WCBO West Coast Bancorp (MM)

-- Diluted quarterly Earnings per share of $.49 Increased 11% over the first quarter 2006. LAKE OSWEGO, Ore., April 17 /PRNewswire-FirstCall/ -- West Coast Bancorp (NASDAQ:WCBO) today announced quarterly earnings of $7.9 million or $.49 per diluted share for the first quarter of 2007, compared to first quarter 2006 earnings of $6.7 million or $.44 per diluted share. Three months ended March 31, (Dollars in millions, except per share data) 2007 2006 % Change Diluted Earnings Per Share $0.49 $0.44 11% Return On Average Equity 15.7% 17.2% Return On Average Equity, Tangible* 17.1% 17.3% Total Period End Loans $2,021 $1,613 25% Total Period End Deposits $2,029 $1,675 21% *Return on Average Equity, Tangible is a non-GAAP measure that we define and calculate as net income excluding intangible asset amortization, net of tax, divided by average equity less average intangible assets. See financial tables for details. "In the first quarter of 2007, the Company experienced solid loan growth from the fourth quarter of 2006," said Robert D. Sznewajs, President & CEO. "The loan growth combined with a better than expected net interest margin of 4.99% in the quarter contributed to strong net interest income growth. This offset the substantial increase in the provision for loan losses compared to prior quarters." Financial Results: The 20% growth in net interest income from the first quarter of 2006 was generated by the very strong loan and deposit growth of 25% and 21% over the same time period. Due to the rising costs of interest-bearing deposits, the first quarter net interest spread fell 26 basis points from the same quarter in 2006. The net interest margin compressed less at 9 basis points mainly due to the growth in and higher value of non-interest-bearing deposit balances. The first quarter 2007 net interest margin of 4.99% exceeded our projections as construction loan balances and fees, along with loan pre-payment fees surpassed our expectations. As a result of broad-based revenue growth in fee income categories, total non-interest income grew $2.0 million or 33% from the first quarter in 2006. Successful product introductions along with heavy marketing efforts supported the continued increase in the number of transaction deposit accounts and related products penetration, including debit cards, and caused deposit service charges and payment systems-related revenues to expand to 17% year over year. Additionally, first quarter 2007 revenues from gains on sales of loans nearly doubled from the first quarter of 2006, with excellent growth in both SBA and single-family residential mortgage areas. First quarter 2006 non-interest income was negatively affected by a $.5 million loss on sales of investment securities. Compared to first quarter 2006, total non-interest expense increased $2.5 million or 13%, with slightly less than half the growth caused by new personnel, branches and the Mid-Valley acquisition in June 2006. The higher personnel expense in the most recent quarter from the prior year first quarter was primarily due to annual merit salary, additional commercial lending personnel and increased performance-based pay. The year over year first quarter 23% increase in equipment expense reflects investments in technology to support our products and delivery platforms. Occupancy expense increased 27% from the same quarter in 2006, with the majority of the growth caused by new locations acquired or opened over the past 12 months. The 2007 first quarter provision for loan losses increased substantially to $2.8 million from $.4 million in the same quarter in 2006. In addition to strong loan growth in first quarter 2007, the net charge-offs were $1.4 million or annualized 0.28% of average loans, an increase from first quarter 2006 net charge-offs of $.2 million or 0.06%. One commercial relationship represented $1.2 million of the net charge offs in the first quarter of 2007. Non-performing assets increased from $1.0 million or .05% of total assets at March 31, 2006, to $3.8 million at quarter end 2007, while still remaining at a historically low level of .15% of total assets. In light of the strong risk-weighted asset growth in the quarter, the Company issued $12.5 million additional trust preferred securities on March 29, 2007, and repurchased only 15,000 of its shares at an average cost of $31.58 per share during the quarter. At March 31, 2007, approximately 242,000 shares remained available for repurchase under the Company's share repurchase program. Other: The Company will hold a Webcast conference call Wednesday, April 18, at 8:30 a.m. Pacific Time, during which the Company will discuss first quarter 2007 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 1st Quarter 2007 Earnings Conference Call" tab. The conference call may also be accessed by dialing 877.604.2072, ID # 1885364 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, 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 60 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, 2006, 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 thousands) Three months ended Twelve months ended March 31, Dec. 31, December 31, 2007 2006 2006 2006 2005 Net interest income Interest and fees on loans $39,911 $29,099 $38,137 $136,193 $101,419 Interest on investment securities 3,742 3,176 3,815 13,737 10,920 Other interest income 119 73 349 868 652 Total interest income 43,772 32,348 42,301 150,798 112,991 Interest expense on deposit accounts 12,988 7,156 13,486 40,927 20,497 Interest on borrowings and subordinated debentures 2,900 2,005 1,975 8,999 5,933 Total interest expense 15,888 9,161 15,461 49,926 26,430 Net interest income 27,884 23,187 26,840 100,872 86,561 Provision for loan losses 2,800 408 1,200 2,733 2,175 Non-interest income Service charges on deposit accounts 2,885 2,536 2,833 11,096 8,686 Payment systems related revenue 1,678 1,359 1,738 6,738 4,900 Trust and investment services revenues 1,492 1,267 1,484 5,480 5,151 Gains on sales of loans 1,304 701 821 2,962 3,046 Other 674 648 631 2,506 3,348 Loss on impairment of securities -- -- -- -- (1,316) Losses on sales of securities -- (479) -- (686) (716) Total non-interest income 8,033 6,032 7,507 28,096 23,099 Non-interest expense Salaries and employee benefits 12,513 11,107 12,017 47,240 40,606 Equipment 1,525 1,242 1,455 5,477 4,837 Occupancy 2,049 1,612 1,921 7,048 6,267 Payment systems related expense 665 528 625 2,378 1,739 Professional fees 421 548 646 2,484 2,984 Postage, printing and office supplies 875 762 919 3,558 2,833 Marketing 1,123 1,021 1,260 4,967 3,830 Communications 434 316 388 1,370 1,210 Other non-interest expense 1,432 1,441 2,149 7,143 8,328 Total non-interest expense 21,037 18,577 21,380 81,665 72,634 Income before income taxes 12,080 10,234 11,767 44,570 34,851 Provision for income taxes 4,216 3,487 4,068 15,310 11,011 Net income $7,864 $6,747 $7,699 $29,260 $23,840 Basic earnings per share $0.51 $0.46 $0.50 $1.95 $1.63 Diluted earnings per share $0.49 $0.44 $0.48 $1.86 $1.55 Weighted average common shares 15,482 14,582 15,432 15,038 14,658 Weighted average diluted shares 16,127 15,284 16,130 15,730 15,344 Tax equivalent net interest income $28,283 $23,561 $27,246 $102,432 $88,026 West Coast Bancorp Consolidated Balance Sheets (Dollars and shares in thousands, unaudited) March 31, March 31, Dec. 31, 2007 2006 2006 Assets: Cash and cash equivalents $89,578 $78,972 $93,800 Investments 288,005 277,999 328,652 Total loans 2,020,788 1,612,562 1,947,690 Allowance for loan losses (24,464) (20,642) (23,017) Loans, net 1,996,324 1,591,920 1,924,673 Goodwill and other intangibles 14,881 96 15,032 Other assets 97,176 81,195 103,215 Total assets $2,485,964 $2,030,182 $2,465,372 Liabilities and Stockholders' Equity: Demand $471,767 $439,441 $496,676 Savings and interest-bearing demand 1,009,880 844,085 986,196 Certificates of deposits 547,719 391,558 523,480 Total deposits 2,029,366 1,675,084 2,006,352 Borrowings and subordinated debentures 211,500 173,148 229,409 Other liabilities 37,037 19,909 28,729 Total liabilities 2,277,903 1,868,141 2,264,490 Stockholders' equity 208,061 162,041 200,882 Total liabilities and stockholders' equity $2,485,964 $2,030,182 $2,465,372 Common shares outstanding period end 15,630 14,726 15,586 Book value per common share $13.31 $11.00 $12.89 Tangible book value per common share $12.36 $11.00 $11.92 West Coast Bancorp Period End Loan Portfolio By Category (Dollars in thousands, unaudited) March 31, March 31, Change Dec. 31, 2007 2006 Amount % 2006 Commercial loans $482,730 $395,464 $87,266 22% $463,188 Real estate construction loans 440,391 238,480 201,911 85% 365,954 Real estate mortgage loans 282,827 249,521 33,306 13% 287,495 Real estate commercial loans 788,964 702,409 86,555 12% 804,865 Installment and other consumer loans 25,876 26,688 (812) -3% 26,188 Total loans $2,020,788 $1,612,562 $408,226 25% $1,947,690 West Coast Bancorp Loans and deposits acquired (Dollars in millions, unaudited) March 31, March 31, Change 2007 2006 Amount % Total period end loans $2,021 $1,613 $408 25% Loans acquired in acquisition $73 $-- $73 -- Total period end organic* loans $1,948 $1,613 $335 21% Total period end deposits $2,029 $1,675 $354 21% Deposits acquired in acquisition $86 $-- $86 -- Total period end organic* deposits $1,943 $1,675 $268 16% * Total loans and deposits less loans and deposits acquired in Mid-Valley Bank acquisition, respectively. West Coast Bancorp Return on average equity tangible reconciliation* (Dollars in thousands) For the period For the years ended March 31, ended December 31, 2007 2006 2006 2005 Net income $7,864 $6,747 $29,260 $23,840 Less: intangible asset amortization, net of tax 98 54 283 220 Net income, tangible $7,962 $6,801 $29,543 $24,060 Average shareholders' equity $203,391 $159,274 $177,648 $151,263 Less: average intangibles (14,955) (136) (8,039) (346) Average shareholders' equity, tangible $188,436 $159,138 $169,609 $150,917 (1) Federal income tax provision applied at 35%. Return on average equity 15.7% 17.2% 16.5% 15.8% Return on average equity, tangible 17.1% 17.3% 17.4% 15.9% *Management uses return on equity, tangible internally and has disclosed it to investors based on its belief that the figure makes it easier to compare the Company's performance to other financial institutions that do not have merger-related intangible assets and is commonly used in the industry. West Coast Bancorp Financial Information (Dollars in thousands except for per share data, unaudited) (all rates have been annualized where appropriate) First First Fourth Year Year Quarter Quarter Quarter to date to date 2007 2006 2006 2006 2005 PERFORMANCE RATIOS - Return on average assets 1.31% 1.37% 1.29% 1.33% 1.28% - Return on average common equity 15.68% 17.18% 15.54% 16.47% 15.76% - Return on average tangible equity 17.13% 17.33% 17.04% 17.42% 15.94% - Non-interest income to average assets 1.33% 1.23% 1.26% 1.28% 1.24% - Non-interest expense to average assets 3.49% 3.78% 3.58% 3.72% 3.88% - Efficiency ratio, tax equivalent 57.9% 61.8% 61.5% 62.2% 64.2% NET INTEREST MARGIN - Yield on interest-earning assets 7.79% 7.05% 7.59% 7.37% 6.49% - Rate on interest-bearing liabilities 3.68% 2.68% 3.71% 3.27% 2.06% - Net interest spread 4.11% 4.37% 3.88% 4.10% 4.43% - Net interest margin 4.99% 5.08% 4.84% 4.96% 4.99% AVERAGE ASSETS - Investment securities $312,780 $289,096 $321,942 $298,758 $262,134 - Commercial loans $467,578 $379,027 $442,512 $418,955 $360,898 - Real estate construction loans 399,119 225,525 328,625 274,856 157,785 - Real estate mortgage loans 282,628 245,096 279,526 265,217 219,422 - Real estate commercial loans 799,576 705,250 802,230 759,023 710,119 - Installment and other consumer loans 25,772 27,353 27,066 27,726 31,708 - Total loans $1,974,673 $1,582,251 $1,879,959 $1,745,777 $1,479,932 - Total interest earning assets $2,300,764 $1,881,206 $2,233,725 $2,066,217 $1,764,209 - Other assets 142,069 112,421 138,218 127,412 105,551 - Total assets $2,442,833 $1,993,627 $2,371,943 $2,193,629 $1,869,760 AVERAGE LIABILITIES & EQUITY - Demand deposits $463,226 $431,060 $496,870 $466,282 $421,766 - Interest bearing demand, savings, and money market 991,908 827,166 984,227 897,817 789,054 - Certificates of deposits 538,304 385,011 534,000 457,077 362,035 - Total deposits $1,993,438 $1,643,237 $2,015,097 $1,821,176 $1,572,855 - Borrowings and subordinated debentures $220,534 $173,960 $137,326 $170,790 $130,352 - Total interest bearing liabilities $1,750,746 $1,386,137 $1,655,553 $1,525,683 $1,281,441 - Other liabilities 488,696 448,216 519,771 490,298 437,056 - Total liabilities $2,239,442 $1,834,353 $2,175,324 $2,015,981 $1,718,497 - Average common equity 203,391 159,274 196,619 177,648 151,263 - Total average liabilities and common equity $2,442,833 $1,993,627 $2,371,943 $2,193,629 $1,869,760 AVERAGE ASSET/ LIABILITY RATIOS - Average stockholders' equity to average assets 8.33% 7.99% 8.29% 8.10% 8.09% - Average int. earning assets to int. bearing liabilities 131.4% 135.7% 134.9% 135.4% 137.7% - Average loans to average assets 80.8% 79.4% 79.3% 79.6% 79.2% - Interest bearing deposits to assets 62.6% 60.8% 64.0% 61.8% 61.6% West Coast Bancorp Allowance For Loan Losses and Net Charge-offs (Dollars in thousands, unaudited) Quarter ended Quarter ended Quarter ended March 31, March 31, Dec. 31, 2007 2006 2006 Allowance for loan losses, beginning of period $23,017 $20,469 $22,404 Provision for loan losses 2,800 408 1,200 Charge-offs 1,520 505 774 Recoveries 167 270 187 Net charge-offs 1,353 235 587 Allowance for loan losses, from acquisition -- -- -- Total allowance for loan losses $24,464 $20,642 $23,017 Net loan charge-offs to average loans (annualized) 0.28% 0.06% 0.12% (Dollars in thousands, unaudited) Year to date Year to date December 31, December 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, unaudited) March 31, March 31, Dec. 31, 2007 2006 2006 Non-accruing loans $3,800 $996 $1,468 90 day delinquencies -- -- -- Total non-performing loans 3,800 996 1,468 Other real estate owned -- -- -- Total non-performing assets $3,800 $996 $1,468 Allowance for loan losses to total loans 1.21% 1.28% 1.18% Non-performing loans to total loans 0.19% 0.06% 0.08% Allowance for loan losses to non-performing loans 644% 2073% 1568% Non-performing assets to total assets 0.15% 0.05% 0.06% Allowance for loan losses to non-performing assets 644% 2073% 1568% 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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