WCBO West Coast Bancorp (MM)

- Diluted Earnings per share of $.42, Increased 11% over fourth quarter 2004 LAKE OSWEGO, Ore., Jan. 17 /PRNewswire-FirstCall/ -- West Coast Bancorp (NASDAQ:WCBO) today announced quarterly earnings of $6.5 million or $0.42 per diluted share for the fourth quarter of 2005, compared to fourth quarter 2004 earnings of $5.8 million or $.38 per diluted share, representing an 11% increase in diluted earnings per share. Three months ended Twelve months ended December 31, December 31, GAAP Core* GAAP ($'s in 000's except per share data) 2005 2004 2005 2005 2004 Diluted Earnings Per Share $.42 $.38 $1.59 $1.55 $1.42 Return On Average Equity 16.5% 15.9% 16.1% 15.8% 15.5% Total Period End Loans $1,554,454 $1,427,994 Total Period End Deposits $1,649,462 $1,472,709 * Core earnings for the year ended December 31, 2005, and numbers derived using core earnings for the year, including core earnings per diluted share, core return on average equity, and core four-year compound annual growth rate, are non-GAAP(Generally Accepted Accounting Principles) financial measures derived by adjusting the Company's GAAP earnings (I) for the beneficial impact of the third quarter 2005 State of Oregon corporate income tax credit of approximately $.3 million or $.02 per diluted share and (II) for the negative impact of a first quarter impairment charge of approximately $.8 million or $.05 per diluted share. 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 core operating performance as compared to prior periods. "With solid revenue growth, the Company's return on average equity improved to 16.5% in the fourth quarter of 2005, while earnings per fully diluted share were .42, representing 11% growth over the same period a year ago," said Robert D. Sznewajs, President & CEO. "Continued growth in the company's real estate construction and home equity loan portfolios combined with excellent growth in demand deposits contributed to a strong net interest margin for the quarter of 5.12%," Sznewajs continued. West Coast Bancorp also announced 2005 core earnings of $24.4 million or $1.59 per diluted share for the year compared to earnings of $22.0 million or $1.42 per diluted share in 2004. Sznewajs also noted, "The company is very proud of the team's sustained, strong performance. The 2005 results represent a four-year compounded annual growth rate in core earnings per share of 13.2%." GAAP earnings per diluted share increased from $1.42 in 2004 to $1.55 per diluted share for 2005. The following table reconciles GAAP net income to core earnings, including per-share figures: (Dollars in thousands, except per share data) Twelve months ended Dec. 31, 2005 2004 Net income $23,840 $22,008 Add back: Impairment charge on securities, net of tax 803 -- Subtract: Impact of State corporate income tax credit (274) -- -- Core earnings $24,369 $22,008 Diluted Earnings per Share GAAP earnings $1.55 $1.42 Core earnings $1.59 $1.42 Twelve months ended Dec. 31, 2001 Diluted earnings per share $0.90 Add back: Kiting charge net of tax 0.07 Core diluted earnings per share $0.97 Four-year compound annual growth rate GAAP rate 15.3% Core rate 13.2% Financial Results: For the quarter ended December 31, 2005, net interest income was $23.4 million, increasing $3.9 million or 20% from the same quarter in 2004. As noted, the year over year growth in fourth quarter average loan and deposit balances was 11% and 12%, respectively. Average non-interest bearing deposits led the way increasing $63 million or 16% from the same period a year ago and represented 28% of total average deposits. The combination of the increase in average demand deposits and the higher value of those deposits in the higher interest rate environment accounted for approximately half of the 41 basis points interest rate margin improvement in the fourth quarter of 2005 from the same quarter a year ago. Fourth quarter 2005 total non-interest income of $6.6 million grew 19% or $1.1 million from the fourth quarter 2004. Deposit service charge and payment system related revenues, primarily from interchange income and merchant services revenues, experienced increases of over 30% each and $.9 million combined compared to the same quarter 2004. Trust and investment revenue growth was 19% or $.2 million. Gain on sales of loans declined by nearly a third or $.3 million primarily due to lower gains on sales of Small Business Administration loans in the most recent quarter. Total non-interest expense increased $2.8 million or 17% in the fourth quarter of 2005 from the same quarter in 2004. Personnel expenses grew 10% or $.9 million with a majority of the increase resulting from higher performance- based variable compensation and the addition of new team members over the last year. Compared to fourth quarter 2004, marketing expense increased $.6 million due to higher direct mailing costs, while occupancy cost was up $.3 million or 22%, related mainly to higher rent and depreciation expense on low income housing investment tax credits. Associated with a $1.0 million expense for a legal matter, other non-interest expense increased $.9 million from the same quarter of 2004. Primarily due to loan growth, the provision for loan losses was $.95 million in the fourth quarter 2005, an increase of $.8 million over the same quarter last year. Annualized loan net charge-offs were low at 0.05% of average loans in the fourth quarter 2005, compared to .17% in the same quarter a year ago. Non- performing assets at December 31, 2005, declined to $1.1 million or 0.05% of total assets from $2.2 million or 0.12% a year ago. During the fourth quarter of 2005, consistent with its capital plan, the Company repurchased approximately 103,000 shares at an average cost of $25.78 per share. At December 31, 2005, approximately 352,000 shares remained available for future repurchases under the Company's share repurchase program. Other: The Company will hold a Webcast conference call Wednesday, January 18th, at 8:30 a.m. Pacific Time, during which the Company will discuss fourth quarter 2005 results, review its strategic progress, and provide management's current expectations for 2006. 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.com/ and clicking on Investor Relations/Conference Call/Archived Conference Call (Replay). West Coast Bancorp is a Northwest bank holding company with $2 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 yields on loans and rates paid on deposits; changing customer investment, deposit and borrowing behaviors; changing interest rate environments, including the shape and the level of the yield curve, all of which could decrease net interest income and fee income, including reducing 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; maintain asset quality; control the level of net charge- offs; sustain fee income generation; 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 (Unaudited) Three months ended Twelve months ended (Dollars and shares in December 31, Sept. 30, December 31, thousands) 2005 2004 2005 2005 2004 Net interest income Interest and fees on loans $28,018 $21,710 $26,264 $101,419 $79,903 Interest on investment securities 3,029 2,926 2,596 10,920 12,889 Other interest income 263 75 298 652 196 Total interest income 31,310 24,711 29,158 112,991 92,988 Interest expense on deposit accounts 6,566 3,093 5,574 20,497 11,214 Interest on borrowings including subordinated debentures 1,357 2,136 1,312 5,933 6,901 Total interest expense 7,923 5,229 6,886 26,430 18,115 Net interest income 23,387 19,482 22,272 86,561 74,873 Provision for loan loss 950 135 400 2,175 2,260 Non-interest income Service charges on deposit accounts 2,459 1,861 2,316 8,686 7,474 Payment systems related revenue 1,352 1,030 1,282 4,900 3,878 Trust and investment services revenues 1,424 1,198 1,359 5,151 4,558 Gains on sales of loans 628 913 741 3,046 3,906 Other 706 595 764 3,348 2,667 Loss on impairment of securities -- -- -- (1,316) -- Losses on sales of securities -- (95) (343) (716) (20) Total non-interest income 6,569 5,502 6,119 23,099 22,463 Non-interest expense Salaries and employee benefits 10,247 9,352 10,703 40,606 36,297 Equipment 1,317 1,314 1,226 4,837 4,917 Occupancy 1,667 1,368 1,530 6,267 5,722 Payment systems related expense 515 398 428 1,739 1,449 Professional fees 801 883 523 2,984 2,314 Postage, printing and office supplies 785 667 713 2,833 2,616 Marketing 1,202 638 998 3,830 2,402 Communications 310 314 300 1,210 1,182 Other non-interest expense 2,717 1,806 2,013 8,328 6,472 Total non-interest expense 19,561 16,740 18,434 72,634 63,371 Income before income taxes 9,445 8,109 9,557 34,851 31,705 Provision for income taxes 2,983 2,266 2,844 11,011 9,697 Net income $6,462 $5,843 $6,713 $23,840 $22,008 Basic earnings per share $0.44 $0.40 $0.46 $1.63 $1.48 Diluted earnings per share $0.42 $0.38 $0.44 $1.55 $1.42 Weighted average common shares 14,607 14,768 14,660 14,658 14,849 Weighted average diluted shares 15,299 15,476 15,370 15,344 15,526 Tax equivalent net interest income $23,758 $19,887 $22,634 $88,026 $76,526 West Coast Bancorp Consolidated Balance Sheets (Dollars and shares in thousands, Dec. 31, Dec. 31, Sept. 30, unaudited) 2005 2004 2005 Assets: Cash and cash equivalents $88,369 $40,854 $78,539 Investments 292,664 266,262 274,344 Total loans 1,554,454 1,427,994 1,516,740 Allowance for loan losses (20,469) (18,971) (19,728) Loans, net 1,533,985 1,409,023 1,497,012 Other assets 82,120 74,780 83,550 Total assets $1,997,138 $1,790,919 $1,933,445 Liabilities and Stockholders' Equity: Demand $456,760 $391,746 $459,831 Savings and interest bearing demand 827,909 738,402 821,042 Certificates of deposits 364,793 342,561 363,249 Total deposits 1,649,462 1,472,709 1,644,122 Borrowings and subordinated debentures 170,450 153,282 114,300 Other liabilities 20,103 17,074 20,066 Total liabilities 1,840,015 1,643,065 1,778,488 Stockholders' equity 157,123 147,854 154,957 Total liabilities and stockholders' equity $1,997,138 $1,790,919 $1,933,445 Common shares outstanding period end 14,692 14,872 14,761 Book value per common share $10.69 $9.94 $10.50 Tangible book value per common share $10.68 $9.91 $10.48 West Coast Bancorp Period End Loan Portfolio By Category (Dollars in thousands, Dec. 31, Dec. 31, Change Sept. 30, unaudited) 2005 2004 Amount % 2005 Commercial loans $364,604 $357,776 $6,828 2% $374,054 Real estate construction loans 210,828 116,974 93,854 80% 187,779 Real estate mortgage loans 242,015 212,959 29,056 14% 218,511 Real estate commercial loans 709,176 704,390 4,786 1% 707,032 Installment and other consumer loans 27,831 35,895 (8,064) -22% 29,364 Total loans $1,554,454 $1,427,994 $126,460 9% $1,516,740 (Reconciliation to GAAP financial measures)* Total loans excluding real estate commercial loans $845,278 $723,604 $121,674 17% $809,708 Real estate commercial loans 709,176 704,390 4,786 1% 707,032 Total loans $1,554,454 $1,427,994 $126,460 9% $1,516,740 * 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) 2005 2004 2005 PERFORMANCE RATIOS - Return on average assets 1.31% 1.31% 1.41% - Return on average common equity 16.49% 15.90% 17.40% - Non-interest income to average assets 1.34% 1.23% 1.29% - Non-interest expense to average assets 3.98% 3.75% 3.88% - Efficiency ratio, tax equivalent 64.5% 65.7% 63.4% NET INTEREST MARGIN - Yield on interest-earning assets 6.83% 5.95% 6.59% - Rate on interest-bearing liabilities 2.38% 1.71% 2.14% - Net interest spread 4.45% 4.24% 4.45% - Net interest margin 5.12% 4.71% 5.05% AVERAGE ASSETS - Investment securities $279,625 $283,748 $247,101 - Commercial loans $361,158 $321,152 $361,771 - Real estate construction loans 202,030 112,230 169,914 - Real estate mortgage loans 225,543 210,072 220,372 - Real estate commercial loans 713,634 695,326 709,822 - Installment and other consumer loans 28,551 36,637 29,854 - Total loans $1,530,916 $1,375,417 $1,491,733 - Total interest earning assets $1,840,939 $1,679,300 $1,777,423 - Other assets 110,692 98,445 108,797 - Total assets $1,951,631 $1,777,745 $1,886,220 AVERAGE LIABILITIES & EQUITY - Demand deposits $459,201 $396,102 $442,922 - Interest bearing demand, savings, and money market 842,663 745,705 790,375 - Certificates of deposits 360,717 343,068 373,197 - Total deposits $1,662,581 $1,484,875 $1,606,494 - Borrowings and subordinated debentures $116,020 $130,244 $112,777 - Total interest bearing liabilities $1,319,400 $1,219,017 $1,276,349 - Other liabilities 476,809 412,484 456,816 - Total liabilities $1,796,209 $1,631,501 $1,733,165 - Average common equity 155,422 146,244 153,055 - Total average liabilities and common equity $1,951,631 $1,777,745 $1,886,220 AVERAGE ASSET/LIABILITY RATIOS - Average stockholders' equity to average assets 7.96% 8.23% 8.11% - Average int. earning assets to int. bearing liabilities 139.5% 137.8% 139.3% - Average loans to average assets 78.4% 77.4% 79.1% - Interest bearing deposits to assets 61.7% 61.2% 61.7% Year Year to date to date 2005 2004 PERFORMANCE RATIOS - Return on average assets 1.28% 1.28% - Return on average common equity 15.76% 15.45% - Non-interest income to average assets 1.24% 1.31% - Non-interest expense to average assets 3.88% 3.69% - Efficiency ratio, tax equivalent 64.2% 64.0% NET INTEREST MARGIN - Yield on interest-earning assets 6.49% 5.84% - Rate on interest-bearing liabilities 2.06% 1.50% - Net interest spread 4.43% 4.34% - Net interest margin 4.99% 4.72% AVERAGE ASSETS - Investment securities $262,134 $302,200 - Commercial loans $360,898 $277,882 - Real estate construction loans 157,785 117,413 - Real estate mortgage loans 219,422 196,698 - Real estate commercial loans 710,119 672,295 - Installment and other consumer loans 31,708 37,159 - Total loans $1,479,932 $1,301,447 - Total interest earning assets $1,764,209 $1,621,683 - Other assets 105,551 95,999 - Total assets $1,869,760 $1,717,682 AVERAGE LIABILITIES & EQUITY - Demand deposits $421,766 $351,432 - Interest bearing demand, savings, and money market 789,054 737,409 - Certificates of deposits 362,035 336,623 - Total deposits $1,572,855 $1,425,464 - Borrowings and subordinated debentures $130,352 $136,259 - Total interest bearing liabilities $1,281,441 $1,210,290 - Other liabilities 437,056 364,965 - Total liabilities $1,718,497 $1,575,255 - Average common equity 151,263 142,427 - Total average liabilities and common equity $1,869,760 $1,717,682 AVERAGE ASSET/LIABILITY RATIOS - Average stockholders' equity to average assets 8.09% 8.29% - Average int. earning assets to int. bearing liabilities 137.7% 134.0% - Average loans to average assets 79.2% 75.8% - Interest bearing deposits to assets 61.6% 62.5% 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) 2005 2004 2005 Allowance for loan losses, beginning of period $19,728 $19,421 $19,897 Provision for loan loss 950 135 400 Charge-offs 412 784 823 Recoveries 203 199 254 Net (recoveries) charge-offs 209 585 569 Total allowance for loan losses $20,469 $18,971 $19,728 Net loan charge-offs to average loans (annualized) 0.05% 0.17% 0.15% Full year Full year Dec. 31, Dec. 31, (Dollars in thousands, unaudited) 2005 2004 Allowance for loan losses, beginning of period $18,971 $18,131 Provision for loan loss 2,175 2,260 Charge-offs 1,624 2,374 Recoveries 947 954 Net Charge-offs 677 1,420 Total allowance for loan losses $20,469 $18,971 Net loan charge-offs to average loans (annualized) 0.05% 0.11% West Coast Bancorp Non-performing Assets Dec. 31, Dec. 31, Sept. 30, (Dollars in thousands, unaudited) 2005 2004 2005 Non-accruing loans $1,088 $1,803 $1,568 90 day delinquencies -- -- -- Total non-performing loans 1,088 1,803 1,568 Other real estate owned -- 384 98 Total non-performing assets $1,088 $2,187 $1,666 Allowance for loan losses to total loans 1.32% 1.33% 1.30% Non-performing loans to total loans 0.07% 0.13% 0.10% Allowance for loan losses to non- performing loans 1882% 1052% 1258% Non-performing assets to total assets 0.05% 0.12% 0.09% Allowance for loan losses to non- performing assets 1882% 867% 1184% 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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