WCBO West Coast Bancorp (MM)

- Diluted quarterly Earnings per share of $.50 Increased 11% over the second quarter 2006. LAKE OSWEGO, Ore., July 17 /PRNewswire-FirstCall/ -- West Coast Bancorp (NASDAQ:WCBO) today announced quarterly earnings of $8.1 million or $.50 per diluted share for the second quarter of 2007, compared to second quarter 2006 earnings of $6.9 million or $.45 per diluted share. Year to date earnings per diluted share growth and return on average equity, tangible, were 11% and 17%, respectively. Three months ended June 30, (Dollars in millions, except per share data) 2007 2006 % Change Diluted Earnings Per Share $0.50 $0.45 11% Return On Average Equity 15.5% 16.8% Return On Average Equity, Tangible* 16.9% 17.0% Total Period End Loans $2,141 $1,802 19% Total Period End Deposits $2,045 $1,851 10% *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. "The second quarter 2007 operating results were very strong despite a difficult operating environment due to the continued effect of the flat interest rate yield curve and the higher provisioning for loan losses in the quarter," said President & CEO Robert D. Sznewajs. "However, continued strong growth in both net interest income and non-interest income combined with modest growth in total non-interest expenses contributed favorably to the Company's performance for both the quarter and the year to date 2007." Financial Results: In the second quarter of 2007, total net interest income increased $4.2 million or 17% year over year largely due to the 19% loan growth from June 31, 2006. The continued rising costs of interest-bearing deposits and borrowings caused the second quarter net interest spread and net interest margin to compress 27 and 16 basis points, respectively, from the second quarter in 2006. Nonetheless, the second quarter 2007 net interest margin of 4.90% met our projections as stronger than anticipated construction loan balances and fees helped offset the higher than expected interest bearing liability costs. Total non-interest revenue rose $1.6 million or 23% year over year second quarter. Similar to recent quarterly trends, we experienced broad-based fee income growth. Successful product introductions helped produce double-digit revenue growth in all major fee income categories compared to the second quarter of 2006. Deposit service charges and payment systems-related revenues grew 18% in the second quarter reflecting a higher base of transaction deposit accounts and improved penetration of related products. Due to a strong equity market, as well as growth in the number of client relationships and investment product sales, trust and investment services revenue grew 17% from the same quarter of 2006. Additionally, second quarter 2007 gains on sales of loans revenue jumped 40% or $.3 million from the second quarter of 2006, due to strong SBA production in the most recent quarter compared to the same period a year ago. Compared to second quarter 2006, total non-interest expense increased a relatively modest $.9 million or 5%. The slower growth was partly explained by planned lower second quarter marketing expenses, which declined $.7 million from the same quarter last year. Higher personnel expense in the most recent quarter compared to second quarter 2006 was primarily attributed to additional relationship managers and branch personnel. The second quarter 15% increase in equipment expense from second quarter of 2006 reflects investments in technology to support our products and delivery capabilities, including those in the payment systems area. Occupancy expense increased 30% from the same quarter in 2006, with the majority of the growth caused by rent and depreciation on new or relocated branch locations. The 47% increase in year over year second quarter payment system expense was largely due to significantly higher transaction volumes across our payment systems product offerings. The $3.5 million 2007 second quarter provision for loan losses represents a substantial increase from $.5 million in the same quarter in 2006. The higher provision was primarily a result of a combination of strong loan growth in second quarter 2007 and net charge-offs increasing to $1.5 million or an annualized 0.28% of average loans from net charge-offs of $.2 million or 0.03% in the same period in 2006. Further deterioration in a commercial credit relationship for which we charged off $1.2 million in the first quarter of 2007 resulted in an additional charge-off of $1.2 million in the second quarter. The remaining balance for this relationship is approximately $.5 million. Non-performing assets increased from $1.8 million or .08% of total assets on June 30, 2006, to $6.1 million on June 30, 2007. Non-performing assets remain at a relatively low level of .24% of total assets. In light of strong risk-weighted asset growth, the Company did not repurchase any of its shares during the second quarter of 2007. As of June 30, 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, July 18 , at 8:30 a.m. Pacific Time, during which the Company will discuss results for second quarter 2007, 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.comand/ click on Investor Relations and the "2nd Quarter 2007 Earnings Conference Call" tab. The conference call may also be accessed by dialing 877.604.2072, ID # 3365891 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.comand/ 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 $2.6 billion in assets, and 61 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's 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 Three months ended Six months ended thousands) June 30, March 31, June 30, 2007 2006 2007 2007 2006 Net interest income Interest and fees on loans $42,637 $32,208 $39,911 $82,548 $61,307 Interest on investment securities 3,397 3,261 3,742 7,139 6,437 Other interest income 114 130 119 233 204 Total interest income 46,148 35,599 43,772 89,920 67,948 Interest expense on deposit accounts 13,524 8,425 12,988 26,511 15,581 Interest on borrowings and subordinated debentures 3,900 2,625 2,900 6,800 4,630 Total interest expense 17,424 11,050 15,888 33,311 20,211 Net interest income 28,724 24,549 27,884 56,609 47,737 Provision for loan losses 3,500 500 2,800 6,300 908 Non-interest income Service charges on deposit accounts 3,136 2,830 2,885 6,021 5,365 Payment systems related revenue 2,012 1,525 1,678 3,690 2,884 Trust and investment services revenues 1,649 1,408 1,492 3,141 2,675 Gains on sales of loans 967 692 1,304 2,271 1,393 Other 845 635 674 1,519 1,284 Gains (losses) on sales of securities 96 - - 96 (479) Total non-interest income 8,705 7,090 8,033 16,738 13,122 Non-interest expense Salaries and employee benefits 12,544 11,907 12,513 25,057 23,014 Equipment 1,574 1,367 1,525 3,100 2,609 Occupancy 2,158 1,660 2,049 4,207 3,273 Payment systems related expense 825 560 665 1,490 1,088 Professional fees 545 609 421 966 1,157 Postage, printing and office supplies 969 881 875 1,845 1,643 Marketing 870 1,585 1,123 1,994 2,605 Communications 354 293 434 787 610 Other non-interest expense 1,661 1,709 1,432 3,093 3,149 Total non-interest expense 21,500 20,571 21,037 42,539 39,148 Income before income taxes 12,429 10,568 12,080 24,508 20,803 Provision for income taxes 4,294 3,624 4,216 8,509 7,111 Net income $8,135 $6,944 $7,864 $15,999 $13,692 Basic earnings per share $0.52 $0.47 $0.51 $1.03 $0.93 Diluted earnings per share $0.50 $0.45 $0.49 $0.99 $0.89 Weighted average common shares 15,567 14,737 15,482 15,525 14,660 Weighted average diluted shares 16,143 15,395 16,127 16,136 15,340 Tax equivalent net interest income $29,121 $24,926 $28,283 $57,404 $48,487 West Coast Bancorp Consolidated Balance Sheets (Dollars and shares in thousands, June 30, June 30, March 31, unaudited) 2007 2006 2007 Assets: Cash and cash equivalents $82,414 $106,810 $89,578 Investments 267,614 300,679 288,005 Total loans 2,140,942 1,801,794 2,020,788 Allowance for loan losses (26,496) (21,883) (24,464) Loans, net 2,114,446 1,779,911 1,996,324 Goodwill and other intangibles 14,730 15,334 14,881 Other assets 105,195 92,676 97,176 Total assets $2,584,399 $2,295,410 $2,485,964 Liabilities and Stockholders' Equity: Demand $482,698 $488,328 $471,767 Savings and interest-bearing demand 347,028 340,735 369,350 Money market 668,373 543,848 640,530 Certificates of deposits 547,054 477,826 547,719 Total deposits 2,045,153 1,850,737 2,029,366 Borrowings and subordinated debentures 296,727 242,619 211,500 Other liabilities 28,656 17,773 37,037 Total liabilities 2,370,536 2,111,129 2,277,903 Stockholders' equity 213,863 184,281 208,061 Total liabilities and stockholders' equity $2,584,399 $2,295,410 $2,485,964 Common shares outstanding period end 15,748 15,470 15,630 Book value per common share $13.58 $11.91 $13.31 Tangible book value per common share $12.65 $10.92 $12.36 West Coast Bancorp Period End Loan Portfolio By Category (Dollars in thousands, June 30, June 30, Change March 31, unaudited) 2007 2006 Amount % 2007 Commercial loans $515,590 $437,397 $78,193 18% $482,730 Real estate construction loans 503,414 271,160 232,254 86% 440,391 Real estate mortgage loans 294,447 274,245 20,202 7% 282,827 Real estate commercial loans 803,155 790,590 12,565 2% 788,964 Installment and other consumer loans 24,336 28,402 (4,066) -14% 25,876 Total loans $2,140,942 $1,801,794 $339,148 19% $2,020,788 West Coast Bancorp Return on average equity tangible reconciliation* For the three months For the six months (Dollars in thousands) ended June 30, ended June 30, 2007 2006 2007 2006 Net income $8,135 $6,944 $15,999 $13,692 Less: intangible asset amortization, net of tax 98 32 196 86 Net income, tangible $8,233 $6,976 $16,195 $13,778 Average shareholders' equity $210,349 $165,671 $206,889 $162,491 Less: average intangibles (14,803) (1,404) (14,878) (774) Average shareholders' equity, tangible $195,546 $164,267 $192,011 $161,717 (1) Federal income tax provision applied at 35%. Return on average equity 15.5% 16.8% 15.6% 17.0% Return on average equity, tangible 16.9% 17.0% 17.0% 17.2% *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. Ratios have been annualized where appropriate. West Coast Bancorp Financial Information (Dollars in thousands except for per share data, unaudited) Second Second First (all rates have been annualized where Quarter Quarter Quarter appropriate) 2007 2006 2007 PERFORMANCE RATIOS - Return on average assets 1.29% 1.33% 1.31% - Return on average common equity 15.51% 16.81% 15.68% - Return on average tangible equity 16.89% 17.03% 17.13% - Non-interest income to average assets 1.38% 1.36% 1.33% - Non-interest expense to average assets 3.41% 3.94% 3.49% - Efficiency ratio, tax equivalent 57.0% 64.3% 57.9% NET INTEREST MARGIN - Yield on interest-earning assets 7.84% 7.30% 7.79% - Rate on interest-bearing liabilities 3.84% 3.03% 3.68% - Net interest spread 4.00% 4.27% 4.11% - Net interest margin 4.90% 5.06% 4.99% AVERAGE ASSETS - Investment securities $285,156 $284,659 $312,780 - Commercial loans $502,749 $404,119 $467,578 - Real estate construction loans 474,660 256,444 399,119 - Real estate mortgage loans 289,812 264,288 282,628 - Real estate commercial loans 790,372 725,756 799,576 - Installment and other consumer loans 25,967 27,909 25,772 - Total loans $2,083,560 $1,678,516 $1,974,673 - Total interest earning assets $2,381,652 $1,977,717 $2,300,764 - Other assets 144,857 114,692 142,069 - Total assets $2,526,509 $2,092,409 $2,442,833 AVERAGE LIABILITIES & EQUITY - Demand deposits $470,622 $446,421 $463,226 - Savings and Interest bearing demand 348,086 340,183 349,050 - Money market 659,817 511,841 642,858 - Certificates of deposits 538,713 402,239 538,304 - Total deposits $2,017,238 $1,700,684 $1,993,438 - Borrowings and subordinated debentures $274,093 $207,988 $220,534 - Total interest bearing liabilities $1,820,709 $1,462,251 $1,750,746 - Other liabilities 495,451 464,487 488,696 - Total liabilities $2,316,160 $1,926,738 $2,239,442 - Average common equity 210,349 165,671 203,391 - Total average liabilities and common equity $2,526,509 $2,092,409 $2,442,833 AVERAGE ASSET/LIABILITY RATIOS - Average stockholders' equity to average assets 8.33% 7.92% 8.33% - Average int. earning assets to int. bearing liabilities 130.8% 135.3% 131.4% - Average loans to average assets 82.5% 80.2% 80.8% - Interest bearing deposits to assets 61.2% 59.9% 62.6% West Coast Bancorp Financial Information (Dollars in thousands except for per share data, unaudited) (all rates have been annualized where Year to date Year to date appropriate) 2007 2006 PERFORMANCE RATIOS - Return on average assets 1.30% 1.35% - Return on average common equity 15.59% 16.99% - Return on average tangible equity 17.01% 17.18% - Non-interest income to average assets 1.36% 1.29% - Non-interest expense to average assets 3.45% 3.86% - Efficiency ratio, tax equivalent 57.5% 63.1% NET INTEREST MARGIN - Yield on interest-earning assets 7.81% 7.17% - Rate on interest-bearing liabilities 3.76% 2.86% - Net interest spread 4.05% 4.31% - Net interest margin 4.94% 5.06% AVERAGE ASSETS - Investment securities $298,891 $288,011 - Commercial loans $485,261 $391,642 - Real estate construction loans 437,098 241,070 - Real estate mortgage loans 286,240 254,745 - Real estate commercial loans 794,948 715,560 - Installment and other consumer loans 25,871 27,633 - Total loans $2,029,418 $1,630,650 - Total interest earning assets $2,341,431 $1,930,875 - Other assets 143,472 113,562 - Total assets $2,484,903 $2,044,437 AVERAGE LIABILITIES & EQUITY - Demand deposits $466,945 $438,783 - Savings and Interest bearing demand 348,566 336,847 - Money market 651,384 502,817 - Certificates of deposits 538,510 393,673 - Total deposits $2,005,405 $1,672,120 - Borrowings and subordinated debentures $247,461 $191,643 - Total interest bearing liabilities $1,785,921 $1,424,980 - Other liabilities 492,093 456,966 - Total liabilities $2,278,014 $1,881,946 - Average common equity 206,889 162,491 - Total average liabilities and common equity $2,484,903 $2,044,437 AVERAGE ASSET/LIABILITY RATIOS - Average stockholders' equity to average assets 8.33% 7.95% - Average int. earning assets to int. bearing liabilities 131.1% 135.5% - Average loans to average assets 81.7% 79.8% - Interest bearing deposits to assets 61.9% 60.3% 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) 2007 2006 2007 Allowance for loan losses, beginning of period $24,464 $20,642 $23,017 Provision for loan losses 3,500 500 2,800 Charge-offs 1,567 312 1,520 Recoveries 99 166 167 Net charge-offs 1,468 146 1,353 Allowance for loan losses, from acquisition - 887 - Total allowance for loan losses $26,496 $21,883 $24,464 Net loan charge-offs to average loans (annualized) 0.28% 0.03% 0.28% Year to date Year to date June 30, June 30, (Dollars in thousands, unaudited) 2007 2006 Allowance for loan losses, beginning of period $23,017 $20,469 Provision for loan losses 6,300 908 Charge-offs 3,087 817 Recoveries 266 436 Net Charge-offs 2,821 381 Allowance for loan losses, from acquisition - 887 Total allowance for loan losses $26,496 $21,883 Net loan charge-offs to average loans 0.28% 0.05% West Coast Bancorp Non-performing Assets June 30, June 30, March 31, (Dollars in thousands, unaudited) 2007 2006 2007 Non-accruing loans $6,116 $1,835 $3,800 90 day delinquencies - - - Total non-performing loans 6,116 1,835 3,800 Other real estate owned - - - Total non-performing assets $6,116 $1,835 $3,800 Allowance for loan losses to total loans 1.24% 1.21% 1.21% Non-performing loans to total loans 0.29% 0.10% 0.19% Allowance for loan losses to non- performing loans 433% 1193% 644% Non-performing assets to total assets 0.24% 0.08% 0.15% Allowance for loan losses to non- performing assets 433% 1193% 644% DATASOURCE: West Coast Bancorp CONTACT: Anders Giltvedt, Executive Vice President & CFO, +1-503-598-3250, or Robert D. Sznewajs, President & CEO, +1-503-598-3243 Web site: http://www.wcb.com/

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