UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarter ended June 30, 2002 Commission file number 0-10997
WEST COAST BANCORP
Oregon (State or other jurisdiction of incorporation or organization) |
93-0810577 (I.R.S. Employer Identification No.) |
|
5335 Meadows Road — Suite 201 Lake Oswego, Oregon (Address of principal executive offices) |
97035 (Zip Code) |
Registrant’s telephone number, including area code: (503) 684-0884
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, No Par Value
(Title of Class)
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares of Registrant’s Common Stock outstanding on July 31, 2002, was 15,581,323
1
WEST COAST BANCORP
FORM 10-Q
TABLE OF CONTENTS
| Page | ||||||
| PART I. | Financial Information | |||||
| Item 1. | Financial Statements (unaudited) | |||||
| Consolidated Balance Sheets — June 30, 2002 and December 31, 2001 | 3 | |||||
| Consolidated Statements of Income — Three and six months ended June 30, 2002 and 2001 | 4 | |||||
| Consolidated Statements of Cash Flows — Six months ended June 30, 2002 and 2001 | 5 | |||||
| Consolidated Statements of Changes in Stockholders’ Equity — Six months ended June 30, 2002 and year ended December 31, 2001 | 6 | |||||
| Notes to Consolidated Financial Statements | 7 | |||||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 13 | ||||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 24 | ||||
| PART II. | Other Information | |||||
| Item 1. | Legal Proceedings | 25 | ||||
| Item 4. | Submissions of Matters to a Vote of Security Holders | 25 | ||||
| Item 6. | Exhibits and Reports on Form 8-K | 25 | ||||
| Signatures | 26 | |||||
2
PART I. FINANCIAL INFORMATION
Item 1.
WEST COAST BANCORP
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| June 30, | December 31, | ||||||||||
| (Dollars in thousands) | 2002 | 2001 | |||||||||
ASSETS: |
|||||||||||
Cash and cash equivalents: |
|||||||||||
Cash and due from banks |
$ | 60,193 | $ | 52,960 | |||||||
Interest-bearing deposits in other banks |
2 | 1 | |||||||||
Federal funds sold |
11,519 | — | |||||||||
Total cash and cash equivalents |
71,714 | 52,961 | |||||||||
Trading assets |
1,055 | 1,092 | |||||||||
Investment securities available for sale |
249,459 | 244,689 | |||||||||
Loans held for sale |
8,346 | 14,023 | |||||||||
Loans |
1,135,892 | 1,085,050 | |||||||||
Allowance for loan losses |
(16,067 | ) | (15,252 | ) | |||||||
Loans, net |
1,119,825 | 1,069,798 | |||||||||
Premises and equipment, net |
27,630 | 29,116 | |||||||||
Intangible assets |
1,395 | 1,575 | |||||||||
Other assets |
22,471 | 22,447 | |||||||||
Total assets |
$ | 1,501,895 | $ | 1,435,701 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|||||||||||
Deposits: |
|||||||||||
Demand |
$ | 246,554 | $ | 224,927 | |||||||
Savings and interest-bearing demand |
577,744 | 569,588 | |||||||||
Certificates of deposit |
399,781 | 376,918 | |||||||||
Total deposits |
1,224,079 | 1,171,433 | |||||||||
Short-term borrowings |
21,373 | 26,688 | |||||||||
Long-term borrowings |
105,500 | 90,500 | |||||||||
Mandatorily redeemable trust preferred securities |
12,500 | 5,000 | |||||||||
Other liabilities |
8,141 | 13,290 | |||||||||
Total liabilities |
1,371,593 | 1,306,911 | |||||||||
Commitments and contingent liabilities |
|||||||||||
STOCKHOLDERS’ EQUITY: |
|||||||||||
Preferred stock: no par value, none issued;
10,000,000 shares authorized |
— | — | |||||||||
Common stock: no par value, 55,000,000 shares
authorized; 15,665,987 and 16,025,316 shares issued
and outstanding, respectively |
19,582 | 20,032 | |||||||||
Additional paid-in capital |
77,602 | 82,679 | |||||||||
Retained earnings |
31,012 | 24,543 | |||||||||
Deferred compensation |
(919 | ) | (878 | ) | |||||||
Accumulated other comprehensive income |
3,025 | 2,414 | |||||||||
Total stockholders’ equity |
130,302 | 128,790 | |||||||||
Total liabilities and stockholders’ equity |
$ | 1,501,895 | $ | 1,435,701 | |||||||
See notes to consolidated financial statements.
3
WEST COAST BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||
| (Dollars in thousands, except per share data) | 2002 | 2001 | 2002 | 2001 | ||||||||||||||
INTEREST INCOME: |
||||||||||||||||||
Interest and fees on loans |
$ | 20,567 | $ | 21,530 | $ | 41,036 | $ | 43,825 | ||||||||||
Interest on taxable investment securities |
2,372 | 2,541 | 4,636 | 5,142 | ||||||||||||||
Interest on nontaxable investment securities |
887 | 972 | 1,791 | 1,954 | ||||||||||||||
Interest on deposits in other banks |
19 | 74 | 34 | 142 | ||||||||||||||
Interest on federal funds sold |
14 | 26 | 20 | 60 | ||||||||||||||
Total interest income |
23,859 | 25,143 | 47,517 | 51,123 | ||||||||||||||
INTEREST EXPENSE: |
||||||||||||||||||
Savings and interest-bearing demand |
1,829 | 3,778 | 3,729 | 8,087 | ||||||||||||||
Certificates of deposit |
3,638 | 5,558 | 7,606 | 11,261 | ||||||||||||||
Short-term borrowings |
79 | 462 | 200 | 1,568 | ||||||||||||||
Long-term borrowings |
1,349 | 1,072 | 2,848 | 2,027 | ||||||||||||||
Mandatorily redeemable trust preferred securities |
118 | — | 229 | — | ||||||||||||||
Total interest expense |
7,013 | 10,870 | 14,612 | 22,943 | ||||||||||||||
NET INTEREST INCOME |
16,846 | 14,273 | 32,905 | 28,180 | ||||||||||||||
Provision for loan loss |
1,442 | 675 | 2,319 | 1,200 | ||||||||||||||
Net interest income after provision for loan loss |
15,404 | 13,598 | 30,586 | 26,980 | ||||||||||||||
NONINTEREST INCOME: |
||||||||||||||||||
Service charges on deposit accounts |
1,556 | 1,510 | 3,112 | 2,973 | ||||||||||||||
Other service charges, commissions and fees |
1,392 | 1,191 | 2,541 | 2,289 | ||||||||||||||
Trust revenue |
446 | 456 | 907 | 897 | ||||||||||||||
Gains on sales of loans |
980 | 855 | 2,072 | 2,002 | ||||||||||||||
Loan servicing fees |
91 | 138 | 179 | 270 | ||||||||||||||
Other |
45 | 76 | 913 | 180 | ||||||||||||||
Total noninterest income |
4,510 | 4,226 | 9,724 | 8,611 | ||||||||||||||
NONINTEREST EXPENSE: |
||||||||||||||||||
Salaries and employee benefits |
7,170 | 6,084 | 14,715 | 12,632 | ||||||||||||||
Equipment |
1,165 | 1,406 | 2,497 | 2,710 | ||||||||||||||
Occupancy |
1,157 | 1,143 | 2,310 | 2,148 | ||||||||||||||
Check and other transaction processing |
645 | 637 | 1,263 | 1,260 | ||||||||||||||
Professional fees |
424 | 500 | 785 | 942 | ||||||||||||||
Courier and postage |
486 | 441 | 962 | 911 | ||||||||||||||
Marketing |
497 | 464 | 889 | 776 | ||||||||||||||
Communications |
299 | 327 | 594 | 640 | ||||||||||||||
Other taxes and insurance |
188 | 194 | 382 | 434 | ||||||||||||||
Printing and office supplies |
190 | 168 | 361 | 373 | ||||||||||||||
Kiting charge |
— | 1,945 | — | 1,945 | ||||||||||||||
Other noninterest expense |
866 | 840 | 2,293 | 1,572 | ||||||||||||||
Total noninterest expense |
13,087 | 14,149 | 27,051 | 26,343 | ||||||||||||||
INCOME BEFORE INCOME TAXES |
6,827 | 3,675 | 13,259 | 9,248 | ||||||||||||||
PROVISION FOR INCOME TAXES |
2,303 | 953 | 4,492 | 2,843 | ||||||||||||||
NET INCOME |
$ | 4,524 | $ | 2,722 | $ | 8,767 | $ | 6,405 | ||||||||||
Basic earnings per share |
$ | 0.29 | $ | 0.17 | $ | 0.56 | $ | 0.40 | ||||||||||
Diluted earnings per share |
$ | 0.28 | $ | 0.17 | $ | 0.54 | $ | 0.39 | ||||||||||
Weighted average common shares |
15,640,000 | 16,178,000 | 15,749,000 | 16,193,000 | ||||||||||||||
Weighted average diluted shares |
16,133,000 | 16,477,000 | 16,222,000 | 16,432,000 | ||||||||||||||
See notes to consolidated financial statements.
4
WEST COAST BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six months ended June 30, | |||||||||||
| (Dollars in thousands) | 2002 | 2001 | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|||||||||||
Net income |
$ | 8,767 | $ | 6,405 | |||||||
Adjustments to reconcile net income to cash
provided by operating activities: |
|||||||||||
Depreciation of premises and equipment |
1,685 | 1,828 | |||||||||
Deferred income tax expense (benefit) |
(33 | ) | 2,162 | ||||||||
Write-down of premises and equipment |
613 | — | |||||||||
Amortization of intangibles |
180 | 192 | |||||||||
Provision for loan loss |
2,319 | 1,200 | |||||||||
Decrease (increase) in interest receivable |
(24 | ) | 1,202 | ||||||||
Decrease (increase) in other assets |
33 | (3,180 | ) | ||||||||
Origination of loans held for sale |
(45,836 | ) | (40,042 | ) | |||||||
Proceeds from sales of loans held for sale |
51,513 | 36,092 | |||||||||
Decrease in interest payable |
(198 | ) | (355 | ) | |||||||
Increase (decrease) in other liabilities |
(4,951 | ) | 286 | ||||||||
Stock based compensation expense |
255 | 228 | |||||||||
Tax benefit associated with stock options |
133 | 109 | |||||||||
Decrease (increase) in trading assets |
37 | (62 | ) | ||||||||
Net cash provided by operating activities |
14,493 | 6,065 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|||||||||||
Proceeds from maturities of available for sale securities |
31,238 | 60,132 | |||||||||
Purchase of available for sale securities |
(35,397 | ) | (56,043 | ) | |||||||
Loans made to customers greater than principal collected on loans |
(52,346 | ) | (14,796 | ) | |||||||
Net capital expenditures |
(812 | ) | (2,199 | ) | |||||||
Net cash used in investing activities |
(57,317 | ) | (12,906 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|||||||||||
Net increase in demand, savings and interest
bearing transaction accounts |
29,783 | 50,171 | |||||||||
Net increase in certificates of deposit |
22,863 | 3,725 | |||||||||
Proceeds from issuance of trust preferred securities |
7,500 | — | |||||||||
Proceeds from issuance of long-term borrowings |
35,000 | 75,500 | |||||||||
Repayment of long-term borrowings |
(20,000 | ) | (50,022 | ) | |||||||
Net decrease in short-term borrowings |
(5,315 | ) | (67,193 | ) | |||||||
Redemption of common stock |
(6,520 | ) | (1,840 | ) | |||||||
Net proceeds from issuance of common stock |
564 | 442 | |||||||||
Dividends paid and cash paid for fractional shares |
(2,298 | ) | (2,126 | ) | |||||||
Net cash provided by financing activities |
61,577 | 8,657 | |||||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS |
18,753 | 1,816 | |||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
52,961 | 60,834 | |||||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
$ | 71,714 | $ | ||||||||