WCBO West Coast Bancorp (MM)

-- 2006 diluted earnings per share of $1.86 grew 20% compared to 2005 LAKE OSWEGO, Ore., Jan. 16 /PRNewswire-FirstCall/ -- West Coast Bancorp (NASDAQ:WCBO) today announced quarterly earnings of $7.7 million or $.48 per diluted share for the fourth quarter of 2006, compared to fourth quarter 2005 earnings of $6.5 million or $.42 per diluted share. The Company also reported net income of $29.3 million or $1.86 per diluted share for the full year 2006, up 20% from $1.55 per diluted share in 2005. (Dollars in millions, except per share data) 2006 2005 % Change Diluted Earnings Per Share $0.48 $0.42 14% Return On Average Equity 15.5% 16.5% Return On Average Equity, Tangible* 17.0% 16.7% Total Period End Loans $1,945 $1,554 25% Total Period End Deposits $2,006 $1,649 22% *Return on Average Equity, Tangible is a non-GAAP measure defined as net income excluding intangible asset amortization, net of tax, divided by average equity less average intangible assets. "Loan and deposit growth exceeded our expectations throughout 2006," said Robert D. Sznewajs, President & CEO. "2006 was a great year for the Company with record earnings and a very positive response by both consumers and businesses to our expanded payments system product offerings. All of our team members are to be congratulated for a very successful year." Financial Results: Excellent 2006 loan and deposit growth of 25% and 22%, respectively, were the catalysts for a 15% or $3.5 million increase in year-over-year fourth quarter net interest income. Negatively impacted by the sustained, flat to inverted interest yield curve, the fourth quarter 2006 net interest margin fell 28 basis points to 4.84% from the same quarter in 2005. The excellent loan growth's impact on the net interest margin was more than offset by the declining spreads and the slowing rate of growth in non-interest bearing demand deposit balances. Total non-interest income in the fourth quarter of 2006 grew $.9 million or 14% from the same quarter of 2005 due to higher payment systems and deposit service charge revenues as well as increased gains on sales of loans. Successful product introductions, new branch locations and heavy marketing efforts supported the continued rise in the number of transaction deposit accounts, which, in turn, boosted our service charge revenue 15% over the last quarter in 2005. Fourth quarter 2006 payment systems-related revenues extended their solid growth trend, increasing 29% from the same quarter 2005, mainly reflecting growth in card accounts and their associated revenues. In contrast to recent quarterly comparisons, revenues from gain on sale of loans increased over 30% in the fourth quarter, with growth in both SBA and single-family mortgage revenues. Compared to fourth quarter 2005, total non-interest expense increased $1.8 million or 9% in the most recent quarter. Overall personnel expense grew 17% over the same period predominantly reflecting higher salaries, additional team members and increased performance-based pay. Occupancy expense increased 15% primarily from new locations over the past 12 months. Higher expenses in the remaining categories were mainly attributed to higher account and transaction volumes, more branch locations, and our enhanced product offerings. In other non-interest expense, the Company recorded a legal charge of $.3 million and $1.0 million in fourth quarters of 2006 and 2005, respectively. The 2006 fourth quarter provision for loan losses of $1.2 million increased $.3 million from the same quarter in 2005, and doubled from the $.6 million provision in the third quarter of 2006. Annualized net charge-offs were 0.12% of average loans in the fourth quarter of 2006, up from fourth quarter 2005 net charge-offs of 0.05%. Non- performing assets at December 31, 2006, remained very low at $1.5 million or .06% of total assets compared to $1.1 million or .05% a year ago, respectively. The Company repurchased 19,000 of its shares at an average cost of $32.06 per share during the fourth quarter of 2006. At December 31, 2006, approximately 257,000 shares remained available for repurchase under the Company's share repurchase program. Other: The Company will hold a Webcast conference call Wednesday, January 17, at 8:30 a.m. Pacific Time, during which the Company will discuss year-end 2006 results, review its strategic progress, and provide management's current expectations for 2007. To access the conference call via a live Webcast, go to http://www.wcb.com/ and click on Investor Relations and the 4th Quarter 2006 Earnings Conference Call" tab. The conference call may also be accessed by dialing 877.604.2074, ID # 5056665 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 following the same instructions. West Coast Bancorp, one of Oregon Business Magazine's 100 Best Companies to Work For, is a Northwest bank holding company with $2.5 billion in assets, operating 59 offices in Oregon and Washington. The company combines the sophisticated products and expertise of larger banks with the local decision making, market knowledge and customer service of a community bank. For more information, 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) (Dollars and shares Three months ended Twelve months ended in thousands) December 31, Sept. 30, December 31, 2006 2005 2006 2006 2005 Net interest income Interest and fees on loans $38,137 $28,018 $36,748 $136,193 $101,419 Interest on investment securities 3,815 3,029 3,485 13,737 10,920 Other interest income 349 263 316 868 652 Total interest income 42,301 31,310 40,549 150,798 112,991 Interest expense on deposit accounts 13,486 6,566 11,860 40,927 20,497 Interest on borrowings including subordinated debentures 1,975 1,357 2,394 8,999 5,933 Total interest expense 15,461 7,923 14,254 49,926 26,430 Net interest income 26,840 23,387 26,295 100,872 86,561 Provision for loan losses 1,200 950 625 2,733 2,175 Non-interest income Service charges on deposit accounts 2,833 2,459 2,897 11,096 8,686 Payment systems related revenue 1,738 1,352 2,116 6,738 4,900 Trust and investment services revenues 1,484 1,424 1,322 5,480 5,151 Gains on sales of loans 821 628 748 2,962 3,046 Other 631 706 591 2,506 3,348 Loss on impairment of securities -- -- -- -- (1,316) Losses on sales of securities -- -- (206) (686) (716) Total non-interest income 7,507 6,569 7,468 28,096 23,099 Non-interest expense Salaries and employee benefits 12,017 10,247 12,209 47,240 40,606 Equipment 1,455 1,317 1,412 5,477 4,837 Occupancy 1,921 1,667 1,855 7,048 6,267 Payment systems related expense 625 515 666 2,378 1,739 Professional fees 646 801 680 2,484 2,984 Postage, printing and office supplies 919 785 996 3,558 2,833 Marketing 1,260 1,202 1,103 4,967 3,830 Communications 388 310 372 1,370 1,210 Other non-interest expense 2,149 2,717 1,845 7,143 8,328 Total non-interest expense 21,380 19,561 21,138 81,665 72,634 Income before income taxes 11,767 9,445 12,000 44,570 34,851 Provision for income taxes 4,068 2,983 4,131 15,310 11,011 Net income $7,699 $6,462 $7,869 $29,260 $23,840 Basic earnings per share $0.50 $0.44 $0.51 $1.95 $1.63 Diluted earnings per share $0.48 $0.42 $0.49 $1.86 $1.55 Weighted average common shares 15,432 14,607 15,386 15,038 14,658 Weighted average diluted shares 16,130 15,299 16,053 15,730 15,344 Tax equivalent net interest income $27,246 $23,758 $26,700 $102,432 $88,026 West Coast Bancorp Consolidated Balance Sheets (Dollars and shares in thousands, Dec. 31, Dec. 31, Sept. 30, unaudited) 2006 2005 2006 Assets: Cash and cash equivalents $93,800 $88,369 $119,301 Investments 328,652 292,664 295,753 Total loans 1,945,293 1,554,454 1,868,564 Allowance for loan losses (23,017) (20,469) (22,404) Loans, net 1,922,276 1,533,985 1,846,160 Goodwill and other intangibles 15,032 180 15,182 Other assets 105,612 81,940 93,045 Total assets $2,465,372 $1,997,138 $2,369,441 Liabilities and Stockholders' Equity: Demand $496,676 $456,760 $508,719 Savings and interest-bearing demand 986,196 827,909 959,209 Certificates of deposits 523,480 364,793 539,319 Total deposits 2,006,352 1,649,462 2,007,247 Borrowings and subordinated debentures 229,409 170,450 146,111 Other liabilities 28,729 20,103 21,827 Total liabilities 2,264,490 1,840,015 2,175,185 Stockholders' equity 200,882 157,123 194,256 Total liabilities and stockholders' equity $2,465,372 $1,997,138 $2,369,441 Common shares outstanding period end 15,586 14,692 15,532 Book value per common share $12.89 $10.69 $12.51 Tangible book value per common share $11.92 $10.68 $11.53 West Coast Bancorp Period End Loan Portfolio By Category (Dollars in thousands, Dec. 31, Dec. 31, Change Sept. 30, unaudited) 2006 2005 Amount % 2006 Commercial loans $463,188 $364,604 $98,584 27% $452,035 Real estate construction loans 363,557 210,828 152,729 72% 308,886 Real estate mortgage loans 287,495 242,015 45,480 19% 274,812 Real estate commercial loans 804,865 709,176 95,689 13% 805,458 Installment and other consumer loans 26,188 27,831 (1,643) -6% 27,373 Total loans $1,945,293 $1,554,454 $390,839 25% $1,868,564 (Reconciliation to GAAP financial measures)* Total loans excluding real estate commercial loans $1,140,428 $845,278 $295,150 35% $1,063,106 Real estate commercial loans 804,865 709,176 95,689 13% 805,458 Total loans $1,945,293 $1,554,454 $390,839 25% $1,868,564 *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. (Dollars in millions, Dec. 31, Dec. 31, Change unaudited) 2006 2005 Amount % Total period end loans $1,945 $1,554 $391 25% Loans acquired in acquisition $73 $-- $73 -- Total period end organic* loans $1,872 $1,554 $318 20% Total period end deposits $2,006 $1,650 $356 22% Deposits acquired in acquisition $86 $-- $86 -- Total period end organic* deposits $1,920 $1,650 $270 16% * Total loans and deposits less loans and deposits acquired in Mid-Valley Bank acquisition, respectively. West Coast Bancorp Financial Information (Dollars in thousands except for per share data, unaudited) (all rates have been annualized where appropriate) Fourth Fourth Third Year Year Quarter Quarter Quarter to date to date 2006 2005 2006 2006 2005 PERFORMANCE RATIOS - Return on average assets 1.29% 1.31% 1.35% 1.33% 1.28% - Return on average common equity 15.54% 16.49% 16.56% 16.47% 15.76% - Return on average tangible equity 17.04% 16.66% 18.02% 17.42% 15.94% - Non-interest income to average assets 1.26% 1.34% 1.28% 1.28% 1.24% - Non-interest expense to average assets 3.58% 3.98% 3.63% 3.72% 3.88% - Efficiency ratio, tax equivalent 61.5% 64.5% 61.5% 62.2% 64.2% NET INTEREST MARGIN - Yield on interest-earning assets 7.59% 6.83% 7.50% 7.37% 6.49% - Rate on interest-bearing liabilities 3.71% 2.38% 3.51% 3.27% 2.06% - Net interest spread 3.88% 4.45% 3.99% 4.10% 4.43% - Net interest margin 4.84% 5.12% 4.89% 4.96% 4.99% AVERAGE ASSETS - Investment securities $321,942 $279,625 $298,988 $298,758 $262,134 - Commercial loans $442,512 $361,158 $449,107 $418,955 $360,898 - Real estate construction loans 328,625 202,030 287,558 274,856 157,785 - Real estate mortgage loans 279,526 225,543 271,511 265,217 219,422 - Real estate commercial loans 802,230 713,634 801,354 759,023 710,119 - Installment and other consumer loans 27,066 28,551 28,567 27,726 31,708 - Total loans $1,879,959 $1,530,916 $1,838,097 $1,745,777 $1,479,932 - Total interest earning assets $2,233,725 $1,840,939 $2,167,250 $2,066,217 $1,764,209 - Other assets 138,218 110,692 143,854 127,412 105,551 - Total assets $2,371,943 $1,951,631 $2,311,104 $2,193,629 $1,869,760 AVERAGE LIABILITIES & EQUITY - Demand deposits $496,870 $459,201 $489,796 $466,282 $421,766 - Interest bearing demand, savings, and money market 984,227 842,663 925,816 897,817 789,054 - Certificates of deposits 534,000 360,717 504,894 457,077 362,035 - Total deposits $2,015,097 $1,662,581 $1,920,506 $1,821,176 $1,572,855 - Borrowings and subordinated debentures $137,326 $116,020 $182,085 $170,790 $130,352 - Total interest bearing liabilities $1,655,553 $1,319,400 $1,612,796 $1,525,683 $1,281,441 - Other liabilities 519,771 476,809 509,812 490,298 437,056 - Total liabilities $2,175,324 $1,796,209 $2,122,608 $2,015,981 $1,718,497 - Average common equity 196,619 155,422 188,496 177,648 151,263 - Total average liabilities and common equity $2,371,943 $1,951,631 $2,311,104 $2,193,629 $1,869,760 AVERAGE ASSET/LIABILITY RATIOS - Average stockholders' equity to average assets 8.29% 7.96% 8.16% 8.10% 8.09% - Average int. earning assets to int. bearing liabilities 134.9% 139.5% 134.4% 135.4% 137.7% - Average loans to average assets 79.3% 78.4% 79.5% 79.6% 79.2% - Interest bearing deposits to assets 64.0% 61.7% 61.9% 61.8% 61.6% West Coast Bancorp Allowance For Loan Losses and Net Charge-offs (Dollars in thousands, Quarter ended Quarter ended Quarter ended unaudited) Dec. 31, Dec. 31, Sept. 30 2006 2005 2006 Allowance for loan losses, beginning of period $22,404 $19,728 $21,883 Provision for loan losses 1,200 950 625 Charge-offs 774 412 330 Recoveries 187 203 226 Net charge-offs 587 209 104 Allowance for loan losses, from acquisition -- -- -- Total allowance for loan losses $23,017 $20,469 $22,404 Net loan charge-offs to average loans (annualized) 0.12% 0.05% 0.02% (Dollars in thousands, Year to date Year to date unaudited) Dec. 31, Dec. 31, 2006 2005 Allowance for loan losses, beginning of period $20,469 $18,971 Provision for loan losses 2,733 2,175 Charge-offs 1,921 1,624 Recoveries 849 947 Net Charge-offs 1,072 677 Allowance for loan losses, from acquisition 887 -- Total allowance for loan losses $23,017 $20,469 Net loan charge-offs to average loans 0.06% 0.05% West Coast Bancorp Non-performing Assets (Dollars in thousands, Dec. 31, Dec. 31, Sept. 30, unaudited) 2006 2005 2006 Non-accruing loans $1,468 $1,088 $2,652 90 day delinquencies -- -- -- Total non-performing loans 1,468 1,088 2,652 Other real estate owned -- -- -- Total non-performing assets $1,468 $1,088 $2,652 Allowance for loan losses to total loans 1.18% 1.32% 1.20% Non-performing loans to total loans 0.08% 0.07% 0.14% Allowance for loan losses to non-performing loans 1568% 1882% 845% Non-performing assets to total assets 0.06% 0.05% 0.11% Allowance for loan losses to non-performing assets 1568% 1182% 845% DATASOURCE: West Coast Bancorp CONTACT: Robert D. Sznewajs of 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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