WCBO West Coast Bancorp (MM)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

(RULE 14A-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. 2)

December [    •    ], 2009

To the Shareholders of
West Coast Bancorp:

        We are writing to seek your approval of two important matters that will complete our recent capital raise and permit us to significantly increase our level of Tier 1 common equity capital. On October 23, 2009, we raised $155 million in the aggregate through a private placement to over 20 separate investors of newly issued mandatorily convertible cumulative participating preferred stock, Series A (which we refer to as the "Series A Preferred Stock") and mandatorily convertible cumulative participating preferred stock, Series B (which we refer to as the "Series B Preferred Stock," and together with the Series A Preferred Stock, the "preferred stock"). In the case of four of these investors, we also issued warrants exercisable for preferred stock convertible into an aggregate of 12 million shares of our common stock at an implied exercise price per underlying common share of $2.00. The preferred stock currently bears a quarterly dividend mirroring that paid on our common stock. The Series A Preferred Stock will automatically convert into common stock upon the receipt of the shareholder approvals we are seeking. The Series B Preferred Stock will automatically convert into common stock upon the receipt of the shareholder approvals we are seeking and following the transfer of the Series B Preferred Stock to third parties in a widely dispersed offering as described below in this document.

        A primary purpose of the private placement was to improve West Coast Bancorp's regulatory capital ratios and, in particular, its Tier 1 common equity ratio. As previously disclosed by the Company and described in further detail in this document, on October 22, 2009, West Coast Bank entered into a regulatory agreement, termed a cease-and-desist order, with its primary banking regulators which required that West Coast Bank enhance its regulatory capital levels. This document is being sent to you because, in order to issue sufficient shares of our common stock to complete these investments in their entirety, the approval of our shareholders is required under our Restated Articles of Incorporation and NASDAQ Listing Rule 5635. If we fail to obtain either approval, the capital raise will not achieve the improvements in our regulatory capital ratios in the manner that we intended. This is because neither the Board of Governors of the Federal Reserve System nor any other banking regulator has approved the Series A Preferred Stock or Series B Preferred Stock or determined that they constitute Tier 1 capital or regulatory capital for West Coast Bancorp at the holding company level.

        In addition, as described below in this document, until the shareholder approval of the proposals described in this document are obtained we are not permitted to pay any dividends on or repurchase our common stock. In the event shareholder approval is not obtained before March 1, 2010, the investors would continue to hold the preferred stock (which otherwise would be converted into common stock). At that date, the preferred stock would begin to accrue on a cumulative basis a 15% annual dividend. Finally, warrants entitling the investors to acquire, at an implied exercise price per underlying common share of $0.50, shares of preferred stock convertible into 12 million shares of common stock (which warrants would otherwise expire without value if our shareholders approve the matters described in this document) would become exercisable.

        Upon approval by our shareholders of the proposals discussed in this document, all outstanding shares of the Series A Preferred Stock will automatically convert into our common stock (subject to regulatory ownership restrictions); the Series B Preferred Stock will not bear a 15% annual dividend but instead will participate solely in any common dividend; and all such securities will be treated as Tier 1 common equity for regulatory capital purposes. As a result of the conversion of preferred stock

currently outstanding, our Tier 1 capital ratio would increase from 9.79% to 16.28% at September 30, 2009 (pro forma), our total capital ratio would increase from 11.05% to 17.54% at September 30, 2009 (pro forma), and our total equity to assets ratio would increase from 6.09% to 10.78% at September 30, 2009 (pro forma). In addition, warrants entitling the investors to acquire shares of preferred stock convertible into 12 million shares of common stock, at an implied exercise price per underlying common share of $0.50, will expire without value.

         You are cordially invited to attend a Special Meeting of Shareholders of West Coast Bancorp to be held on [    •    ] at [    •    ], Pacific Time, at [    •    ]. At the Special Meeting, you will be asked to consider and vote on proposals to (i) amend our Restated Articles of Incorporation to increase the number of authorized shares of all classes of stock and common stock and (ii) approve the issuance of shares of common stock in connection with the conversion of the preferred stock (including the preferred stock issuable upon exercise of the warrants) into our common stock, in each case issued to the investors pursuant to the Investment Agreements, for purposes of NASDAQ Listing Rule 5635.

         THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF THESE PROPOSALS. We encourage you to read the accompanying document, which provides information regarding West Coast Bancorp and the matters to be voted on at the Special Meeting.

        It is important that your shares be represented at the Special Meeting. Whether or not you plan to attend the Special Meeting, you may vote your common shares via a toll-free telephone number or on the Internet or you may complete, date, sign and return the enclosed proxy card in the enclosed postage-paid envelope. If you attend the meeting and prefer to vote in person, you may do so.

WEST COAST BANCORP
5335 Meadows Road, Suite 201
Lake Oswego, Oregon 97035
(503) 684-0884

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON [    •    ], 2010
[    •    ] Pacific Time

To the Shareholders of West Coast Bancorp:

        A Special Meeting of shareholders (which we refer to as the "Special Meeting") of West Coast Bancorp (which we refer to as the "Company") will be held on [    •    ] at [    •    ], Pacific Time, at [    •    ], for the following purposes:

1.

Amendment of Restated Articles of Incorporation.     To approve an amendment to our Restated Articles of Incorporation to increase the number of authorized shares of common stock to 250,000,000 (and, correspondingly, to increase the total number of authorized shares of all classes of stock from 60,000,000 to 260,000,000) (Proposal 1);



2.

Issuance of common stock.     To approve for purposes of NASDAQ Listing Rule 5635 the issuance of shares of our common stock in connection with the conversion of our Mandatorily Convertible Cumulative Participating Preferred Stock, Series A and Mandatorily Convertible Cumulative Participating Preferred Stock, Series B (including the preferred stock issuable upon exercise of the warrants) into our common stock (Proposal 2); and



3.

Adjournment of Special Meeting if Necessary or Appropriate.     To approve the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt Proposals 1 or 2.

        These items of business are more fully described in the document accompanying this Notice.

         The Board of Directors unanimously recommends that shareholders vote "FOR" Proposals 1, 2 and 3.

        The Board of Directors has fixed the close of business on [    •    ], 2009 as the record date for the determination of shareholders entitled to notice of and to vote at the Special Meeting. Only shareholders of record at the close of business on that date will be entitled to notice of and to vote at the Special Meeting or any adjournments thereof. The Company is first mailing this document to its shareholders on or about [    •    ], 2009.

By order of the Board of Directors

IT IS IMPORTANT THAT YOU VOTE PROMPTLY. THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE VOTE YOUR COMMON SHARES VIA THE TOLL-FREE TELEPHONE NUMBER LISTED ON THE PROXY CARD, THE INTERNET OR BY MAIL.

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be held on [    •    ], 2010: This document, along with our Annual Report on Form 10-K for the fiscal year ended December 31, 2008 and our 2008 Annual Report are available free of charge on the Investor Information section of our website at www.wcb.com .

WEST COAST BANCORP
5335 Meadows Road, Suite 201
Lake Oswego, Oregon 97035
(503) 684-0884

PROXY STATEMENT FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON [    •    ], 2010
[    •    ] Pacific Time

Solicitation, Voting and Revocability of Proxies

        This document is being furnished to you as a shareholder of West Coast Bancorp as part of the solicitation of proxies by our Board of Directors (our "Board") from holders of our outstanding shares of common stock, no par value, for use at the Special Meeting of our shareholders to be held on [    •    ] at [    •    ], Pacific Time, at [    •    ], and at any adjournments thereof. This document, together with the enclosed proxy card, is being mailed to our shareholders on or about [    •    ], 2009.

Questions and Answers about these Proxy Materials and the Special Meeting:

Question:    Why am I receiving these materials?

Answer:     We have raised an aggregate of $155 million through a private placement to over 20 separate investors (whom we refer to as the "investors") of newly issued preferred stock and warrants. In order for the private placement to be fully accomplished as we contemplate and to achieve its desired purpose of increasing our level of Tier 1 common equity capital, our shareholders must amend our Restated Articles of Incorporation to increase the number of shares of authorized common stock to 250,000,000 and also must approve the issuance of common stock to the investors upon the conversion of the preferred stock (including the preferred stock issuable upon exercise of the warrants) in accordance with NASDAQ Listing Rule 5635. In order to obtain the requisite shareholder approvals, we are calling a Special Meeting of our shareholders, to be held on [    •    ], 2010. Our Board is providing these proxy materials to you in connection with the Special Meeting. As a shareholder of record of our common stock, you are invited to attend the Special Meeting, and are entitled to and requested to vote on the proposals described in this document.

Question:    Who is entitled to vote?

Answer:     All shareholders who were shareholders of record of our common stock at the close of business on [    •    ], 2009, and only those shareholders, will be entitled to vote at the Special Meeting.

Shares of the preferred stock are not entitled to vote at the Special Meeting.

Question:    How many shares are eligible to be voted?

Answer:     As of the record date of [    •    ], 2009, we had [    •    ] shares of our common stock outstanding. Each outstanding share of our common stock will entitle its holder to one vote on each matter to be voted on at the Special Meeting.

As of the record date, our directors and executive officers as a group owned [    •    ] shares of our common stock, or [    •    ] percent of the total number of shares entitled to vote at the Special Meeting. Our directors and executive officers have indicated that they will vote their shares in favor of each proposal described in this document.

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Question:    What am I voting on?

Answer:     You are voting on the following matters:

•

A proposal to approve an amendment to our Restated Articles of Incorporation to increase the number of authorized shares of our common stock to 250,000,000 (and, correspondingly, to increase the total number of authorized shares of all classes of stock from 60,000,000 to 260,000,000) (Proposal 1);



•

A proposal to approve for purposes of NASDAQ Listing Rule 5635 the issuance of shares of our common stock in connection with the conversion of the preferred stock (including the preferred stock issuable upon exercise of the warrants) into our common stock (Proposal 2); and



•

A proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt the foregoing proposals (Proposal 3).

In this document, we refer to approval of Proposals 1 and 2 collectively as the "Shareholder Approvals." Both Proposal 1 and Proposal 2 must be approved by our shareholders for the private placement to be fully completed in the intended form.

Question:    What securities did the Company issue to the investors in the private placement?

Answer:     In the private placement, the Company issued:

•

an aggregate of 1,428,849 shares of Series A Preferred Stock, which will automatically convert into an aggregate of 71,442,450 shares of our common stock at a per common share conversion price of $2.00 upon receipt of the Shareholder Approvals, in each case subject to adjustment in accordance with the terms of the Series A Preferred Stock;



•

an aggregate of 121,328 shares of Series B Preferred Stock, which will automatically convert into an aggregate of 6,066,400 shares of our common stock at a per common share conversion price of $2.00 upon receipt of the Shareholder Approvals and the transfer of the Series B Preferred Stock to third parties in a widely dispersed offering, in each case subject to adjustment in accordance with the terms of the Series B Preferred Stock;



•

to four of the investors (whom we refer to as the "Specified Investors"), warrants to purchase an aggregate of 240,000 shares of Series B Preferred Stock (which we refer to as the "Class C Warrants") at an exercise price of $100.00 per preferred share (an implied exercise price per underlying common share of $2.00); and



•

warrants to purchase an aggregate of 117,972 shares of Series A Preferred Stock (which we refer to as the "Class B Warrants") at an exercise price of $25.00 per preferred share (an implied exercise price per underlying common share of $0.50), and warrants to purchase an aggregate of 122,028 shares of Series B Preferred Stock (which we refer to as the "Class D Warrants") at an exercise price of $25.00 per preferred share (an implied exercise price per underlying common share of $0.50). The Class B Warrants and Class D Warrants are only exercisable if the Shareholder Approvals have not been obtained before March 1, 2010, and they will expire automatically upon receipt of such approvals. The shares of Series A Preferred Stock received upon the exercise of the Class B Warrants (assuming full exercise of such warrants on or after March 1, 2010 and prior to the expiration of such warrants) will automatically convert into an aggregate of 5,898,600 shares of our common stock upon receipt of the Shareholder Approvals, in each case subject to adjustment in accordance with the terms of the Series A Preferred Stock. The shares of Series B Preferred Stock received upon the exercise of the Class D Warrants (assuming full exercise of such warrants on or after March 1, 2010 and prior to the expiration of such warrants) will automatically convert into an aggregate of 6,101,400 shares of our common stock upon receipt of the Shareholder Approvals and the transfer of the Series B Preferred

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Stock to third parties in a widely dispersed offering, in each case subject to adjustment in accordance with the terms of the Series B Preferred Stock. We refer to the Class B Warrants, the Class C Warrants and the Class D Warrants collectively as the "warrants."

The shares of Series A Preferred Stock acquired by the investors in the private placement will automatically convert into our common stock on the fifth business day following the date on which we receive the Shareholder Approvals. To the extent that conversion of the Series A Preferred Stock would cause the holder to own more than 9.9% of any class of our voting securities or be subject to the receipt of required regulatory approvals, delivery of our common stock would be delayed until that limit would not be exceeded and any required regulatory approvals are obtained.

Certain of the investors acquired shares of Series B Preferred Stock in the private placement as a result of bank regulatory ownership restrictions. Shares of Series B Preferred Stock will convert automatically into our common stock following both (1) the receipt of the Shareholder Approvals and (2) the transfer of the Series B Preferred Stock to a third-party transferee in (a) a widespread public distribution, including pursuant to Rule 144 under the Securities Act of 1933, as amended (which we refer to as the "Securities Act"), (b) a transfer in which no transferee (or group of associated transferees) would receive more than 2% of any class of voting securities of the Company or (c) a transfer to a transferee that would control more than 50% of the voting securities of the Company without any transfer from the transferor (we collectively refer to these types of transfers as a "widely dispersed offering").

In addition to the shares of Series B Preferred Stock issued at the closing of the private placement, Series B Preferred Stock will also be issued in connection with the exercise of the Class C Warrants and the exercise (if any) of the Class D Warrants, and in some cases due to bank regulatory restrictions on ownership levels, in connection with the exercise (if any) of the Class B Warrants.

Question:    Why is the Company seeking shareholder approval for the amendment to its Restated Articles of Incorporation to increase the number of authorized shares of our common stock to 250,000,000?

Answer:     Our Restated Articles of Incorporation currently authorize the issuance of 50,000,000 shares of our common stock. As of [    •    ], the record date, [    •    ] shares of our common stock were issued and outstanding. In order to issue the shares of common stock necessary to complete the private placement in its entirety in the manner that we and the investors contemplated—i.e., through the conversion of the Series A Preferred Stock and, as applicable, the Series B Preferred Stock (including preferred stock issuable upon exercise of the warrants) into our common stock—the number of shares of our common stock authorized for issuance must be increased. The proposed authorized number of 250,000,000 is greater than the number of shares of our common stock that would be required to complete the private placement as contemplated. The additional shares authorized for issuance will provide us with the flexibility to issue additional shares from time to time as our Board may determine for future financings, strategic business relationships, stock-based incentives to employees, directors and consultants and for other purposes.

As of the date of this document, other than the issuance and sale of shares pursuant to the private placement, upon the exercise of outstanding options, restricted stock grants and other awards under our current stock plans and upon the exercise of outstanding warrants, our Board has no agreement, arrangement or intention to issue any of the shares for which approval is sought. Other than with respect to Proposals 1 and 2, our Board does not intend to solicit further shareholder approval prior to the issuance of any additional shares of common stock, except as may be required by applicable law, rules of the NASDAQ or other applicable stock exchange requirements.

Question:    Why is the Company seeking shareholder approval for the issuance of our common stock?

Answer:     Because our common stock is listed on the NASDAQ Global Select Market, we are subject to NASDAQ rules and regulations. NASDAQ Listing Rule 5635 requires shareholder approval prior to

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the issuance of common stock, or securities convertible into or exercisable for common stock, equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for less than the greater of book value or market value of the stock.

The proposed conversion of the preferred stock (including the preferred stock issuable upon exercise of the warrants) for shares of our common stock falls under this rule because the common stock issuable upon conversion of the preferred stock will exceed 20% of both the voting power and number of shares of our common stock outstanding before the issuance, and the negotiated price per share of common stock on an as-converted basis was below both the book value and market value of our common stock.

Question:    Must the shareholders approve both the Shareholder Approvals (Proposal 1 and Proposal 2) for the private placement to proceed as intended by the Company?

Answer:     Yes.

Question:    How will the conversion of the preferred stock occur?

Answer:     We and the investors intended that the private placement ultimately be in our common equity and thereby enhance our Tier 1 common equity ratio. Because of the need to obtain both Shareholder Approvals in order to issue the amount of our common stock implied by the size of the private placement, we initially issued the nonvoting Series A Preferred Stock to the investors and intend that it will automatically convert into shares of our common stock upon the receipt of the Shareholder Approvals. At that time, each outstanding share of Series A Preferred Stock will automatically convert into a number of shares of common stock determined by dividing (i) $100 (the purchase price per share of the Series A Preferred Stock) by (ii) the conversion price of the Series A Preferred Stock then in effect, subject to any applicable adjustment described under "Description of the Preferred Stock—Anti-Dilution Provision." The initial conversion price of the Series A Preferred Stock is $2.00 per share, which results in an initial conversion rate of 50 shares of common stock for each share of Series A Preferred Stock.

An aggregate of 121,328 shares of Series B Preferred Stock were issued at the closing of the private placement. The Series B Preferred Stock will also be issued in connection with the exercise of the Class C Warrants and the exercise (if any) of the Class D Warrants, and in some cases due to regulatory restrictions on ownership levels, in connection with the exercise (if any) of the Class B Warrants. The Series B Preferred Stock will convert automatically into our common stock following (1) the receipt of the Shareholder Approvals and (2) the transfer of the Series B Preferred Stock to a third-party in a widely dispersed offering. At the time of conversion, the applicable shares of Series B Preferred Stock will automatically convert into a number of shares of common stock determined by dividing (i) $100 (the purchase price per share of the Series B Preferred Stock) by (ii) the conversion price of the Series B Preferred Stock then in effect, subject to any applicable adjustment described under "Description of the Preferred Stock—Anti-Dilution Provision." The initial conversion price of the Series B Preferred Stock is $2.00 per share, which results in an initial conversion rate of 50 shares of common stock for each share of Series B Preferred Stock.

Question:    How does the Company's Board of Directors recommend that I vote?

Answer:     Our Board approved the private placement and the entry by the Company into the Investment Agreements, and shareholder approval of both Proposal 1 and Proposal 2 is necessary for the private placement to be completed in its intended form. Accordingly, our Board unanimously recommends that you vote "FOR" the proposal to approve an amendment to our Restated Articles of Incorporation to increase the number of authorized shares of all classes of stock and common stock (Proposal 1), "FOR" the proposal to approve for purposes of Rule 5635 of the NASDAQ Listing Rules the issuance of shares of common stock in connection with the conversion of the preferred stock (including the preferred stock issuable upon exercise of the warrants) into our common stock (Proposal

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2), and "FOR" the proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies (Proposal 3). Each member of our Board has indicated that he or she will vote in favor of these proposals.

Question:    What happens if the Shareholder Approvals are received before March 1, 2010, and what are the resulting effects on shares of common stock held by existing shareholders?

Answer:     If the Shareholder Approvals are received before March 1, 2010, we will issue to the investors a total of 71,442,450 shares of our common stock upon conversion of all of the shares of the Series A Preferred Stock, which, based on the number of shares of our common stock outstanding on the record date, will represent, in the aggregate, approximately [    •    ]% of the total number of shares of common stock outstanding immediately after giving effect to such conversion.

The Series B Preferred Stock (including that received upon the exercise of the Class C Warrant) will convert into common stock following receipt of the Shareholder Approvals and the transfer of the Series B Preferred Stock to a third party in a widely dispersed offering. Based on the number of shares of our common stock outstanding on the record date, and assuming that the 121,328 shares of Series B Preferred Stock currently outstanding are converted into 6,066,400 shares of our common stock, and that all of the outstanding Class C Warrants are exercised for 240,000 shares of Series B Preferred Stock which are subsequently converted into 12,000,000 shares of our common stock, there will be [    •    ] shares of our common stock outstanding following such conversions and the conversion of the Series A Preferred Stock described above, and the shares of common stock held by the investors immediately following all such conversions will represent [    •    ]% of the total number of shares of common stock outstanding. If the Shareholder Approvals are received and the preferred stock is converted into common stock, there will be immediate and substantial dilution to the existing holders of common stock as a result of the mandatory conversion.

Upon completion of the conversion, all rights with respect to such shares of Series A Preferred Stock and Series B Preferred Stock will terminate, such shares of Series A Preferred Stock and Series B Preferred Stock will be cancelled and no further dividends will accrue on such shares. In addition, the restrictions under the terms of the preferred stock on our redeeming, purchasing or acquiring any shares of common stock or other junior securities, and from paying dividends on any shares of our common stock or other junior securities, would cease to apply.

If the Shareholder Approvals are received before March 1, 2010, the Class B Warrants, which cover 117,972 shares of our Series A Preferred Stock, and the Class D Warrants, which cover 122,028 shares of our Series B Preferred Stock, will expire without ever becoming exercisable. Unlike the Class B Warrants and the Class D Warrants, the exercisability of the Class C Warrants is unaffected by receipt of the Shareholder Approvals; the Class C Warrants will be exercisable regardless of whether or not the Shareholder Approvals are received before March 1, 2010.

Upon receipt of the Shareholder Approvals, the investors' private placement in us will be in the form of common stock, (until transfer to a third party in a widely dispersed offering) Series B Preferred Stock and (until exercise) the Class C Warrants, as intended by the Company and the investors, and our Tier 1 common equity ratio will thereby be enhanced as contemplated by the Company.

Question:    What happens if either Shareholder Approval is not received before March 1, 2010 or at any time thereafter?

Answer:     If either Shareholder Approval is not obtained at the Special Meeting or any subsequent meeting of our shareholders, on and after March 1, 2010:

•

all outstanding Series A Preferred Stock and Series B Preferred Stock, which currently accrue dividends on an as-converted basis at the rate payable on our common stock (currently zero due to the announced suspension of dividend payments on our common stock), would instead accrue

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dividends at an annual rate of 15% of $100 (the purchase price per share of the preferred stock)—equivalent to a $15.00 annual dividend per share of preferred stock. We refer to these dividends as the "Special Dividends." The Special Dividends on the preferred stock will be cumulative, which means that they will accrue regardless of whether the Board declares a dividend with respect to the preferred stock for any dividend period;

•

the Class B Warrants will be exercisable for an aggregate of 117,972 shares of Series A Preferred Stock (or to the extent that Series A Preferred Stock cannot be issued due to regulatory ownership restrictions, Series B Preferred Stock) that will accrue Special Dividends, at an implied initial exercise price of $0.50 per underlying common share, which is substantially lower than the market price of our common stock as of the date of this document;



•

the Class C Warrants will be exercisable for an aggregate of 240,000 shares of Series B Preferred Stock that will accrue Special Dividends;



•

the Class D Warrants will be exercisable for an aggregate of 122,028 shares of Series B Preferred Stock that will accrue Special Dividends, at an implied initial exercise price of $0.50 per underlying common share, which is substantially lower than the market price of our common stock as of the date of this document;



•

the preferred stock, including any preferred stock received upon exercise of the Class B Warrants, Class C Warrants or Class D Warrants, will not convert into our common stock without receipt of the Shareholder Approvals;



•

we will be prohibited from paying any dividends on our common stock and from redeeming, purchasing or acquiring any shares of our common stock; and



•

we will not have enhanced our capital structure as we intended in entering into the Investment Agreements.

Question:    What is the effect on the Class B Warrants, the Class C Warrants and the Class D Warrants if the Shareholder Approvals are received on or after March 1, 2010?

Answer:     Receipt of the Shareholder Approvals on or after March 1, 2010 will have no effect on the exercisability of the Class C Warrants; such warrants will remain exercisable regardless of when the Shareholder Approvals are received. If the Shareholder Approvals are obtained on or after March 1, 2010, any Class B Warrants and Class D Warrants not yet exercised will terminate and no longer be exercisable. Any shares of Series A Preferred Stock or Series B Preferred Stock issued upon exercise of the Class B Warrants or Class D Warrants on or after March 1, 2010 but prior to the expiration of the warrants will be identical to other shares of Series A Preferred Stock or Series B Preferred Stock in all respects and are mandatorily convertible into shares of our common stock on the same terms as such other shares in the respective series. The timing of the receipt of the Shareholder Approvals (whether before, on or after March 1, 2010) will not impact the convertibility of the preferred stock upon the receipt of such approvals and, in the case of the Series B Preferred Stock, transfer to a third party in a widely dispersed offering.

Question:    What vote is required to approve the proposals at the Special Meeting?

Answer:     The proposals to be considered at the Special Meeting require the following votes in order to be approved:

•

Approval of the proposal to amend our Restated Articles of Incorporation to increase the number of authorized shares of common stock to 250,000,000 (and, correspondingly, to increase the total number of authorized shares of all classes of stock from 60,000,000 to 260,000,000) requires that the votes cast by the holders of stock having voting power present at the Special Meeting in person or by proxy favoring the action exceed the votes cast opposing the action.

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•

Under the rules of the NASDAQ, approval of the proposal to authorize the issuance of shares of common stock in connection with the conversion of the preferred stock into, and exercise of the warrants for, common stock requires also that the majority of votes cast on the proposal are cast in favor of the proposal.



•

Approval of the proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies requires the affirmative vote of the holders of a majority of the stock represented at the Special Meeting in person or by proxy, whether or not a quorum exists.

Assuming the presence of a quorum, failure to vote or a broker non-vote will not count as a vote cast on the proposals. Broker non-votes will count towards obtaining a quorum for the proposals.

Question:    How can I vote my shares?

Answer:     If your shares are held in "street name" by a broker, the broker will vote your shares for you, but only if you provide instructions to your broker on how to vote. You should follow the directions provided by your broker regarding how to instruct your broker to vote your shares. Without those instructions, your shares will not be voted.

If you hold your common stock in your own name and not through a broker or another nominee, you may vote your shares of common stock as follows, subject to compliance with the applicable cutoff times and deadlines described below in the "—Vote by Telephone," "—Vote by Internet" and "—Vote by Proxy" paragraphs:

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by using the toll-free telephone number listed on the proxy card,



•

by using the Internet website listed on the proxy card,



•

by signing, dating and mailing the proxy card in the enclosed postage-paid envelope, or



•

by attending the Special Meeting and voting in person.

Whichever of these methods you select to transmit your instructions, the proxy holders will vote your common stock in accordance with your instructions. If you give a proxy without specific voting instructions, your proxy will be voted by the proxy holders as recommended by our Board.

        Vote by Telephone.     If you hold your common stock in your own name and not through your broker or another nominee, you can vote your shares of common stock by telephone by dialing the toll-free telephone number printed on your proxy card. Telephone voting is available 24 hours a day until 11:59 p.m., Pacific Time, on [    •    ], 2010 (until 11:59 p.m., Pacific Time, on [    •    ], 2010 for shares held through the West Coast Bancorp 401(k) Plan). Easy-to-follow voice prompts allow you to vote your shares of common stock and confirm that your instructions have been properly recorded. If you vote by telephone, you do not need to return your proxy card.

        Vote by Internet.     If you hold your common stock in your own name and not through your broker or another nominee, you can choose to vote via the Internet. The website for Internet voting is printed on your proxy card. Internet voting is available 24 hours a day until 11:59 p.m., Pacific Time, on [    •    ], 2010 (until 11:59 p.m., Pacific Time, on [    •    ], 2010 for shares held through the West Coast Bancorp 401(k) Plan). As with telephone voting, you will be given the opportunity to confirm that your instructions have been properly recorded. If you vote via the Internet, you do not need to return your proxy card.

        Vote by Mail.     You can vote by mail by signing, dating and returning the enclosed proxy card in the enclosed postage-paid envelope. Proxy cards sent by mail must be received by [    •    ], 2010 (by [    •    ], 2010 for shares held through the West Coast Bancorp 401(k) Plan).

The telephone and Internet voting procedures are designed to authenticate shareholders' identities, to allow shareholders to give their voting instructions and to confirm that shareholders' instructions have

7

been recorded properly. Shareholders voting via the Internet should understand that there may be costs associated with electronic access, such as usage charges from Internet access providers and telephone companies, that must be borne by the shareholder.

You can revoke a proxy at any time before the vote is taken at the Special Meeting by submitting a properly executed proxy of a later date by mail, telephone or Internet, or by attending the Special Meeting and voting in person. Communications about revoking your proxies should be addressed to the Secretary of the Company at 5335 Meadows Road, Suite 201, Lake Oswego, Oregon 97035. If your shares are held in street name, you should follow the instructions of your bank, broker or other nominee regarding the revocation of proxies. Please note that attendance at the Special Meeting will not, in itself, constitute revocation of your proxy.

Question:    Who should I call if I have questions or need assistance voting my shares?

Answer:     Please call our proxy solicitor: Morrow & Co., LLC at (800) 607-0088. Banks and brokers should call (800) 662-5200.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        Statements in this document regarding future events, performance or results are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (which we refer to as the "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, any failure to obtain the shareholder approvals sought in this document and any resulting inability to complete the capital raise in the manner intended, and 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 June 30, 2009, including under the headings "Forward Looking Statement Disclosure" and in "Risk Factors."

8

RECENT DEVELOPMENTS

Regulatory Orders

        West Coast Bank (which we refer to as the "Bank"), a wholly owned banking subsidiary of the Company, entered into a Stipulation and Consent agreeing to the issuance of an Order to Cease and Desist (which we refer to as the "Order") with the Federal Deposit Insurance Corporation (which we refer to as the "FDIC") and the Oregon Division of Finance and Corporate Securities (which we refer to as the "DFCS") effective October 22, 2009, addressing, among other items, management of asset quality and increased capital for the Bank.

        Among other things, the Order requires the Bank to:

•

No later than December 31, 2009 and during the life of the Order, maintain a Tier 1 capital to total assets leverage ratio of not less than 10 percent and a total risk-based capital ratio of not less than 12 percent;



•

Within 30 days of the Order, eliminate from its books, by charge-off or collection, all assets classified "loss";



•

Within 90 days of the Order, reduce assets classified "substandard" in relation to Tier 1 capital plus the allowance for loan and lease losses to not more than 90 percent; within 180 days from the effective date of the Order, to not more than 70 percent; within 270 days from the effective date of the Order, to not more than 50 percent and to continue to reduce the volume of such assets after that date;



•

Have and retain qualified management of the Bank, and within 90 days assess management and staffing needs, responsibilities, qualifications and compensation;



•

Assure the on-going participation of the Bank's board of directors in the affairs of the Bank;



•

Cease to extend additional credit to any borrower who has a loan or extension of credit with the Bank that is classified as "loss" or, without the approval of a majority of the Bank's board or senior loan committee, "substandard" or "doubtful," subject to certain exceptions;



•

Within 90 days of the Order, correct all "special mention" deficiencies;



•

Within 30 days of the Order, strengthen the effectiveness of the internal loan review function to ensure timely and adequate loan reviews and to correct identified loan review deficiencies;



•

Analyze, plan for and continue to reduce credit concentrations with respect to commercial real estate loans and acquisition, development and construction loans;



•

Within 90 days of the Order, correct credit data and collateral documentation exceptions;



•

Within 60 days of the Order, develop and submit a written profit plan and a three-year strategic plan, including specific goals for the dollar volume of total loans, total investment securities and total deposits;



•

Within 30 days of the Order, eliminate and correct all violations of law, taking all necessary steps to ensure future compliance with all applicable laws and regulations, and strengthening its appraisal review processes;



•

Within 120 days of the Order, provide training in suspicious activity detection and reporting to all employees, officers, and directors, and shall do so thereafter every year;



•

Within 60 days of the Order, develop or revise, adopt and implement a written liquidity and funds management policy, including with respect to maintaining a minimum Primary Liquidity Ratio of 15 percent and a Net Non-Core Funding Dependency Ratio of 25 percent;

9

•

Conduct a risks analysis with respect to ceasing business activities with certain counterparties identified as having been involved in or suspected of fraudulent activities;



•

Not pay cash dividends without the prior written consent of the FDIC and DFCS;



•

Not solicit, accept, renew or roll over brokered deposits unless it has applied for and been granted a waiver of this prohibition by the FDIC; and



•

Within 30 days of the Order, and within 30 days of the end of each quarter thereafter, furnish written progress reports detailing the form and manner of any actions taken to secure compliance with the Order and the results thereof.

Tax Benefit Preservation Plan

        On October 23, 2009, our Board adopted a Tax Benefit Preservation Plan with Wells Fargo Bank, National Association, as Rights Agent designed to preserve its tax assets. The Board adopted the Tax Benefit Preservation Plan in an effort to protect shareholder value by attempting to protect against a possible limitation on the Company's ability to use net operating losses, tax credits and other tax assets under the Internal Revenue Code of 1986, as amended, and rules promulgated by the Internal Revenue Service.

        Under the Tax Benefit Preservation Plan, from and after November 2, 2009, each share of our common stock will carry with it one preferred share purchase right (a "Right"), each share of the Company's Series A Preferred Stock will carry with it 50 Rights (subject to adjustment) and each share of the Company's Series B Preferred Stock will carry with it 50 Rights (subject to adjustment), until the Distribution Date (as such term is defined in the Tax Benefit Preservation Plan) or earlier expiration of the Rights, as described in the Tax Benefit Preservation Plan. In general, the Rights will work to impose a significant penalty upon any person or group which becomes the "Beneficial Owner" (as such term is defined in the Tax Benefit Preservation Plan) of 4.9% or more of the Company's outstanding common stock after October 23, 2009, without the approval of the Board. A shareholder who was a Beneficial Owner of 4.9% or more of the outstanding common stock as of October 23, 2009 will not trigger the Rights so long as such shareholder does not (i) become the Beneficial Owner of additional shares of common stock representing 0.2% or more of the shares of common stock then outstanding or (ii) become the Beneficial Owner of less than 4.9% ownership of the outstanding common stock and then reacquire shares that would result in such shareholder becoming the Beneficial Owner of 4.9% or more of the outstanding common stock. Any holder of the preferred stock and warrants is deemed to "beneficially own" shares of our common stock into which such preferred stock (including preferred stock issuable upon exercise of the warrants) is convertible. The Board may, in its sole discretion, exempt any person or group for purposes of the Plan if it determines the acquisition by such person or group will not jeopardize tax benefits or is otherwise in the Company's best interests.

10

BACKGROUND TO THE PROPOSALS

        Over the past eighteen months, our Board of Directors and management have considered a range of alternative strategies to continue to maintain our capital ratios at levels above those required to be considered well-capitalized for regulatory purposes in light of the credit quality and loan loss challenges, liquidity pressures, and reported operating losses resulting from the disruptions in the credit and real estate markets and the weakening economy, including in particular the soft regional economic conditions in Oregon and Washington. During the third quarter of 2008, in an effort to preserve capital we reduced the quarterly cash dividend on our shares of common stock to $.01 per share. Also during and following this time, management actively sought to enhance capital and liquidity levels, including by undertaking expense reduction initiatives, substantially reducing its risk weighted assets and in particular exposure to residential land and construction loans and non-owner occupied term commercial real estate loans, as well as lending primarily to existing qualified borrowers. More recently, the Company elected to eliminate common stock dividends entirely and defer dividend payments on its trust preferred securities, as is permitted by the terms of those securities.

        In February 2009, the Company engaged Sandler O'Neill + Partners, L.P. to act as its financial adviser. Thereafter, with Sandler O'Neill's assistance, the Board and management discussed alternative strategies for enhancing the Company's capital ratios, including dispositions of certain assets, public and private capital raises, and opportunities for potential business combination transactions. The Board instructed management and Sandler O'Neill to comprehensively review these potential strategies. Thereafter, the Board regularly met with management and Sandler O'Neill to receive updates and to discuss strategies. Also during this time, the Company engaged Wachtell, Lipton, Rosen & Katz to act as its legal advisor in connection with considering capital raising strategies.

        Starting in early March 2009, the Company began exploring opportunities for certain asset sales. After an extensive review which included discussions with potentially interested parties, the Board determined in May 2009 to concurrently focus on a potential capital raise. In light of the Board's and management's objectives for the size and terms of a potential capital raise, conditions in the public trading markets generally and for the Company's common stock, and specifically the Company's market capitalization, the relatively limited number of Company common shares authorized and available for issuance in a capital raise, and Sandler O'Neill's views regarding the significant challenges the Company would face in pursuing a public offering, the Board determined to focus primarily on potential private capital raises.

        In May 2009, Sandler O'Neill was formally engaged as sole placement agent and directed to speak to potential investors on the Company's behalf to assess their level of interest in a potential private placement of equity securities. At the outset, the Company and Sandler O'Neill understood that it would be necessary and desirable to identify one or more so-called "key" investors to facilitate due diligence and determination of investment terms and pricing. While undertaking this role, in mid-June 2009 representatives of Sandler O'Neill spoke with representatives of MFP Investors LLC, the Glick Family, and Headwaters Capital LLC, each of which expressed an interest in being a "key" investor.

        In mid-July 2009, Sandler O'Neill began to discuss separately with each of the three key investors (each of whom had entered into confidentiality agreements with the Company) the potential private placement and how the terms of such an investment could be structured in view of regulatory control requirements, NASDAQ listing standards and necessary shareholder approvals, and each of the key investors conducted due diligence on the Company.

        The Company and the potential investors agreed at the outset that the structure of the investment should emphasize common equity, reflecting the increased market and regulatory focus on the Tier 1 common equity ratio. During August 2009, discussions continued with a view to refining the terms of an investment and addressing structuring issues. The parties understood that, as a result of the proposed size of the private placement and their mutual intent that the investment ultimately be in the

11

form of Tier 1 common equity securities, the approval of the Company's shareholders would be required. In addition, the Company recognized that in order to incentivize each of the investors to fully fund its investment prior to the receipt of such approval, it would be reasonable for the securities issued to include elements to compensate the investors in a reasonable manner in the event such approval was not received. Also during this time discussions were held with representatives of the Federal Reserve, the primary regulator of our holding company, regarding the structure of the securities to be issued in the proposed private placement, the treatment of the securities under its capital adequacy rules, and the permissibility of the investment under the Federal Reserve's practice and policies relating to non-controlling investments in bank holding companies. Throughout this period, the Company's senior management, Sandler O'Neill, and Wachtell Lipton updated the Board regarding the progress of discussions and the potential terms of the private placement. Discussions between the Company and the individual investors continued and terms for the private placement, as well as a governance and investment structure that was believed to be acceptable to the Federal Reserve, were finalized.

        During this time, the Company also remained in regular contact with representatives of the FDIC and the DFCS, the Bank's primary regulators. The Board, senior management, the Company's outside advisors and the Bank's primary regulators had discussed the Bank's capital levels and other matters pertaining to the operations of the Bank, and, as a result of such discussions, the Bank entered into a Stipulation and Consent agreeing to the issuance of the Order dated October 22, 2009 as described under "Recent Developments—Regulatory Orders". Among the provisions of the Order is a requirement that, during the life of the Order, the Bank maintain a Tier 1 leverage ratio of at least 10% and a total risk based capital ratio of at least 12%.

        On October 23, 2009, following approval by the Company's Board of Directors, the Company entered into the Investment Agreements with each of the investors, and completed the private placement in which it issued, in exchange for gross aggregate proceeds of $155 million: (i) a total of 1.55 million shares of Series A Preferred Stock and Series B Preferred Stock, convertible into an aggregate of 77.5 million shares of our common stock (which pay Special Dividends described on page [    •    ] of this document in the event the Shareholder Approvals are not obtained before March 1, 2010), (ii) to the Specified Investors only, Class C Warrants, in the aggregate exercisable for 240,000 shares of Series B Preferred Stock, at an exercise price per underlying share of common stock of $2.00 and (iii) to all of the investors, contingent Class B or Class D Warrants collectively exercisable only in the event that the Shareholder Approvals are not obtained before March 1, 2010 for an aggregate of 240,000 shares of Series A Preferred Stock and Series B Preferred Stock (mandatorily convertible into an aggregate of 12 million shares of our common stock on the same terms as all other preferred shares of such series) at an exercise price per underlying share of common stock of $0.50. All shares of Series A Preferred Stock and Series B Preferred Stock (including any preferred stock issued upon exercise of the warrants) are mandatorily convertible into our common stock upon, and will not convert into our common stock until, receipt of the Shareholder Approvals and, in the case of the Series B Preferred Stock only, transfer of the preferred stock to a third party in a widely dispersed offering.

        Following the public announcement of the private placement and at the closing of the market on October 26, 2009, our common stock, which had closed at a price of $2.53 on October 23, 2009, closed at $2.82, an 11.5% increase over the prior trading day closing price.

        In order for the Company to avoid the cost of Special Dividends on the preferred stock, to avoid the costs associated with the Class B Warrants and the Class D Warrants, and to receive favorable Tier 1 capital treatment at the holding company level for the net proceeds received in the private placement, the Company's shareholders must approve Proposal 1 and Proposal 2. Our Board of Directors unanimously recommends that our shareholders vote "FOR" the proposals at the Special Meeting.

12

PROPOSAL 1

APPROVAL OF AMENDMENT TO OUR RESTATED ARTICLES OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF ALL CLASSES OF STOCK AND COMMON STOCK

        Our Board has adopted a resolution recommending that the shareholders approve an amendment to our Restated Articles of Incorporation (which we refer to as the "Articles") to increase the number of authorized shares of common stock to 250,000,000 (and, correspondingly, to increase the total number of authorized shares of all classes of stock from 60,000,000 to 260,000,000).

        If the shareholders approve the amendment, the Articles will be amended to increase the number of authorized shares of all classes of stock and of common stock as described above. The increase will become effective on the filing of the amendment to the Articles with the Secretary of State of the State of Oregon. The text of the relevant section of the Articles as proposed to be amended is set forth as Annex B to this document.

        The primary purpose of Proposal 1 is to satisfy our obligations under the Investment Agreements in connection with the sale and issuance of the Series A Preferred Stock, the Series B Preferred Stock and the warrants. As of [    •    ], the record date, [    •    ] shares of our common stock were outstanding and [    •    ] shares were reserved for future issuance upon exercise of outstanding stock options.

        The Company currently does not have a sufficient number of authorized shares of common stock to effect the conversion in full of the Series A Preferred Stock and Series B Preferred Stock (including preferred stock issuable upon exercise of the warrants) into common stock; therefore approval of Proposal 1 is required for these conversions to occur.

        If Proposal 1 and Proposal 2 are approved, based on the current conversion price, 71,442,450 shares of our common stock will be issuable upon full conversion of the Series A Preferred Stock issued at the closing of the private placement and 6,066,400 shares of our common stock will be issuable upon full conversion of the Series B Preferred Stock issued at the closing of the private placement. In addition, the total number of shares of our common stock issuable upon the conversion of the Series B Preferred Stock that would be received in connection with the full exercise of the Class C Warrants, based on the current conversion and exercise price, is 12,000,000.

        If either of Proposal 1 or Proposal 2, or both, are not approved by the shareholders before March 1, 2010, then commencing on June 15, 2010, cumulative quarterly dividends will be payable on the Series A Preferred Stock and Series B Preferred Stock at an annual rate of 15%.

        The proposed authorized number of 250,000,000 is greater than the number of shares of our common stock that would be required to complete the private placement as contemplated. The additional shares authorized for issuance will provide us with the flexibility to issue additional shares from time to time as our Board may determine for future financings, strategic business relationships, stock-based incentives to employees, directors and consultants and for other purposes.

        As of the date of this document, other than the issuance and sale of shares pursuant to the private placement, upon the exercise of outstanding options, restricted stock grants and other awards under our current stock plans and upon the exercise of outstanding warrants, our Board has no agreement, arrangement or intention to issue any of the shares for which approval is sought. Other than with respect to Proposals 1 and 2, our Board does not intend to solicit further shareholder approval prior to the issuance of any additional shares of common stock, except as may be required by applicable law, rules of the NASDAQ or other applicable stock exchange requirements.

        A failure to approve Proposal 1 at the Special Meeting would have potentially adverse consequences for the Company and its shareholders described elsewhere in this document, including under "Consequences If Either of the Shareholder Approvals Is Not Received" on page [    •    ].

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSED AMENDMENT TO OUR RESTATED ARTICLES OF INCORPORATION.

13

PROPOSAL 2

APPROVE THE ISSUANCE OF SHARES OF COMMON STOCK
PURSUANT TO THE CONVERSION OF THE PREFERRED STOCK

        Our Board adopted a resolution recommending that the shareholders approve the issuance of shares of our common stock in connection with the conversion of our Mandatorily Convertible Cumulative Participating Preferred Stock, Series A and Mandatorily Convertible Cumulative Participating Preferred Stock, Series B (including with respect to the conversion of preferred stock issuable upon exercise of the Class B Warrants, Class C Warrants and Class D Warrants—the exercise of the warrants is described under "Description of the Warrants—Exercise of Warrants") into common stock for purposes of Rule 5635 of the NASDAQ Listing Rules.

        Because our common stock is listed on the NASDAQ Global Select Market, we are subject to the NASDAQ's rules and regulations. NASDAQ Listing Rule 5635 requires shareholder approval prior to the issuance of common stock, or securities convertible into or exercisable for common stock, equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for less than the greater of book value or market value of the stock.

        Our proposed issuance of common stock to the investors upon conversion of the preferred stock (including the preferred stock issuable upon exercise of the warrants) falls under this rule because the common stock issuable will exceed 20% of the voting power and number of shares of common stock outstanding before the private placement and qualify as a discounted issuance as the price per share of common stock on an as-converted basis was below both the book value and market value of our common stock at the time of entering into the Investment Agreements and issuance of the securities.

        A failure to approve Proposal 2 at the Special Meeting would have potentially adverse consequences for the Company and its shareholders described elsewhere in this document, including under "Consequences If Either of the Shareholder Approvals Is Not Received" on page [    •    ].

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSED ISSUANCE OF SHARES OF COMMON STOCK PURSUANT TO THE CONVERSION OF THE PREFERRED STOCK.

14

PROPOSAL 3

APPROVE THE ADJOURNMENT OF THE SPECIAL MEETING,
IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES

        If there are insufficient votes at the time of the Special Meeting to adopt Proposals 1 or 2 or if a quorum is not present, the Board seeks to, if necessary or appropriate, adjourn the Special Meeting to solicit additional proxies.

        A failure to approve Proposal 3 would have potentially adverse consequences for the Company and its shareholders if, as a consequence, Proposal 1 or 2 is not approved. Please refer to "Consequences If Either of the Shareholder Approvals Is Not Received" on page [    •    ].

         THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE ADJOURNMENT OF THE SPECIAL MEETING, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES.

15

THE SPECIAL MEETING

Date, Time and Place

        The Special Meeting will be held on [    •    ], 2010, at [    •    ], Pacific Time, at [    •    ].

Matters to be Considered

        At the Special Meeting, our shareholders will be asked to:

1.

approve the amendment to our Restated Articles of Incorporation to increase the number of authorized shares of common stock to 250,000,000 (and, correspondingly, to increase the total number of authorized shares of all classes of stock from 60,000,000 to 260,000,000);



2.

approve the issuance of shares of our common stock for purposes of NASDAQ Listing Rule 5635 in connection with the conversion of the preferred stock (including the preferred stock issuable upon exercise of the warrants) into our common stock; and



3.

approve the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the Special Meeting to adopt Proposals 1 and 2.

Proxies

        If you are a shareholder of record (that is, you own stock registered in your own name), you may attend the Special Meeting and vote in person, or you may vote by proxy. You may vote by proxy by completing and returning the proxy card accompanying this document or by telephone or through the Internet by following the instructions described on your proxy card. If your shares are held through a bank, broker or other nominee (that is, if your shares are held in "street name"), you will receive separate voting instructions from your bank, broker or other nominee with your proxy materials. Although most banks, brokers and other nominees offer telephone and Internet voting, availability and specific processes will depend on their voting arrangements.

        You can revoke a proxy at any time before the vote is taken at the Special Meeting by submitting a properly executed proxy of a later date by mail, telephone or Internet, or by attending the Special Meeting and voting in person. Communications about revoking your proxies should be addressed to the Secretary of the Company at 5335 Meadows Road, Suite 201, Lake Oswego, Oregon 97035. If your shares are held in street name, you should follow the instructions of your bank, broker or other nominee regarding the revocation of proxies. Please note that attendance at the Special Meeting will not, in itself, constitute revocation of your proxy.

        All shares represented by valid proxies that the Company receives through this solicitation, and that are not revoked, will be voted in accordance with the instructions on the proxy card. If you make no specification on your proxy card as to how you want your shares voted before signing and returning it, your proxy will be voted "FOR" each of the proposals. Our Board is currently unaware of any other matters that may be presented for action at the Special Meeting. If other matters properly come before the Special Meeting, or at any adjournment or postponement of the meeting, the Company intends that shares represented by properly submitted proxies will be voted, or not voted, by and in accordance with the best judgment of the persons named as proxies on the proxy card.

Solicitation of Proxies

        The Company will bear the cost of preparing, printing and mailing the materials in connection with this solicitation of proxies. In addition to mailing these materials, directors, officers and regular employees of the Company may, without being additionally compensated, solicit proxies personally and by mail, telephone, facsimile or electronic communication. The Company will reimburse banks and

16

brokers for their reasonable out-of-pocket expenses related to forwarding proxy materials to beneficial owners of stock or otherwise in connection with this solicitation. We have retained Morrow & Co., LLC to assist in the solicitation at a cost of approximately $8,000, plus payment of reasonable out-of-pocket expenses and other customary costs.

Record Date and Quorum

        Our Board has fixed the close of business on [    •    ], 2009 as the record date for determining the shareholders entitled to receive notice of and to vote at the Special Meeting. At that time, [    •    ] shares of our common stock were outstanding, held by approximately [    •    ] holders of record.

        A quorum of a majority of the issued and outstanding common stock is required for the transaction of business by shareholders at the Special Meeting. Therefore, at the Special Meeting, the presence, in person or by proxy, of the holders of at least [    •    ] shares of common stock will be required to establish a quorum.

Vote Required

        Each outstanding share of our common stock is entitled to one vote on each proposal at the Special Meeting. Assuming a quorum is present, approval of each proposal requires that the votes cast in favor of each proposal exceed the votes cast against each proposal. If a quorum is present, the failure to vote or an abstention will not count as a vote against any of the proposals. Approval of the proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies requires the affirmative vote of the holders of a majority of the stock represented at the Special Meeting in person or by proxy, whether or not a quorum exists. If a quorum is not present, a failure to vote will not count as a vote against the proposal to adjourn the meeting but an abstention will count as a vote against the proposal to adjourn the meeting.

Voting Options

        If you are a shareholder of record:     You may vote by one of the following four methods (as instructed on the enclosed proxy card):

•

by using the toll-free telephone number listed on the proxy card,



•

by using the Internet website listed on the proxy card,



•

by signing, dating and mailing the proxy card in the enclosed postage-paid envelope, or



•

by attending the Special Meeting and voting in person.

Whichever of these methods you select to transmit your instructions, the proxy holders will vote your common stock in accordance with your instructions. If you give a proxy without specific voting instructions, your proxy will be voted by the proxy holders as recommended by our Board.

        Vote by Telephone.     If you hold your common stock in your own name and not through your broker or another nominee, you can vote your shares of common stock by telephone by dialing the toll-free telephone number printed on your proxy card. Telephone voting is available 24 hours a day until 11:59 p.m., Pacific Time, on [    •    ], 2010 (until 11:59 p.m., Pacific Time, on [                    ], 2010 for shares held through the West Coast Bancorp 401(k) Plan). Easy-to-follow voice prompts allow you to vote your shares of common stock and confirm that your instructions have been properly recorded. If you vote by telephone, you do not need to return your proxy card.

        Vote by Internet.     If you hold your common stock in your own name and not through your broker or another nominee, you can choose to vote via the Internet. The website for Internet voting is printed on your proxy card. Internet voting is available 24 hours a day until 11:59 p.m., Pacific Time, on [

17

    •    ], 2010 (until 11:59 p.m., Pacific Time, on [                    ], 2010 for shares held through the West Coast Bancorp 401(k) Plan). As with telephone voting, you will be given the opportunity to confirm that your instructions have been properly recorded. If you vote via the Internet, you do not need to return your proxy card.

        Vote by Mail.     You can vote by mail by signing, dating and returning the enclosed proxy card in the enclosed postage-paid envelope. Proxy cards sent by mail must be received by [                    ], 2010 (by [                    ], 2010 for shares held through the West Coast Bancorp 401(k) Plan).

        If you own your shares in "street name," that is, through a brokerage account or in another nominee form:     You must provide instructions to the broker or nominee as to how your shares should be voted. Brokers do not have the discretion to vote on the proposals and will only vote at the direction of the underlying beneficial owners of the shares of common stock. Accordingly, if you do not instruct your broker to vote your shares, your broker will not have the discretion to vote your shares. Your broker or nominee will usually provide you with the appropriate instruction forms at the time you receive this document. If you own your shares in this manner, you cannot vote in person at the Special Meeting unless you receive a proxy to do so from the broker or the nominee, and you bring that proxy to the Special Meeting.

Recommendations of Our Board of Directors

         Our Board has unanimously approved each of the proposals. The Board believes that the proposals are advisable and unanimously recommends that shareholders vote "FOR" the approval of (i) the amendment to our Restated Articles of Incorporation to increase the number of authorized shares of all classes of stock and common stock, (ii) the issuance of shares of common stock in connection with the conversion of the preferred stock (including the preferred stock issuable upon exercise of the warrants) into common stock and (iii) the proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies. Each member of our Board has indicated that he or she will vote in favor of these proposals.

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CONSEQUENCES IF EITHER OF THE SHAREHOLDER APPROVALS IS NOT RECEIVED

No Payment of Dividends on Common Stock and No Share Repurchases.

        For as long as the preferred stock remains outstanding and the Shareholder Approvals have not been received, subject to limited exceptions, the Company will be prohibited from paying dividends on any share of our common stock or other junior securities and from redeeming, purchasing or acquiring any shares of our common stock or other junior securities. Once the Shareholder Approvals have been received, the foregoing limitations on paying dividends apply only if declared quarterly dividends on the preferred stock have not been paid in full for the applicable dividend period.

Increased Preferred Stock Dividends.

        Beginning on March 1, 2010 and until the Shareholder Approvals are obtained, the preferred stock, which currently accrues dividends on an as-converted basis at the rate payable on our common stock (currently zero since dividend payments on common stock were suspended), would instead accrue cumulative Special Dividends at an annual rate of 15% of $100 (the purchase price per share of the preferred stock)—equivalent to a $15.00 annual dividend per share of preferred stock.

Class B Warrants and Class D Warrants Become Exercisable.

        If the Shareholder Approvals have not been received before March 1, 2010, then on and after March 1, 2010 and until the earlier of such time as the Shareholder Approvals are obtained or October 23, 2016, the Class B Warrants will be exercisable for an aggregate of 117,972 shares of Series A Preferred Stock and the Class D Warrants will be exercisable for an aggregate of 122,028 shares of Series B Preferred Stock at a price per share of underlying common stock of $0.50, which is substantially lower than the current market price of our common stock. The shares of Series A Preferred Stock received in respect of the Class B Warrants assuming full exercise of the Class B Warrants would automatically convert into 5,898,600 shares of our common stock upon receipt of the Shareholder Approvals, substantially diluting the interests of shareholders other than the investors. The shares of Series B Preferred Stock received in respect of the Class D Warrants assuming full exercise of the Class D Warrants would automatically convert into 6,101,400 shares of common stock following both the receipt of the Shareholder Approvals and transfer to a third-party transferee in a widely dispersed offering, substantially diluting the interests of shareholders.

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DESCRIPTION OF THE INVESTMENT AGREEMENTS

         As described above, each of the investors entered into an Investment Agreement with the Company to purchase the preferred stock and warrants. The Investment Agreements of the Specified Investors differ in certain respects from the Investment Agreements of other investors, including by providing two of the Specified Investors with the right to representation on our Board and one with the right to a board observer; one other investor who was not a Specified Investor also received the right to a board observer. The following is a summary of material terms of the Investment Agreements; a copy of the form of Investment Agreement is attached to this document as Annex A and is incorporated by reference into this document. Shareholders are urged to read the form of Investment Agreement attached as Annex A in its entirety. While the Company believes this summary covers the material terms and provisions of the Investment Agreements, it may not contain all of the information that is important to you and is qualified in its entirety by reference to Annex A.

Covenants

        We have agreed to call a Special Meeting of our shareholders, as promptly as reasonably practicable following the closing (which occurred on October 23, 2009), to vote on proposals to (1) approve the amendment to our Restated Articles of Incorporation to increase the number of authorized shares of our common stock and (2) approve the issuance of shares of common stock in connection with the conversion of the preferred stock (including the preferred stock issuable upon exercise of the warrants) into common stock for purposes of NASDAQ Listing Rule 5635. In the event that both of the foregoing approvals are not obtained at the Special Meeting, we have agreed to include a proposal to approve (and our Board will unanimously recommend approval of) such issuance at a subsequent meeting of our shareholders within 60 days of the initial meeting.

Board Representation

        In connection with the private placement, two of the Specified Investors, Castle Creek Capital Partners IV, LP (whom we refer to as "Castle Creek") and GF Financial, LLC (whom we refer to as "GF Financial"), obtained the right to representation on our Board (and the board of directors of West Coast Bank). Specifically, these two investors are entitled to nominate one person to be elected or appointed to our Board (and the board of directors of West Coast Bank) subject to receipt of applicable regulatory approvals, satisfaction of all legal and governance requirements regarding service as a director of the Company and the Bank and the reasonable approval of the Governance and Nominating Committee of our Board and the Board. In that connection, Castle Creek has nominated John Pietrzak as a director, and GF Financial has nominated Simon Glick as a director; their appointments remain subject to receipt of applicable regulatory approvals. So long as each of these investors holds at least 5% of all outstanding shares of our common stock (counting for such purposes all shares of common stock into which or for which shares of any preferred stock or the warrants owned by such investor are directly or indirectly convertible or exercisable (which we refer to as a "Qualifying Ownership Interest"), and excluding as shares owned and outstanding shares of common stock issued by the Company after the closing date, other than as contemplated by the Investment Agreements), the Company will be required to recommend to its shareholders the election of the investor's board representative at the Company's annual meeting, subject to satisfaction of all legal and governance requirements regarding service as a director of the Company and to the reasonable approval of the Governance and Nominating Committee and the Board. At the option of GF Financial's board representative, the Board will cause such representative to be appointed to the Company's Governance & Nominating Committee, Executive Committee, and Loan, Investment, & Asset/Liability Committee, so long as the board representative qualifies to serve on such committees under applicable rules of NASDAQ and the Company's corporate governance guidelines and the charters of such committees. For so long as Castle Creek and GF Financial are entitled to a board

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representative but do not have a board representative serving on the Board, these investors will be entitled to designate one board observer subject to applicable legal requirements. Two other investors, MFP Partners, L.P. and Stadium Capital Partners, L.P., are entitled to designate one board observer to attend Board meetings subject to applicable legal requirements for so long as each investor has a Qualifying Ownership Interest.

Transfer Restrictions

        The preferred stock and the warrants issued in the private placement, and the common stock issuable pursuant to those securities, have not been registered under the Securities Act, or under the securities laws of any state or other jurisdiction, and unless so registered may not be offered or sold in the United States or to U.S. persons except pursuant to an exemption from the registration requirements of the Securities Act and applicable state securities laws. In addition, subject to certain exceptions, Castle Creek and GF Financial are prohibited from selling, transferring, assigning or otherwise disposing of any securities acquired pursuant to the Investment Agreements, except for transfers (i) following the date that is twelve months from the closing date; and (ii) in the event the Shareholder Approvals are not received before March 1, 2010, such investors may transfer 50% of the common stock, preferred stock and the warrants owned by them during the period commencing on such date and ending twelve months after the closing date. The other investors are not subject to such transfer restrictions.

Registration Rights

        The Company has agreed to file a resale registration statement covering the securities issued in the private placement within 60 days of the closing of the private placement. Additionally, the Investment Agreements provide investors with customary registration rights, including "shelf" registration rights that may be exercised to execute sales (other than during certain black-out periods), and (only with respect to the Specified Investors and one additional investor) "piggy-back" registration rights, with respect to the securities purchased by them under the Investment Agreements.

Preemptive Rights

        The Investment Agreements provide the Specified Investors with preemptive rights, generally applicable for so long as such investors have a Qualifying Ownership Interest (including as shares owned and outstanding shares of common stock issued by the Company after the closing date) to enable it to maintain its proportionate ownership of our common stock. One additional investor also received such preemptive rights, applicable so long as it does not dispose of any of the securities purchased by it in the private placement. At any time that such investors with preemptive rights meet this ownership threshold and the Company makes any public or nonpublic offering or sale of any equity, or any securities convertible or exchangeable into equity or that includes an equity component at a price per share that is less than 90% of the market price of such security, such investor may acquire at the same price and on the same terms, subject to certain limitations, that number of the securities being offered necessary to maintain its proportionate common stock-equivalent interest in the Company. However, the investor may not exercise the foregoing right in connection with (1) securities issued in connection with the Tax Benefit Preservation Plan adopted by us to preserve the use of our tax benefits; (2) subscription rights distributed in connection with a possible $10 million rights offering with an issuance price of at least $2.00 per share; (3) any common stock or other securities issuable upon the exercise or conversion of any securities of the Company issued or agreed or contemplated to be issued as of the date of the Investment Agreements; (4) issuances under the Company's stock incentive plans, employee stock purchase plan or any similar plan in the ordinary course of providing incentive compensation; or (5) issuances as full or partial consideration for a merger, acquisition, joint venture, strategic alliance, license agreement or other similar nonfinancing transaction.

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Standstill Agreement

        Castle Creek and GF Financial are also subject to certain "standstill" restrictions. Until such investors no longer hold a Qualifying Ownership Interest, such investors and its affiliates are prohibited from acquiring additional common stock if the acquisition of the additional common stock would result in the investor and its affiliates owning more than 9.9% of the total outstanding common stock of the Company. Additionally, these investors and any of their affiliates are prohibited from (1) making or participating in any solicitation of proxies or seeking to influence any vote with respect to the Company's common stock, (2) seeking to call a special meeting of shareholders or initiating a shareholder proposal with respect to the Company or seeking to influence or control the management, board of directors or policies of the Company or its subsidiaries, (3) contesting the validity or seeking a waiver of this standstill, (4) agreeing or proposing any business combination relating to all or part of the Company or any of its subsidiaries or any acquisition of their respective assets or (5) disclosing any intention or plan inconsistent with these limitations. However, these restrictions will not apply if a change in control (as defined in the Investment Agreements) occurs or any person commences and does not withdraw a bona fide public tender or exchange offer that would result in a change in control.

Representations and Warranties

        In the Investment Agreements, we made customary representations and warranties to the investors relating to us, our business and the preferred stock and the warrants issued to the investors and the common stock to be issued to the investors upon conversion of the preferred stock and the exercise of the warrants, and agreed to indemnify the investors for breaches of certain of our representations and warranties in certain circumstances. Shareholders are not third-party beneficiaries under the Investment Agreements and should not construe the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company, any of the investors or any of their respective subsidiaries or affiliates. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Investment Agreements, which subsequent information may or may not be fully reflected in the Company's public disclosures. The provisions of the Investment Agreements, including the representations and warranties, should not be read alone, but instead should only be read together with the information provided elsewhere in this document and in the documents incorporated by reference into this document, including the periodic and current reports and statements that the Company files with the Securities and Exchange Commission, or the "SEC." For more information regarding these documents incorporated by reference, see the section entitled "Where You Can Find More Information" below.

Fees and Expenses

        We reimbursed and compensated the Specified Investors for their and their affiliates' expenses incurred in connection with due diligence, the negotiation and preparation of the transaction documents and consummating the private placement, in an aggregate amount of 2% of the overall gross proceeds from the private placements, or approximately $3.1 million, whether or not incurred. In addition, we reimbursed GF Financial for the fees and expenses of its counsel. Sandler O'Neill + Partners, L.P. served as Placement Agent with respect to private placement for compensation of $7.5 million, of which $5 million has been paid and the remaining $2.5 million will be paid upon receipt of the Shareholder Approvals.

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DESCRIPTION OF THE PREFERRED STOCK

         The following is a summary of the material terms and provisions of the preferences, limitations, voting powers and relative rights of the Series A Preferred Stock and Series B Preferred Stock as contained in the Articles of Amendment of the Company relating to the Series A Preferred Stock and Series B Preferred Stock, which are attached to this document as Annex C and Annex D respectively, which we incorporate by reference into this document. Shareholders are urged to read the Articles of Amendment relating to the Series A Preferred Stock and Series B Preferred Stock in their entirety. While the Company believes this summary covers the material terms and provisions of the Articles of Amendment of the Company relating to the Series A Preferred Stock and Series B Preferred Stock, it may not contain all of the information that is important to you and is qualified in its entirety by reference to Annex C and Annex D .

Authorized Shares and Liquidation Preference

        The number of authorized shares of Series A Preferred Stock is 2,000,000, and the number of authorized shares of Series B Preferred Stock is 600,000. Shares of Series A Preferred Stock and Series B Preferred Stock have no par value and the liquidation preference of the Series A Preferred Stock and Series B Preferred Stock is $100 per share.

Ranking

        The Series A Preferred Stock and Series B Preferred Stock, with respect to dividend rights and rights on liquidation, winding-up and dissolution, rank (i) on a parity with our other authorized series of preferred stock and with each other class or series of preferred stock, established after the date of issuance of the preferred stock, the terms of which do not expressly provide that such class or series will rank senior or junior to the preferred stock as to dividend rights and rights on liquidation, winding-up and dissolution of the Company, and (ii) senior to the Company's common stock and each other class or series of capital stock outstanding or established after the date the preferred stock is first issued, the terms of which expressly provide that it ranks junior to the Series A Preferred Stock or Series B Preferred Stock as to dividend rights and/or as to rights on liquidation, winding-up and dissolution of the Company. The Company has the right to authorize and/or issue additional shares or classes or series of junior securities or parity securities without the consent of the holders.

Dividends

        Holders of Series A Preferred Stock and Series B Preferred Stock are entitled to receive, when, as and if declared by the Board, dividends in the amount determined as set forth below.

        If our Board declares and pays a cash dividend in respect of any shares of our common stock, then the Board is required to declare and pay to the holders of the preferred stock a cash dividend in an amount per share of preferred stock equal to the product of (i) the per share dividend declared and paid in respect of each share of common stock and (ii) the number of shares of common stock into which such share of preferred stock is then convertible, assuming receipt of the Shareholder Approvals.

        If the Shareholder Approvals have not been received prior to March 1, 2010, each share of Series A Preferred Stock and Series B Preferred Stock that remains outstanding on and after March 1, 2010 will begin to accrue Special Dividends commencing with the dividend period relating to the dividend payment date on June 15, 2010 until such time as the Shareholder Approvals have been obtained.

        Special Dividends on the preferred stock are cumulative. Even if the Board does not declare a dividend on the preferred stock in respect of any dividend period, Special Dividends will accrue on the preferred stock until such time as the Shareholder Approvals have been obtained and there is no longer a requirement to pay a Special Dividend.

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        Subject to limited exceptions, until the Shareholder Approvals are received, for as long as the preferred stock is outstanding, the Company will not be permitted to declare or pay dividends with respect to, or redeem, purchase or acquire any of its junior securities, including our common stock.

Repurchase of Junior Securities

        For as long as the preferred stock remains outstanding and the Shareholder Approvals have not been received, subject to limited exceptions, the Company will be prohibited from paying dividends on any share of our common stock or other junior securities and from redeeming, purchasing or acquiring any shares of our common stock or other junior securities. Once the Shareholder Approvals have been received, the foregoing limitations on paying dividends apply only if declared quarterly dividends on the preferred stock have not been paid in full for the applicable dividend period.

Rights Upon Liquidation

        In the event the Company voluntarily or involuntarily liquidates, dissolves or winds up, the holders of the preferred stock will be entitled, for each share of the preferred stock held, to (1) the liquidation preference per share of preferred stock, plus any accrued but unpaid dividends, plus (2) an amount equal to the liquidation amount payable on an as-converted basis on the number of shares of common stock into which such shares of preferred stock could have been converted on a date at least ten business days before the first liquidating distribution is made on the preferred stock.

        In the event the assets of the Company available for distribution to shareholders upon any liquidation, dissolution or winding-up of the affairs of the Company, whether voluntary or involuntary, are insufficient to pay in full the amounts payable with respect to all outstanding shares of the preferred stock and the corresponding amounts payable on any parity securities, holders of preferred stock and the holders of parity securities will share ratably in any distribution of assets of the Company in proportion to the full respective liquidating distributions to which they would otherwise be respectively entitled.

Redemption

        The preferred stock is not redeemable.

Mandatory Conversion

        The Series A Preferred Stock is mandatorily convertible into shares of our common stock on the fifth business day following the date on which the Shareholder Approvals have been received, provided that the Series A Preferred Stock will not convert if any required regulatory approvals have not been obtained or if conversion would cause the holder to surpass regulatory ownership limits.

        Each share of Series B Preferred Stock mandatorily converts into shares of our common stock following receipt of Shareholder Approvals and the completion of the transfer of that share to a third party in a widely dispersed offering.

        The number of shares of our common stock into which a share of preferred stock will be convertible will be determined by dividing the base value by the then applicable conversion price. No fractional shares of common stock will be issued. Upon conversion, cash will be paid in lieu of fractional shares based on the closing price of the common stock determined as of the second trading day immediately preceding the date of the mandatory conversion. The initial conversion price of the preferred stock is $2.00 per share of common stock into which it is converted and the initial number of shares of our common stock into which one share of preferred stock is convertible into is 50. No additional consideration will be paid to the Company by holders of preferred stock in connection with the conversion of the preferred stock.

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Anti-Dilution Provision

        The conversion price of the preferred stock is also subject to customary anti-dilution adjustments, which will be made (subject to certain exceptions) in the event that the Company:

•

pays dividends or other distributions on the common stock in shares of common stock;



•

subdivides, splits or combines the shares of common stock;



•

subject to certain exceptions and limitations, issues to holders of its common stock rights or warrants entitling them to purchase common stock at less than the then-current market price (as defined in the articles of amendment for the applicable series of preferred stock);



•

distributes to holders of its common stock indebtedness, shares of capital stock, securities, cash or other assets (other than cash dividends and certain other transactions);



•

makes a cash distribution to holders of common stock, other than (1) cash dividends to the extent a corresponding dividend is paid on the corresponding series of preferred stock, (2) cash distributed in a reorganization event or spin-off, (3) upon liquidation, dissolution or winding-up and (4) in connection with a tender or exchange offer by the Company; and



•

completes a tender or exchange offer for the common stock where the consideration exceeds the closing price (as defined in the articles of amendment for the applicable series of preferred stock) per share of the common stock.

Reorganization Events

        If the Company enters into a transaction constituting a consolidation or merger of the Company or similar transaction or any sale or other transfer of all or substantially all of the consolidated assets of the Company and its subsidiaries, taken as a whole (in each case pursuant to which its common stock will be converted into cash, securities or other property) or for certain reclassifications or exchanges of its common stock, then each holder of preferred stock will have the right to convert such preferred stock, effective on the date such transaction is consummated (or, if later, the date applicable regulatory approvals are obtained), into the securities, cash and other property receivable in the transaction by the holder of the number of shares of common stock into which such preferred stock would then be convertible, assuming receipt of any applicable regulatory approval.

Voting Rights

        Except as set forth below, holders of the preferred stock will not have any voting rights.

        So long as any shares of preferred stock are outstanding, in addition to any other vote or consent of shareholders required by law or by our Restated Articles of Incorporation, the vote or consent of the holders of three-quarters of the outstanding shares of preferred stock voting as a single class with all other classes and series of parity stock having similar voting rights then outstanding, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, will be necessary for (1) any amendment of our Restated Articles of Incorporation to authorize, or increase the authorized amount of, any shares of any class or series of capital stock ranking senior to the preferred stock with respect to the payment of dividends or the distribution of assets on our liquidation, (2) any amendment, alteration or repeal (including by means of a merger, consolidation or otherwise) of any provision of our Restated Articles of Incorporation or our bylaws that would alter or change the rights, preferences or privileges of the preferred stock so as to affect them significantly and adversely or (3) the consummation of a binding share exchange or reclassification involving the preferred stock or a merger or consolidation of the Company with another entity, except that holders will have no right to vote under this provision or under Oregon law if the Company shall have complied with certain notice requirements with respect to such transaction.

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DESCRIPTION OF THE WARRANTS

         Pursuant to the Investment Agreements, we issued to the investors warrants to acquire common stock and preferred stock. The following is a summary of the material terms and provisions of the Class B Warrants, the Class C Warrants and the Class D Warrants issued to the investors, copies of which are attached to this document as Annex E , Annex F and Annex G , respectively, and are incorporated by reference into this document. Shareholders are urged to read the attached forms of warrant in their entirety. While the Company believes this summary covers the material terms and provisions of the warrants issued to the investors, it may not contain all of the information that is important to you and is qualified in its entirety by reference to the attached annexes.

Exercise of Warrants

        Class B Warrants.     If the Shareholder Approvals are obtained prior to March 1, 2010, the Class B Warrants will expire and will never become exercisable. If the Shareholder Approvals have not been obtained before March 1, 2010, the Class B Warrants will become exercisable by the holders thereof to purchase in the aggregate 117,972 shares of Series A Preferred Stock at any time between March 1, 2010 and the earlier of the time of receipt of the Shareholder Approvals and the seventh anniversary of the issuance of such warrants, at an implied exercise price per common share underlying the Series A Preferred Stock of $0.50. To the extent that receipt of Series A Preferred Stock would cause the holder to violate the regulatory restrictions on ownership levels, the holder may exercise the Class B Warrants for Series B Preferred Stock. Each share of Series A Preferred Stock (or Series B Preferred Stock if applicable) received upon exercise of the Class B Warrants will begin to accrue Special Dividends until such time as the Shareholder Approvals have been obtained. If the Shareholder Approvals are received on or after March 1, 2010, any unexercised portions of the Class B Warrants will expire at the time such approvals are received and will no longer be exercisable. Shares of preferred stock issued upon exercise of the Class B Warrants will have the same terms as all other shares of the applicable series of preferred stock and will mandatorily convert into our common stock on the same terms as such other shares.

        Class C Warrants.     The Class C Warrants are exercisable by the holders to purchase in the aggregate 240,000 shares of Series B Preferred Stock at any time (subject to limited exceptions), in whole or in part, until the seventh anniversary of the issuance of such warrants, at an implied exercise price per common share underlying the Series B Preferred Stock of $2.00. If the Shareholder Approvals have not been received prior to March 1, 2010, each share of Series B Preferred Stock received upon exercise of the Class C Warrants will begin to accrue Special Dividends until such time as the Shareholder Approvals have been obtained. Receipt of the Shareholder Approvals on or after March 1, 2010 will have no effect on the exercisability of the Class C Warrants. The Series B Preferred Stock issued upon exercise of the Class C Warrants will have the same terms as all other shares of Series B Preferred Stock and will mandatorily convert into our common stock on the same terms as such other shares.

        Class D Warrants.     If the Shareholder Approvals are obtained prior to March 1, 2010, the Class D Warrants will expire and will never become exercisable. If the Shareholder Approvals have not been obtained before March 1, 2010, the Class D Warrants will become exercisable by the holders thereof to purchase in the aggregate 122,028 shares of Series B Preferred Stock at any time between March 1, 2010 and the earlier of the time of receipt of the Shareholder Approvals and the seventh anniversary of the issuance of such warrants, at an implied exercise price per common share underlying the Series B Preferred Stock of $0.50. Each share of Series B Preferred Stock received upon exercise of the Class D Warrant will begin to accrue Special Dividends until such time as the Shareholder Approvals have been obtained. If the Shareholder Approvals are received on or after March 1, 2010, any unexercised portions of the Class D Warrants will expire at the time such approvals are received and will no longer be exercisable. Shares of Series B Preferred Stock issued upon exercise of the Class D Warrants will

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have the same terms as all other shares of Series B Preferred Stock and will mandatorily convert into our common stock on the same terms as such other shares.

Anti-Dilution and Other Provisions

        Subject to certain exceptions, the exercise price of the warrants will be adjusted upon the occurrence of any of the following events:

•

issuances of common stock (other than in connection with a permitted rights offering, certain stock compensation plans, stock splits or subdivisions, conversions of preferred stock or exercise of the warrants) at less than 95% of the greater of the most recent closing price per share as reported by the NASDAQ on (i) the date on which the Company issues or sells any common stock or (ii) on the first date of the announcement of such issuance;



•

stock splits, subdivisions, reclassifications or combinations;



•

certain distributions of shares of a class other than common stock or other property (including cash but excluding ordinary dividends) to holders of common stock;



•

certain repurchases of common stock;



•

certain business combinations; or



•

any other Company action that in the opinion of the Board would adversely affect the rights of the holders of the warrants.

Transfer Restrictions

        The warrants are fully non-transferable until the first anniversary of the date of issuance, unless (1) certain change of control events have occurred or (2) the Shareholder Approvals have not been obtained before March 1, 2010.

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PRO FORMA FINANCIAL INFORMATION

Basis of Presentation

        The unaudited pro forma consolidated balance sheet tables and pro forma earnings per share tables presented below have been prepared by management to illustrate the impact of the Company's recent capital raise. On October 23, 2009, the Company entered into investment agreements with over 20 separate investors pursuant to which the investors acquired in private placements an aggregate of $155.0 million of newly issued preferred stock and warrants of the Company, including:

•

A total of 1,428,849 shares of Series A Mandatorily Convertible Cumulative Participating Preferred Stock, no par value ("Series A Preferred Stock") which will automatically convert into an aggregate of 71,442,450 shares of common stock at a per common share conversion price of $2.00 (subject to certain adjustments) upon receipt of the Shareholder Approvals;



•

A total of 121,328 shares of Series B Mandatorily Convertible Cumulative Participating Preferred Stock, no par value ("Series B Preferred Stock") which will automatically convert into an aggregate of 6,066,400 shares of common stock at a per common share conversion price of $2.00 (subject to certain adjustments) upon receipt of the Shareholder Approvals and the transfer of the Series B Preferred Stock to third parties in a widely dispersed offering;



•

Class C Warrants to purchase an aggregate of 240,000 shares of Series B Preferred Stock at an exercise price of $100.00 per share; these shares of preferred stock will automatically convert into an aggregate of 12,000,000 shares of common stock upon receipt of the Shareholder Approvals and the transfer of the Series B Preferred Stock to third parties in a widely dispersed offering; and



•

Class B Warrants to purchase an aggregate of 117,972 shares of Series A Preferred Stock at an exercise price of $25.00 per share; these shares of preferred stock will automatically convert into an aggregate of 5,898,600 shares of common stock upon receipt of the Shareholder Approvals, and Class D Warrants to purchase an aggregate of 122,028 shares of Series B Preferred Stock at an exercise price of $25.00 per share; these shares of preferred stock will automatically convert into an aggregate of 6,101,400 shares of common stock upon receipt of the Shareholder Approvals and the transfer of the Series B Preferred Stock to third parties in a widely dispersed offering. The Class B Warrants and the Class D Warrants are only exercisable if the Shareholder Approvals have not been obtained before March 1, 2010, and they will expire automatically upon receipt of such approvals.

        In the event the Shareholder Approvals are not obtained before March 1, 2010, in addition to the Class B Warrants and Class D Warrants becoming exercisable as described above, holders of shares of Series A Preferred Stock and Series B Preferred Stock will be entitled to cumulative dividends that will accrue whether or not declared by the Company's board of directors at the rate of 15% per year until the Shareholder Approvals are obtained.

        The net proceeds of the investments, after estimated direct expenses of $15.8 million, were $139.2 million of which $5 million was retained by the Company and $134.2 million was contributed to the Bank as a capital contribution.

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Balance Sheet

        The following tables present the Company's unaudited pro forma consolidated balance sheets adjusted for the pro forma impacts of the capital raise for the periods shown. The pro forma consolidated balance sheets as of September 30, 2009 and December 31, 2008 assume the Company completed the capital raise on January 1, 2008, and the conversion of the Series A Preferred Stock and Series B Preferred Stock into common stock occurred on January 1, 2008. The pro forma balance sheet adjustments reflect cash received of $142.1 million in the offering, liabilities for direct costs of the capital raise of $2.9 million and a net increase in common stock of $139.2 million.

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