WCBO West Coast Bancorp (MM)

- Diluted Earnings per share of $.45 Increased 13% over diluted earnings per share of $.40 for the second quarter 2005 LAKE OSWEGO, Ore., July 18 /PRNewswire-FirstCall/ -- West Coast Bancorp (NASDAQ:WCBO) today announced quarterly earnings of $6.9 million or $.45 per diluted share for the second quarter of 2006, compared to second quarter 2005 earnings of $6.1 million or $.40 per diluted share. ($'s in 000's except per share data) 2006 2005 % Change Diluted Earnings Per Share $0.45 $0.40 13% Return On Average Equity 16.81% 16.61% Total Period End Loans $1,801,794 $1,478,331 22% Loans acquired in acquisition 72,837 -- -- Total Period End Organic* loans $1,728,957 $1,478,331 17% Total Period End Deposits $1,850,737 $1,563,867 18% Deposits acquired in acquisition 85,547 -- -- Total Period End Organic* Deposits $1,765,190 $1,563,867 13% * Total loans and deposits less loans and deposits acquired in Mid-Valley Bank acquisition, respectively. "The Company's second quarter earnings performance was strong with the return on average equity of 17% similar to the first quarter of 2006, and diluted earnings per share reaching $.45, a 13% increase from the same period a year ago," said Robert D. Sznewajs, President and CEO. "The Company also successfully completed the acquisition of Mid-Valley Bank late in the quarter thanks to the hard work and dedication of employees from both organizations, and also hired a team of commercial lenders to lead the Company's entry into the Kent, Washington market," said Sznewajs. Financial Results: Arising from 14% growth in average loans and an increase of 10% in average non-interest bearing demand deposits, second quarter 2006 net interest income was $24.5 million, up 17% from the same quarter in 2005. With second quarter 2006 average total deposits growing 11% from the second quarter 2005, average non-interest bearing demand deposits remained at 26% of total average deposits in the current quarter. In the second quarter of 2006, the net interest margin improved 13 basis points over the same period a year ago mainly due to the rising value of non-interest bearing deposits in the current higher interest rate environment. Second quarter 2006 total non-interest income grew 16% from the same quarter of 2005. As a result of the strategic product development initiatives and successful marketing efforts, transaction accounts experienced solid growth. This, in turn, led to deposit service charges and payment systems revenues combined increasing 35% since the second quarter of 2005. Growth in number of accounts and assets under management produced a 13% rise in second quarter 2006 trust and investment revenue compared to last year second quarter. Compared to second quarter 2005, total non-interest expense increased 20% in the current quarter. Particularly stemming from higher performance-based variable compensation, personnel expense grew 19% year-over-year second quarter. Marketing and related production costs grew 42% in the second quarter of 2006 due to increased direct mailing activity and print advertising in support of strategic product initiatives, namely, High Performance Checking and iDeposit. Payment system expense rose 35% from the same period a year ago due to higher transaction account volumes. Finally, the Company recorded pre-tax stock option expense of $.2 million in the second quarter compared to no stock option expense for the same period in 2005, from implementation of Statement of Financial Accounting Standards No. 123 (Revised), "Share-Based Payment," in the first quarter of 2006. The second quarter 2006 provision for loan losses of $.5 million exceeded the net charge offs mainly due to significantly higher loan growth during the quarter. The provision for loan losses was $.8 million in the same quarter of 2005. Annualized loan net charge-offs remained modest at 0.03% of average loans in the second quarter 2006, compared to net recoveries of 0.02% in last year's second quarter. Non-performing assets at June 30, 2006, remained very low at $1.8 million or .08% of total assets versus $1.8 million or .09% a year ago. West Coast Bancorp also announced earnings of $13.7 million or $.89 per fully diluted share for the six months ended June 30, 2006. Core earnings* were $11.5 million or $.75 per fully diluted share for the same period in 2005. The following table reconciles GAAP net income to core earnings*, including per-share figures: (Dollars in thousands, except per share data) Six months ended June 30, 2006 2005 Change % Net income $13,692 $10,666 28% Add back: Impairment charge on securities, net of tax -- 803 Core earnings* $13,692 $11,469 19% Earnings per Diluted Share GAAP earnings $0.89 $0.70 27% Core earnings* $0.89 $0.75 19% * Core earnings and core earnings per diluted share for the six months ended June 30, 2005, 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 2005 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. Due in part to higher than projected loan growth in the second quarter of 2006, the Company only repurchased 15,000 of its shares at an average cost of $26.93 per share during the quarter. At June 30, 2006, approximately 312,000 shares remained available for future repurchases under the Company's share repurchase program. West Coast Bancorp previously announced that it issued $15 million in trust preferred securities on April 17, 2006. The proceeds were utilized in part to fund the cash portion of the acquisition of Mid-Valley Bank announced in February 2006, and to enhance the Tier 1 capital for the Company in light of the higher than expected loan growth. Other: The Company will hold a Webcast conference call Wednesday, July 19th, at 8:30 a.m. Pacific Time, during which the Company will discuss second quarter 2006 results, review its strategic progress, and provide management's current expectations for the remainder of 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 $2.3 billion in assets, operating 56 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 athttp://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) (Dollars and shares in Three months ended Six months ended thousands) June 30, March 31, June 30, 2006 2005 2006 2006 2005 Net interest income Interest and fees on loans $32,208 $24,666 $29,099 $61,307 $47,137 Interest on investment securities 3,261 2,603 3,176 6,437 5,294 Other interest income 130 52 73 204 92 Total interest income 35,599 27,321 32,348 67,948 52,523 Interest expense on deposit accounts 8,425 4,596 7,156 15,581 8,357 Interest on borrowings including subordinated debentures 2,625 1,697 2,005 4,630 3,264 Total interest expense 11,050 6,293 9,161 20,211 11,621 Net interest income 24,549 21,028 23,187 47,737 40,902 Provision for loan losses 500 825 408 908 825 Non-interest income Service charges on deposit accounts 2,830 2,020 2,536 5,365 3,911 Payment systems related revenue 1,525 1,194 1,359 2,884 2,270 Trust and investment services revenues 1,408 1,244 1,267 2,675 2,368 Gains on sales of loans 692 901 701 1,393 1,676 Other 635 1,153 648 1,284 1,875 Loss on impairment of securities -- -- -- -- (1,316) Losses on sales of securities -- (373) (479) (479) (373) Total non-interest income 7,090 6,139 6,032 13,122 10,411 Non-interest expense Salaries and employee benefits 11,907 9,982 11,107 23,014 19,657 Equipment 1,367 1,159 1,242 2,609 2,294 Occupancy 1,660 1,531 1,612 3,273 3,069 Payment systems related expense 560 414 528 1,088 792 Professional fees 609 561 548 1,157 1,660 Postage, printing and office supplies 881 707 762 1,643 1,336 Marketing 1,585 1,029 1,021 2,605 1,630 Communications 293 328 316 610 600 Other non-interest expense 1,709 1,454 1,441 3,149 3,601 Total non-interest expense 20,571 17,165 18,577 39,148 34,639 Income before income taxes 10,568 9,177 10,234 20,803 15,849 Provision for income taxes 3,624 3,031 3,487 7,111 5,183 Net income $6,944 $6,146 $6,747 $13,692 $10,666 Basic earnings per share $0.47 $0.42 $0.46 $0.93 $0.73 Diluted earnings per share $0.45 $0.40 $0.44 $0.89 $0.70 Weighted average common shares 14,737 14,642 14,582 14,660 14,684 Weighted average diluted shares 15,395 15,246 15,284 15,340 15,339 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, June 30, June 30, March 31, unaudited) 2006 2005 2006 Assets: Cash and cash equivalents $106,810 $78,299 $78,972 Investments 300,679 231,499 277,999 Total loans 1,801,794 1,478,331 1,612,562 Allowance for loan losses (21,883) (19,897) (20,642) Loans, net 1,779,911 1,458,434 1,591,920 Goodwill and other intangibles 15,334 348 96 Other assets 92,676 78,747 81,195 Total assets $2,295,410 $1,847,327 $2,030,182 Liabilities and Stockholders' Equity: Demand $488,328 $428,825 $439,441 Savings and interest-bearing demand 884,583 761,587 844,085 Certificates of deposits 477,826 373,455 391,558 Total deposits 1,850,737 1,563,867 1,675,084 Borrowings and subordinated debentures 242,619 119,326 173,148 Other liabilities 17,773 12,667 19,909 Total liabilities 2,111,129 1,695,860 1,868,141 Stockholders' equity 184,281 151,467 162,041 Total liabilities and stockholders' equity $2,295,410 $1,847,327 $2,030,182 Common shares outstanding period end 15,470 14,737 14,726 Book value per common share $11.91 $10.28 $11.00 Tangible book value per common share $10.92 $10.25 $11.00 West Coast Bancorp Period End Loan Portfolio By Category (Dollars in thousands, June 30, June 30, Change March 31, unaudited) 2006 2005 Amount % 2006 Commercial loans $437,397 $360,872 $76,525 21% $395,464 Real estate construction loans 271,160 148,487 122,673 83% 238,480 Real estate mortgage loans 274,245 221,735 52,510 24% 249,521 Real estate commercial loans 790,590 714,291 76,299 11% 702,409 Installment and other consumer loans 28,402 32,946 (4,544) -14% 26,688 Total loans $1,801,794 $1,478,331 $323,463 22% $1,612,562 (Reconciliation to GAAP financial measures)* Total loans excluding real estate commercial loans $1,011,204 $764,040 $247,164 32% $910,153 Real estate commercial loans 790,590 714,291 76,299 11% 702,409 Total loans $1,801,794 $1,478,331 $323,463 22% $1,612,562 * 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 Second Second First share data, unaudited) Quarter Quarter Quarter (all rates have been annualized where appropriate) 2006 2005 2006 PERFORMANCE RATIOS - Return on average assets 1.33% 1.34% 1.37% - Return on average common equity 16.81% 16.61% 17.18% - Return on average tangible equity - Non-interest income to average assets 1.36% 1.33% 1.23% - Non-interest expense to average assets 3.94% 3.73% 3.78% - Efficiency ratio, tax equivalent 64.3% 61.5% 61.8% NET INTEREST MARGIN - Yield on interest-earning assets 7.30% 6.38% 7.05% - Rate on interest-bearing liabilities 3.03% 1.98% 2.68% - Net interest spread 4.27% 4.40% 4.37% - Net interest margin 5.06% 4.93% 5.08% AVERAGE ASSETS - Investment securities $284,659 $257,743 $289,096 - Commercial loans $404,119 $368,485 $379,027 - Real estate construction loans 256,444 139,947 225,525 - Real estate mortgage loans 264,288 217,670 245,096 - Real estate commercial loans 725,756 714,201 705,250 - Installment and other consumer loans 27,909 33,162 27,353 - Total loans $1,678,516 $1,473,465 $1,582,251 - Total interest earning assets $1,977,717 $1,741,618 $1,881,206 - Other assets 114,692 103,255 112,421 - Total assets $2,092,409 $1,844,873 $1,993,627 AVERAGE LIABILITIES & EQUITY - Demand deposits $446,421 $405,760 $431,060 - Interest bearing demand, savings, and money market 852,024 766,658 827,166 - Certificates of deposits 402,239 366,109 385,011 - Total deposits $1,700,684 $1,538,527 $1,643,237 - Borrowings and subordinated debentures $207,988 $145,039 $173,960 - Total interest bearing liabilities $1,462,251 $1,277,806 $1,386,137 - Other liabilities 464,487 418,635 448,216 - Total liabilities $1,926,738 $1,696,441 $1,834,353 - Average common equity 165,671 148,432 159,274 - Total average liabilities and common equity $2,092,409 $1,844,873 $1,993,627 AVERAGE ASSET/LIABILITY RATIOS - Average stockholders' equity to average assets 7.92% 8.05% 7.99% - Average int. earning assets to int. bearing liabilities 135.3% 136.3% 135.7% - Average loans to average assets 80.2% 79.9% 79.4% - Interest bearing deposits to assets 59.9% 61.4% 60.8% (Dollars in thousands except for per share data, unaudited) (all rates have been annualized where Year to date Year to date appropriate) 2006 2005 PERFORMANCE RATIOS - Return on average assets 1.35% 1.18% - Return on average common equity 16.99% 14.51% - Return on average tangible equity - Non-interest income to average assets 1.29% 1.15% - Non-interest expense to average assets 3.86% 3.84% - Efficiency ratio, tax equivalent 63.1% 64.5% NET INTEREST MARGIN - Yield on interest-earning assets 7.17% 6.25% - Rate on interest-bearing liabilities 2.86% 1.85% - Net interest spread 4.31% 4.40% - Net interest margin 5.06% 4.89% AVERAGE ASSETS - Investment securities $288,011 $260,885 - Commercial loans $391,642 $360,321 - Real estate construction loans 241,070 129,131 - Real estate mortgage loans 254,745 215,829 - Real estate commercial loans 715,560 708,484 - Installment and other consumer loans 27,633 34,255 - Total loans $1,630,650 $1,448,020 - Total interest earning assets $1,930,875 $1,718,492 - Other assets 113,562 101,288 - Total assets $2,044,437 $1,819,780 AVERAGE LIABILITIES & EQUITY - Demand deposits $438,783 $391,984 - Interest bearing demand, savings, and money market 839,664 761,134 - Certificates of deposits 393,673 357,031 - Total deposits $1,672,120 $1,510,149 - Borrowings and subordinated debentures $191,643 $146,570 - Total interest bearing liabilities $1,424,980 $1,264,735 - Other liabilities 456,966 406,807 - Total liabilities $1,881,946 $1,671,542 - Average common equity 162,491 148,238 - Total average liabilities and common equity $2,044,437 $1,819,780 AVERAGE ASSET/LIABILITY RATIOS - Average stockholders' equity to average assets 7.95% 8.15% - Average int. earning assets to int. bearing liabilities 135.5% 135.9% - Average loans to average assets 79.8% 79.6% - Interest bearing deposits to assets 60.3% 61.5% West Coast Bancorp Allowance For Loan Losses and Net Charge-offs Quarter Quarter Quarter ended ended ended June 30, June 30, March 31, (Dollars in thousands, unaudited) 2006 2005 2006 Allowance for loan losses, beginning of period $20,642 $18,997 $20,469 Provision for loan losses 500 825 408 Charge-offs 312 195 505 Recoveries 166 270 270 Net (recoveries) charge-offs 146 (75) 235 Allowance for loan losses, from acquisition 887 -- -- Total allowance for loan losses $21,883 $19,897 $20,642 Net loan charge-offs to average loans (annualized) 0.03% -0.02% 0.06% Year to Year to date date June 30, June 30, (Dollars in thousands, unaudited) 2006 2005 Allowance for loan losses, beginning of period $20,469 $18,971 Provision for loan losses 908 825 Charge-offs 817 389 Recoveries 436 490 Net Charge-offs 381 (101) Allowance for loan losses, from acquisition 887 -- Total allowance for loan losses $21,883 $19,897 Net loan charge-offs to average loans 0.05% -0.01% West Coast Bancorp Non-performing Assets June 30, June 30, March 31, (Dollars in thousands, unaudited) 2006 2005 2006 Non-accruing loans $1,835 $1,556 $996 90 day delinquencies -- -- -- Total non-performing loans 1,835 1,556 996 Other real estate owned -- 198 -- Total non-performing assets $1,835 $1,754 $996 Allowance for loan losses to total loans 1.21% 1.35% 1.28% Non-performing loans to total loans 0.10% 0.11% 0.06% Allowance for loan losses to non- performing loans 1193% 1279% 2073% Non-performing assets to total assets 0.08% 0.09% 0.05% Allowance for loan losses to non- performing assets 1193% 1134% 2073% 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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