Attached files
| file | filename |
|---|---|
| 8-K - WEST COAST BANCORP /NEW/OR/ | v190763_8k.htm |
| EX-99.2 - WEST COAST BANCORP /NEW/OR/ | v190763_ex99-2.htm |
For
more information, contact:
Robert
D. Sznewajs
President
& CEO
(503)
598-3243
Anders
Giltvedt
Executive
Vice President & CFO
(503)
598-3250
West
Coast Bancorp Reports Termination of Regulatory Order and Second Quarter 2010
Results
|
·
|
On July 15, 2010, the Federal
Deposit Insurance Corporation (“FDIC”) and the State of Oregon provided
notice that West Coast Bank’s October 2009 cease and desist order has been
terminated.
|
|
·
|
As of June 30, 2010, the
Company has raised $172.9 million of capital since October 2009, including
approximately $7.9 million through the recently announced discretionary
equity issuance program.
|
|
·
|
Regulatory capital ratios at
West Coast Bank have improved significantly, including an increase in its
total risk based capital ratio to 17.10% at June 30, 2010, from 10.81% a
year earlier.
|
|
·
|
Second quarter 2010 net loss
was $3.8 million, a reduction from a $6.3 million net loss in the same
quarter in 2009.
|
|
·
|
Nonperforming assets of $116.2
million continued to decline and have been reduced by $94.4 million or 45%
since June 30, 2009.
|
|
·
|
Second quarter 2010 average
rate paid on total deposits declined to .64% from 1.23% in the same period
in 2009.
|
Lake
Oswego, OR – July 16, 2010 – West Coast Bancorp (NASDAQ: WCBO) (“Bancorp”
or “Company”) today announced a net loss of $3.8 million or $.04 per diluted
share for the second quarter of 2010 compared to a net loss for second quarter
2009 of $6.3 million or $.41 per diluted share.
“The key
operating metrics of the Company continued to improve in the second quarter of
2010 as nonperforming assets continued their decline, the allowance for loan
losses as a percentage of loans increased, and the quarterly trend in the net
interest margin, excluding the term borrowing prepayment fee, continued to
improve. Also, with the additional common equity sold during the quarter, the
capital ratios continued to improve from prior periods”, said Robert D.
Sznewajs, President and CEO. “The consistent improving trend of these and
other operating metrics over the past several quarters support our belief that
the Company is well on the way to recovery in spite of a very difficult
operating environment. The removal of the Order by the regulators is further
validation of the favorable trends the Company is experiencing. The Company will
continue to take actions that will enhance future operating performance which
may include loan sales and raising additional capital,” says
Sznewajs.
WEST
COAST BANCORP REPORTS SECOND QUARTER 2010 RESULTS
July 16,
2010
Page 2 of
19
The
improved year-over-year second quarter was primarily a result of lower credit
costs, including a $3.6 million decrease in the provision for credit losses and
a $3.5 million decline in Other Real Estate Owned (“OREO”) valuation adjustments
and losses upon OREO dispositions. Also, noninterest expense declined by $2.3
million year-over year second quarter, which was partly due to a $1.2 million
special FDIC assessment in second quarter last year. These improvements were
partly offset by a $2.3 million prepayment fee incurred in connection with
prepaying $99 million Federal Home Loan Bank of Seattle (“FHLB”) borrowings in
the most recent quarter and a $5.8 million increase in the Company’s tax
expense, which was $1.7 million in the most recent quarter compared to a tax
benefit of $4.1 million in the second quarter last year.
Capital
On June
24, 2010, the Company announced the commencement of a discretionary equity
issuance program pursuant to which the Company will offer shares of its common
stock from time to time for aggregate gross sale proceeds of up to $30 million.
As of June 30, 2010, the Company had issued 2.8 million shares through this
program with aggregate gross sales proceeds of approximately $7.9 million. The
Company contributed $6.0 million in proceeds to West Coast Bank (“Bank”) in the
second quarter. There is no certainty that the Company will raise the $30
million maximum amount in the discretionary equity issuance
program.
Table 1
below shows regulatory capital ratios for Bancorp and the Bank at June 30, 2009
and 2010, and at March 31, 2010, illustrating significant improvement as a
result of capital raising activities and continued material reduction in
risk-weighted assets.
WEST
COAST BANCORP REPORTS SECOND QUARTER 2010 RESULTS
July 16,
2010
Page 3 of
19
|
Table
1
|
||||||||||||||||||||
|
SELECTED
INFORMATION
|
||||||||||||||||||||
|
Capital
Ratios
|
||||||||||||||||||||
|
June
30,
|
June
30,
|
March
31,
|
||||||||||||||||||
|
2010
|
2009
|
Change
|
2010
|
Change
|
||||||||||||||||
|
West Coast
Bancorp
|
||||||||||||||||||||
|
Tier
1 capital ratio
|
16.50 | % | 9.85 | % | 6.65 | 15.88 | % | 0.62 | ||||||||||||
|
Total
capital ratio
|
17.76 | % | 11.10 | % | 6.66 | 17.14 | % | 0.62 | ||||||||||||
|
Leverage
ratio
|
11.90 | % | 8.65 | % | 3.25 | 11.57 | % | 0.33 | ||||||||||||
|
West Coast
Bank
|
||||||||||||||||||||
|
Tier
1 capital ratio
|
15.84 | % | 9.56 | % | 6.28 | 15.24 | % | 0.60 | ||||||||||||
|
Total
capital ratio
|
17.10 | % | 10.81 | % | 6.29 | 16.50 | % | 0.60 | ||||||||||||
|
Leverage
ratio
|
11.43 | % | 8.39 | % | 3.04 | 11.16 | % | 0.27 | ||||||||||||
|
Selective quarterly
performance ratios
|
||||||||||||||||||||
|
Return
on average equity, annualized
|
-5.92 | % | -14.61 | % | 8.69 | -1.42 | % | (4.50 | ) | |||||||||||
|
Return
on average assets, annualized
|
-0.58 | % | -0.99 | % | 0.41 | -0.13 | % | (0.45 | ) | |||||||||||
|
Efficiency
ratio for the quarter to date
|
80.83 | % | 97.46 | % | 16.63 | 78.41 | % | (2.42 | ) | |||||||||||
|
Share and Per Share
Figures
|
||||||||||||||||||||
|
Quarter
ended
|
Quarter
ended
|
Quarter
ended
|
||||||||||||||||||
|
(Shares
in thousands)
|
June
30, 2010
|
June
30, 2009
|
Change
|
March
31, 2010
|
Change
|
|||||||||||||||
|
Common
shares outstanding at period end 1
|
96,421 | 15,660 | 80,761 | 92,077 | 4,344 | |||||||||||||||
|
Weighted
average diluted shares
|
92,123 | 15,522 | 76,601 | 67,125 | 24,998 | |||||||||||||||
|
Loss
per diluted share
|
$ | (0.04 | ) | $ | (0.41 | ) | $ | 0.37 | $ | (0.01 | ) | $ | (0.03 | ) | ||||||
|
Book
value per common share
|
$ | 2.55 | $ | 10.77 | $ | (8.22 | ) | $ | 2.60 | $ | (0.05 | ) | ||||||||
|
1
For additional information regarding outstanding shares please see
table 20.
|
||||||||||||||||||||
Balance
Sheet Overview
Total
loan balances declined $315 million or 16% from June 30, 2009 to $1.60 billion
at June 30, 2010. The decline reflects the prolonged weakness in the economy,
which continues to negatively impact loan demand, as well as the Company’s
on-going strategies to reduce risk exposure in selective loan segments. As a
result, the real estate construction loan portfolio contracted $127 million or
63% over the past 12 months and measured 5% of total loans at quarter end
compared to 11% at June 30, 2009. The Company also continued to exit a number of
higher risk rated commercial loans in the most recent quarter, which contributed
to the $117 million or 27% contraction in the commercial loan category from June
30 a year ago. Additionally, commercial credit line commitment utilization at
most recent quarter end remained low compared to the historical
levels.
WEST
COAST BANCORP REPORTS SECOND QUARTER 2010 RESULTS
July 16,
2010
Page 4 of
19
|
Table
2
|
||||||||||||||||||||||||||||||||
|
PERIOD
END LOANS
|
||||||||||||||||||||||||||||||||
|
(Dollars
in thousands)
|
June
30,
|
%
of
|
June
30,
|
%
of
|
Change
|
Mar.
31,
|
%
of
|
|||||||||||||||||||||||||
|
2010
|
total
|
2009
|
total
|
Amount
|
%
|
2010
|
total
|
|||||||||||||||||||||||||
|
Commercial
loans
|
$ | 312,170 | 19 | % | $ | 428,852 | 22 | % | $ | (116,682 | ) | -27 | % | $ | 342,385 | 21 | % | |||||||||||||||
|
Commercial
real estate
construction
|
22,096 | 1 | % | 71,945 | 4 | % | (49,849 | ) | -69 | % | 23,554 | 1 | % | |||||||||||||||||||
|
Residential
real estate
construction
|
52,062 | 3 | % | 129,588 | 7 | % | (77,526 | ) | -60 | % | 60,879 | 4 | % | |||||||||||||||||||
|
Total
real estate construction loans
|
74,158 | 5 | % | 201,533 | 11 | % | (127,375 | ) | -63 | % | 84,433 | 5 | % | |||||||||||||||||||
|
Mortgage
|
73,867 | 5 | % | 83,941 | 4 | % | (10,074 | ) | -12 | % | 74,613 | 4 | % | |||||||||||||||||||
|
Nonstandard
mortgage
|
14,348 | 1 | % | 23,916 | 1 | % | (9,568 | ) | -40 | % | 18,233 | 1 | % | |||||||||||||||||||
|
Home
equity
|
274,072 | 17 | % | 280,366 | 15 | % | (6,294 | ) | -2 | % | 277,527 | 17 | % | |||||||||||||||||||
|
Total
real estate mortgage
|
362,287 | 23 | % | 388,223 | 20 | % | (25,936 | ) | -7 | % | 370,373 | 22 | % | |||||||||||||||||||
|
Commercial
real estate loans
|
837,033 | 52 | % | 878,379 | 46 | % | (41,346 | ) | -5 | % | 853,180 | 51 | % | |||||||||||||||||||
|
Installment
and other consumer loans
|
16,384 | 1 | % | 20,041 | 1 | % | (3,657 | ) | -18 | % | 16,562 | 1 | % | |||||||||||||||||||
|
Total
|
$ | 1,602,032 | $ | 1,917,028 | $ | (314,996 | ) | -16 | % | $ | 1,666,933 | |||||||||||||||||||||
|
Yield
on loans
|
5.46 | % | 5.33 | % | 0.13 | 5.44 | % | |||||||||||||||||||||||||
Over the
past twelve months the Company’s total cash equivalents and investment
securities balances collectively grew $300 million to $769 million at June 30,
2010. The majority of the growth occurred in U.S. Government Agency and
mortgage-backed securities. These securities were purchased to manage the
Company’s interest rate sensitivity position while providing sufficient cash
flows for future loan growth. The expected duration of the investment
securities portfolio, excluding FHLB stock, was 1.8 years at
quarter end.
Total
cash equivalents at June 30, 2010, declined $119 million or nearly 50% since
March 31, 2010. This occurred primarily as a consequence of the second quarter
prepayment of the FHLB term borrowings, which were originally scheduled to
mature between September 2010 and May 2012.
WEST
COAST BANCORP REPORTS SECOND QUARTER 2010 RESULTS
July 16,
2010
Page 5 of
19
|
Table
3
|
||||||||||||||||||||||||||||||||
|
PERIOD
END CASH EQUIVALENTS AND INVESTMENT SECURITIES
|
||||||||||||||||||||||||||||||||
|
(Dollars
in thousands)
|
June
30,
|
%
of
|
June
30,
|
%
of
|
Change
|
Mar.
31,
|
%
of
|
|||||||||||||||||||||||||
|
2010
|
total
|
2009
|
total
|
Amount
|
%
|
2010
|
total
|
|||||||||||||||||||||||||
|
Cash
equivalents:
|
||||||||||||||||||||||||||||||||
|
Federal
funds sold
|
$ | 13,431 | 2 | % | $ | 6,643 | 1 | % | $ | 6,788 | 102 | % | $ | 3,859 | 1 | % | ||||||||||||||||
|
Interest-bearing
deposits in
other banks
|
109,781 | 14 | % | 92,458 | 20 | % | 17,323 | 19 | % | 238,680 | 29 | % | ||||||||||||||||||||
|
Total
cash equivalents
|
123,212 | 16 | % | 99,101 | 21 | % | 24,111 | 24 | % | 242,539 | 30 | % | ||||||||||||||||||||
|
Investment
securities:
|
||||||||||||||||||||||||||||||||
|
U.S.
Treasury securities
|
14,688 | 2 | % | 45,292 | 10 | % | (30,604 | ) | -68 | % | 24,849 | 3 | % | |||||||||||||||||||
|
U.S.
Government Agency
securities
|
250,848 | 32 | % | 38,943 | 8 | % | 211,905 | 544 | % | 136,208 | 17 | % | ||||||||||||||||||||
|
Corporate
securities
|
9,674 | 1 | % | 9,302 | 2 | % | 372 | 4 | % | 10,231 | 1 | % | ||||||||||||||||||||
|
Mortgage-backed
securities
|
300,485 | 39 | % | 196,969 | 42 | % | 103,516 | 53 | % | 330,849 | 41 | % | ||||||||||||||||||||
|
Obligations
of state and
political sub.
|
58,564 | 8 | % | 70,144 | 15 | % | (11,580 | ) | -17 | % | 60,111 | 7 | % | |||||||||||||||||||
|
Equity
investments and other
securities
|
11,972 | 2 | % | 9,264 | 2 | % | 2,708 | 29 | % | 9,352 | 1 | % | ||||||||||||||||||||
|
Total
investment securities
|
646,231 | 84 | % | 369,914 | 79 | % | 276,317 | 75 | % | 571,600 | 70 | % | ||||||||||||||||||||
|
Total
cash equivalents and investment securities
|
$ | 769,443 | 100 | % | $ | 469,015 | 100 | % | $ | 300,428 | 64 | % | $ | 814,139 | 100 | % | ||||||||||||||||
|
Tax
equivalent yield on cash equivalents and investment
securities
|
2.27 | % | 3.11 | % | (0.84 | ) | 2.34 | % | ||||||||||||||||||||||||
Second
quarter 2010 average total deposits of $2.05 billion declined 1% or $28 million
from the same quarter in 2009. With excess balance sheet liquidity, we elected
to reduce higher cost time deposit balances, which declined $183 million or 30%
from average time deposit balances in the second quarter last year. Time
deposits represented just 21% of the Company’s average total deposits in the
most recent quarter. The combination of the Company’s favorable deposit mix and
recent deposit pricing strategies helped reduce the average rate paid on total
deposits to .64% in second quarter 2010, representing a decline of 59 basis
points from 1.23% in same quarter 2009.
|
Table
4
|
||||||||||||||||||||||||||||||||
|
QUARTERLY
AVERAGE DEPOSITS BY CATEGORY
|
||||||||||||||||||||||||||||||||
|
(Dollars
in thousands)
|
Q2
|
%
of
|
Q2
|
%
of
|
Change
|
Q1
|
%
of
|
|||||||||||||||||||||||||
|
2010
|
total
|
2009
|
total
|
Amount
|
%
|
2010
|
total
|
|||||||||||||||||||||||||
|
Demand
deposits
|
$ | 523,298 | 26 | % | $ | 478,289 | 23 | % | $ | 45,009 | 9 | % | $ | 519,492 | 25 | % | ||||||||||||||||
|
Interest
bearing demand
|
332,850 | 16 | % | 298,012 | 14 | % | 34,838 | 12 | % | 321,070 | 15 | % | ||||||||||||||||||||
|
Savings
|
104,052 | 5 | % | 87,624 | 4 | % | 16,428 | 19 | % | 98,075 | 5 | % | ||||||||||||||||||||
|
Money
market
|
657,454 | 32 | % | 599,417 | 29 | % | 58,037 | 10 | % | 642,594 | 31 | % | ||||||||||||||||||||
|
Time
deposits
|
431,669 | 21 | % | 614,472 | 30 | % | (182,803 | ) | -30 | % | 507,706 | 24 | % | |||||||||||||||||||
|
Total
|
$ | 2,049,323 | 100 | % | $ | 2,077,814 | 100 | % | $ | (28,491 | ) | -1 | % | $ | 2,088,937 | 100 | % | |||||||||||||||
|
Average
rate on total deposits
|
0.64 | % | 1.23 | % | (0.59 | ) | 0.83 | % | ||||||||||||||||||||||||
WEST
COAST BANCORP REPORTS SECOND QUARTER 2010 RESULTS
July 16,
2010
Page 6 of
19
The
number of checking accounts, which are the foundation from which to build
broader client relationships, grew by 2,100 during the second quarter of 2010,
and as a result, the Company’s total checking accounts surpassed 100,000 by June
30, 2010.
|
Table
5
|
||||||||||||||||||||||||||||||||
|
NUMBER
OF DEPOSIT ACCOUNTS
|
||||||||||||||||||||||||||||||||
|
(In
thousands)
|
June
30,
|
%
of
|
June
30,
|
%
of
|
Change
|
March
31,
|
%
of
|
|||||||||||||||||||||||||
|
2010
|
total
|
2009
|
total
|
$ | % |
2010
|
total
|
|||||||||||||||||||||||||
|
Demand
deposits
|
50,340 | 32 | % | 46,544 | 31 | % | 3,796 | 8 | % | 49,230 | 32 | % | ||||||||||||||||||||
|
Interest
bearing demand
|
51,465 | 34 | % | 47,568 | 32 | % | 3,897 | 8 | % | 50,465 | 32 | % | ||||||||||||||||||||
|
Savings
|
28,488 | 18 | % | 25,356 | 17 | % | 3,132 | 12 | % | 27,773 | 18 | % | ||||||||||||||||||||
|
Money
market
|
14,575 | 9 | % | 15,367 | 10 | % | (792 | ) | -5 | % | 14,629 | 9 | % | |||||||||||||||||||
|
Time
deposits
|
11,681 | 7 | % | 14,921 | 10 | % | (3,240 | ) | -22 | % | 13,850 | 9 | % | |||||||||||||||||||
|
Total
|
156,549 | 100 | % | 149,756 | 100 | % | 6,793 | 5 | % | 155,947 | 100 | % | ||||||||||||||||||||
Also, the
Bank has recently been advised by the FHLB and the Federal Reserve Bank (“FRB”)
that it will again be able to borrow from these funding sources on more
favorable terms.
Operating
Results Improved Significantly from Second Quarter 2009
As shown
in table 6 below, the second quarter 2010 pretax loss of $2.1 million declined
$8.3 million from $10.5 million in the same quarter of 2009. Furthermore,
excluding the FHLB prepayment fee and effects of taxes, the Company’s adjusted
net income in the second quarter of 2010 would have been $.2 million. See
reconciliation below.
WEST
COAST BANCORP REPORTS SECOND QUARTER 2010 RESULTS
July 16,
2010
Page 7 of
19
|
Table
6
|
||||||||||||||||||||||||||||
|
SUMMARY
INCOME STATEMENT
|
||||||||||||||||||||||||||||
|
(Dollars
in thousands)
|
Q2
|
Q2
|
Change
|
Q1
|
Change
|
|||||||||||||||||||||||
|
2010
|
2009
|
$
|
% |
2010
|
$
|
%
|
||||||||||||||||||||||
|
Net
interest income
|
$ | 18,910 | $ | 20,214 | $ | (1,304 | ) | -6 | % | $ | 20,633 | $ | (1,723 | ) | -8 | % | ||||||||||||
|
Provision
for credit losses
|
7,758 | 11,393 | 3,635 | 32 | % | 7,634 | (124 | ) | -2 | % | ||||||||||||||||||
|
Noninterest
income
|
9,625 | 5,958 | 3,667 | 62 | % | 6,408 | 3,217 | 50 | % | |||||||||||||||||||
|
Noninterest
expense
|
22,909 | 25,244 | 2,335 | 9 | % | 21,095 | (1,814 | ) | -9 | % | ||||||||||||||||||
|
Loss
before income taxes
|
(2,132 | ) | (10,465 | ) | 8,333 | 80 | % | (1,688 | ) | (444 | ) | -26 | % | |||||||||||||||
|
Provision
(benefit) for income taxes
|
1,717 | (4,126 | ) | (5,843 | ) | -142 | % | (800 | ) | (2,517 | ) | -315 | % | |||||||||||||||
|
Net
income (loss)
|
$ | (3,849 | ) | $ | (6,339 | ) | $ | 2,490 | 39 | % | $ | (888 | ) | $ | (2,961 | ) | -333 | % | ||||||||||
|
Reconciliation of adjusted net income to
GAAP
|
||||||||||||||||||||||||||||
|
Net
loss
|
$ | (3,849 | ) | $ | (6,339 | ) | $ | 2,490 | 39 | % | $ | (888 | ) | $ | (2,961 | ) | -333 | % | ||||||||||
|
Less
FHLB prepayment fee
1
|
(2,326 | ) | - | (2,326 | ) | - | (2,326 | ) | ||||||||||||||||||||
|
Less:
Impact of taxes:
|
||||||||||||||||||||||||||||
|
Unrealized
gain on securities
|
(1,798 | ) | - | (1,798 | ) | (800 | ) | (998 | ) | |||||||||||||||||||
|
Increase
in deferred tax assets-tax return
adjustments
|
3,515 | - | 3,515 | - | 3,515 | |||||||||||||||||||||||
|
Benefit
for income taxes
|
- | (4,126 | ) | (4,126 | ) | - | - | |||||||||||||||||||||
|
Net
income (loss) excluding FHLB
prepayment
fee and taxes
2
|
$ | 194 | $ | (10,465 | ) | $ | 10,659 | 102 | % | $ | (1,688 | ) | $ | 1,882 | 111 | % | ||||||||||||
|
1 No tax benefit was
recognized for FHLB prepayment fee.
|
||||||||||||||||||||||||||||
|
2 Management uses
this non-GAAP information internally and has disclosed it to investors
based on its belief that the infomration provides
|
||||||||||||||||||||||||||||
|
additional
, valuable information relating to its operating performance as compared
to prior periods.
|
||||||||||||||||||||||||||||
WEST
COAST BANCORP REPORTS SECOND QUARTER 2010 RESULTS
July 16,
2010
Page 8 of
19
As a
consequence of the $2.3 million fee associated with prepayment of $99 million in
FHLB borrowings with an average rate of 2.93%, the second quarter 2010 net
interest margin compressed 39 basis points from second quarter 2009 to 3.11%.
Without the prepayment fee, the net interest margin would have been 3.48%, or
relatively unchanged from second quarter 2009 and up 10 basis points from first
quarter 2010. The considerable year-over-year shift in average earning assets
from higher yielding loan balances to cash equivalents and investment securities
balances, which collectively earned 319 basis points less than the loan
portfolio, was substantially offset by a 73 basis points reduction in the rate
paid on interest bearing deposits from the same quarter of 2009. Reflecting an
underlying positive operational trend, the year-over-year second quarter spread
between the yield earned on loans and rate paid on deposits expanded 86 basis
points. As a result of prepaying higher cost FHLB borrowings and current market
conditions, we anticipate the third quarter net interest margin will improve
over the second quarter margin excluding the FHLB prepayment
fee.
Second
quarter 2010 net interest income of $18.9 million declined $1.3 million from the
same quarter in 2009. This decline was caused by the $2.3 million FHLB
prepayment fee.
|
Table
7
|
||||||||||||||||||||
|
NET
INTEREST SPREAD AND MARGIN
|
||||||||||||||||||||
|
(Annualized,
tax-equivalent basis)
|
Q2
|
Q2
|
Q1
|
|||||||||||||||||
|
2010
|
2009
|
Change
|
2010
|
Change
|
||||||||||||||||
|
Yield
on average interest-earning assets
|
4.39 | % | 4.97 | % | (0.58 | ) | 4.44 | % | (0.05 | ) | ||||||||||
|
Rate
on average interest-bearing liabilities
|
1.72 | % | 1.83 | % | (0.11 | ) | 1.41 | % | 0.31 | |||||||||||
|
Net
interest spread
|
2.67 | % | 3.14 | % | (0.47 | ) | 3.03 | % | (0.36 | ) | ||||||||||
|
Net
interest margin
|
3.11 | % | 3.50 | % | (0.39 | ) | 3.38 | % | (0.27 | ) | ||||||||||
|
Impact
of FHLB prepayment fee in Q2 2010
|
-0.37 | % | 0.00 | % | (0.37 | ) | 0.00 | % | (0.37 | ) | ||||||||||
|
Net
interest margin excluding FHLB prepayment fee
|
3.48 | % | 3.50 | % | (0.02 | ) | 3.38 | % | 0.10 | |||||||||||
As shown
in table 8 below, second quarter 2010 total noninterest income of $9.6 million
increased $3.7 million or 62% from the same quarter last year. The increase was
mainly due to a $3.5 million improvement in OREO valuation adjustments and gains
or losses associated with OREO dispositions. During the second quarter 2010, the
Company recorded a $1.0 million gain on sales of OREO properties compared to a
loss of $.6 million in second quarter 2009.
Excluding
OREO valuation adjustments and gain or losses from both quarters, the Company’s
noninterest income increased $.2 million year-over-year second quarter. The $.5
million or 22% growth in payment system revenues and $.2 million or 20% increase
in trust and investment services revenues more than offset the $.5 million
decline in gains on sales of loans. Gains on sales of loans decreased
compared to second quarter 2009 due to a significant decline in originations and
sales of residential mortgage loans. The Company recognized gains on sales of
securities of $.5 million during the most recent quarter compared to $.6 million
in same quarter last year.
WEST
COAST BANCORP REPORTS SECOND QUARTER 2010 RESULTS
July 16,
2010
Page 9 of
19
|
Table
8
|
||||||||||||||||||||||||||||
|
NONINTEREST
INCOME
|
||||||||||||||||||||||||||||
|
(Dollars
in thousands)
|
Q2
|
Q2
|
Change
|
Q1
|
Change
|
|||||||||||||||||||||||
|
2010
|
2009
|
$
|
% |
2010
|
$ | % | ||||||||||||||||||||||
|
Noninterest
income
|
||||||||||||||||||||||||||||
|
Service
charges on deposit accounts
|
$ | 4,213 | $ | 4,133 | $ | 80 | 2 | % | $ | 3,596 | $ | 617 | 17 | % | ||||||||||||||
|
Payment
systems related revenue
|
2,875 | 2,359 | 516 | 22 | % | 2,536 | 339 | 13 | % | |||||||||||||||||||
|
Trust
and investment services revenues
|
1,167 | 971 | 196 | 20 | % | 979 | 188 | 19 | % | |||||||||||||||||||
|
Gains
on sales of loans
|
306 | 756 | (450 | ) | -60 | % | 141 | 165 | 117 | % | ||||||||||||||||||
|
Other
|
785 | 787 | (2 | ) | 0 | % | 757 | 28 | 4 | % | ||||||||||||||||||
|
Gain
on sales of securities
|
488 | 635 | (147 | ) | -23 | % | 457 | 31 | 7 | % | ||||||||||||||||||
|
Total
|
9,834 | 9,641 | 193 | 2 | % | 8,466 | 1,368 | 16 | % | |||||||||||||||||||
|
OREO
gains (losses) on sale
|
1,047 | (620 | ) | 1,667 | 269 | % | 301 | 746 | 248 | % | ||||||||||||||||||
|
OREO
valuation adjustments
|
(1,256 | ) | (3,063 | ) | 1,807 | 59 | % | (2,359 | ) | 1,103 | -47 | % | ||||||||||||||||
|
Total
|
(209 | ) | (3,683 | ) | 3,474 | 94 | % | (2,058 | ) | 1,849 | -90 | % | ||||||||||||||||
|
Total
noninterest income
|
$ | 9,625 | $ | 5,958 | $ | 3,667 | 62 | % | $ | 6,408 | $ | 3,217 | 50 | % | ||||||||||||||
As
presented in table 9 below, second quarter 2010 total noninterest expense of
$22.9 million decreased $2.3 million from the same quarter in 2009. The primary
factors in this decline were a $1.2 million special FDIC assessment that
increased other noninterest expense in the second quarter last year and lower
OREO, equipment, and professional expenses in the most recent quarter. Personnel
cost remained unchanged over the two periods while payment system related
expenses grew $.2 million or 21% related to increased transaction
activity.
|
Table
9
|
||||||||||||||||||||||||||||
|
NONINTEREST
EXPENSE
|
||||||||||||||||||||||||||||
|
(Dollars
in thousands)
|
Q2 | Q2 |
Change
|
Q1 |
Change
|
|||||||||||||||||||||||
|
2010
|
2009
|
$ | % |
2010
|
$ | % | ||||||||||||||||||||||
|
Noninterest
expense
|
||||||||||||||||||||||||||||
|
Salaries
and employee benefits
|
$ | 11,322 | $ | 11,267 | $ | (55 | ) | 0 | % | $ | 11,175 | $ | (147 | ) | -1 | % | ||||||||||||
|
Equipment
|
1,606 | 1,850 | 244 | 13 | % | 1,576 | (30 | ) | -2 | % | ||||||||||||||||||
|
Occupancy
|
2,249 | 2,295 | 46 | 2 | % | 2,184 | (65 | ) | -3 | % | ||||||||||||||||||
|
Payment
systems related expense
|
1,212 | 998 | (214 | ) | -21 | % | 1,004 | (208 | ) | -21 | % | |||||||||||||||||
|
Professional
fees
|
1,161 | 1,371 | 210 | 15 | % | 861 | (300 | ) | -35 | % | ||||||||||||||||||
|
Postage,
printing and office supplies
|
737 | 826 | 89 | 11 | % | 804 | 67 | 8 | % | |||||||||||||||||||
|
Marketing
|
738 | 696 | (42 | ) | -6 | % | 687 | (51 | ) | -7 | % | |||||||||||||||||
|
Communications
|
381 | 404 | 23 | 6 | % | 382 | 1 | 0 | % | |||||||||||||||||||
|
Other
noninterest expense
|
3,503 | 5,537 | 2,034 | 37 | % | 2,422 | (1,081 | ) | -45 | % | ||||||||||||||||||
|
Total
|
22,909 | 25,244 | 2,335 | 9 | % | 21,095 | (1,814 | ) | -9 | % | ||||||||||||||||||
WEST
COAST BANCORP REPORTS SECOND QUARTER 2010 RESULTS
July 16,
2010
Page 10 of
19
Income
Taxes and Deferred Tax Asset Valuation Allowance
Second
quarter 2010 income tax expense was $1.7 million compared to a tax benefit of
$4.1 million in the same quarter 2009. The provision for income taxes
for the second quarter 2010 was primarily the result of adjustments made to the
Company’s 2009 tax estimates in conjunction with finalizing its 2009 income tax
return which increased the deferred tax asset valuation allowance by $3.5
million. This tax expense was partially offset by a $1.8 million tax benefit
associated with an increase in the unrealized gain on our investment securities.
Looking forward, such unrealized gain will fluctuate and be subject to changing
interest rate environments.
The
Company maintained a valuation allowance of $22.8 million against the deferred
tax asset balance of $27.7 million as of June 30, 2010, for a net deferred tax
asset of $4.9 million. This represented a $1.8 million increase from the March
31, 2010 net deferred tax asset balance of $3.1 million.
|
Table
10
|
||||||||||||||||||||
|
PROVISION
(BENEFIT) FOR INCOME TAXES
|
||||||||||||||||||||
|
(Dollars
in thousands)
|
Q2 | Q2 | Q1 | |||||||||||||||||
|
2010
|
2009
|
Change
|
2010
|
Change
|
||||||||||||||||
|
Benefit
for income taxes excluding deferred tax asset
|
||||||||||||||||||||
|
valuation
allowance
|
$ | - | $ | (4,126 | ) | $ | 4,126 | $ | - | $ | - | |||||||||
|
Provision
(benefit) for taxes from deferred
|
||||||||||||||||||||
|
tax
asset valuation allowance:
|
||||||||||||||||||||
|
Unrealized
gain on securities
|
(1,798 | ) | - | (1,798 | ) | (800 | ) | (998 | ) | |||||||||||
|
Increase
in deferred tax assets-tax return adjustments
|
3,515 | - | 3,515 | - | 3,515 | |||||||||||||||
|
Total
provision (benefit) for income taxes
|
$ | 1,717 | $ | (4,126 | ) | $ | 5,843 | $ | (800 | ) | $ | 2,517 | ||||||||
Credit
Quality
The
Company recorded a second quarter 2010 provision for credit losses of $7.8
million, a decline from $11.4 million in the same quarter of 2009. Consistent
with the first quarter of 2010, the latest quarter marked a reduction in loan
net charge-offs compared to the corresponding quarter a year ago. Second quarter
2010 net charge-offs of $4.7 million or 1.15% of average loans on an annualized
basis, decreased $6.6 million from $11.3 million in the second quarter 2009, and
was at the lowest level since the fourth quarter 2007. The reduction in net
charge-offs from second quarter 2009 was primarily attributable to a $6.6
million decline in real estate construction loan net charge-offs. The Company’s
future provisioning will be heavily dependent on the local real estate market,
level of market interest rates, and general economic conditions nationally and
in the areas in which we do business.
WEST
COAST BANCORP REPORTS SECOND QUARTER 2010 RESULTS
July 16,
2010
Page 11 of
19
|
Table
11
|
||||||||||||||||||||
|
ALLOWANCE
FOR CREDIT LOSSES AND NET CHARGEOFFS
|
||||||||||||||||||||
|
(Dollars
in thousands)
|
Q2 | Q1 | Q4 | Q3 | Q2 | |||||||||||||||
|
2010
|
2010
|
2009
|
2009
|
2009
|
||||||||||||||||
|
Allowance
for credit losses, beginning of period
|
$ | 41,299 | $ | 39,418 | $ | 40,036 | $ | 38,569 | $ | 38,463 | ||||||||||
|
Provision
for credit losses loans other than two-step loans
|
7,569 | 7,539 | 35,149 | 19,575 | 9,004 | |||||||||||||||
|
Provision
for credit losses two-step loans
|
189 | 95 | 84 | 725 | 2,389 | |||||||||||||||
|
Total
provision for credit losses
|
7,758 | 7,634 | 35,233 | 20,300 | 11,393 | |||||||||||||||
|
Loan
net charge-offs:
|
||||||||||||||||||||
|
Commercial
|
1,684 | 839 | 13,271 | 5,744 | 1,333 | |||||||||||||||
|
Commercial
real estate construction
|
248 | 487 | - | 324 | - | |||||||||||||||
|
Residential
real estate construction
|
432 | 734 | 10,538 | 8,536 | 7,266 | |||||||||||||||
|
Total
real estate construction
|
680 | 1,221 | 10,538 | 8,860 | 7,266 | |||||||||||||||
|
Mortgage
|
478 | 909 | 4,734 | 3,018 | 1,244 | |||||||||||||||
|
Nonstandard
mortgage
|
641 | 1,497 | 692 | 725 | 320 | |||||||||||||||
|
Home
equity
|
627 | 914 | 1,346 | 203 | 529 | |||||||||||||||
|
Total
real estate mortgage
|
1,746 | 3,320 | 6,772 | 3,946 | 2,093 | |||||||||||||||
|
Commercial
real estate
|
275 | 95 | 4,733 | (79 | ) | 172 | ||||||||||||||
|
Installment
and consumer
|
146 | 137 | 285 | 128 | 251 | |||||||||||||||
|
Overdraft
|
179 | 141 | 252 | 234 | 172 | |||||||||||||||
|
Total
loan net charge-offs
|
4,710 | 5,753 | 35,851 | 18,833 | 11,287 | |||||||||||||||
|
Total
allowance for credit losses
|
$ | 44,347 | $ | 41,299 | $ | 39,418 | $ | 40,036 | $ | 38,569 | ||||||||||
|
Components
of allowance for credit losses:
|
||||||||||||||||||||
|
Allowance
for loan losses
|
$ | 43,329 | $ | 40,446 | $ | 38,490 | $ | 39,075 | $ | 37,700 | ||||||||||
|
Reserve
for unfunded commitments
|
1,018 | 853 | 928 | 961 | 869 | |||||||||||||||
|
Total
allowance for credit losses
|
$ | 44,347 | $ | 41,299 | $ | 39,418 | $ | 40,036 | $ | 38,569 | ||||||||||
|
Net
loan charge-offs to average loans (annualized)
|
1.15 | % | 1.37 | % | 7.94 | % | 4.01 | % | 2.30 | % | ||||||||||
|
Allowance
for loan losses to total loans
|
2.70 | % | 2.43 | % | 2.23 | % | 2.14 | % | 1.97 | % | ||||||||||
|
Allowance
for credit losses to total loans
|
2.77 | % | 2.48 | % | 2.29 | % | 2.20 | % | 2.01 | % | ||||||||||
|
Allowance
for loan losses to nonperforming loans
|
55 | % | 47 | % | 39 | % | 30 | % | 30 | % | ||||||||||
|
Allowance
for credit losses to nonperforming loans
|
56 | % | 48 | % | 40 | % | 30 | % | 30 | % | ||||||||||
The June
30, 2010 allowance for credit losses of $44.3 million or 2.77% of total
outstanding loan balances expanded from $38.6 million or 2.01% of loan balances
a year ago. The combination of higher general valuation allowances in the June
30, 2010 allowance model, an unfavorable loan risk rating migration over the
past year, and a larger unallocated allowance, caused the increase in the
allowance for credit losses relative to total loan balances. At June 30, 2010,
the unallocated portion of the allowance for loan losses amounted to $6.7
million or 15% of the total allowance for credit losses, an increase from $3.8
million or 10% at the end of the second quarter 2009. As a result of provision
for credit losses exceeding net charge-offs by $3.0 million in the second
quarter and lower June 30, 2010 loan balances, the allowance for credit losses
as a percentage of total loans increased 29 basis points to 2.77% from 2.48% at
March 31, 2010. As shown in table 17, year-to-date provision for credit losses
exceeded net charge-offs by $5.0 million. The Company’s estimate of appropriate
reserve amounts will continue to be primarily dependent on the loan portfolio’s
credit quality performance trends, including net charge-offs, which will be
heavily dependent on economic conditions.
WEST
COAST BANCORP REPORTS SECOND QUARTER 2010 RESULTS
July 16,
2010
Page 12 of
19
Total
nonperforming assets were $116.2 million or 4.6% of total assets as of June 30,
2010, which represented the fifth consecutive quarterly decline. The balance of
nonperforming loans had decreased 45% or $94.4 million from $210.6 million at
June 30, 2009, at which time nonperforming assets represented 8.1% of total
assets. The balance of total nonperforming assets at quarter end reflected
write-downs totaling $63 million or 36% from the original principal loan balance
compared to write-downs of 27% twelve months ago. Total nonperforming assets
fell $14.5 million or 11% during the most recent quarter. The allowance for
credit losses represented 56% of nonperforming loans at June 30, 2010, an
increase from 30% from twelve months ago.
At June
30, 2010, total delinquent loans 30-89 days past due were $2.7 million or .17%
of total loans, a reduction from $16.1 million and .84% a year ago. For further
details see table 18.
|
Table
12
|
||||||||||||||||||||
|
NONPERFORMING
ASSETS
|
||||||||||||||||||||
|
(Dollars
in thousands)
|
June
30,
|
March
31,
|
Dec.
31.
|
Sept.
30,
|
June
30,
|
|||||||||||||||
|
2010
|
2010
|
2009
|
2009
|
2009
|
||||||||||||||||
|
Loans
on nonaccrual status:
|
||||||||||||||||||||
|
Commercial
|
$ | 15,317 | $ | 24,856 | $ | 36,211 | $ | 49,871 | $ | 34,396 | ||||||||||
|
Real
estate construction:
|
||||||||||||||||||||
|
Commercial
real estate construction
|
3,391 | 3,939 | 1,488 | 2,449 | 2,922 | |||||||||||||||
|
Residential
real estate construction
|
19,465 | 19,776 | 22,373 | 42,277 | 56,507 | |||||||||||||||
|
Total
real estate construction
|
22,856 | 23,715 | 23,861 | 44,726 | 59,429 | |||||||||||||||
|
Real
estate mortgage:
|
||||||||||||||||||||
|
Mortgage
|
14,535 | 9,829 | 11,563 | 12,498 | 14,179 | |||||||||||||||
|
Nonstandard
mortgage
|
6,121 | 9,327 | 8,752 | 10,810 | 10,486 | |||||||||||||||
|
Home
equity
|
2,198 | 2,248 | 2,036 | 1,599 | 1,259 | |||||||||||||||
|
Total
real estate mortgage
|
22,854 | 21,404 | 22,351 | 24,907 | 25,924 | |||||||||||||||
|
Commercial
real estate
|
17,542 | 15,322 | 16,778 | 12,463 | 6,905 | |||||||||||||||
|
Installment
and consumer
|
74 | 172 | 144 | 39 | 69 | |||||||||||||||
|
Total
nonaccrual loans
|
78,643 | 85,469 | 99,345 | 132,006 | 126,723 | |||||||||||||||
|
90
days past due not on nonaccrual
|
- | - | - | - | - | |||||||||||||||
|
Total
nonperforming loans
|
78,643 | 85,469 | 99,345 | 132,006 | 126,723 | |||||||||||||||
|
Other
real estate owned
|
37,578 | 45,238 | 53,594 | 76,570 | 83,830 | |||||||||||||||
|
Total
nonperforming assets
|
$ | 116,221 | $ | 130,707 | $ | 152,939 | $ | 208,576 | $ | 210,553 | ||||||||||
|
Nonperforming
loans to total loans
|
4.91 | % | 5.13 | % | 5.76 | % | 7.25 | % | 6.61 | % | ||||||||||
|
Nonperforming
assets to total assets
|
4.64 | % | 4.91 | % | 5.60 | % | 7.86 | % | 8.06 | % | ||||||||||
Over the
past year total nonaccrual loans declined $48.1 million or 38% to $78.6 million
at June 30, 2010. This reduction was largely due to the Company taking ownership
of additional residential site development and construction properties related
to loans which previously were on nonaccrual status, nonaccrual loan payoffs,
and the disposition of certain large nonaccrual commercial loans. At June 30,
2010, the total nonaccrual loan portfolio had been written down 25% from the
original principal balance compared to 21% at the end of the second quarter a
year ago.
WEST
COAST BANCORP REPORTS SECOND QUARTER 2010 RESULTS
July 16,
2010
Page 13 of
19
As
indicated in table 13 below, the Company’s OREO property disposition activities
continued at a consistent pace. During the most recent quarter, the Company
disposed of 170 OREO properties with a book value of $13.6 million. At June 30,
2010, the OREO portfolio consisted of 446 properties valued at $37.6 million.
The quarter end OREO balance reflected write-downs totaling 52% from the
original loan principal compared to 34% twelve months ago. The largest segments
of the OREO balance at June 30, 2010 were completed homes followed by
residential site development projects. In the quarter just ended, the Company
sold two residential site development properties with a total of 109 lots and a
book value of $4.7 million for a $.4 million gain upon final disposition. The
site development projects remaining as of quarter end are primarily located in
Vancouver and Washougal, Washington and in Beaverton and Salem,
Oregon.
|
Table
13
|
||||||||||||||||||||||||||||||||||||||||
|
OTHER
REAL ESTATE OWNED ACTIVITY
|
||||||||||||||||||||||||||||||||||||||||
|
(Dollars
in thousands)
|
Q2 2010 | Q1 2010 | Q4 2009 | Q3 2009 | Q2 2009 | |||||||||||||||||||||||||||||||||||
|
Amount
|
#
|
Amount
|
# |
Amount
|
# |
Amount
|
# |
Amount
|
# | |||||||||||||||||||||||||||||||
|
Beginning
balance
|
$ | 45,238 | 596 | $ | 53,594 | 672 | $ | 76,570 | 301 | $ | 83,830 | 335 | $ | 87,189 | 349 | |||||||||||||||||||||||||
|
Additions
to OREO
|
7,209 | 20 | 5,003 | 15 | 26,293 | 536 | 12,064 | 36 | 14,819 | 48 | ||||||||||||||||||||||||||||||
|
Dispositions
of OREO
|
(13,612 | ) | (170 | ) | (11,000 | ) | (91 | ) | (42,329 | ) | (165 | ) | (15,527 | ) | (70 | ) | (15,114 | ) | (62 | ) | ||||||||||||||||||||
|
OREO
valuation adjustments
|
(1,257 | ) | - | (2,359 | ) | - | (6,940 | ) | - | (3,797 | ) | - | (3,064 | ) | - | |||||||||||||||||||||||||
|
Ending
balance
|
37,578 | 446 | 45,238 | 596 | $ | 53,594 | 672 | $ | 76,570 | 301 | $ | 83,830 | 335 | |||||||||||||||||||||||||||
|
Table
14
|
||||||||||||||||||||||||
|
OTHER
REAL ESTATE OWNED BY PROPERTY TYPE
|
||||||||||||||||||||||||
|
(Dollars
in thousands)
|
June
30,
|
#
of
|
Mar.
31,
|
#
of
|
Dec.
31,
|
#
of
|
||||||||||||||||||
|
2010
|
properties
|
2010
|
properties
|
2009
|
properties
|
|||||||||||||||||||
|
Homes
|
$ | 17,254 | 75 | $ | 21,040 | 91 | $ | 29,435 | 118 | |||||||||||||||
|
Residential
site developments
|
7,296 | 265 | 13,488 | 400 | 14,851 | 453 | ||||||||||||||||||
|
Lots
|
4,750 | 67 | 5,114 | 71 | 5,235 | 71 | ||||||||||||||||||
|
Land
|
3,474 | 10 | 2,682 | 7 | 1,607 | 7 | ||||||||||||||||||
|
Income
producing properties
|
2,996 | 6 | 1,094 | 4 | 1,255 | 4 | ||||||||||||||||||
|
Condominiums
|
1,111 | 12 | 1,111 | 12 | 982 | 12 | ||||||||||||||||||
|
Multifamily
|
697 | 11 | 709 | 11 | 229 | 7 | ||||||||||||||||||
|
Total
|
$ | 37,578 | 446 | $ | 45,238 | 596 | $ | 53,594 | 672 | |||||||||||||||
Future
financial results will be impacted by the Company's ability to dispose of its
OREO properties at prices that are in line with current valuation
expectations.
Other:
The
Company will hold a Webcast conference call Friday, July 16, 2010, at 11:00 a.m.
Pacific Time, during which the Company will discuss second quarter 2010 results
and key activities. To access the conference call via a live Webcast, go to
www.wcb.com and
click on Investor Relations and the “2nd Quarter 2010 Earnings Conference Call”
tab. The conference call may also be accessed by dialing (877) 247-4281
Conference ID#: 83069438 a few minutes prior to 11:00 a.m. Pacific Time. The
call will be available for replay by accessing the Company’s website at www.wcb.com and
following the same instructions.
WEST
COAST BANCORP REPORTS SECOND QUARTER 2010 RESULTS
July 16,
2010
Page 14 of
19
West
Coast Bancorp is a Northwest bank holding company with $2.5 billion in assets
and 65 offices in Oregon and Washington. The Company combines the
sophisticated products and expertise of larger banks with the local decision
making, market knowledge and customer service of a community
bank. For more information, visit the Company’s web site at www.wcb.com.
Forward
Looking Statements:
Statements
in this release regarding future events, performance or results are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 ("PSLRA") and are made pursuant to the safe
harbors of the PSLRA. These statements can often be identified by words
such as "expects," "believes," “anticipates,” or "will," or other words of
similar meaning. Actual results could be quite different from those
expressed or implied by the forward-looking statements, which give our current
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, the effects of (i) market conditions in our service
areas on our efforts to continue to reduce our levels of nonperforming assets
and increase loan originations as well as (ii) all risk factors identified in
our Annual Report on Form 10-K for the year ended December 31, 2009, including
under the headings "Forward Looking Statement Disclosure" and in the section
"Risk Factors,” and in our most recent Quarterly Report on Form
10-Q.
WEST
COAST BANCORP REPORTS SECOND QUARTER 2010 RESULTS
July 16,
2010
Page 15 of
19
|
Table
15
|
||||||||||||||||||||||||||||
|
INCOME
STATEMENT
|
||||||||||||||||||||||||||||
|
(Dollars
in thousands)
|
Q2 | Q2 |
Change
|
Q1 |
Year
to date
|
Year
to date
|
||||||||||||||||||||||
|
2010
|
2009
|
$ | % |
2010
|
2010
|
2009
|
||||||||||||||||||||||
|
Net
interest income
|
||||||||||||||||||||||||||||
|
Interest
and fees on loans
|
$ | 22,416 | $ | 26,247 | $ | (3,831 | ) | -15 | % | $ | 22,843 | $ | 45,259 | $ | 52,364 | |||||||||||||
|
Interest
on investment securities
|
4,237 | 2,572 | 1,665 | 65 | % | 4,207 | 8,444 | 5,050 | ||||||||||||||||||||
|
Other
interest income
|
163 | 50 | 113 | 226 | % | 148 | 311 | 63 | ||||||||||||||||||||
|
Total
interest income
|
26,816 | 28,869 | (2,053 | ) | -7 | % | 27,198 | 54,014 | 57,477 | |||||||||||||||||||
|
Interest
expense on deposit accounts
|
3,275 | 6,359 | 3,084 | 48 | % | 4,293 | 7,568 | 12,844 | ||||||||||||||||||||
|
Interest
on borrowings and subordinated debentures
|
4,631 | 2,296 | (2,335 | ) | -102 | % | 2,272 | 6,903 | 4,289 | |||||||||||||||||||
|
Total
interest expense
|
7,906 | 8,655 | 749 | 9 | % | 6,565 | 14,471 | 17,133 | ||||||||||||||||||||
|
Net
interest income
|
18,910 | 20,214 | (1,304 | ) | -6 | % | 20,633 | 39,543 | 40,344 | |||||||||||||||||||
|
Provision
for credit losses
|
7,758 | 11,393 | 3,635 | 32 | % | 7,634 | 15,392 | 34,524 | ||||||||||||||||||||
|
Noninterest
income
|
||||||||||||||||||||||||||||
|
Service
charges on deposit accounts
|
4,213 | 4,133 | 80 | 2 | % | 3,596 | 7,809 | 7,938 | ||||||||||||||||||||
|
Payment
systems related revenue
|
2,875 | 2,359 | 516 | 22 | % | 2,536 | 5,411 | 4,496 | ||||||||||||||||||||
|
Trust
and investment services revenues
|
1,167 | 971 | 196 | 20 | % | 979 | 2,146 | 1,890 | ||||||||||||||||||||
|
Gains
on sales of loans
|
306 | 756 | (450 | ) | -60 | % | 141 | 447 | 1,099 | |||||||||||||||||||
|
OREO
valuation adjustments and gains/
(losses) on sale
|
(209 | ) | (3,683 | ) | 3,474 | 94 | % | (2,058 | ) | (2,267 | ) | (8,487 | ) | |||||||||||||||
|
Other
|
785 | 787 | (2 | ) | 0 | % | 757 | 1,542 | 2,729 | |||||||||||||||||||
|
Other-than-temporary
impairment losses
|
- | - | - | 0 | % | - | - | (192 | ) | |||||||||||||||||||
|
Gain
on sales of securities
|
488 | 635 | (147 | ) | -23 | % | 457 | 945 | 833 | |||||||||||||||||||
|
Total
noninterest income
|
9,625 | 5,958 | 3,667 | 62 | % | 6,408 | 16,033 | 10,306 | ||||||||||||||||||||
|
Noninterest
expense
|
||||||||||||||||||||||||||||
|
Salaries
and employee benefits
|
11,322 | 11,267 | (55 | ) | 0 | % | 11,175 | 22,497 | 22,462 | |||||||||||||||||||
|
Equipment
|
1,606 | 1,850 | 244 | 13 | % | 1,576 | 3,182 | 3,742 | ||||||||||||||||||||
|
Occupancy
|
2,249 | 2,295 | 46 | 2 | % | 2,184 | 4,433 | 4,661 | ||||||||||||||||||||
|
Payment
systems related expense
|
1,212 | 998 | (214 | ) | -21 | % | 1,004 | 2,216 | 1,917 | |||||||||||||||||||
|
Professional
fees
|
1,161 | 1,371 | 210 | 15 | % | 861 | 2,022 | 2,298 | ||||||||||||||||||||
|
Postage,
printing and office supplies
|
737 | 826 | 89 | 11 | % | 804 | 1,541 | 1,621 | ||||||||||||||||||||
|
Marketing
|
738 | 696 | (42 | ) | -6 | % | 687 | 1,425 | 1,326 | |||||||||||||||||||
|
Communications
|
381 | 404 | 23 | 6 | % | 382 | 763 | 797 | ||||||||||||||||||||
|
Goodwill
impairment
|
- | - | - | 0 | % | - | - | 13,059 | ||||||||||||||||||||
|
Other
noninterest expense
|
3,503 | 5,537 | 2,034 | 37 | % | 2,422 | 5,925 | 8,735 | ||||||||||||||||||||
|
Total
noninterest expense
|
22,909 | 25,244 | 2,335 | 9 | % | 21,095 | 44,004 | 60,618 | ||||||||||||||||||||
|
Loss
before income taxes
|
(2,132 | ) | (10,465 | ) | 8,333 | 80 | % | (1,688 | ) | (3,820 | ) | (44,492 | ) | |||||||||||||||
|
Provision
(benefit) for income taxes
|
1,717 | (4,126 | ) | (5,843 | ) | -142 | % | (800 | ) | 917 | (14,554 | ) | ||||||||||||||||
|
Net
loss
|
$ | (3,849 | ) | $ | (6,339 | ) | $ | 2,490 | 39 | % | $ | (888 | ) | $ | (4,737 | ) | $ | (29,938 | ) | |||||||||
|
Loss
per share:
|
||||||||||||||||||||||||||||
|
Basic
|
$ | (0.04 | ) | $ | (0.41 | ) | $ | 0.37 | $ | (0.01 | ) | $ | (0.06 | ) | $ | (1.91 | ) | |||||||||||
|
Diluted
|
$ | (0.04 | ) | $ | (0.41 | ) | $ | 0.37 | $ | (0.01 | ) | $ | (0.06 | ) | $ | (1.91 | ) | |||||||||||
|
Weighted
average common shares
|
92,123 | 15,522 | 76,601 | 67,125 | 79,693 | 15,504 | ||||||||||||||||||||||
|
Weighted
average diluted shares
|
92,123 | 15,522 | 76,601 | 67,125 | 79,693 | 15,504 | ||||||||||||||||||||||
|
Tax
equivalent net interest income
|
$ | 19,205 | $ | 20,580 | $ | (1,375 | ) | $ | 20,954 | $ | 40,159 | $ | 41,125 | |||||||||||||||
WEST
COAST BANCORP REPORTS SECOND QUARTER 2010 RESULTS
July 16,
2010
Page 16 of
19
|
Table
16
|
||||||||||||||||||||
|
BALANCE
SHEETS
|
||||||||||||||||||||
|
(Dollars
in thousands)
|
June.
30.
|
June.
30.
|
Dec.
31.
|
Dec.
31.
|
||||||||||||||||
|
2010
|
2009
|
2009
|
2008
|
|||||||||||||||||
|
Assets:
|
||||||||||||||||||||
|
Cash
and due from banks
|
$ | 45,685 | $ | 49,181 | $ | 47,708 | $ | 58,046 | ||||||||||||
|
Federal
funds sold
|
13,431 | 6,643 | 20,559 | 6,682 | ||||||||||||||||
|
Interest-bearing
deposits in other banks
|
109,781 | 92,458 | 234,830 | 50 | ||||||||||||||||
|
Total
cash and cash equivalents
|
168,897 | 148,282 | 303,097 | 64,778 | ||||||||||||||||
|
Investment
securities
|
646,231 | 369,914 | 562,277 | 198,515 | ||||||||||||||||
|
Total
loans
|
1,602,032 | 1,917,028 | 1,724,842 | 2,064,796 | ||||||||||||||||
|
Allowance
for loan losses
|
(43,329 | ) | (37,700 | ) | (38,490 | ) | (28,920 | ) | ||||||||||||
|
Loans,
net
|
1,558,703 | 1,879,328 | 1,686,352 | 2,035,876 | ||||||||||||||||
|
OREO,
net
|
37,578 | 83,830 | 53,594 | 70,110 | ||||||||||||||||
|
Goodwill
and other intangibles
|
477 | 796 | 637 | 14,054 | ||||||||||||||||
|
Other
assets
|
93,600 | 131,333 | 127,590 | 132,807 | ||||||||||||||||
|
Total
assets
|
$ | 2,505,486 | $ | 2,613,483 | $ | 2,733,547 | $ | 2,516,140 | ||||||||||||
|
Liabilities
and Stockholders' Equity:
|
||||||||||||||||||||
|
Demand
|
$ | 533,865 | $ | 483,397 | $ | 542,215 | $ | 478,292 | ||||||||||||
|
Savings
and interest-bearing demand
|
433,001 | 396,100 | 422,838 | 346,206 | ||||||||||||||||
|
Money
market
|
661,913 | 606,349 | 657,306 | 615,588 | ||||||||||||||||
|
Time
deposits
|
375,321 | 623,521 | 524,525 | 584,293 | ||||||||||||||||
|
Total
deposits
|
2,004,100 | 2,109,367 | 2,146,884 | 2,024,379 | ||||||||||||||||
|
Borrowings
and subordinated debentures
|
215,199 | 314,299 | 314,299 | 274,059 | ||||||||||||||||
|
Reserve
for unfunded commitments
|
1,018 | 869 | 928 | 1,014 | ||||||||||||||||
|
Other
liabilities
|
17,757 | 20,282 | 22,378 | 18,501 | ||||||||||||||||
|
Total
liabilities
|
2,238,074 | 2,444,817 | 2,484,489 | 2,317,953 | ||||||||||||||||
|
Stockholders'
equity
|
267,412 | 168,666 | 249,058 | 198,187 | ||||||||||||||||
|
Total
liabilities and stockholders' equity
|
$ | 2,505,486 | $ | 2,613,483 | $ | 2,733,547 | $ | 2,516,140 | ||||||||||||
|
AVERAGE
BALANCE SHEETS
|
||||||||||||||||||||
|
(Dollars
in thousands)
|
QTD
June 30.
|
QTD
June 30.
|
QTD
Mar 31.
|
Year
to date
|
Year
to date
|
|||||||||||||||
|
2010
|
2009
|
2010
|
2010
|
2009
|
||||||||||||||||
|
Cash
and due from banks
|
$ | 48,232 | $ | 48,611 | $ | 46,480 | $ | 47,361 | $ | 46,183 | ||||||||||
|
Federal
funds sold
|
3,605 | 5,781 | 12,912 | 8,233 | 4,854 | |||||||||||||||
|
Interest-bearing
deposits in other banks
|
249,007 | 69,216 | 227,278 | 238,203 | 41,383 | |||||||||||||||
|
Total
cash and cash equivalents
|
300,844 | 123,608 | 286,670 | 293,797 | 92,420 | |||||||||||||||
|
Investment
securities
|
578,669 | 297,662 | 557,378 | 568,082 | 249,536 | |||||||||||||||
|
Total
loans
|
1,645,189 | 1,971,467 | 1,702,763 | 1,673,816 | 2,003,077 | |||||||||||||||
|
Allowance
for loan losses
|
(42,895 | ) | (38,393 | ) | (39,957 | ) | (41,434 | ) | (34,331 | ) | ||||||||||
|
Loans,
net
|
1,602,294 | 1,933,074 | 1,662,806 | 1,632,382 | 1,968,746 | |||||||||||||||
|
Total
interest earning assets
|
2,477,349 | 2,360,328 | 2,513,313 | 2,489,191 | 2,314,210 | |||||||||||||||
|
Other
assets
|
158,604 | 212,360 | 170,521 | 164,279 | 215,250 | |||||||||||||||
|
Total
assets
|
2,640,411 | 2,566,705 | 2,677,375 | 2,658,540 | 2,525,952 | |||||||||||||||
|
Demand
|
$ | 523,298 | $ | 478,289 | $ | 519,492 | $ | 521,405 | $ | 474,002 | ||||||||||
|
Savings
and interest-bearing demand
|
436,902 | 385,636 | 419,145 | 428,073 | 366,927 | |||||||||||||||
|
Money
market
|
657,454 | 599,417 | 642,594 | 650,065 | 596,777 | |||||||||||||||
|
Time
deposits
|
431,669 | 614,472 | 507,706 | 469,477 | 592,384 | |||||||||||||||
|
Total
deposits
|
2,049,323 | 2,077,814 | 2,088,937 | 2,069,020 | 2,030,090 | |||||||||||||||
|
Borrowings
and subordinated debentures
|
313,210 | 297,951 | 314,299 | 313,752 | 293,702 | |||||||||||||||
|
Total
interest bearing liabilities
|
1,839,235 | 1,897,476 | 1,883,744 | 1,861,367 | 1,849,790 | |||||||||||||||
|
Other
liabilities
|
17,118 | 16,883 | 19,762 | 18,182 | 16,624 | |||||||||||||||
|
Stockholders'
equity
|
260,760 | 174,057 | 254,377 | 257,586 | 185,536 | |||||||||||||||
|
Total
liabilities and stockholders' equity
|
$ | 2,640,411 | $ | 2,566,705 | $ | 2,677,375 | $ | 2,658,540 | $ | 2,525,952 | ||||||||||
WEST
COAST BANCORP REPORTS SECOND QUARTER 2010 RESULTS
July 16,
2010
Page 17 of
19
The following table presents information with respect to the
Company’s allowance for credit losses.
|
Table
17
|
||||||||
|
ALLOWANCE
FOR CREDIT LOSSES
|
||||||||
|
(Dollars
in thousands)
|
Year
to date
|
Year
to date
|
||||||
|
June
30.
|
June
30.
|
|||||||
|
2010
|
2009
|
|||||||
|
Allowance
for credit losses, beginning of period
|
$ | 39,418 | $ | 29,934 | ||||
|
Provision
for credit losses loans other than two-step loans
|
15,108 | 29,032 | ||||||
|
Provision
for credit losses two-step loans
|
284 | 5,492 | ||||||
|
Total
provision for credit losses
|
15,392 | 34,524 | ||||||
|
Loan
charge-offs:
|
||||||||
|
Commercial
|
3,248 | 3,000 | ||||||
|
Commercial
real estate construction
|
735 | - | ||||||
|
Residential
real estate construction
|
1,104 | 9,992 | ||||||
|
Two-step
residential construction
|
284 | 6,067 | ||||||
|
Total
real estate construction
|
2,123 | 16,059 | ||||||
|
Mortgage
|
1,447 | 2,262 | ||||||
|
Nonstandard
mortgage
|
2,140 | 2,249 | ||||||
|
Home
equity
|
1,562 | 1,810 | ||||||
|
Total
real estate mortgage
|
5,149 | 6,321 | ||||||
|
Commercial
real estate
|
391 | 578 | ||||||
|
Installment
and consumer
|
349 | 399 | ||||||
|
Overdraft
|
402 | 479 | ||||||
|
Total
loan charge-offs
|
11,662 | 26,836 | ||||||
|
Loan
recoveries:
|
||||||||
|
Commercial
|
725 | 609 | ||||||
|
Commercial
real estate construction
|
- | - | ||||||
|
Residential
real estate construction
|
222 | 14 | ||||||
|
Two-step
residential construction
|
- | 154 | ||||||
|
Total
real estate construction
|
222 | 168 | ||||||
|
Mortgage
|
60 | 3 | ||||||
|
Nonstandard
mortgage
|
2 | - | ||||||
|
Home
equity
|
21 | - | ||||||
|
Total
real estate mortgage
|
83 | 3 | ||||||
|
Commercial
real estate
|
21 | - | ||||||
|
Installment
and consumer
|
66 | 38 | ||||||
|
Overdraft
|
82 | 129 | ||||||
|
Total
loan recoveries
|
1,199 | 947 | ||||||
|
Net
charge-offs
|
10,463 | 25,889 | ||||||
|
Total
allowance for credit losses
|
$ | 44,347 | $ | 38,569 | ||||
|
Components
of allowance for credit losses:
|
||||||||
|
Allowance
for loan losses
|
$ | 43,329 | $ | 37,700 | ||||
|
Reserve
for unfunded commitments
|
1,018 | 869 | ||||||
|
Total
allowance for credit losses
|
$ | 44,347 | $ | 38,569 | ||||
|
Net
loan charge-offs to average loans
|
1.26 | % | 2.61 | % | ||||
WEST
COAST BANCORP REPORTS SECOND QUARTER 2010 RESULTS
July 16,
2010
Page 18 of
19
The following table presents information about the Company’s total
delinquent loans.
|
Table
18
|
||||||||||||
|
DELINQUENT
LOANS 30-89 DAYS PAST DUE AS A % OF LOAN CATEGORY
|
||||||||||||
|
(Dollars
in thousands)
|
June
30,
|
June
30,
|
March
31,
|
|||||||||
|
2010
|
2009
|
2010
|
||||||||||
|
Commercial
loans
|
0.14 | % | 0.42 | % | 0.10 | % | ||||||
|
Real
estate construction loans
|
1.48 | % | 2.93 | % | 0.72 | % | ||||||
|
Real
estate mortgage loans
|
0.18 | % | 1.84 | % | 0.53 | % | ||||||
|
Commercial
real estate loans
|
0.04 | % | 0.13 | % | 0.30 | % | ||||||
|
Installment
and other consumer loans
|
1.27 | % | 0.50 | % | 0.69 | % | ||||||
|
Total
delinquent loans 30-89 days past due
|
$ | 2,743 | $ | 16,082 | $ | 5,566 | ||||||
|
Delinquent
loans to total loans
|
0.17 | % | 0.84 | % | 0.33 | % | ||||||
The following table presents information about the Company’s activity in
other real estate owned.
|
Table
19
|
||||||||||||||||||||||||
|
OTHER
REAL ESTATE OWNED ACTIVITY
|
||||||||||||||||||||||||
|
(Dollars
in thousands)
|
||||||||||||||||||||||||
|
Two-step
related OREO activity
|
Non
two-step related OREO activity
|
Total
OREO related activity
|
||||||||||||||||||||||
|
Amount
|
Number
|
Amount
|
Number
|
Amount
|
Number
|
|||||||||||||||||||
|
Full year
2009:
|
||||||||||||||||||||||||
|
Beginning
balance January 1, 2009
|
$ | 60,022 | 251 | $ | 10,088 | 37 | $ | 70,110 | 288 | |||||||||||||||
|
Additions
to OREO
|
34,724 | 114 | 39,450 | 585 | 74,174 | 699 | ||||||||||||||||||
|
Capitalized
improvements
|
4,650 | 283 | 4,933 | |||||||||||||||||||||
|
Valuation
adjustments
|
(14,704 | ) | (3,858 | ) | (18,562 | ) | ||||||||||||||||||
|
Disposition
of OREO properties
|
(59,030 | ) | (243 | ) | (18,031 | ) | (72 | ) | (77,061 | ) | (315 | ) | ||||||||||||
|
Ending
balance Dec. 31, 2009
|
$ | 25,662 | 122 | $ | 27,932 | 550 | $ | 53,594 | 672 | |||||||||||||||
|
Quarterly
2010
|
||||||||||||||||||||||||
|
Additions
to OREO
|
288 | 2 | 3,559 | 13 | 3,847 | 15 | ||||||||||||||||||
|
Capitalized
improvements
|
987 | 169 | 1,156 | |||||||||||||||||||||
|
Valuation
adjustments
|
(1,846 | ) | (513 | ) | (2,359 | ) | ||||||||||||||||||
|
Disposition
of OREO properties
|
(6,937 | ) | (27 | ) | (4,063 | ) | (64 | ) | (11,000 | ) | (91 | ) | ||||||||||||
|
Ending
balance March 31, 2010
|
$ | 18,154 | 97 | $ | 27,084 | 499 | $ | 45,238 | 596 | |||||||||||||||
|
Additions
to OREO
|
- | 1 | 5,924 | 19 | 5,924 | 20 | ||||||||||||||||||
|
Capitalized
improvements
|
497 | 788 | 1,285 | |||||||||||||||||||||
|
Valuation
adjustments
|
(493 | ) | (764 | ) | (1,257 | ) | ||||||||||||||||||
|
Disposition
of OREO properties
|
(5,197 | ) | (18 | ) | (8,415 | ) | (152 | ) | (13,612 | ) | (170 | ) | ||||||||||||
|
Ending
balance June 30, 2010
|
$ | 12,961 | 80 | $ | 24,617 | 366 | $ | 37,578 | 446 | |||||||||||||||
WEST
COAST BANCORP REPORTS SECOND QUARTER 2010 RESULTS
July 16,
2010
Page 19 of
19
The following table presents information regarding common shares
outstanding at June 30, 2010 on an actual and diluted basis.
|
Table
20
|
||||||||
|
COMMON
SHARE AND DILUTIVE SHARE INFORMATION
|
||||||||
|
(Shares
in thousands)
|
||||||||
|
Number
|
||||||||
|
of
shares
|
||||||||
|
Common
shares outstanding at June 30, 2010
|
96,421 | 1 | ||||||
|
Common
shares issuable on conversion of series B preferred stock 2
|
6,066 | |||||||
|
Dilutive
impact of warrants 3
|
3,738 | 4 | ||||||
|
Dilutive
impact of stock options and restricted stock
|
127 | 4 | ||||||
|
Total
potential dilutive shares
|
106,352 | 5 | ||||||
|
1 Includes 71.4
million shares issued on the conversion of Series A preferred stock, 5.0
million shares related to the rights
|
||||||||
|
offering
and 2.8 million shares from the discretionary equity issuance
program.
|
||||||||
|
2 121,328
shares of series B preferred stock outstanding at June 30,
2010.
|
||||||||
|
3 Warrants to
purchase 240,000 shares at a price of $100 per series B preferred share
outstanding at June 30, 2010.
|
||||||||
|
4 The estimated
dilutive impact of warrants, options, and restricted stock are shown.
These figures are calculated
|
||||||||
|
under the treasury method utilizing an average stock price of $2.90 for
the period and do not reflect the number
|
||||||||
|
of
common shares that would be issued if securities were exercised in
full.
|
||||||||
|
5 Assumes all
shares were outstanding at January 1, 2010 for the entire period. Common
stock equivalents were not
|
||||||||
|
considered dilutive in the earnings per share disclosures presented due to
net losses in such periods. Potential
|
||||||||
|
dilutive shares is a non-GAAP figure and not the weighted average diluted
shares that would have been disclosed if
|
||||||||
|
the
Company was not in a loss position.
|
||||||||