter 2005 total non-interest income of $5.6 million, excluding the before mentioned impairment charge, increased 1% or $.1 million from the same quarter last year. (See reconciliation to GAAP financial measures, page 5.) Strong growth in payment system, merchant bankcard, trust, and investment sales revenues, which increased a combined $.5 million from the same quarter last year, offset the 25% or $.2 million decline in gain on sales of mortgages and the $.3 million decline in other non-interest income from the same quarter of 2004. Total non-interest expense increased $1.5 million or 10% in the first quarter of 2005 from the same quarter in 2004. Personnel expense grew $0.8 million, with substantially all of the increase caused by three branch openings in Portland-Vancouver, plus one in Bend and one in Salem, and the hiring of additional commercial lenders. The remaining non-interest expense growth was concentrated in legal and accounting fees, which increased a combined $.7 million from first quarter 2004. Annualized net recoveries were 0.01% of average loans in the first quarter 2005, down from annualized net charge-offs of 0.11% in the same period a year ago. At March 31, 2005, the allowance for loan losses was 1.33% of total loans compared to 1.48% for the same time last year. Non-performing assets at March 31, 2005, were $4.4 million or 0.24% of total assets, down from $5.2 million or 0.31% a year ago. The allowance for loan losses was 434% of total non- performing assets at March 31, 2005, versus 363% at the same time last year. During the first quarter of 2005, consistent with its capital plan, the Company repurchased approximately 146,000 shares at an average cost of $24.05 per share. At March 31, 2005, approximately 691,000 shares remained available for future repurchases under its corporate repurchase program. Other: The Company will hold a webcast conference call Wednesday, April 20, 2005, at 8:30 a.m. Pacific Time, during which the Company will discuss first quarter 2005 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. PDT. The call will be available for replay by accessing the Company's website at http://www.wcb.com/ and 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. 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 months (Unaudited) Three months ended ended (Dollars and shares in thousands) March 31, December 31, December 31, 2005 2004 2004 2004 2003 Net interest income Interest and fees on loans $22,471 $18,936 $21,710 $79,903 $77,321 Interest on investment securities 2,692 3,482 2,926 12,889 12,148 Other interest income 39 14 75 196 209 Total interest income 25,202 22,432 24,711 92,988 89,678 Interest expense on deposit accounts 3,761 2,751 3,093 11,214 15,131 Interest on borrowings including subordinated debentures 1,567 1,444 2,136 6,901 5,508 Total interest expense 5,328 4,195 5,229 18,115 20,639 Net interest income 19,874 18,237 19,482 74,873 69,039 Provision for loan loss -- 900 135 2,260 3,800 Non-interest income Service charges on deposit accounts 1,891 1,855 1,861 7,474 6,960 Other service charges, commissions and fees 2,085 1,706 1,929 7,515 6,577 Trust revenues 567 500 602 2,184 1,776 Gains on sales of loans 775 913 913 3,906 5,124 Other 270 534 292 1,404 1,417 Loss on impairment of securities (1,316) -- -- -- -- Gains (losses) on sales of securities -- -- (95) (20) 192 Total non-interest income 4,272 5,508 5,502 22,463 22,046 Non-interest expense Salaries and employee benefits 9,674 8,920 9,352 36,297 32,487 Equipment 1,253 1,301 1,457 5,442 5,139 Occupancy 1,539 1,573 1,368 5,722 4,901 Check and other transaction processing 758 629 719 2,671 2,778 Professional fees 1,099 414 883 2,314 2,314 Postage, printing and office supplies 629 642 667 2,616 2,590 Marketing 601 492 638 2,402 2,047 Communications 272 290 314 1,182 1,166 Other non-interest expense 849 927 1,342 4,725 4,728 Total non-interest expense 16,674 15,188 16,740 63,371 58,150 Income before income taxes 7,472 7,657 8,109 31,705 29,135 Provision for income taxes 2,442 2,486 2,266 9,697 9,338 Net income $5,030 $5,171 $5,843 $22,008 $19,797 Basic earnings per share $0.34 $0.35 $0.40 $1.48 $1.31 Diluted earnings per share $0.33 $0.33 $0.38 $1.42 $1.26 Weighted average common shares 14,726 14,943 14,768 14,849 15,077 Weighted average diluted shares 15,422 15,642 15,476 15,526 15,674 Tax equivalent net interest income $20,238 $18,655 $19,887 $76,526 $70,793 West Coast Bancorp Consolidated Balance Sheets (Dollars and shares in thousands, March 31, March 31, December 31, unaudited) 2005 2004 2004 Assets: Cash and cash equivalents $58,968 $51,382 $40,854 Investments 258,181 316,410 266,262 Total loans 1,432,446 1,260,771 1,427,994 Allowance for loan losses (18,997) (18,685) (18,971) Loans, net 1,413,449 1,242,086 1,409,023 Other assets 75,704 74,123 74,780 Total assets $1,806,302 $1,684,001 $1,790,919 Liabilities and Stockholders' Equity: Demand $395,323 $325,513 $391,746 Savings and interest bearing demand 758,783 734,337 738,402 Certificates of deposits 355,182 320,270 342,561 Total deposits 1,509,288 1,380,120 1,472,709 Borrowings and subordinated debentures 135,142 148,739 153,282 Other liabilities 14,528 12,028 17,074 Total liabilities 1,658,958 1,540,887 1,643,065 Stockholders' equity 147,344 143,114 147,854 Total liabilities and stockholders' equity $1,806,302 $1,684,001 $1,790,919 Common shares outstanding period end 14,775 15,025 14,872 Book value per common share $9.97 $9.52 $9.94 Tangible book value per common share $9.94 $9.47 $9.91 West Coast Bancorp Period End Loan Portfolio By Category (Dollars in thousands, March 31, March 31, Change December 31, unaudited) 2005 2004 Amount % 2004 Commercial loans $357,505 $256,989 $100,516 39% $357,776 Real estate construction loans 125,959 120,253 5,706 5% 116,974 Real estate mortgage loans 215,580 185,656 29,924 16% 212,959 Real estate commercial loans 698,864 660,065 38,799 6% 704,390 Installment and other consumer loans 34,538 37,808 (3,270) -9% 35,895 Total loans $1,432,446 $1,260,771 $171,675 14% $1,427,994 (Reconciliation to GAAP financial measures)* Total loans excluding real estate commercial loans $733,582 $600,706 $132,876 22% $723,604 Real estate commercial loans 698,864 660,065 38,799 6% 704,390 Total loans $1,432,446 $1,260,771 $171,675 14% $1,427,994 Total non-interest income $4,272 $5,508 $(1,236) -22% $5,502 Add back: Impairment charge on securities, pre-tax 1,316 -- 1,316 -- Total operating non-interest income $5,588 $5,508 $80 1% 5,502 * 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) First First Fourth (all rates have been annualized where Quarter Quarter Quarter appropriate) 2005 2004 2004 PERFORMANCE RATIOS - Return on average assets 1.14% 1.25% 1.31% - Return on average common equity 13.78% 14.79% 15.90% - Non-interest income to average assets 0.97% 1.33% 1.23% - Non-interest expense to average assets 3.77% 3.68% 3.75% - Efficiency ratio, tax equivalent 64.6% 62.9% 65.7% NET INTEREST MARGIN - Yield on interest-earning assets 6.12% 5.86% 5.95% - Rate on interest-bearing liabilities 1.73% 1.40% 1.71% - Net interest spread 4.39% 4.46% 4.24% - Net interest margin 4.84% 4.78% 4.71% AVERAGE ASSETS - Investment securities $264,062 $317,741 $283,748 - Commercial loans $352,067 $246,461 $321,152 - Real estate construction loans 118,194 117,368 112,230 - Real estate mortgage loans 213,969 182,234 210,072 - Real estate commercial loans 702,705 656,030 695,326 - Installment and other consumer loans 35,359 38,560 36,637 - Total loans $1,422,294 $1,240,653 $1,375,419 - Total interest earning assets $1,695,109 $1,568,364 $1,679,300 - Other assets 99,299 91,563 98,445 - Total assets $1,794,408 $1,659,927 $1,777,745 AVERAGE LIABILITIES & EQUITY - Demand deposits $378,054 $300,358 $396,102 - Interest bearing demand, savings, and money market 755,550 734,022 745,705 - Certificates of deposits 347,852 329,418 343,068 - Total deposits $1,481,456 $1,363,798 $1,484,875 - Borrowings and subordinated debentures $148,118 $141,389 $130,244 - Total interest bearing liabilities $1,251,519 $1,204,829 $1,219,017 - Other liabilities 394,842 314,476 412,484 - Total liabilities $1,646,361 $1,519,305 $1,631,501 - Average common equity 148,047 140,622 146,244 - Total average liabilities and common equity $1,794,408 $1,659,927 $1,777,745 AVERAGE ASSET/LIABILITY RATIOS - Average stockholders' equity to average assets 8.25% 8.47% 8.23% - Average int. earning assets to int. bearing liabilities 135.4% 130.2% 137.8% - Average loans to average assets 79.3% 74.7% 77.4% - Interest bearing deposits to assets 61.5% 64.1% 61.2% (Dollars in thousands except for per share data, unaudited) (all rates have been annualized where Full year Full year 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 March 31, March 31, December 31, (Dollars in thousands, unaudited) 2005 2004 2004 Allowance for loan losses, beginning of period $18,971 $18,131 $19,421 Provision for loan loss -- 900 135 Charge-offs 195 570 784 Recoveries 221 224 199 Net (recoveries) charge-offs (26) 346 585 Total allowance for loan losses $18,997 $18,685 $18,971 Net loan charge-offs to average loans (annualized) -0.01% 0.11% 0.17% Full year Full year 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 March 31, March 31, December 31, (Dollars in thousands, unaudited) 2005 2004 2004 Non-accruing loans $3,695 $3,560 $1,803 90 day delinquencies 301 9 -- Total non-performing loans 3,996 3,569 1,803 Other real estate owned 384 1,582 384 Total non-performing assets $4,380 $5,151 $2,187 Allowance for loan losses to total loans 1.33% 1.48% 1.33% Non-performing loans to total loans 0.28% 0.28% 0.13% Allowance for loan losses to non- performing loans 475% 524% 1052% Non-performing assets to total assets 0.24% 0.31% 0.12% Allowance for loan losses to non- performing assets 434% 363% 867% 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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