WCBO West Coast Bancorp (MM)

- Second quarter 2009 operating loss*, which excludes an industry-wide special FDIC assessment charge of $.8 million after tax, was $5.5 million or $.36 per diluted share compared to operating income per diluted share of $.17 in the same quarter 2008. - West Coast Bank's total risk based capital ratio increased to 10.81% at June 30, 2009 from 10.70% at June 30, 2008. - Total number of customer checking accounts grew by over 2,000 or 9% annualized during the second quarter 2009. - June 30, 2009 total nonperforming assets decreased slightly from March 31, 2009. - Excluding the special FDIC assessment charge and an increase in the FDIC assessment rate, total non-interest expense fell 4% from the same quarter in 2008 as a result of continued efforts to manage controllable expenses. LAKE OSWEGO, Ore., July 24 /PRNewswire-FirstCall/ -- West Coast Bancorp (NASDAQ:WCBO) today announced a loss for the second quarter of 2009 of $6.3 million or $.41 per diluted share including a special FDIC assessment charge of $.8 million after-tax or $.05 per diluted share. The operating loss* was $5.5 million or $.36 per diluted share in the second quarter of 2009, compared to operating income of $2.7 million or $.17 per diluted share in the same quarter of 2008. (Dollars in thousands, GAAP Operating* except per Three months ended Three months ended share data, June 30, June 30, unaudited) ------------------ ------------------ 2009 2008 Change 2009 2008 Change ------------------ ------------------ For the three months ended: -------------- Net (loss) income $(6,339) $2,684 -336% $(5,562) $2,684 -307% Net (loss) income per diluted share ($0.41) $0.17 -341% ($0.36) $0.17 -312% Return on average equity -14.6% 5.2% -19.8% -12.8% 5.2% -18.0% West Coast Bank Tier 1 capital ratio 9.56% 9.45% 0.11% West Coast Bank Total capital ratio 10.81% 10.70% 0.11% West Coast Bank leverage ratio 8.39% 8.90% -0.51% West Coast Bancorp Tier 1 capital ratio 9.85% 10.00% -0.15% West Coast Bancorp Total capital ratio 11.10% 11.25% -0.15% West Coast Bancorp leverage ratio 8.65% 9.46% -0.81% West Coast Bancorp common equity to tangible assets 6.46% 7.85% -1.39% Total period end loans $1,917,028 $2,153,716 -11% Total period end deposits $2,109,367 $2,078,250 1% *Operating loss for the quarter ended June 30, 2009, and numbers derived using operating loss for the quarter, including operating loss per diluted share and operating return on average equity are non-GAAP (Generally Accepted Accounting Principles) financial measures derived by adjusting the Company's loss under GAAP to eliminate the special FDIC assessment charge of $.8 million after-tax. 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 performance as compared to prior periods. See table 1 below for a reconciliation of non-GAAP financial information. "Second quarter operating results continue to be disappointing. However, there were a number of positive developments in the second quarter. Our branch personnel and relationship managers did an excellent job generating new core accounts which resulted in a 9% annualized growth in checking accounts. Fee income rebounded from the first quarter due to increased transaction activity and growth in our account and card base. The inflow to nonperforming assets slowed from recent quarters as exposure to residential real estate construction continued to decline, and we disposed of a considerable number of residential OREO properties. Lastly, as a result of a combination of actions we have taken to enhance our liquidity position and maintain our risk based capital levels, we continue to have solid capacity to meet the banking needs of our customers," said Robert D. Sznewajs, President and CEO. "The service to our customers remains strong, evidenced by our recent recognition in The Statesman Journal as the number one rated financial institution in the Mid-Willamette Valley, where the bank enjoys the highest deposit market share of any bank. This achievement is a tremendous credit to our people and an indication of our loyal customer bases," continued Sznewajs. Financial Results: Over the past year total loans declined $237 million or 11% to $1.92 billion at June 30, 2009. Excluding the $135 million or 93% contraction in two-step loan balances, loan balances declined 5% or $102 million. The impact of the recession and the challenging residential housing market were evident in both demand for and origination of construction and commercial loans. The residential construction loan portfolio contracted 57% over the past year, meaningfully reducing the Company's risk exposure to this sector. Additionally, and consistent with our capital preservation strategies, the Company remains focused on taking care of existing borrowers' credit needs. At June 30, 2009, the remaining two-step loan balance measured $10 million or less than 1% of total loans, down from $146 million and 7%, respectively, a year ago. Second quarter 2009 average total deposits of $2.08 billion increased 2% from the same quarter in 2008. Growth in demand, savings, and certificate of deposit balances less than $100,000 more than offset the effect of a lower average balance per money market account and a reduction in certificate of deposit balances greater than $100,000. The Company's funding position changed favorably over the past 12 months with its loan to deposit ratio decreasing from 104% to 91% at June 30, 2009. As a result of lower average earning asset balances and a 44 basis points compression in the net interest margin to 3.50%, second quarter 2009 net interest income at $20.2 million declined $3.5 million from the second quarter 2008. However, net interest income was relatively unchanged from the first quarter of 2009. The year over year contraction in second quarter net interest margin was primarily a consequence of the declining benefit from our sizable non-interest bearing demand deposit balances in this unusually low interest rate environment and a shift in the earning asset mix from loan balances to investment securities as part of our liquidity and capital strategies. The lengthening of certificate of deposit maturities and Federal Home Loan Bank ("FHLB") borrowings, which were consistent with our interest rate sensitivity and liquidity strategies, also negatively impacted the net interest margin in the quarter. Total non-interest income of $6.0 million in the quarter ended June 30, 2009 declined $3.1 million due to OREO valuation adjustments which measured $3.1 million in the quarter compared to no such charges in the same quarter of 2008. Two-step properties accounted for $2.3 million of the total OREO valuation adjustment. We experienced only a modest loss at final disposition of two-step OREO properties sold during the second quarter. Our two-step property sales have been strong over the past few months as evidenced by 54 closed sales in the second quarter with total proceeds of $13.4 million. The disposition volume accelerated from 24 closed sales of such properties in the first quarter. Additionally, we had sales pending for 42 two-step properties at quarter end, with expected total proceeds of $10.5 million and no loss projected upon final disposition. We continue to expect a meaningful decline in the two-step nonperforming asset balance as we proceed through 2009. At the end of the second quarter, the two-step OREO portfolio consisted of 278 properties valued at $70 million, which reflected a write-down of 34% from original carrying value. (See table 7 for details.) We disposed of 13 non two-step properties in the most recent quarter with proceeds of $3.4 million, which helped the non two-step OREO balance to remain relatively unchanged in the quarter. Future financial results will be heavily dependent on the Company's ability to dispose of its OREO properties at prices that are in line with current valuation expectations. The Company's key recurring noninterest revenue sources performed well in second quarter 2009. As a result of 4% growth in total consumer and business deposit transaction accounts over the past 12 months, second quarter 2009 deposit service charge revenues grew 6% or $.3 million. Directly related to the significant slowing in economic activity, total payment systems revenues remained unchanged from the second quarter of 2008 despite the increase in both number of deposit accounts and associated cards. However, payment systems revenues increased 10% over the first quarter 2009 reflecting improved transaction activity in the second quarter. The weak equity market compared to a year ago contributed to the $.6 million or 37% decline in year over year second quarter trust and investment revenues. Gain on sales of loans was substantially unchanged from the second quarter 2008 but more than doubled compared to the first quarter of 2009 as the secondary market for SBA loans appears to be returning. Second quarter 2009 total non-interest expense of $25.2 million included a special pre-tax FDIC assessment charge of $1.2 million and a pre-tax FDIC rate increase of $1.6 million compared to the second quarter a year ago. Without the higher FDIC expense total non-interest expense measured $22.4 million, a reduction of $.9 million or 4% from the same period in 2008. The Company continues to focus diligently on reducing controllable expense items. As part of that effort, and despite deferred loan origination expense being lower by $.6 million, total personnel expense fell 11% or $1.4 million in the most recent quarter compared to the second quarter of 2008. This was due to lower salary, incentive and benefit costs. The lower personnel expense was partially offset by a $.5 million year over year second quarter increase in property disposition expenses associated primarily with the two-step program. Capital: The Bank's total capital ratio measured 10.81% at June 30, 2009 up from 10.70% a year ago, and 10.68% at March 31, 2009. The Bank's Tier 1 capital ratio at 9.56% also improved 11 basis points over the past 12 months. The increase in Bank Tier 1 and total capital ratios was primarily accomplished by reducing total outstanding loan balances and commitments and therefore risk-weighted assets. The leverage and common equity to assets ratios declined due to the Company's operating loss over the past 12 months and the reinvestments of loan balance declines in the investment securities portfolio. Credit Quality: The Company recorded a second quarter 2009 provision for credit losses of $11.4 million, up from $6.0 million in the same quarter of 2008, but down from $23.1 million in the first quarter of 2009. The provision related to the two-step portfolio has trended down with the declining two-step loan balance. The two-step loan provision measured $2.4 million in the most recent quarter, down from $3.1 million in first quarter 2009 and $4.8 million in the final quarter of 2008. Each two-step property is re-appraised within 45 days of its expected foreclosure date, and the additional provision has arisen out of this process. The following table illustrates the significant decline in the two-step loan portfolio over the past 18 months. (Dollars in thousands, unaudited) --------------------------------- Total accruing Total two-step Accruing Nonaccrual two-step loan two-step two-step Two-step nonperforming Period ended commitments loans loans OREO assets -------------------------------------------------------------------------- 12/31/2007 $320,991 $242,407 $20,545 $3,255 $23,800 3/31/2008 156,823 122,622 88,784 5,688 94,472 6/30/2008 59,603 46,975 98,728 26,460 125,188 9/30/2008 16,943 14,904 82,990 44,675 127,665 12/31/2008 3,276 3,124 49,960 60,022 109,982 3/31/2009 - - 23,725 73,319 97,044 6/30/2009 - - 10,348 69,632 79,980 The provision for credit losses associated with loans other than two-step loans was $9.0 million in the second quarter of 2009, up from $4.1 million in the same quarter of 2008 and down from $20.0 million in the first quarter of 2009. The combination of negative risk rating migration, higher net charge-offs, and higher general valuation allowances under our allowance model increased the provision compared to the second quarter of 2008. The level of future provisioning will be heavily dependent on the local real estate market and general economic conditions nationally and in the areas in which we do business. As shown in the table below, at June 30, 2009 total residential construction and land loans measured $148 million or under 8% of the total loan portfolio down from 15% a year ago, representing a $177 million or 55% year over year decline. This portfolio consists of residential land, site development, vertical construction (construction of residences) and two-step construction loans. At the end of the most recent quarter, accruing loans in this portfolio totaled $83 million or 4% of total loans, down from $218 million and 10%, respectively, at June 30, 2008. Accruing loans to borrowers involved in residential land and site development segments totaled $34 million or less than 2% of total loans at the close of the second quarter. Total nonaccrual residential land and construction loan balances declined by $43 million over the past 12 months to $64 million or 3% of total loans as the decline in the two-step nonaccrual loan balances more than offset the increase in nonaccrual residential construction loans other than two-step. The properties associated with nonaccrual residential construction loans other than two-step are largely located in Clark, Pierce and King Counties in the state of Washington, and in Marion and Deschutes counties in the state of Oregon. The amount of future losses with these properties will depend on market conditions, which do appear to be improving somewhat. The June residential housing inventory level in our markets fell to 8.7 months or the lowest level since October 2007. West Coast Bancorp Residential construction and land loans including two-step loans (Dollars in thousands, unaudited) June 30, 2009 June 30, 2008 March 31, 2009 ---------------------- --------------- --------------- --------------- Percent Percent Percent of of of total total total Amount loans(2) Amount loans(2) Amount loans(2) --------------- --------------- --------------- Accruing residential construction loans and land loans Land loans(1) $10,281 0.5% $24,413 1.1% $17,739 0.9% Site development 23,276 1.2% 72,960 3.4% 28,946 1.4% Vertical construction 49,838 2.6% 73,253 3.4% 57,244 2.9% Two-step loans - 0.0% 46,975 2.2% - 0.0% ------ --- ------ --- ------ --- Total accruing residential construction and land loans $83,395 4.4% $217,601 10.1% $103,929 5.2% ======= === ======== ==== ======== === Nonaccrual residential construction loans and land loans Land loans(1) $7,629 0.4% $1,396 0.1% $2,092 0.1% Site development 33,721 1.8% 2,830 0.1% 34,316 1.7% Vertical construction 12,438 0.6% 3,712 0.2% 12,901 0.6% Two-step loans 10,348 0.5% 98,728 4.6% 23,725 1.2% ------ --- ------ --- ------ --- Total nonaccrual residential construction and land loans $64,136 3.3% $106,666 5.0% $73,034 3.7% ======= === ======== === ======= === Total residential construction and land loans Land loans(1) $17,910 0.9% $25,809 1.2% $19,831 1.0% Site development 56,997 3.0% 75,790 3.5% 63,262 3.2% Vertical construction 62,276 3.2% 76,965 3.6% 70,145 3.5% Two-step loans 10,348 0.5% 145,703 6.8% 23,725 1.2% ------ --- ------- --- ------ --- Total residential construction and land loans $147,531 7.7% $324,267 15.1% $176,963 8.9% ======== === ======== ==== ======== === (1) Land loans represent balances that are carried in the Company's residential real estate mortgage and commercial real estate loan portfolios. (2) Calculations have been based on more detailed information and therefore may not recompute exactly due to rounding. Total net charge-offs in the second quarter of 2009 were $11.3 million. Net charge-offs related to the two-step portfolio continued to decline and totaled $2.4 million in the quarter, down from $8.5 million in the same period last year and $3.5 million in the first quarter of 2009. Net charge-offs for loans other than two-step loans were $8.9 million compared to $2.9 million in the second quarter of 2008 and $11.1 million in the first quarter this year. The higher year over year second quarter net charge-off activity for loans other than two-step loans was primarily associated with residential construction and land loans. The allowance for credit losses associated with loans other than two-step loans increased from $31.8 million or 1.58% of such outstanding loan balances at June 30, 2008 to $38.6 million or 2.02% at second quarter end 2009. The unallocated portion of the allowance for loan losses amounted to $3.8 million or 10% of the total allowance at June 30, 2009, up from $ 2.7 million and 8.7% at June 30, 2008 and down from $5.8 million and 15% at March 31, 2009. The Company's estimate of reserve amounts will continue to be primarily dependent on the loan portfolio's credit quality performance trends, including net charge-offs, which will be heavily dependent on local economic conditions. Total non-performing assets were $211 million or 8.1% of total assets at June 30, 2009, up from $147 million and 5.6%, respectively, at June 30, 2008 and down from $215 million and 8.6% at March 31, 2009. Non-performing assets related to the two-step loan portfolio were $80 million or 3.1% of total assets, down from $125 million a year ago and a reduction from $97 million at the end of the first quarter. At second quarter end these non-performing assets included $10 million in nonaccrual loans and the $70 million two-step OREO balance. Nonperforming assets, excluding the two-step portfolio, measured $131 million or 5.0% of total assets up $13 million from $118 million and 4.7% at March 31, 2009, and $22 million and .8% a year ago. The increase occurred primarily in the residential land and commercial loan categories. Three commercial relationships represent $26 million of the $34 million nonaccrual commercial balance. The commercial construction, term commercial real estate and home equity categories continue to perform well in these challenging economic times. As anticipated, the inflow into nonaccrual loan balances from the residential construction portfolio slowed from prior quarters as the accruing land and site development portfolio balances have contracted. At June 30, 2009, all individually risk rated nonaccrual loans, including all non two-step loans, had been measured for impairment and written down to fair value less sales expense. The Company's nonaccrual balances outside the two-step portfolio had been written down over 21% from their original principle loan balance as of June 30, 2009. For more detailed credit quality information, see tables 3 through 12. Other: The Company will hold a Webcast conference call Friday, July 24, 2009, at 11:00 a.m. Pacific Time, during which the Company will discuss second quarter 2009 results and key activities. To access the conference call via a live Webcast, go to http://www.wcb.com/ and click on Investor Relations and the "2nd Quarter 2009 Earnings Conference Call" tab. The conference call may also be accessed by dialing (866) 395-2683 Conference ID#: 88847420 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 is a Northwest bank holding company with $2.6 billion in assets and 65 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, 2008, and Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, including under the headings "Forward Looking Statement Disclosure" and in "Risk Factors." West Coast Bancorp Consolidated Statements of Income (Loss) ---------------------------------------------- (Unaudited) (Dollars and shares in thousands, except per Three months ended Six months ended share data) ---------------------------- ---------------- June 30, March 31, June 30, 2009 2008 2009 2009 2008 ---------------------------- ---------------- Net interest income Interest and fees on loans $26,247 $32,826 $26,117 $52,364 $67,899 Interest on investment securities 2,572 2,779 2,478 5,050 5,877 Other interest income 50 140 13 63 281 ------ ------- ------ ------ ------ Total interest income 28,869 35,745 28,608 57,477 74,057 Interest expense on deposit accounts 6,359 9,064 6,485 12,844 20,677 Interest on borrowings and subordinated debentures 2,296 2,968 1,993 4,289 6,090 ------ ------- ------ ------ ------ Total interest expense 8,655 12,032 8,478 17,133 26,767 ------ ------- ------ ------ ------ Net interest income 20,214 23,713 20,130 40,344 47,290 Provision for credit losses 11,393 6,000 23,131 34,524 14,725 Noninterest income Service charges on deposit accounts 4,133 3,883 3,805 7,938 7,518 Payment systems related revenue 2,359 2,340 2,137 4,496 4,471 Trust and investment services revenues 971 1,534 919 1,890 3,119 Gains on sales of loans 756 769 343 1,099 1,629 OREO valuation adjustments and loss on sale (3,683) (274) (4,804) (8,487) (263) Other 787 599 1,942 2,729 1,998 Other-than-temporary impairment losses - - (192) (192) - Gain on sales of securities 635 187 198 833 777 ------ ------- ------ ------ ------ Total noninterest income 5,958 9,038 4,348 10,306 19,249 Noninterest expense Salaries and employee benefits 11,267 12,645 11,195 22,462 25,000 Equipment 1,850 1,765 1,892 3,742 3,516 Occupancy 2,295 2,297 2,366 4,661 4,672 Payment systems related expense 998 892 919 1,917 1,735 Professional fees 1,371 948 927 2,298 1,748 Postage, printing and office supplies 826 1,000 795 1,621 1,966 Marketing 696 1,006 630 1,326 1,801 Communications 404 427 393 797 829 Goodwill impairment - - 13,059 13,059 - Other noninterest expense 5,537 2,366 3,198 8,735 4,300 ------ ------- ------ ------ ------ Total noninterest expense 25,244 23,346 35,374 60,618 45,567 ------ ------- ------ ------ ------ Income (loss) before income taxes (10,465) 3,405 (34,027) (44,492) 6,247 Provision (benefit) for income taxes (4,126) 721 (10,428) (14,554) 1,563 ------ ------- ------ ------ ------ Net income (loss) $(6,339) $2,684 $(23,599) $(29,938) $4,684 ======= ====== ======= ======= ====== Earnings (loss) per share: Basic $(0.41) $0.17 $(1.51) $(1.91) $0.30 Diluted $(0.41) $0.17 $(1.51) $(1.91) $0.30 Weighted average common shares 15,522 15,467 15,485 15,504 15,456 Weighted average diluted shares 15,522 15,540 15,485 15,504 15,572 Tax equivalent net interest income $20,580 $24,162 $20,545 $41,125 $48,189 West Coast Bancorp Consolidated Balance Sheets -------------------------------- (Dollars and shares in thousands, June 30, June 30, March 31, unaudited) 2009 2008 2009 -------- -------- -------- Assets: Cash and cash equivalents $148,282 $101,767 $72,626 Investments 369,914 234,372 233,668 Total loans 1,917,028 2,153,716 1,998,451 Allowance for loan losses (37,700) (35,723) (37,532) ------- ------- ------- Loans, net 1,879,328 2,117,993 1,960,919 OREO, net 83,830 27,892 87,189 Goodwill and other intangibles 796 14,253 895 Other assets 131,333 136,649 140,930 ------- ------- ------- Total assets $2,613,483 $2,632,926 $2,496,227 ========== ========== ========== Liabilities and Stockholders' Equity: Demand $483,397 $500,189 $489,274 Savings and interest-bearing demand 396,100 349,950 351,153 Money market 606,349 693,801 595,954 Time deposits 623,521 534,310 615,716 ------- ------- ------- Total deposits 2,109,367 2,078,250 2,052,097 Borrowings and subordinated debentures 314,299 322,378 252,059 Reserve for unfunded commitments 869 1,322 931 Other liabilities 20,282 25,468 16,581 ------ ------ ------ Total liabilities 2,444,817 2,427,418 2,321,668 Stockholders' equity 168,666 205,508 174,559 ------- ------- ------- Total liabilities and stockholders' equity $2,613,483 $2,632,926 $2,496,227 ========== ========== ========== Common shares outstanding period end 15,660 15,702 15,687 Book value per common share $10.77 $13.09 $11.13 Tangible book value per common share $10.72 $12.18 $11.07 West Coast Bancorp Summary Financial Information --------------------------------------------------- (Dollars in thousands except for per share data, unaudited) Year Year (all rates have been Second Second First to date to date annualized where Quarter Quarter Quarter June 30, June 30, appropriate) 2009 2008 2009 2009 2008 ------- ------- ------- -------- -------- PERFORMANCE RATIOS - Return on average assets (0.99%) 0.41% (3.85%) (2.39%) 0.36% - Return on average common equity (14.61%) 5.19% (48.54%) (32.54%) 4.50% - Return on average tangible equity (14.53%) 5.69% (52.07%) (33.73%) 4.96% - Non-interest income to average assets 0.93% 1.39% 0.71% 0.82% 1.49% - Non-interest expense to average assets 3.94% 3.60% 5.77% 4.84% 3.52% - Efficiency ratio, tax equivalent 97.5% 70.7% 143.2% 86.4% 68.4% NET INTEREST MARGIN - Yield on average interest-earning assets 4.97% 5.91% 5.19% 5.08% 6.12% - Rate on average interest-bearing liabilities 1.83% 2.52% 1.91% 1.87% 2.83% - Net interest spread 3.14% 3.39% 3.28% 3.21% 3.29% - Net interest margin 3.50% 3.94% 3.67% 3.58% 3.93% AVERAGE ASSETS - Investment securities $309,810 $233,156 $200,875 $249,536 $243,964 - Commercial loans 452,517 527,781 471,650 462,031 518,173 - Real estate construction loans 229,127 432,398 267,296 248,106 466,929 - Real estate mortgage loans 391,993 366,997 392,445 392,218 354,656 - Commercial real estate loans 877,405 834,069 882,614 879,995 817,209 - Installment and other consumer loans 20,425 24,367 21,032 20,727 24,306 ------ ------ ------ ------ ------ - Total loans 1,971,467 2,185,612 2,035,037 2,003,077 2,181,273 - Total interest earning assets 2,360,328 2,465,147 2,267,580 2,314,210 2,464,713 - Other assets 206,377 144,807 217,178 211,742 138,633 ------- ------- ------- ------- ------- - Total assets $2,566,705 $2,609,954 $2,484,758 $2,525,952 $2,603,346 ========== ========== ========== ========== ========== AVERAGE LIABILITIES & EQUITY - Demand deposits $478,289 $467,664 $469,667 $474,002 $465,876 - Savings and Interest bearing demand 385,636 357,664 348,011 366,927 358,326 - Money market 599,417 662,962 594,108 596,777 662,735 - Time deposits 614,472 558,087 570,049 592,384 568,622 ------- ------- ------- ------- ------- - Total deposits 2,077,814 2,046,377 1,981,835 2,030,090 2,055,559 - Borrowings and subordinated debentures 297,951 341,578 289,406 293,702 313,358 - Total interest bearing liabilities 1,897,476 1,920,292 1,801,575 1,849,790 1,903,041 - Other liabilities 495,172 481,791 486,028 490,626 490,765 ------- ------- ------- ------- ------- - Total liabilities 2,392,648 2,402,083 2,287,603 2,340,416 2,393,806 - Common equity 174,057 207,871 197,155 185,536 209,540 ------- ------- ------- ------- ------- - Total average liabilities and common equity $2,566,705 $2,609,954 $2,484,758 $2,525,952 $2,603,346 ========== ========== ========== ========== ========== AVERAGE ASSET/LIABILITY RATIOS - Stockholders' equity to total assets 6.78% 7.96% 7.93% 7.35% 8.05% - Interest earning assets to interest bearing liabilities 124.4% 128.4% 125.9% 125.1% 129.5% - Total loans to total assets 76.8% 83.7% 81.9% 79.3% 83.8% - Interest bearing deposits to total assets 62.3% 60.5% 60.9% 61.6% 61.1% The following table reconciles GAAP financial measures to non-GAAP financial measures. Table 1 West Coast Bancorp Reconciliation of Operating earnings (loss) to GAAP net income For the three For the six (Dollars in months ended months ended thousands, June 30, June 30, unaudited) ----------------- ---------------- ----------- 2009 2008 2009 2008 ---- ---- ---- ---- GAAP net income (loss) $(6,339) $2,684 $(29,938) $4,684 Add: FDIC special assessment charge, net of tax 777 777 Add: Goodwill impairment charge, net of tax - - 13,059 - ---- ----- ------ ----- Operating net income (loss) $(5,562) $2,684 $(16,102) $4,684 ======= ====== ======== ====== Diluted earnings (loss) per diluted share --------------------------- GAAP net income (loss) $(0.41) $0.17 $(1.91) $0.30 Operating net income (loss) $(0.36) $0.17 $(1.02) $0.30 Reconciliation of Non GAAP noninterest expense to GAAP noninterest expense (Dollars in thousands, For the three months unaudited) ended June 30, ---------------------- -------------------- Increase/ 2009 2008 (decrease) % change ---- ---- GAAP noninterest expense $25,244 $23,346 $1,898 8% Less: FDIC special assessment charge 1,195 - 1,195 - Less: FDIC assessment charge rate increase 1,569 - 1,569 - ----- ---- ----- ---- Non-GAAP noninterest expense $22,480 $23,346 $(866) -4% ======= ======= The following table presents information with respect to the Company's loan portfolio. Table 2 West Coast Bancorp Period End Loan Portfolio By Category (Dollars in ------------------------------------------------------------- thousands, unaudited) ----------- June 30, % of June 30, % of Change March 31, % of 2009 loans 2008 loans Amount % 2009 loans --------------------------------------------- -------------- Commercial loans $428,852 22% $512,689 24% $(83,837) -16% $462,466 23% Commercial real estate con- struction 71,945 4% 94,583 4% (22,638) -24% 87,561 4% Residential real estate con- struction 129,588 7% 298,141 14% (168,553) -57% 157,050 8% ------- -- ------- -- -------- ------- -- Total real estate construction loans 201,533 11% 392,724 18% (191,191) -49% 244,611 12% Mortgage 83,941 4% 87,735 4% (3,794) -4% 83,889 4% Non- standard mortgage 23,916 1% 30,536 1% (6,620) -22% 26,111 1% Home equity 280,366 15% 259,500 12% 20,866 8% 281,186 14% ------- -- ------- -- ------ ------- -- Total real estate mortgage 388,223 20% 377,771 18% 10,452 3% 391,186 20% Commercial real estate loans 878,379 46% 847,430 39% 30,949 4% 879,394 46% Installment and other consumer loans 20,041 1% 23,102 1% (3,061) -13% 20,794 1% ------ -- ------ -- ------ ------ -- Total loans $1,917,028 $2,153,716 $(236,688) -11% $1,998,451 ========== ========== ========= ========== Two-step residential construction loans $10,348 1% $145,703 7% $(135,355) -93% $23,725 1% Total loans other than two-step loans 1,906,680 99% 2,008,013 93% (101,333) -5% 1,974,726 99% --------- -- --------- -- -------- --------- -- Total loans $1,917,028 100% $2,153,716 100% $(236,688) -11% $1,998,451 100% ========== ========== ========= ========== The following tables present 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) 2009 2008 2009 --------------------------------- ---- ---- ---- Allowance for credit losses, beginning of period $38,463 $42,454 $29,934 Provision for credit losses 11,393 6,000 23,131 Loan charge-offs: Commercial 1,725 2,118 1,275 Commercial real estate construction - - - Residential real estate construction 7,283 10,028 8,776 ----- ------ ----- Total real estate construction 7,283 10,028 8,776 Mortgage 1,244 95 1,018 Nonstandard mortgage 320 136 1,929 Home equity 529 28 1,281 --- --- ----- Total real estate mortgage 2,093 259 4,228 Commercial real estate 172 - 406 Installment and consumer 267 45 132 Overdraft 230 303 249 --- --- --- Total loan charge-offs 11,770 12,753 15,066 Loan recoveries: Commercial 392 - 217 Commercial real estate construction - - - Residential real estate construction 17 1,239 151 ----- ----- --- Total real estate construction 17 1,239 151 Mortgage - - 3 Nonstandard mortgage - - - Home equity - 25 - - -- - Total real estate mortgage - 25 3 Commercial real estate - - - Installment and consumer 16 28 22 Overdraft 58 52 71 ----- ----- ----- Total loan recoveries 483 1,344 464 ----- ----- ----- Net charge-offs 11,287 11,409 14,602 Total allowance for credit losses $38,569 $37,045 $38,463 ======= ======= ======= Components of allowance for credit losses: Allowance for loan losses $37,700 $35,723 $37,532 Reserve for unfunded commitments 869 1,322 931 --- ----- --- Total allowance for credit losses $38,569 $37,045 $38,463 ======= ======= ======= Net loan charge-offs to average loans (annualized) 2.30% 2.10% 2.92% Allowance for loan losses to total loans 1.97% 1.66% 1.88% Allowance for credit losses to total loans 2.01% 1.72% 1.92% Allowance for loan losses to nonperforming loans 30% 30% 29% Allowance for credit losses to nonperforming loans 30% 31% 30% Table 4 West Coast Bancorp Total Loan Portfolio Allowance For Credit Losses and Net Charge-offs -------------------------- Year to Year to date date June 30, June 30, (Dollars in thousands, unaudited) 2009 2008 --------------------------------- ---- ---- Allowance for credit losses, beginning of period $29,934 $54,903 Provision for credit losses 34,524 14,725 Loan charge-offs: Commercial 3,000 2,741 Commercial real estate construction - - Residential real estate construction 16,059 30,422 ------ ------ Total real estate construction 16,059 30,422 Mortgage 2,262 95 Nonstandard mortgage 2,249 136 Home equity 1,810 28 ------ ------ Total real estate mortgage 6,321 259 Commercial real estate 578 - Installment and consumer 399 119 Overdraft 479 605 ------ ------ Total loan charge-offs 26,836 34,146 Loan recoveries: Commercial 609 32 Commercial real estate construction - - Residential real estate construction 168 1,305 ------ ------ Total real estate construction 168 1,305 Mortgage 3 - Nonstandard mortgage - - Home equity - 52 ------ ------ Total real estate mortgage 3 52 Commercial real estate - - Installment and consumer 38 54 Overdraft 129 120 ------ ------ Total loan recoveries 947 1,563 ------ ------ Net charge-offs 25,889 32,583 ------ ------ Total allowance for credit losses $38,569 $37,045 ======= ======= Components of allowance for credit losses: Allowance for loan losses $37,700 $35,723 Reserve for unfunded commitments 869 1,322 ------ ------ Total allowance for credit losses $38,569 $37,045 ======= ======= Net loan charge-offs to average loans 2.61% 3.00% Allowance for loan losses to total loans 1.97% 1.66% Allowance for credit losses to total loans 2.01% 1.72% Allowance for loan losses to nonperforming loans 30% 30% Allowance for credit losses to nonperforming loans 30% 31% The following table presents information about the Company's total nonperforming assets and delinquent loans. Table 5 West Coast Bancorp Total Loan Portfolio Nonperforming Assets and Delinquencies -------------------------------------- (Dollars in thousands, June 30, June 30, March 31, unaudited) 2009 2008 2009 ---------------------- ---- ---- ---- Loans on nonaccrual status: Commercial $34,396 $4,168 $29,014 Real estate construction: Commercial real estate construction 2,922 - 2,923 Residential real estate construction 56,507 105,270 70,942 ------ ------- ------ Total real estate construction 59,429 105,270 73,865 Real estate mortgage: Mortgage 14,179 1,888 9,467 Nonstandard mortgage 10,486 5,849 10,972 Home equity 1,259 278 961 ----- --- --- Total real estate mortgage 25,924 8,015 21,400 Commercial real estate 6,905 2,074 3,980 Installment and consumer 69 2 22 --- --- --- Total nonaccrual loans 126,723 119,529 128,281 90 days past due not on nonaccrual - - - --- --- --- Total non-performing loans 126,723 119,529 128,281 Other real estate owned 83,830 27,892 87,189 ------ ------ ------ Total non-performing assets $210,553 $147,421 $215,470 ======== ======== ======== Non-performing loans to total loans 6.61% 5.55% 6.42% Non-performing assets to total assets 8.06% 5.60% 8.63% Total Loan Portfolio Delinquent loans 30-89 days past due as a % of loan category ------------------------------------------- (Dollars in thousands, June 30, June 30, March 31, unaudited) 2009 2008 2009 ---------------------- ---- ---- ---- Commercial loans 0.42% 0.19% 0.20% Real estate construction loans 2.93% 1.92% 1.51% Real estate mortgage loans 1.84% 1.42% 0.78% Commercial real estate loans 0.13% 0.10% 0.19% Installment and other consumer loans 0.50% 0.90% 0.96% Delinquent loans 30-89 days past due: Two-step residential construction loans $- $5,462 $- Total loans other than two-step loans 16,082 9,432 9,605 ------ ----- ----- Total delinquent loans 30-89 days past due, not in nonaccrual status $16,082 $14,894 $9,605 ======= ======= ====== Delinquent loans to total loans 0.84% 0.69% 0.48% The following table presents information about the Company's activity in other real estate owned. Table 6 West Coast Bancorp Other real estate owned ("OREO") activity ---------------------------------------------------- (Dollars in Three months Number Three months Number thousands, ended June 30, of ended June 30, of unaudited) 2009 properties 2008 properties ----------- ---------------------------------------------------- Beginning balance $87,189 349 $5,688 24 Additions to OREO(1) 14,819 48 25,390 94 Valuation adjustments to OREO (3,064) - (245) - Disposition of OREO (15,114) (62) (2,941) (10) Ending balance $83,830 335 $27,892 108 West Coast Bancorp Other real estate owned ("OREO") activity ----------------------------------------- Three months Number (Dollars in thousands, ended March 31, of unaudited) 2009 properties -------------------------- -------- ---------- Beginning balance $70,110 288 Additions to OREO(1) 25,931 79 Valuation adjustments to OREO (4,761) - Disposition of OREO (4,091) (18) ------ --- Ending balance $87,189 349 ======= === OREO activity related to two-step loans ---------------------------------------------------- (Dollars in Three months Number Three months Number thousands, ended June 30, of ended June 30, of unaudited) 2009 properties 2008 properties ----------- ---------------------------------------------------- Beginning balance $73,319 296 $5,688 23 Additions to OREO(1) 10,902 33 23,734 87 Valuation adjustments to OREO (2,320) (245) Disposition of OREO (12,269) (51) (2,717) (9) Ending balance $69,632 278 $26,460 101 OREO activity related to two-step loans --------------------------------------- Three months Number (Dollars in thousands, ended March 31, of unaudited) 2009 properties -------------------------- -------- ---------- Beginning balance $60,022 251 Additions to OREO(1) 21,303 62 Valuation adjustments to OREO (4,110) Disposition of OREO (3,896) (17) ------ --- Ending balance $73,319 296 ======= === OREO activity related to loans other than two-step loans -------------------------------------------------------- (Dollars in Three months Number Three months Number thousands, ended June 30, of ended June 30, of unaudited) 2009 properties 2008 properties ----------- -------------------------------------------------------- Beginning balance $13,870 53 $- 1 Additions to OREO(1) 3,917 15 1,656 7 Valuation adjustments to OREO (744) - - Disposition of OREO (2,845) (11) (224) (1) Ending balance $14,198 57 $1,432 7 OREO activity related to loans other than two-step loans -------------------------------------------------------- Three months Number (Dollars in thousands, ended March 31, of unaudited) 2009 properties -------------------------- -------- ---------- Beginning balance $10,088 37 Additions to OREO(1) 4,628 17 Valuation adjustments to OREO (651) Disposition of OREO (195) (1) ---- --- Ending balance $13,870 53 ======= === (1) Includes capitalized cost of OREO. The following table presents information with respect to two-step residential construction related OREO activity and two-step short sales. Table 7 (Dollars in thousands) Total two-step OREO property Two-step related Two-step short sales and OREO activity sales short sales Amount Number Amount Number Amount Number ------ ------ ------ ------ ------ ------ Full year 2008: --------------- Beginning balance January 1, 2008 $3,255 14 Additions to OREO 75,863 294 Capitalized improvements 1,319 Valuation adjustments (4,286) Disposition of OREO properties and short sales (16,129) (57) $(11,448) (40) $(27,577) (97) ------- --- ========= === ======== === Ending balance December 31, 2008 $60,022 251 ======= === Quarterly 2009: --------------- Beginning balance January 1, 2009 $60,022 251 Additions to OREO 20,635 62 Capitalized improvements 668 Valuation adjustments (4,110) Disposition of OREO properties and short sales (3,896) (17) $(2,502) (7) $(6,398) (24) ------ --- Ending balance March 31, 2009 $73,319 296 Additions to OREO 9,822 33 Capitalized improvements 1,080 Valuation adjustments (2,320) Disposition of OREO properties and short sales (12,269) (51) $(1,177) (3) $(13,446) (54) ------- --- Ending balance June 30, 2009 $69,632 278 Full year 2009: --------------- Beginning balance January 1, 2009 $60,022 251 Additions to OREO 30,457 95 Capitalized improvements 1,748 Valuation adjustments (6,430) Disposition of OREO properties and short sales (16,165) (68) $(3,679) (10) $(19,844) (78) ------- --- ======= === ======== === Ending balance June 30, 2009 $69,632 278 ======= === The following table presents information with respect to non two-step related OREO activity and non two-step short sales. Table 8 (Dollars in Total non two- thousands) Non two- step OREO step related Non two-step property sales OREO activity short sales and short sales Amount Number Amount Number Amount Number ---------------------------------------------- Full year 2008: --------------- Beginning balance January 1, 2008 $- 1 Additions to OREO 11,936 42 Capitalized improvements 10 Valuation adjustments (499) Disposition of OREO properties and short sales (1,359) (6) $- - $(1,359) (6) ------ -- == == ====== == Ending balance December 31, 2008 $10,088 37 ====== == Quarterly 2009: --------------- Beginning balance January 1, 2009 $10,088 37 Additions to OREO 4,614 17 Capitalized improvements 14 Valuation adjustments (651) Disposition of OREO properties and short sales (195) (1) $(948) (4) $(1,143) (5) ---- -- Ending balance March 31, 2009 $13,870 53 Additions to OREO 3,841 15 Capitalized improvements 76 Valuation adjustments (744) Disposition of OREO properties and short sales (2,845) (11) $(509) (2) $(3,354) (13) ------ --- Ending balance June 30, 2009 $14,198 57 Full year 2009: --------------- Beginning balance January 1, 2009 $10,088 37 Additions to OREO 8,455 32 Capitalized improvements 90 Valuation adjustments (1,395) Disposition of OREO properties and short ------------- ------------ sales (3,040) (12) $(1,457) (6) $(4,497) (18) ------ --- ======= == ======= === Ending balance June 30, 2009 $14,198 57 ====== === 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 9 West Coast Bancorp Two-Step Loan Portfolio Allowance For Credit Losses and Net Charge-offs Two-Step Portfolio ------------------------------------- Quarter Quarter Quarter ended ended ended (Dollars in thousands, June 30, June 30, March 31, unaudited) 2009 2008 2009 ---------------------- ---- ---- ---- Allowance for credit losses, beginning of period $- $11,812 $421 Provision for credit losses 2,389 1,947 3,103 Charge-offs 2,392 9,718 3,675 Recoveries 3 1,239 151 -- ----- --- Net charge-offs 2,389 8,479 3,524 Total allowance for credit losses $- $5,280 $- === ====== === Components of allowance for credit losses Allowance for loan losses $- $4,858 $- Reserve for unfunded commitments - 422 - --- --- --- Total allowance for credit losses $- $5,280 $- === ====== === Year to date Year to date (Dollars in thousands, June 30, June 30, unaudited) 2009 2008 ---------------------- ---- ---- Allowance for credit losses, beginning of period $421 $31,065 Provision for credit losses 5,492 2,727 Charge-offs 6,067 29,817 Recoveries 154 1,305 --- ----- Net Charge-offs 5,913 28,512 Total allowance for credit losses $- $5,280 === ====== Components of allowance for credit losses Allowance for loan losses $- $4,858 Reserve for unfunded commitments - 422 --- --- Total allowance for credit losses $- $5,280 === ====== Net loan charge-offs to average total loans 0.60% 2.63% The following table presents information about the Company's nonperforming assets and delinquencies in the two-step residential construction loan portfolio. Table 10 West Coast Bancorp Two-Step Residential Construction Loans Nonperforming Assets and Delinquencies -------------------------------------- (Dollars in thousands, June 30, June 30, March 31, unaudited) 2009 2008 2009 ---------------------- ---- ---- ---- Nonaccrual two-step loans $10,348 $98,728 $23,725 90 day past due and accruing interest - - - --- --- --- Total nonperforming two-step loans 10,348 98,728 23,725 Other real estate owned two-step 69,632 26,460 73,319 ------ ------ ------ Total nonperforming two-step assets $79,980 $125,188 $97,044 ======= ======== ======= Delinquent two-step loans 30-89 days past due, not in nonaccrual status $- $5,462 $- Nonperforming two-step assets to total assets 3.06% 4.75% 3.89% Delinquent two-step loans to total two-step loans 0.00% 3.75% 0.00% 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 11 West Coast Bancorp Other than two-step loan portfolio Allowance For Credit Losses and Net Charge-offs other than two-step loans ---------------------------------------- Quarter ended Quarter ended Quarter ended (Dollars in thousands, June 30, June 30, March 31, unaudited) 2009 2008 2009 ---------------------- ---- ---- ---- Allowance for credit losses, beginning of period $38,463 $30,642 $29,513 Provision for credit losses 9,004 4,053 20,028 Loan charge-offs: Commercial 1,725 2,118 1,275 Commercial real estate construction - - - Residential real estate construction 4,891 310 5,101 ----- --- ----- Total real estate construction 4,891 310 5,101 Mortgage 1,244 95 1,018 Nonstandard mortgage 320 136 1,929 Home equity 529 28 1,281 --- -- ----- Total real estate mortgage 2,093 259 4,228 Commercial real estate 172 - 406 Installment and consumer 267 45 132 Overdraft 230 303 249 --- --- --- Total loan charge-offs 9,378 3,035 11,391 Loan recoveries: Commercial 392 - 217 Commercial real estate construction - - - Residential real estate construction 14 - - --- --- --- Total real estate construction 14 - - Mortgage - - 3 Nonstandard mortgage - - - Home equity - 25 - --- --- --- Total real estate mortgage - 25 3 Commercial real estate --- --- --- Installment and consumer 16 28 22 Overdraft 58 52 71 -- -- -- Total loan recoveries 480 105 313 --- --- --- Net charge-offs 8,898 2,930 11,078 Total allowance for credit losses $38,569 $31,765 $38,463 ======= ======= ======= Components of allowance for credit losses: Allowance for loan losses $37,700 $30,865 $37,532 Reserve for unfunded commitments 869 900 931 --- --- --- Total allowance for credit losses $38,569 $31,765 $38,463 ======= ======= ======= Net loan charge-offs to average loans (annualized) 1.81% 0.54% 2.21% Allowance for loan losses to total loans 1.98% 1.54% 1.90% Allowance for credit losses to total loans 2.02% 1.58% 1.95% Allowance for loan losses to nonperforming loans 32% 148% 36% Allowance for credit losses to nonperforming loans 33% 153% 37% Table 12 West Coast Bancorp Other than two-step loan portfolio Allowance For Credit Losses and Net Charge-offs other than two-step loans ------------------------------------- (Dollars in Year to date Year to date thousands, June 30, June 30, unaudited) 2009 2008 ----------- ------- -------- Allowance for credit losses, beginning of period $29,513 $23,838 Provision for credit losses 29,032 11,998 Loan charge-offs: Commercial 3,000 2,741 Commercial real estate construction - - Residential real estate construction 9,992 605 ----- --- Total real estate construction 9,992 605 Mortgage 2,262 95 Nonstandard mortgage 2,249 136 Home equity 1,810 28 ----- -- Total real estate mortgage 6,321 259 Commercial real estate 578 - Installment and consumer 399 119 Overdraft 479 605 --- --- Total loan charge-offs 20,769 4,329 Loan recoveries: Commercial 609 32 Commercial real estate construction - - Residential real estate construction 14 - -- -- Total real estate construction 14 - Mortgage 3 - Nonstandard mortgage - - Home equity - 52 -- -- Total real estate mortgage 3 52 Commercial real estate - - Installment and consumer 38 54 Overdraft 129 120 --- --- Total loan recoveries 793 258 --- --- Net charge-offs 19,976 4,071 ------- ------- Total allowance for credit losses $38,569 $31,765 ======= ======= Components of allowance for credit losses: Allowance for loan losses $37,700 $30,865 Reserve for unfunded commitments 869 900 --- --- Total allowance for credit losses $38,569 $31,765 ======= ======= Net loan charge-offs to average loans 2.01% 0.38% The following table presents information about the Company's nonperforming assets and delinquencies in the loan portfolio excluding two-step residential construction loans. Table 13 West Coast Bancorp Loans Other than Two-Step Loans Nonperforming Assets and Delinquencies -------------------------------------- (Dollars in thousands, June 30, June 30, March 31, unaudited) 2009 2008 2009 ----------- ---- ---- ---- Loans on nonaccrual status: Commercial $34,396 $4,168 $29,014 Real estate construction: Commercial real estate construction 2,922 - 2,923 Residential real estate construction 46,159 6,542 47,217 ------ ----- ------ Total real estate construction 49,081 6,542 50,140 Real estate mortgage: Mortgage 14,179 1,888 9,467 Nonstandard mortgage 10,486 5,849 10,972 Home equity 1,259 278 961 ----- --- --- Total real estate mortgage 25,924 8,015 21,400 Commercial real estate 6,905 2,074 3,980 Installment and consumer 69 2 22 --- --- --- Total nonaccrual loans 116,375 20,801 104,556 90 days past due not on nonaccrual - - - --- --- --- Total non-performing loans 116,375 20,801 104,556 Other real estate owned 14,198 1,432 13,870 ------ ----- ------ Total non-performing assets $130,573 $22,233 $118,426 ======== ======= ======== Delinquent non two-step loans 30-89 days past due, not in nonaccrual status $16,082 $9,432 $9,605 Nonperforming non two-step loans to total non two-step loans 6.10% 1.04% 5.29% Nonperforming non two-step assets to total assets 5.00% 0.84% 4.74% Delinquent non two-step loans to total non two-step loans 0.84% 0.47% 0.49% The following table shows the components of our construction and land loans outside the two-step portfolio as of the dates shown: Table 14 West Coast Bancorp Construction and land loans outside the two-step portfolio --------------------------------------------------- (Dollars in thousands, unaudited) June 30, 2009 June 30, 2008 March 31, 2009 ------------ ------------------------------------------------------- Amount Percent(2) Amount Percent(2) Amount Percent(2) ------------------------------------------------------- Land loans(1) $37,503 16% $44,256 15% $41,483 16% Residential construction loans other than two-step loans 119,274 52% 152,755 52% 133,407 51% Commercial construction loans 72,045 32% 94,779 33% 87,709 33% ------ --- ------ --- ------ --- Total construction and land loans other than two-step loans $228,822 100% $291,790 100% $262,599 100% ======== === ======== === ======== === Components of residential construction and land loans other than two-step loans: Land loans(1) $17,910 13% $25,809 15% $19,831 13% Site development 56,997 42% 75,790 42% 63,262 41% Vertical construction 62,276 45% 76,965 43% 70,145 46% ------ --- ------ --- ------ --- Total residential construction and land loans other than two-step loans $137,183 100% $178,564 100% $153,238 100% ======== === ======== === ======== === Components of commercial construction and land loans: Land loans(1) $19,593 21% $18,447 16% $21,652 20% Site development 607 1% 1,122 1% 607 1% Vertical construction 71,439 78% 93,657 83% 87,102 79% ------ --- ------ --- ------ --- Total commercial construction and land loans $91,639 100% $113,226 100% $109,361 100% ======= === ======== === ======== === Components of total construction and land loans other than two-step loans: Land loans(1) $37,503 17% $44,256 15% $41,483 16% Site development 57,604 25% 76,912 26% 63,869 24% Vertical construction 133,715 58% 170,622 59% 157,247 60% ------- --- ------- --- ------- -- Total construction and land loans other than two-step loans $228,822 100% $291,790 100% $262,599 100% ======== === ======== === ======== === (1) Land loans represent balances that are carried in the Company's residential real estate mortgage and commercial real estate loan portfolios. (2) Calculations have been based on more detailed information and therefore may not recompute exactly due to rounding. The following table shows the components of our nonaccrual construction and land loans outside the two-step portfolio as of the dates shown. Table 15 West Coast Bancorp Nonaccrual construction and land loans outside the two-step portfolio (Dollars in thousands, June 30, 2009 June 30, 2008 March 31, 2009 unaudited) ---------------------------------------------------------- ------------ Percent Percent Percent of of of loan loan loan Amount category(2) Amount category(2) Amount category(2) ------ ----------- ------ ----------- ------ ----------- Land loans(1) $8,625 23.00% $1,396 0.48% $2,092 5.04% Residential construction loans other than two-step loans 46,159 38.70% 6,542 2.24% 47,217 36.39% Commercial construction loans 2,922 4.06% - 0.00% 2,922 3.33% ------ ------- ------- Total nonaccrual construction and land loans other than two- step loans $57,706 25.22% $7,938 2.72% $52,231 19.89% ======= ======= ======= Components of nonaccrual residential construction and land loans other than two-step loans: Land loans(1) $7,629 42.60% $1,396 0.78% $2,092 10.55% Site development 33,721 59.16% 2,830 1.58% 34,316 54.24% Vertical construction 12,438 19.97% 3,712 2.08% 12,901 18.39% ------ ------- ------- Total nonaccrual residential construction and land loans other than two- step loans $53,788 39.21% $7,938 4.45% $49,309 32.18% ======= ======= ======= Components of nonaccrual commercial construction and land loans: Land loans(1) 996 5.08% - 0.00% - 0.00% Site development - 0.00% - 0.00% - 0.00% Vertical construction 2,922 4.09% - 0.00% 2,922 3.35% ------ ------- ------- Total nonaccrual commercial construction and land loans other than two- step loans $3,918 4.28% $- 0.00% $2,922 2.67% ======= ======= ======= Components of total nonaccrual construction and land loans other than two-step loans: Land loans(1) $8,625 23.00% $1,396 0.48% $2,092 5.04% Site development 33,721 58.54% 2,830 0.97% 34,316 53.73% Vertical construction 15,360 11.49% 3,712 1.27% 15,823 10.06% ------ ------- ------- Total nonaccrual construction and land loans other than two- step loans $57,706 25.22% $7,938 2.72% $52,231 19.89% ======= ======= ======= (1) Land loans represent balances that are carried in the Company's residential real estate mortgage and commercial real estate loan portfolios. (2) Calculations have been based on more detailed information and therefore may not recompute exactly due to rounding. The following table shows the components of our delinquent construction and land loans outside the two-step portfolio as of the dates shown. Table 16 West Coast Bancorp Delinquent construction and land loans outside the two- step loan portfolio (Dollars in thousands, June 30, 2009 June 30, 2008 March 31, 2009 unaudited) ----------------------------------------------------------- ------------ Percent Percent Percent of of of loan loan loan Amount category(2) Amount category(2) Amount category(2) ------ ----------- ------ ----------- ------ ----------- Land loans(1) $4,552 12.14% $- 0.00% $452 1.09% Residential construction loans other than two-step loans 5,895 4.94% 1,976 0.68% 3,718 2.84% Commercial construction loans - 0.00% 83 0.03% - 0.00% ------ ------ ------ Total 30-89 days past due construction loans other than two-step loans $10,447 4.57% $2,059 0.71% $4,170 1.60% ======= ====== ====== Components of 30-89 days past due residential construction and land loans other than two- step loans: Land loans(1) $3,961 22.12% $- 0.00% $452 2.28% Site development 2,521 4.42% - 0.00% 1,090 1.79% Vertical construction 3,374 5.42% 1,976 1.11% 2,628 3.75% ------ ------ ------ Total 30-89 days past due residential construction and land loans other than two- step loans $9,856 7.18% $1,976 1.11% $4,170 2.76% ======= ====== ====== Components of 30-89 days past due commercial construction and land loans: Land loans(1) $591 3.02% $- 0.00% $- 0.00% Site development - 0.00% - 0.00% - 0.00% Vertical construction - 0.00% 83 0.07% - 0.00% ------ ------ ------ Total 30-89 days past due commercial construction and land loans $591 0.64% $83 0.07% $- 0.00% ======= ====== ====== Components of total 30-89 days past due construction and land loans other than two-step loans: Land loans(1) $4,552 12.14% $- 0.00% $452 1.09% Site development 2,521 4.38% - 0.00% 1,090 1.77% Vertical construction 3,374 2.52% 2,059 0.71% 2,628 1.67% ------ ------ ------ Total 30-89 days past due construction and land loans other than two- step loans $10,447 4.57% $2,059 0.71% $4,170 1.60% ======= ====== ====== (1) Land loans represent balances that are carried in the Company's residential real estate mortgage and commercial real estate loan portfolios. (2) Calculations have been based on more detailed information and therefore may not recompute exactly due to rounding. 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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