WCBO West Coast Bancorp (MM)

- Diluted Earnings Per Share of $.49 Increased 11% Over the Third Quarter 2005 - Return on Average Equity of 16.6% in the Third Quarter of 2006 - Since Third Quarter 2005: - 18% and 17% Period End Organic* Loan and Deposit Growth, Respectively - 11% Growth in Period-End Non-Interest Bearing Demand Deposits - Highest Business Customer Satisfaction of Any Bank in Portland-Vancouver Market LAKE OSWEGO, Ore., Oct. 17 /PRNewswire-FirstCall/ -- West Coast Bancorp (NASDAQ:WCBO) today announced quarterly earnings of $7.9 million or $.49 per diluted share for the third quarter of 2006, compared to third quarter 2005 earnings of $6.7 million or $.44 per diluted share. Third quarter 2005 earnings included a State Corporate Income Tax Credit of approximately $.3 million or $.02 per diluted share. (Dollars in millions except per share data) 2006 2005 % Change Diluted Earnings Per Share $0.49 $0.44 11% Return On Average Equity 16.6% 17.4% Total Period End Loans $1,869 $1,517 23% Total Period End Deposits $2,007 $1,644 22% * Total loan and deposit growth less loans and deposits acquired in the Mid-Valley Bank acquisition, respectively. See reconciliation in the financial section below. The Company's third quarter earnings performance continues to be strong with the return on average equity of 16.6%, and with diluted earnings per share increasing 11% from the same period a year ago," said Robert D. Sznewajs, President & CEO. "A highly regarded, national research organization recently recognized West Coast Bank for having the highest business customer satisfaction of any Portland-Vancouver bank. Offering our business customers a wide range of sophisticated and innovative products, such as iDeposit(TM), rewards cards, and payroll cards, along with a high level of customer service has been acknowledged as a winning combination and our people are proud of this recognition," Sznewajs continued. Financial Results: Period-end loan and deposit growth of 23% and 22% respectively since September 30, 2005, helped generate an 18% or $4.0 million increase in net interest income year-over-year third quarter. The third quarter 2006 net interest margin of 4.89% compressed 16 basis points from the same quarter in 2005, and was heavily influenced by the rise in short-term interest rates during 2006. Quarter end non-interest bearing demand deposits grew 11% from September 30, 2005, and partly offset the net interest margin pressure from the rising short-term interest rates. Third quarter 2006 total non-interest income rose $1.3 million or 22% from the same quarter of 2005 due to higher payment systems and deposit service charge revenues. The combination of successful strategic product introductions, new branch locations and marketing efforts increased the number of transaction deposit accounts. This growth lifted deposit service charge revenue 25%. Payment systems revenues increased 65% from the third quarter of 2005, including a $.4 million contract adjustment for merchant services. Third quarter 2006 trust and investment revenue fell slightly compared to third quarter last year as investment sales revenue declined 18% in the most recent quarter. Compared to third quarter 2005, total non-interest expense increased $2.7 million or 15% in the current quarter. Personnel expense grew 14% year-over-year third quarter partly reflecting higher performance-based variable compensation, new branches, and additional lending teams. Equipment and occupancy increased 19% combined mainly from technology investments and new branch locations. Higher expenses in the remaining categories were mainly attributed to higher transaction volumes and more locations. Also, the Company recorded pre-tax stock option expense of $.1 million in the third 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 third quarter 2006 provision for loan losses of $.6 million increased $.2 million from the same quarter in 2005. Annualized net charge-offs were 0.02% of average loans in the third quarter of 2006, which compared favorably to third quarter 2005 net charge-offs of 0.15%. Non-performing assets at September 30, 2006, were $2.7 million or .11% of total assets versus $1.7 million or .09% a year ago. West Coast Bancorp also announced earnings of $21.6 million or $1.38 per diluted share for the nine months ended September 30, 2006. Core earnings* were $17.9 million or $1.17 per 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 Three months Nine months ended share data) ended Sept. 30, Sept. 30, 2006 2005 2006 2005 Net income $7,869 $6,713 $21,561 $17,379 Add back: Impairment charge on securities, net of tax - - - 803 Subtract: Impact of State corporate income tax credit - (274) - (274) Core earnings $7,869 $6,439 $21,561 $17,908 Diluted Earnings per Share Net income $0.49 $0.44 $1.38 $1.13 Core earnings $0.49 $0.42 $1.38 $1.17 *Core earnings and core earnings per diluted share are non-GAAP (Generally Accepted Accounting Principles) financial measures derived by adjusting the Company's GAAP earnings to exclude (I) the beneficial impact of the State corporate income tax credit in the third quarter 2005 of approximately $.3 million or $.02 per diluted share and (II) 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 operating results derived from its operations as compared to prior periods. The Company repurchased 36,200 of its shares at an average cost of $30.11 per share during the third quarter of 2006. At September 30, 2006, approximately 276,000 shares remained available for repurchase under the Company's share repurchase program. Other: The Company will hold a Webcast conference call Wednesday, October 18, at 8:30 a.m. Pacific Time, during which the Company will discuss third 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 and the "3rd Quarter 2006 Earnings Conference Call" tab . The conference call may also be accessed by dialing 877-604-2074, ID #7029906 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 following the same instructions. West Coast Bancorp is a Northwest bank holding company with $2.4 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 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 Nine months ended (Dollars and shares in thousands) September 30, June 30, September 30, 2006 2005 2006 2006 2005 Net interest income Interest and fees on loans $36,748 $26,264 $32,208 $98,056 $73,401 Interest on investment securities 3,485 2,596 3,261 9,921 7,891 Other interest income 316 298 130 519 389 Total interest income 40,549 29,158 35,599 108,496 81,681 Interest expense on deposit accounts 11,860 5,574 8,425 27,441 13,931 Interest on borrowings including subordinated debentures 2,394 1,312 2,625 7,023 4,576 Total interest expense 14,254 6,886 11,050 34,464 18,507 Net interest income 26,295 22,272 24,549 74,032 63,174 Provision for loan losses 625 400 500 1,533 1,225 Non-interest income Service charges on deposit accounts 2,897 2,316 2,830 8,262 6,227 Payment systems related revenue 2,116 1,282 1,525 5,000 3,548 Trust and investment services revenues 1,322 1,359 1,408 3,997 3,727 Gains on sales of loans 748 741 692 2,141 2,417 Other 591 764 635 1,875 2,642 Loss on impairment of securities - - - - (1,316) Losses on sales of securities (206) (343) - (686) (716) Total non-interest income 7,468 6,119 7,090 20,589 16,529 Non-interest expense Salaries and employee benefits 12,209 10,703 11,907 35,223 30,359 Equipment 1,412 1,226 1,367 4,022 3,520 Occupancy 1,855 1,530 1,660 5,127 4,600 Payment systems related expense 666 428 560 1,754 1,224 Professional fees 680 523 609 1,837 2,183 Postage, printing and office supplies 996 713 881 2,639 2,048 Marketing 1,103 998 1,585 3,708 2,628 Communications 372 300 293 982 900 Other non-interest expense 1,845 2,013 1,709 4,994 5,610 Total non-interest expense 21,138 18,434 20,571 60,286 53,072 Income before income taxes 12,000 9,557 10,568 32,802 25,406 Provision for income taxes 4,131 2,844 3,624 11,241 8,027 Net income $7,869 $6,713 $6,944 $21,561 $17,379 Basic earnings per share $0.51 $0.46 $0.47 $1.45 $1.18 Diluted earnings per share $0.49 $0.44 $0.45 $1.38 $1.13 Weighted average common shares 15,386 14,660 14,737 14,904 14,675 Weighted average diluted shares 16,053 15,370 15,395 15,587 15,355 Tax equivalent net interest income $26,700 $22,634 $24,926 $75,186 $64,267 West Coast Bancorp Consolidated Balance Sheets Sept. 30, Sept. 30, June 30, (Dollars and shares in thousands, unaudited) 2006 2005 2006 Assets: Cash and cash equivalents $119,301 $78,539 $106,810 Investments 295,753 274,344 300,679 Total loans 1,868,564 1,516,740 1,801,794 Allowance for loan losses (22,404) (19,728) (21,883) Loans, net 1,846,160 1,497,012 1,779,911 Goodwill and other intangibles 15,182 264 15,334 Other assets 93,045 83,286 92,676 Total assets $2,369,441 $1,933,445 $2,295,410 Liabilities and Stockholders' Equity: Demand $508,719 $459,831 $488,328 Savings and interest-bearing demand 959,209 821,042 884,583 Certificates of deposits 539,319 363,249 477,826 Total deposits 2,007,247 1,644,122 1,850,737 Borrowings and subordinated debentures 146,111 114,300 242,619 Other liabilities 21,827 20,066 17,773 Total liabilities 2,175,185 1,778,488 2,111,129 Stockholders' equity 194,256 154,957 184,281 Total liabilities and stockholders' equity $2,369,441 $1,933,445 $2,295,410 Common shares outstanding period end 15,532 14,761 15,470 Book value per common share $12.51 $10.50 $11.91 Tangible book value per common share $11.53 $10.48 $10.92 West Coast Bancorp Period End Loan Portfolio By Category Sept. 30, Sept. 30, Change June 30, (Dollars in thousands, unaudited) 2006 2005 Amount % 2006 Commercial loans $452,035 $374,054 $77,981 21% $437,397 Real estate construction loans 308,886 187,779 121,107 64% 271,160 Real estate mortgage loans 274,812 218,511 56,301 26% 274,245 Real estate commercial loans 805,458 707,032 98,426 14% 790,590 Installment and other consumer loans 27,373 29,364 (1,991) -7% 28,402 Total loans $1,868,564 $1,516,740 $351,824 23% $1,801,794 (Reconciliation to GAAP financial measures)* Total loans excluding real estate commercial loans $1,063,106 $809,708 $253,398 31% $1,011,204 Real estate commercial loans 805,458 707,032 98,426 14% 790,590 Total loans $1,868,564 $1,516,740 $351,824 23% $1,801,794 *Management uses the non-GAAP information above, 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. Sept. 30, Sept. 30, Change (Dollars in millions, unaudited) 2006 2005 Amount % Total period end loans $1,868.6 $1,516.7 $351.9 23% Loans acquired in acquisition 72.8 - 72.8 - Total period end organic* loans $1,795.8 $1,516.7 $279.1 18% Total period end deposits $2,007.2 $1,644.1 $363.1 22% Deposits acquired in acquisition 85.5 - 85.5 - Total period end organic* deposits $1,921.7 $1,644.1 $277.6 17% * Total loans and deposits less loans and deposits acquired in Mid-Valley Bank acquisition, respectively. West Coast Bancorp Financial Information Third Third Second (Dollars in thousands except for per share data, unaudited) Quarter Quarter Quarter (all rates have been annualized where appropriate) 2006 2005 2006 PERFORMANCE RATIOS - Return on average assets 1.35% 1.41% 1.33% - Return on average common equity 16.56% 17.40% 16.81% - Return on average tangible equity 18.02% 17.44% 16.96% - Non-interest income to average assets 1.28% 1.29% 1.36% - Non-interest expense to average assets 3.63% 3.88% 3.94% - Efficiency ratio, tax equivalent 61.5% 63.4% 64.3% NET INTEREST MARGIN - Yield on interest-earning assets 7.50% 6.59% 7.30% - Rate on interest-bearing liabilities 3.51% 2.14% 3.03% - Net interest spread 3.99% 4.45% 4.27% - Net interest margin 4.89% 5.05% 5.06% AVERAGE ASSETS - Investment securities $298,988 $247,101 $284,659 - Commercial loans $449,107 $361,771 $404,119 - Real estate construction loans 287,558 169,914 256,444 - Real estate mortgage loans 271,511 220,372 264,288 - Real estate commercial loans 801,354 709,822 725,756 - Installment and other consumer loans 28,567 29,854 27,909 - Total loans $1,838,097 $1,491,733 $1,678,516 - Total interest earning assets $2,167,250 $1,777,423 $1,977,717 - Other assets 143,854 108,797 114,692 - Total assets $2,311,104 $1,886,220 $2,092,409 AVERAGE LIABILITIES & EQUITY - Demand deposits $489,796 $442,922 $446,421 - Interest bearing demand, savings, and money market 925,816 790,375 852,024 - Certificates of deposits 504,894 373,197 402,239 - Total deposits $1,920,506 $1,606,494 $1,700,684 - Borrowings and subordinated debentures $182,085 $112,777 $207,988 - Total interest bearing liabilities $1,612,796 $1,276,349 $1,462,251 - Other liabilities 509,812 456,816 464,487 - Total liabilities $2,122,608 $1,733,165 $1,926,738 - Average common equity 188,496 153,055 165,671 - Total average liabilities and common equity $2,311,104 $1,886,220 $2,092,409 AVERAGE ASSET/LIABILITY RATIOS - Average stockholders' equity to average assets 8.16% 8.11% 7.92% - Average int. earning assets to int. bearing liabilities 134.4% 139.3% 135.3% - Average loans to average assets 79.5% 79.1% 80.2% - Interest bearing deposits to assets 61.9% 61.7% 59.9% West Coast Bancorp Financial Information (Dollars in thousands except for per share data, unaudited) Year to date Year to date (all rates have been annualized where appropriate) 2006 2005 PERFORMANCE RATIOS - Return on average assets 1.35% 1.26% - Return on average common equity 16.83% 15.50% - Return on average tangible equity 17.41% 15.54% - Non-interest income to average assets 1.29% 1.20% - Non-interest expense to average assets 3.78% 3.85% - Efficiency ratio, tax equivalent 62.5% 64.1% NET INTEREST MARGIN - Yield on interest-earning assets 7.29% 6.37% - Rate on interest-bearing liabilities 3.10% 1.95% - Net interest spread 4.19% 4.42% - Net interest margin 5.00% 4.94% AVERAGE ASSETS - Investment securities $290,946 $256,240 - Commercial loans $411,016 $360,810 - Real estate construction loans 256,736 142,875 - Real estate mortgage loans 260,395 217,360 - Real estate commercial loans 744,463 708,935 - Installment and other consumer loans 27,948 32,771 - Total loans $1,700,558 $1,462,751 - Total interest earning assets $2,009,767 $1,738,352 - Other assets 123,771 103,818 - Total assets $2,133,538 $1,842,170 AVERAGE LIABILITIES & EQUITY - Demand deposits $455,975 $409,150 - Interest bearing demand, savings, and money market 868,697 770,988 - Certificates of deposits 431,154 362,479 - Total deposits $1,755,826 $1,542,617 - Borrowings and subordinated debentures $188,422 $135,182 - Total interest bearing liabilities $1,488,273 $1,268,649 - Other liabilities 474,011 423,660 - Total liabilities $1,962,284 $1,692,309 - Average common equity 171,254 149,861 - Total average liabilities and common equity $2,133,538 $1,842,170 AVERAGE ASSET/LIABILITY RATIOS - Average stockholders' equity to average assets 8.03% 8.14% - Average int. earning assets to int. bearing liabilities 135.0% 137.0% - Average loans to average assets 79.7% 79.4% - Interest bearing deposits to assets 60.9% 61.5% West Coast Bancorp Allowance For Loan Losses and Net Charge-offs Quarter Quarter Quarter ended ended ended Sept. 30 Sept. 30 June 30, (Dollars in thousands, unaudited) 2006 2005 2006 Allowance for loan losses, beginning of period $21,883 $19,897 $20,642 Provision for loan losses 625 400 500 Charge-offs 330 823 312 Recoveries 226 254 166 Net charge-offs 104 569 146 Allowance for loan losses, from acquisition - - 887 Total allowance for loan losses $22,404 $19,728 $21,883 Net loan charge-offs to average loans (annualized) 0.02% 0.15% 0.03% Year to date Year to date Sept. 30, Sept. 30, (Dollars in thousands, unaudited) 2006 2005 Allowance for loan losses, beginning of period $20,469 $18,971 Provision for loan losses 1,533 1,225 Charge-offs 1,147 1,212 Recoveries 662 744 Net Charge-offs 485 468 Allowance for loan losses, from acquisition 887 - Total allowance for loan losses $22,404 $19,728 Net loan charge-offs to average loans 0.04% 0.04% West Coast Bancorp Non-performing Assets Sept. 30, Sept. 30, June 30, (Dollars in thousands, unaudited) 2006 2005 2006 Non-accruing loans $2,652 $1,568 $1,835 90 day delinquencies - - - Total non-performing loans 2,652 1,568 1,835 Other real estate owned - 98 - Total non-performing assets $2,652 $1,666 $1,835 Allowance for loan losses to total loans 1.20% 1.30% 1.21% Non-performing loans to total loans 0.14% 0.10% 0.10% Allowance for loan losses to non- performing loans 845% 1258% 1193% Non-performing assets to total assets 0.11% 0.09% 0.08% Allowance for loan losses to non- performing assets 845% 1184% 1193% 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 for West Coast Bancorp Web site: http://www.wcb.com/

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