WCBO West Coast Bancorp (MM)

- Diluted earnings per share of $.17 increased by $.04 from first quarter 2008 and declined from $.50 in the second quarter of 2007. LAKE OSWEGO, Ore., July 21 /PRNewswire-FirstCall/ -- West Coast Bancorp (NASDAQ:WCBO) today announced quarterly earnings of $2.7 million or $.17 per diluted share for the second quarter of 2008, compared to second quarter 2007 earnings of $8.1 million or $.50 per diluted share. Three months ended Three months ended (Dollars in thousands, June 30, March 31, except per share data) 2008 2007 Change 2008 Change Net income $2,684 $8,135 -67% $2,000 34% Diluted Earnings Per Share $0.17 $0.50 -66% $0.13 31% Return On Average Equity 5.2% 15.5% -10.3% 3.8% 1.4% Return On Average Equity, Tangible* 5.7% 16.9% -11.2% 4.3% 1.5% Tier 1 capital ratio 9.45% 9.57% -0.12% 9.32% 0.13% Total capital ratio 10.71% 10.65% 0.06% 10.57% 0.14% Leverage ratio 8.90% 9.35% -0.45% 8.84% 0.06% Total Period End Loans $2,153,716 $2,140,942 1% $2,194,311 -2% Total Period End Deposits $2,078,250 $2,045,153 2% $2,061,847 1% * 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 a reconciliation to the GAAP measure. "The financial markets continue to create uncertainty for our economy and the financial services industry," said Robert D. Sznewajs, President and Chief Executive Officer. "Consistent with industry trends, the residential construction portfolio and our borrowers with significant ties to the residential housing sector are experiencing the most difficulty at this time. Positively, our term commercial real estate, commercial and industrial, home equity, and commercial construction portfolios have been relatively unaffected up to this point. The Company is very focused on managing through the challenges created in this environment while remaining committed to our core businesses that have been less affected by the current economic conditions. We have also consistently maintained our capital position in 'well capitalized' status under regulatory guidelines," said Sznewajs. Financial Results: Total loan balances increased to $2.154 billion at June 30, 2008, a modest 1% increase over the balance at June 30, 2007. Excluding two-step loan balances, year-over-year loan growth was $123 million, or nearly 7%, with growth concentrated in the commercial real estate and residential mortgage loan categories. Outstanding two-step loan balances at June 30, 2008, were $146 million, a decline of $111 million or 43% since June 30, 2007, and at quarter end represented less than 7% of total loans down from approximately 12% a year ago. Total credit remaining available on two-step commitments has fallen to less than $13 million. Second quarter 2008 average total deposits of $2.046 billion grew 1% or $29 million from the second quarter of 2007, with the majority of the increase in interest bearing demand deposit and certificate of deposit categories. The second quarter 2008 net interest income of $23.7 million declined $5.0 million or 17% from the same quarter last year due to the substantial 96 basis point compression in the net interest margin. The net interest margin declined as a result of the lower value of non-interest bearing demand deposits and a 61 basis point contraction in the net interest spread. The combination of interest reversals on two-step loans and cost of carrying the nonaccrual two-step loan balances reduced the spread by approximately 37 basis points. The remaining 24 basis point contraction in the spread resulted from competitive pressures for interest bearing deposits, lower construction loan fees and the aggressive decrease in the Federal Funds Rate in early 2008, which negatively affected our loan yields. As shown in the following table, interest reversals related to two-step loans have had a significant adverse effect on the net interest margin in 2008. Excluding the effects of two-step loan interest reversals, the net interest margin would have been approximately 4.19% and 4.61% in the two most recent quarters, respectively. Compared to first quarter 2008, the net interest margin after adjustments for interest reversals relating to the two-step program contracted 42 basis points with approximately equal impact from lower value of non-interest bearing demand deposits and deposit rate lagging the decline in the market interest rates and loan yields. The following table reconciles the net interest margin for the periods shown to the net interest margin excluding the effect of interest reversals relating to two-step loans. Net interest margin reconciliations(1) For the three months ended June June March 30, 30, 31, (Unaudited) 2008 2007 Change 2008 Change Net interest margin 3.94% 4.90% -0.96% 3.92% 0.02% Add: impact of two-step loan interest reversals 0.25% 0.00% 0.25% 0.69% -0.44% Net interest margin excluding impact of loan interest reversals 4.19% 4.90% -0.71% 4.61% -0.42% (1) Management uses this net interest margin data internally and has disclosed it to investors based on its belief it makes it easier to compare the Company's performance across the periods shown by highlighting the impact from material factors. Second quarter 2008 non-interest income of $9.0 million increased $.3 million or 4% from the same period in 2007. Both payment system and deposit service charge revenues showed excellent growth. Payment systems revenues increased $.3 million or 16% over the second quarter of 2007, with particularly solid growth in card-related revenues. Total deposit service charge revenues grew $.7 million or 24% over the same period, primarily attributable to the 8% combined growth in consumer and business transaction accounts, higher transaction volumes, and lower earnings credit rates on business analysis accounts. Gain on sales of loans declined 20% or $.2 million in the current quarter as a result of reduced activity in the residential mortgage market. The uncertainty surrounding the economy generally and equity markets in particular negatively affected trust and investment revenues, which declined $.1 million or 7% from the same quarter 2007. Additionally, in the most recent quarter we recognized a $.2 million gain on sales of investment securities and recorded a negative valuation adjustment of $.3 million related to our other real estate owned ("OREO") properties. Compared to the first quarter of 2008, total non-interest income declined $1.2 million in the current quarter due to the first quarter VISA IPO gain of $.7 million and $.4 million higher gain on sale of securities. Second quarter 2008 total non-interest expense of $23.3 million increased $1.8 million or 9% from the same period of 2007. Our personnel expense increased slightly; lower performance-related pay nearly offset annual merit increases, additional team members, and materially lower deferred construction loan origination costs. Other significant variances from the second quarter of 2007 included a $.5 million increase in legal expense, the majority of which relates to the two-step program, an increase in FDIC insurance premium expense of $.5 million, and $.5 million growth in expenses associated with the portfolio of OREO properties related to the two-step program. Compared to first quarter 2008, our total non-interest expense grew $1.1 million due to higher legal, FDIC insurance premium, and OREO expenses together with increased personnel and marketing expenses. As a result of materially lower pre-tax income, the second quarter 2008 provision for income taxes as a percentage of pre-tax net income was 21.2%, down from 34.5% during the same quarter in 2007. Credit Quality: The Company recorded a second quarter 2008 provision for credit losses of $6.0 million, up $2.5 million from the same quarter in 2007, and a decline of $2.7 million from the first quarter 2008. The provision related to the two-step portfolio was $1.9 million in the most recent second quarter. The Company continues to believe that the assumptions made in establishing the allowance for credit losses for the two-step portfolio at December 31, 2007, have generally proven sound to date based on information currently available to it, including data acquired from 10 pending sales and 27 sales that had been completed as of June 30, 2008. The provision associated with loans other than two-step loans was $4.1 million. In the second quarter, the combination of risk rating changes, net charge-offs, and increases in our general valuation percentages in our allowance model contributed to this provision expense. Total net charge-offs in the second quarter of 2008 were $11.4 million, of which $8.5 million related to the two-step portfolio. The charge-offs associated with the two-step portfolio in the second quarter were substantially applied against the allowance for credit losses for the portfolio established at year end 2007. The second quarter 2008 net charge-offs for loans other than two-step loans were $2.9 million, or .54% (annualized) of average total loans, up from $1.5 million and .28%, respectively, in the second quarter of 2007. At June 30, 2008, the total allowance for credit losses was $37.1 million, including $5.3 million associated with the two-step loan portfolio and $31.8 million related to the remainder of the loan portfolio. The allowance for credit losses in the two-step portfolio at June 30, 2008, was 8.9% of total two-step commitments associated with two-step loans on accruing status as of June 30, 2008, as compared to 9.7% at year-end 2007 and 7.5% at March 31, 2008. The following table provides additional two-step loan and allowance for credit losses information. Additional information regarding the two-step loan portfolio (Dollars in thousands, unaudited) Nonperforming Accruing Total accruing Total two- two-step two-step two-step loan Period ended step loans loans loans commitments 12/31/2007 $262,952 $20,545 $242,407 $320,991 3/31/2008 211,406 88,784 122,622 156,823 6/30/2008 145,703 98,728 46,975 59,603 Allowance for Allowance for credit losses on credit losses on Allowance for two-step loans as two-step loans as Period ended credit losses on a % of accruing a % of total accruing two-step loans two-step loans two-step loan commitments 12/31/2007 $31,065 12.8% 9.7% 3/31/2008 11,812 9.6% 7.5% 6/30/2008 5,280 11.2% 8.9% The allowance for credit losses associated with loans other than two-step loans was 1.58% of such outstanding loan balances at June 30, 2008, up from 1.25% at December 31, 2007 and 1.55% at March 31, 2008. Total non-performing assets were $147 million or 5.6% of total assets at June 30, 2008, up from $30 million and 1.1%, respectively, as of December 31, 2007 and $105 million and 4.0% as of March 31, 2008. Non-performing assets related to the two-step loan portfolio were $125 million or 4.8% of total assets, up from $24 million and .9% at year-end 2007 and $94 million and 3.6% at March 31, 2008. As of June 30, 2008, $21 million in charge-offs had been taken against the nonaccrual two-step loans. The current two-step nonaccrual balance of $98.7 million reflects these charge-offs. Within the nonaccrual two-step loan balance, $9.1 million in loans were current on loan payments and $27.8 million were 30-89 days past due, and the remainder were over 90 days past due. At June 30, 2008, there were $22.2 million of non-performing assets other than in the two-step portfolio or .84% of total assets, up from $5.9 million and .22% at December 31, 2007 and $10.3 million and .39% at March 31, 2008. The nonaccrual balances in the residential builder construction and non-standard mortgage segments each grew $4 million during the second quarter. These additional nonaccruals were measured for impairment and written down to estimated fair value net of selling costs. Total delinquent loans were $14.9 million or .69% of total loans at end of the second quarter 2008, down from $44.5 million and 2.05% at year end 2007, and $27.1 million and 1.23% at March 31, 2008. The decrease was primarily due to lower delinquencies within the two-step, residential builder construction, and commercial portfolios. For more detailed credit quality information, see tables 4 through 9. Capital: The Company remains well capitalized. At June 30, 2008, the total capital ratio for West Coast Bank was approximately 10.71%, up from 10.57% at March 31, 2008, and 10.65% at June 30, 2007. West Coast Bank's tier 1 capital ratio at 9.45% and leverage ratio of 8.90% are above the well capitalized regulatory threshold by a significant level. The following table shows the Company's risk-based capital ratios for the indicated periods. Risk based capital ratios (Unaudited) 06/30/08 06/30/07 03/31/08 Excess Well over well capitalized capitalzed West Coast Bancorp Ratio minimum minimum Ratio Ratio Tier 1 capital ratio 9.99% 6.00% 3.99% 10.25% 9.96% Total capital ratio 11.24% 10.00% 1.24% 11.33% 11.22% Leverage ratio 9.46% 5.00% 4.46% 10.03% 9.49% West Coast Bank Tier 1 capital ratio 9.45% 6.00% 3.45% 9.57% 9.32% Total capital ratio 10.71% 10.00% 0.71% 10.65% 10.57% Leverage ratio 8.90% 5.00% 3.90% 9.35% 8.84% Other: The Company will hold a Webcast conference call Monday, July 21, 2008, at 11:00 a.m. Pacific Time, during which the Company will discuss second quarter 2008 results and key activities. To access the conference call via a live Webcast, go to http://www.wcb.comand/ click on Investor Relations and the "2nd Quarter 2008 Earnings Conference Call" tab. The conference call may also be accessed by dialing (877) 604-2074. Conference ID#: 51095353 a few minutes prior to 11:00 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 $2.6 billion in assets, and 64 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, 2007, including under the heading "Forward Looking Statement Disclosure" and in Item 1A, all as updated in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2008. West Coast Bancorp Consolidated Statements of Income (Unaudited) Three months ended Six months ended (Dollars and shares in thousands, except per share data) June 30, March 31, June 30, 2008 2007 2008 2008 2007 Net interest income Interest and fees on loans $32,826 $42,637 $35,073 $67,899 $82,548 Interest on investment securities 2,779 3,397 3,098 5,877 7,139 Other interest income 140 114 141 281 233 Total interest income 35,745 46,148 38,312 74,057 89,920 Interest expense on deposit accounts 9,064 13,524 11,613 20,677 26,511 Interest on borrowings and subordinated debentures 2,968 3,900 3,122 6,090 6,800 Total interest expense 12,032 17,424 14,735 26,767 33,311 Net interest income 23,713 28,724 23,577 47,290 56,609 Provision for credit losses 6,000 3,500 8,725 14,725 6,300 Non-interest income Service charges on deposit accounts 3,883 3,136 3,635 7,518 6,021 Payment systems related revenue 2,340 2,012 2,131 4,471 3,690 Trust and investment services revenues 1,534 1,649 1,585 3,119 3,141 Gains on sales of loans 769 967 860 1,629 2,271 Other 325 845 1,410 1,735 1,519 Gains on sales of securities 187 96 590 777 96 Total non-interest income 9,038 8,705 10,211 19,249 16,738 Non-interest expense Salaries and employee benefits 12,645 12,544 12,355 25,000 25,057 Equipment 1,765 1,574 1,751 3,516 3,100 Occupancy 2,297 2,158 2,375 4,672 4,207 Payment systems related expense 892 825 843 1,735 1,490 Professional fees 948 545 800 1,748 966 Postage, printing and office supplies 1,000 969 966 1,966 1,845 Marketing 1,006 870 795 1,801 1,994 Communications 427 354 402 829 787 Other non-interest expense 2,366 1,661 1,934 4,300 3,093 Total non-interest expense 23,346 21,500 22,221 45,567 42,539 Income before income taxes 3,405 12,429 2,842 6,247 24,508 Provision for income taxes 721 4,294 842 1,563 8,509 Net income $2,684 $8,135 $2,000 $4,684 $15,999 Basic earnings per share $0.17 $0.52 $0.13 $0.30 $1.03 Diluted earnings per share $0.17 $0.50 $0.13 $0.30 $0.99 Weighted average common shares 15,467 15,567 15,445 15,456 15,525 Weighted average diluted shares 15,540 16,143 15,589 15,572 16,136 Tax equivalent net interest income $24,162 $29,121 $24,027 $48,189 $57,404 West Coast Bancorp Consolidated Balance Sheets (Dollars and shares in thousands, June 30, June 30, March 31, unaudited) 2008 2007 2008 Assets: Cash and cash equivalents $101,767 $82,414 $88,205 Investments 248,954 267,614 242,163 Total loans 2,153,716 2,140,942 2,194,311 Allowance for loan losses (35,723) (26,496) (39,602) Loans, net 2,117,993 2,114,446 2,154,709 Goodwill and other intangibles 14,253 14,730 14,372 Other assets 149,959 105,195 121,445 Total assets $2,632,926 $2,584,399 $2,620,894 Liabilities and Stockholders' Equity: Demand $500,189 $482,698 $472,116 Savings and interest-bearing demand 349,950 347,028 366,267 Money market 693,801 668,373 652,559 Time deposits 534,310 547,054 570,905 Total deposits 2,078,250 2,045,153 2,061,847 Borrowings and subordinated debentures 322,378 296,727 306,052 Reserve for unfunded commitments 1,322 2,852 Other liabilities 25,468 28,656 42,206 Total liabilities 2,427,418 2,370,536 2,412,957 Stockholders' equity 205,508 213,863 207,937 Total liabilities and stockholders' equity $2,632,926 $2,584,399 $2,620,894 Common shares outstanding period end 15,702 15,748 15,580 Book value per common share $13.09 $13.58 $13.35 Tangible book value per common share $12.18 $12.65 $12.42 West Coast Bancorp Period End Loan Portfolio By Category (Dollars in thousands, % of % of unaudited) June 30, total June 30, total Change 2008 loans 2007 loans Amount % Commercial loans $512,689 24% $515,590 24% $(2,901) -1% Real estate construction loans(1) 392,724 18% 503,414 24% (110,690) -22% Real estate mortgage loans 377,771 18% 294,447 14% 83,324 28% Commercial real estate loans 847,430 39% 803,155 37% 44,275 6% Installment and other consumer loans 23,102 1% 24,336 1% (1,234) -5% Total loans $2,153,716 100% $2,140,942 100% $12,774 1% (1)Two-step residential construction loans $145,703 7% $256,332 12% $(110,629) -43% Total loans other than two-step loans 2,008,013 93% 1,884,610 88% 123,403 7% Total loans $2,153,716 100% $2,140,942 100% $12,774 1% West Coast Bancorp Period End Loan Portfolio By Category March 31, Change (Dollars in thousands, unaudited) 2008 % Commercial loans $529,519 -3% Real estate construction loans(1) 464,028 -15% Real estate mortgage loans 356,185 6% Commercial real estate loans 819,586 3% Installment and other consumer loans 24,993 -8% Total loans $2,194,311 -2% (1)Two-step residential construction loans $211,406 -31% Total loans other than two-step loans 1,982,905 1% Total loans $2,194,311 -2% The following table reconciles return on average equity to return on average equity, tangible. Table 1 West Coast Bancorp Return on average equity tangible reconciliation(1) For the three months For the six months ended June 30, ended June 30, (Dollars in thousands, unaudited) 2008 2007 2008 2007 Net income $2,684 $8,135 $4,684 $15,999 Add: intangible asset amortization, net of tax* 77 98 154 196 Net income, tangible $2,761 $8,233 $4,838 $16,195 Average shareholders' equity $207,871 $210,349 $209,540 $206,889 Less: average intangibles (14,311) (14,803) (14,370) (14,878) Average shareholders' equity, tangible $193,560 $195,546 $195,170 $192,011 *Federal income tax provision applied at 35%. Return on average equity 5.2% 15.5% 4.5% 15.6% Return on average equity, tangible 5.7% 16.9% 5.0% 17.0% (1) 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. Table 2 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) 2008 2007 2008 PERFORMANCE RATIOS - Return on average assets 0.41% 1.29% 0.31% - Return on average common equity 5.19% 15.51% 3.81% - Return on average tangible equity 5.69% 16.89% 4.25% - Non-interest income to average assets 1.39% 1.38% 1.58% - Non-interest expense to average assets 3.60% 3.41% 3.44% - Efficiency ratio, tax equivalent 70.7% 57.0% 66.0% NET INTEREST MARGIN - Yield on interest-earning assets 5.91% 7.84% 6.33% - Rate on interest-bearing liabilities 2.52% 3.84% 3.14% - Net interest spread 3.39% 4.00% 3.19% - Net interest margin 3.94% 4.90% 3.92% AVERAGE ASSETS - Investment securities $247,189 $285,156 $265,304 - Commercial loans 527,781 502,749 508,566 - Real estate construction loans 432,398 474,660 501,459 - Real estate mortgage loans 366,997 289,812 342,315 - Commercial real estate loans 834,069 790,372 800,350 - Installment and other consumer loans 24,367 25,967 24,245 - Total loans 2,185,612 2,083,560 2,176,935 - Total interest earning assets 2,465,147 2,381,652 2,464,280 - Other assets 144,807 144,857 132,456 - Total assets $2,609,954 $2,526,509 $2,596,736 AVERAGE LIABILITIES & EQUITY - Demand deposits $467,664 $470,622 $464,088 - Savings and Interest bearing demand 357,664 348,086 358,986 - Money market 662,962 659,817 662,508 - Time deposits 558,087 538,713 579,157 - Total deposits 2,046,377 2,017,238 2,064,739 - Borrowings and subordinated debentures 341,578 274,093 285,138 - Total interest bearing liabilities 1,920,292 1,820,709 1,885,789 - Other liabilities 481,791 495,451 499,741 - Total liabilities 2,402,083 2,316,160 2,385,530 - Average common equity 207,871 210,349 211,206 - Total average liabilities and common equity $2,609,954 $2,526,509 $2,596,736 AVERAGE ASSET/LIABILITY RATIOS - Average stockholders' equity to average assets 7.96% 8.33% 8.13% - Average int. earning assets to int. bearing liabilities 128.4% 130.8% 130.7% - Average loans to average assets 83.7% 82.5% 83.8% - Interest bearing deposits to assets 60.5% 61.2% 59.0% Table 2 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) 2008 2007 PERFORMANCE RATIOS - Return on average assets 0.36% 1.30% - Return on average common equity 4.50% 15.59% - Return on average tangible equity 4.96% 17.01% - Non-interest income to average assets 1.49% 1.36% - Non-interest expense to average assets 3.52% 3.45% - Efficiency ratio, tax equivalent 68.4% 57.5% NET INTEREST MARGIN - Yield on interest-earning assets 6.12% 7.81% - Rate on interest-bearing liabilities 2.83% 3.76% - Net interest spread 3.29% 4.05% - Net interest margin 3.93% 4.94% AVERAGE ASSETS - Investment securities $256,246 $298,891 - Commercial loans 518,173 485,261 - Real estate construction loans 466,929 437,098 - Real estate mortgage loans 354,656 286,240 - Commercial real estate loans 817,209 794,948 - Installment and other consumer loans 24,306 25,871 - Total loans 2,181,273 2,029,418 - Total interest earning assets 2,464,713 2,341,431 - Other assets 138,633 143,472 - Total assets $2,603,346 $2,484,903 AVERAGE LIABILITIES & EQUITY - Demand deposits $465,876 $466,945 - Savings and Interest bearing demand 358,326 348,566 - Money market 662,735 651,384 - Time deposits 568,622 538,510 - Total deposits 2,055,559 2,005,405 - Borrowings and subordinated debentures 313,358 247,461 - Total interest bearing liabilities 1,903,041 1,785,921 - Other liabilities 490,765 492,093 - Total liabilities 2,393,806 2,278,014 - Average common equity 209,540 206,889 - Total average liabilities and common equity $2,603,346 $2,484,903 AVERAGE ASSET/LIABILITY RATIOS - Average stockholders' equity to average assets 8.05% 8.33% - Average int. earning assets to int. bearing liabilities 129.5% 131.1% - Average loans to average assets 83.8% 81.7% - Interest bearing deposits to assets 61.1% 61.9% The following table presents information with respect to the change in the Company's total allowance for credit losses. Table 3 West Coast Bancorp Total Loan Portfolio Allowance For Credit Losses and Net Charge-offs Quarter Quarter Quarter ended ended ended June 30, June 30, March 31, (Dollars in thousands, unaudited) 2008 2007 2008 Allowance for credit losses, beginning of period $42,454 $24,464 $54,903 Provision for credit losses 6,000 3,500 8,725 Charge-offs 12,753 1,567 21,393 Recoveries 1,344 99 219 Net charge-offs 11,409 1,468 21,174 Total allowance for credit losses $37,045 $26,496 $42,454 Components of allowance for credit losses Allowance for loan losses $35,723 $26,496 $39,602 Reserve for unfunded commitments 1,322 - 2,852 Total allowance for credit losses $37,045 $26,496 $42,454 Net loan charge-offs to average loans (annualized) 2.10% 0.28% 3.91% Allowance for loan losses to total loans 1.66% 1.24% 1.80% Allowance for credit losses to total loans 1.72% 1.24% 1.93% Allowance for loan losses to non- performing loans 30% 433% 40% Allowance for loan losses to non- performing assets 24% 433% 38% Year to date Year to date June 30, June 30, (Dollars in thousands, unaudited) 2008 2007 Allowance for credit losses, beginning of period $54,903 $23,017 Provision for credit losses 14,725 6,300 Charge-offs 34,146 3,087 Recoveries 1,563 266 Net Charge-offs 32,583 2,821 Total allowance for credit losses $37,045 $26,496 Components of allowance for credit losses Allowance for loan losses $35,723 $26,496 Reserve for unfunded commitments 1,322 - Total allowance for credit losses $37,045 $26,496 Net loan charge-offs to average loans (annualized) 3.00% 0.28% The following table presents information about the Company's total non-performing assets and delinquent loans. Table 4 West Coast Bancorp Total Loan Portfolio Non-performing Assets and Delinquencies June 30, June 30, March 31, (Dollars in thousands, unaudited) 2008 2007 2008 Non-accruing loans $119,529 $6,116 $99,038 90 day past and accruing interest - - - Total non-performing loans 119,529 6,116 99,038 Other real estate owned 27,892 - 5,688 Total non-performing assets $147,421 $6,116 $104,726 Non-performing loans to total loans 5.55% 0.29% 4.51% Non-performing assets to total assets 5.60% 0.24% 4.00% Total Loan Portfolio Delinquent loans 30-89 days past due as a % of loan category June 30, June 30, March 31, (Dollars in thousands, unaudited) 2008 2007 2008 Commercial loans 0.19% 0.18% 0.47% Real estate construction loans (1) 1.92% 2.60% 4.06% Real estate mortgage loans 1.42% 0.02% 1.43% Commercial real estate loans 0.10% 0.03% 0.07% Installment and other consumer loans 0.90% 0.32% 0.39% (1)Two-step residential construction loan balances $5,462 $6,931 $14,269 Total loans other than two-step loans 9,432 7,409 12,826 Total delinquent loans 30-89 days past due, not in nonaccrual status $14,894 $14,340 $27,095 Delinquent loans to total loans 0.69% 0.67% 1.23% The following table presents information about the Company's activity in other real estate owned. Table 5 West Coast Bancorp Other real estate owned ("OREO") activity Three months Three months Three months ended ended ended June 30, June 30, March 31, (Dollars in thousands, unaudited) 2008 2007 2008 Beginning balance $5,688 $- $3,255 Additions to OREO including capitalized costs 25,390 - 2,707 Disposition of OREO (2,941) - (274) Valuation adjustments to OREO (245) - Ending balance $27,892 $- $5,688 The following table presents information with respect to the change in the Company's allowance for credit losses in the two-step residential construction loan portfolio. Table 6 West Coast Bancorp Two-Step Loan Portfolio Allowance For Credit Losses and Net Charge-offs Two-Step Portfolio Quarter Quarter Quarter ended ended ended June 30, June 30, March 31, (Dollars in thousands, unaudited) 2008 2007 2008 Allowance for credit losses, beginning of period $11,812 $3,242 $31,065 Provision for credit losses 1,947 729 780 Charge-offs 9,718 - 20,099 Recoveries 1,239 - 66 Net charge-offs 8,479 - 20,033 Total allowance for credit losses $5,280 $3,971 $11,812 Components of allowance for credit losses Allowance for loan losses $4,858 $3,971 $9,991 Reserve for unfunded commitments 422 - 1,821 Total allowance for credit losses $5,280 $3,971 $11,812 Net loan charge-offs to average total loans (annualized) 1.56% 0.00% 3.70% Allowance for two-step loan losses to nonperforming two-step loans(1) 5% 91% 11% Allowance for two-step credit losses to total two-step loans 3.62% 1.55% 5.59% Allowance for two-step loan losses to total two-step loans 3.33% 1.55% 4.73% Allowance for two-step loan losses to nonperforming two-step assets 4% 91% 11% (1) Two-step nonaccrual loans are net of chargeoffs taken against the balance. Year to date Year to date June 30, June 30, (Dollars in thousands, unaudited) 2008 2007 Allowance for credit losses, beginning of period $31,065 $2,618 Provision for credit losses 2,727 1,353 Charge-offs 29,817 - Recoveries 1,305 - Net Charge-offs 28,512 - Total allowance for credit losses $5,280 $3,971 Components of allowance for credit losses Allowance for loan losses $4,858 $3,971 Reserve for unfunded commitments 422 - Total allowance for credit losses $5,280 $3,971 Net loan charge-offs to average total loans (annualized) 2.63% 0.00% The following table presents information about the Company's non-performing assets and delinquencies in the two-step residential construction loan portfolio. Table 7 West Coast Bancorp Two-Step Residential Construction Loans Non-performing Assets and Delinquencies June 30, June 30, March 31, (Dollars in thousands, unaudited) 2008 2007 2008 Nonaccrual two-step loans $98,728 $4,375 $88,784 90 day past due and accruing interest - - - Total nonperforming two-step loans 98,728 4,375 88,784 Other real estate owned two-step 26,460 - 5,688 Total nonperforming two-step assets $125,188 $4,375 $94,472 Delinquent two-step loans 30-89 days past due, not in nonaccrual status $5,462 $6,931 $14,269 Non-performing two-step loans to total two-step loans 67.76% 1.71% 42.00% Non-performing two-step assets to total assets 4.75% 0.17% 3.60% Delinquent two-step loans to total two-step loans 3.75% 2.70% 6.75% The following table presents information with respect to the change in the Company's allowance for credit losses for the loans other than two-step residential construction loans. Table 8 West Coast Bancorp Loans Other than Two-Step Loans Allowance For Credit Losses and Net Charge-offs loans other than two-step loans Quarter Quarter Quarter ended ended ended June 30, June 30, March 31, (Dollars in thousands, unaudited) 2008 2007 2008 Allowance for credit losses, beginning of period $30,642 $21,222 $23,838 Provision for credit losses 4,053 2,771 7,945 Charge-offs 3,035 1,567 1,294 Recoveries 105 99 153 Net charge-offs 2,930 1,468 1,141 Total allowance for credit losses $31,765 $22,525 $30,642 Components of allowance for credit losses Allowance for loan losses $30,865 $22,525 $29,611 Reserve for unfunded commitments 900 - 1,031 Total allowance for credit losses $31,765 $22,525 $30,642 Net loan charge-offs to average total loans (annualized) 0.54% 0.28% 0.21% Allowance for non two-step loan losses to total non two-step loans 1.54% 1.20% 1.49% Allowance for non two-step credit losses to total non two-step loans 1.58% 1.20% 1.55% Allowance for non two-step loan losses to non-performing non two- step loans 148% 1294% 289% Allowance for non two-step loan losses to non-performing non two- step assets 139% 1294% 289% Year to date Year to date June 30, June 30, (Dollars in thousands, unaudited) 2008 2007 Allowance for credit losses, beginning of period $23,838 $20,399 Provision for credit losses 11,998 4,947 Charge-offs 4,329 3,087 Recoveries 258 266 Net Charge-offs 4,071 2,821 Total allowance for credit losses $31,765 $22,525 Components of allowance for credit losses Allowance for loan losses $30,865 $22,525 Reserve for unfunded commitments 900 - Total allowance for credit losses $31,765 $22,525 Net loan charge-offs to average total loans (annualized) 0.38% 0.28% The following table presents information about the Company's non-performing assets and delinquencies in the loan portfolio excluding two-step residential construction loans. Table 9 West Coast Bancorp Loans Other than Two-Step Loans Non-performing Assets and Delinquencies June 30, June 30, March 31, (Dollars in thousands, unaudited) 2008 2007 2008 Non-accruing non two-step loans $20,801 $1,741 $10,254 90 day past and accruing interest - - - Total non-performing non-step loans 20,801 1,741 10,254 Other real estate owned non two-step 1,432 - - Total non-performing non two-step assets $22,233 $1,741 $10,254 Delinquent non two-step loans 30-89 days past due, not in nonaccrual status $9,432 $7,409 $12,826 Non-performing non two-step loans to total non two-step loans 1.04% 0.09% 0.52% Non-performing non two-step assets to total assets 0.84% 0.07% 0.39% Delinquent non two-step loans to total non two-step loans 0.47% 0.39% 0.65% 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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