WCBO West Coast Bancorp (MM)

- Diluted Earnings per share of $.44 increased 26% over core earnings per diluted share of $.35 for the first quarter 2005 LAKE OSWEGO, Ore., April 18 /PRNewswire-FirstCall/ -- West Coast Bancorp (NASDAQ:WCBO) today announced quarterly earnings of $6.7 million or $.44 per diluted share for the first quarter of 2006, compared to first quarter 2005 earnings of $4.5 million or $.29 per diluted share. Core earnings and earnings per diluted share were $5.3 million and $.35, respectively, in the first quarter of 2005. Three months ended March 31, ($'s in 000's except GAAP Core* per share data) 2006 2005 2005 Diluted Earnings Per Share $.44 $.29 $.35 Return On Average Equity 17.2% 12.4% 14.6% Total Period End Loans $1,612,562 $1,432,446 Total Period End Deposits $1,675,084 $1,509,288 *Core earnings for the quarter ended March 31, 2005, and numbers derived using core earnings for the quarter, including core earnings per diluted share and core return on average equity, are non-GAAP (Generally Accepted Accounting Principles) financial measures derived by adjusting the Company's GAAP earnings for the negative impact of a first quarter impairment charge of approximately $.8 million or $.06 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. "I am extremely pleased with our first quarter results as the earnings performance of the Company continues to be very strong. Both average total loans and deposits increased by 11% in the first quarter of 2006 from the same quarter a year ago," said Robert D. Sznewajs, President and Chief Executive Officer. "The continued solid growth in the balance sheet and non-interest income improved the return on average equity to 17% for the first quarter of 2006." The following table reconciles GAAP net income to core earnings, including per-share figures: (Dollars in thousands, except Three months ended per share data) March 31, 2006 2005 Change % Net income $6,747 $4,519 49% Add back: Impairment charge on securities, net of tax -- 803 -- Core earnings $6,747 $5,322 27% Diluted Earnings per Share GAAP earnings $0.44 $0.29 52% Core earnings $0.44 $0.35 26% Financial Results: For the quarter ended March 31, 2006, net interest income was $23.2 million, increasing $3.3 million or 17% from the same quarter in 2005. Average non-interest bearing demand deposits constituted approximately 26% of total average deposits in the first quarter of 2006. While the net interest spread has remained substantially flat since first quarter 2005, the net interest margin improved 24 basis points over the same period due to the rising value of non-interest bearing deposits in the higher interest rate environment. First quarter 2006 total non-interest income of $6.0 million grew 41% or $1.8 million from the first quarter 2005. The first quarter 2005 non-interest income included a $1.3 million pre-tax, other than temporary impairment charge for a security, and excluding this charge, total non-interest income increased nearly 8%. As a result of a continued strategic focus and emphasis, deposit service charges and payment systems revenues experienced increases of 34% and 26%, respectively, or $.9 million combined for the first quarter of 2006. Consistent with the improving stock market, trust and investment revenue was up 13% or $.1 million, while gain on sales of loans declined by $.1 million. The Company realized $.5 million in losses on investment securities in the quarter compared to no investment security losses in the same quarter of 2005. Total non-interest expense increased $1.1 million or 6% in the first three months of 2006 from the same quarter in 2005. Personnel expense grew nearly 15% or $1.4 million primarily as a function of higher performance-based variable compensation and the addition of new team members over the past year. In addition, the Company recorded pre-tax stock option expense of $.1 million from implementation of Statement of Financial Accounting Standards No. 123 (Revised), "Share-Based Payment," in the first quarter of 2006, compared to no stock option expense for the same period in 2005. Marketing expense grew $.4 million in the first quarter of 2006 due to increased direct mailing activity and print advertising. Due to a $.8 million litigation settlement in the first quarter of 2005, other non-interest expense decreased $.7 million in the first quarter of 2006, while professional fees declined $.5 million from lower legal fees in the most recent quarter. Because of significantly higher loan growth during the first quarter this year compared to same quarter in 2005, the provision for loan losses was $.4 million, up from no provision in the first quarter in 2005. Annualized loan net charge-offs continued to remain low at 0.06% of average loans in the first quarter 2006, compared to net recoveries of 0.01% in the same quarter a year ago. Non-performing assets at March 31, 2006, declined to a very modest $1.0 million or 0.05% of total assets from $4.4 million or 0.24% a year ago. During the first quarter of 2006, consistent with its capital plan and an anticipated slower pace of stock repurchases in 2006, the Company repurchased approximately 25,000 shares at an average cost of $26.67 per share. At March 31, 2006, approximately 327,000 shares remained available for future repurchases under the Company's share repurchase program. West Coast Bancorp also announces that it issued $15 million in trust preferred securities on April 17, 2006. The proceeds will be used in part to fund the cash portion of the acquisition of Mid-Valley Bank announced in February 2006. The securities will qualify as Tier 1 capital for the Company and will reprice quarterly at a competitive spread over LIBOR. Other: The Company will hold a webcast conference call Wednesday, April 19th, at 8:30 a.m. Pacific Time, during which the Company will discuss first quarter 2006 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. 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 $2 billion in assets, operating 53 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. 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, 2005, including under the heading "Forward Looking Statement Disclosure" and in Item 1A. Risk Factors. West Coast Bancorp Consolidated Income Statements (Unaudited) Three months ended Twelve months ended (Dollars and shares in thousands) March 31, Dec. 31, December 31, 2006 2005 2005 2005 2004 Net interest income Interest and fees on loans $29,099 $22,471 $28,018 $101,419 $79,903 Interest on investment securities 3,176 2,692 3,029 10,920 12,889 Other interest income 73 39 263 652 196 Total interest income 32,348 25,202 31,310 112,991 92,988 Interest expense on deposit accounts 7,156 3,761 6,566 20,497 11,214 Interest on borrowings including subordinated debentures 2,005 1,567 1,357 5,933 6,901 Total interest expense 9,161 5,328 7,923 26,430 18,115 Net interest income 23,187 19,874 23,387 86,561 74,873 Provision for loan losses 408 -- 950 2,175 2,260 Non-interest income Service charges on deposit accounts 2,536 1,891 2,459 8,686 7,474 Payment systems related revenue 1,359 1,076 1,352 4,900 3,878 Trust and investment services revenues 1,267 1,125 1,424 5,151 4,558 Gains on sales of loans 701 775 628 3,046 3,906 Other 648 721 706 3,348 2,667 Loss on impairment of securities -- (1,316) -- (1,316) -- Losses on sales of securities (479) -- -- (716) (20) Total non-interest income 6,032 4,272 6,569 23,099 22,463 Non-interest expense Salaries and employee benefits 11,107 9,674 10,247 40,606 36,297 Equipment 1,242 1,135 1,317 4,837 4,917 Occupancy 1,612 1,539 1,667 6,267 5,722 Payment systems related expense 528 379 515 1,739 1,449 Professional fees 548 1,099 801 2,984 2,314 Postage, printing and office supplies 762 629 785 2,833 2,616 Marketing 1,021 601 1,202 3,830 2,402 Communications 316 272 310 1,210 1,182 Other non-interest expense 1,441 2,146 2,717 8,328 6,472 Total non-interest expense 18,577 17,474 19,561 72,634 63,371 Income before income taxes 10,234 6,672 9,445 34,851 31,705 Provision for income taxes 3,487 2,153 2,983 11,011 9,697 Net income $6,747 $4,519 $6,462 $23,840 $22,008 Basic earnings per share $0.46 $0.31 $0.44 $1.63 $1.48 Diluted earnings per share $0.44 $0.29 $0.42 $1.55 $1.42 Weighted average common shares 14,582 14,726 14,607 14,658 14,849 Weighted average diluted shares 15,284 15,422 15,299 15,344 15,526 Tax equivalent net interest income $23,561 $20,238 $23,758 $88,026 $76,526 West Coast Bancorp Consolidated Balance Sheets (Dollars and shares in thousands, March 31, March 31, Dec. 31, unaudited) 2006 2005 2005 Assets: Cash and cash equivalents $78,972 $58,968 $88,369 Investments 277,999 258,181 292,664 Total loans 1,612,562 1,432,446 1,554,454 Allowance for loan losses (20,642) (18,997) (20,469) Loans, net 1,591,920 1,413,449 1,533,985 Other assets 81,291 75,704 82,120 Total assets $2,030,182 $1,806,302 $1,997,138 Liabilities and Stockholders' Equity: Demand $439,441 $395,323 $456,760 Savings and interest-bearing demand 844,085 758,783 827,909 Certificates of deposits 391,558 355,182 364,793 Total deposits 1,675,084 1,509,288 1,649,462 Borrowings and subordinated debentures 173,148 135,142 170,450 Other liabilities 19,909 15,038 20,103 Total liabilities 1,868,141 1,659,468 1,840,015 Stockholders' equity 162,041 146,834 157,123 Total liabilities and stockholders' equity $2,030,182 $1,806,302 $1,997,138 Common shares outstanding period end 14,726 14,775 14,692 Book value per common share $11.00 $9.94 $10.69 Tangible book value per common share $11.00 $9.91 $10.68 West Coast Bancorp Period End Loan Portfolio By Category (Dollars in thousands, March 31, March 31, Change Dec. 31, unaudited) 2006 2005 Amount % 2005 Commercial loans $395,464 $357,505 $37,959 11% $364,604 Real estate construction loans 238,480 125,959 112,521 89% 210,828 Real estate mortgage loans 249,521 215,580 33,941 16% 242,015 Real estate commercial loans 702,409 698,864 3,545 1% 709,176 Installment and other consumer loans 26,688 34,538 (7,850) -23% 27,831 Total loans $1,612,562 $1,432,446 $180,116 13% $1,554,454 (Reconciliation to GAAP financial measures)* Total loans excluding real estate commercial loans $910,153 $733,582 $176,571 24% $845,278 Real estate commercial loans 702,409 698,864 3,545 1% 709,176 Total loans $1,612,562 $1,432,446 $180,116 13% $1,554,454 * 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) 2006 2005 2005 PERFORMANCE RATIOS - Return on average assets 1.37% 1.02% 1.31% - Return on average common equity 17.18% 12.38% 16.49% - Non-interest income to average assets 1.23% 0.97% 1.34% - Non-interest expense to average assets 3.78% 3.95% 3.98% - Efficiency ratio, tax equivalent 61.8% 67.7% 64.5% NET INTEREST MARGIN - Yield on interest-earning assets 7.05% 6.12% 6.83% - Rate on interest-bearing liabilities 2.68% 1.73% 2.38% - Net interest spread 4.37% 4.39% 4.45% - Net interest margin 5.08% 4.84% 5.12% AVERAGE ASSETS - Investment securities $289,096 $264,062 $279,625 - Commercial loans $379,027 $352,067 $361,158 - Real estate construction loans 225,525 118,194 202,030 - Real estate mortgage loans 245,096 213,969 225,543 - Real estate commercial loans 705,250 702,705 713,634 - Installment and other consumer loans 27,353 35,359 28,551 - Total loans $1,582,251 $1,422,294 $1,530,916 - Total interest earning assets $1,881,206 $1,695,109 $1,840,939 - Other assets 112,421 99,299 110,692 - Total assets $1,993,627 $1,794,408 $1,951,631 AVERAGE LIABILITIES & EQUITY - Demand deposits $431,060 $378,054 $459,201 - Interest bearing demand, savings, and money market 827,166 755,550 842,663 - Certificates of deposits 385,011 347,852 360,717 - Total deposits $1,643,237 $1,481,456 $1,662,581 - Borrowings and subordinated debentures $173,960 $148,118 $116,020 - Total interest bearing liabilities $1,386,137 $1,251,519 $1,319,400 - Other liabilities 448,216 394,847 476,809 - Total liabilities $1,834,353 $1,646,366 $1,796,209 - Average common equity 159,274 148,042 155,422 - Total average liabilities and common equity $1,993,627 $1,794,408 $1,951,631 AVERAGE ASSET/LIABILITY RATIOS - Average stockholders' equity to average assets 7.99% 8.25% 7.96% - Average int. earning assets to int. bearing liabilities 135.7% 135.4% 139.5% - Average loans to average assets 79.4% 79.3% 78.4% - Interest bearing deposits to assets 60.8% 61.5% 61.7% (Dollars in thousands except for per share data, unaudited) (all rates have been annualized where Full year Full year appropriate) 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 March 31, March 31, Dec. 31, (Dollars in thousands, unaudited) 2006 2005 2005 Allowance for loan losses, beginning of period $20,469 $18,971 $19,728 Provision for loan losses 408 -- 950 Charge-offs 505 195 412 Recoveries 270 221 203 Net (recoveries) charge-offs 235 (26) 209 Total allowance for loan losses $20,642 $18,997 $20,469 Net loan charge-offs to average loans (annualized) 0.06% -0.01% 0.05% 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 losses 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 0.05% 0.11% West Coast Bancorp Non-performing Assets March 31, March 31, Dec. 31, (Dollars in thousands, unaudited) 2006 2005 2005 Non-accruing loans $996 $3,695 $1,088 90 day delinquencies -- 301 -- Total non-performing loans 996 3,996 1,088 Other real estate owned -- 384 -- Total non-performing assets $996 $4,380 $1,088 Allowance for loan losses to total loans 1.28% 1.33% 1.32% Non-performing loans to total loans 0.06% 0.28% 0.07% Allowance for loan losses to non- performing loans 2073% 475% 1882% Non-performing assets to total assets 0.05% 0.24% 0.05% Allowance for loan losses to non- performing assets 2073% 434% 1882% 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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