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Final

 

Robert D. Sznewajs

President & CEO

(503) 598-3243

 

Anders Giltvedt

Executive Vice President & CFO

(503) 598-3250

 

 

West Coast Bancorp Reports Second Quarter 2012 Net Income of $6.0 million, a 30% Increase From The Same Quarter a Year Ago

 

 

·

Return on average assets was 1.01% in the second quarter 2012, an improvement from .76% in the same quarter last year.

 

·

Net income for the six month period ended, June 30, 2012 was $11.8 million, an increase of 21% from the same period in 2011.

 

·

The written agreement between the holding company and certain regulators was terminated on June 27, 2012.

 

·

Second quarter 2012 total noninterest expense declined 6%, or $1.5 million, from the same period in 2011.

 

·

The efficiency ratio improved to 70.3% in first half of 2012 from 75.1% in the same period in 2011.

 

 

Lake Oswego, OR – July 23, 2012 – West Coast Bancorp (NASDAQ: WCBO) (“Bancorp” or “Company”), the parent company of West Coast Bank (“Bank”) and West Coast Trust Company, Inc., today announced second quarter 2012 net income of $6.0 million or $.28 per diluted share compared to net income of $4.6 million or $.22 per diluted share in the same quarter of 2011. Net income for the first six months of 2012 was $11.8 million or $.55 per diluted share compared to net income of $9.7 million or $.45 per diluted share in the same period of 2011.

 

“Net income reached $11.8 million for the first half of 2012 and grew 21% or $2.1 million from the same period a year ago,” said Robert D. Sznewajs, President and Chief Executive Officer. “The continued reduction in credit-related costs and ongoing improvements in expense management were the primary contributors to the improved operating results. The Company’s return on average assets for the first half of 2012 reached 1.00% compared to .80% in the same period in 2011.”

  

Table 1 below shows summary financial information for the quarters ended June 30, 2012, and 2011, and March 31, 2012.

  

Table 1
SUMMARY FINANCIAL INFORMATION
		Qtr. ended				Qtr. ended								Qtr. ended
		June 30,				June 30,								March 31,
(Dollars and shares in thousands)		2012				2011				Change				2012				Change
Net income		$	6,034			$	4,634			$	1,400			$	5,789			$	245
Net income available to common stockholders 1		$	5,639			$	4,312			$	1,327			$	5,393				246
Selective quarterly performance ratios
Return on average assets, annualized			1.01	%			0.76	%			0.25				0.98	%			0.03	%
Return on average equity, annualized			7.50	%			6.58	%			0.92				7.34	%			0.16	%
Efficiency ratio2			70.85	%			76.05	%			(5.20	)			69.76	%			1.09	%
Share and Per Share Figures-Actual
Common shares outstanding at period end			19,295				19,316				(21	)			19,295				-
Weighted average diluted shares3			21,547				21,326				221				21,348				199
Weighted average diluted shares-two class method 4			20,256				20,025				231				20,054				202
Net income per diluted share		$	0.28			$	0.22			$	0.06			$	0.27			$	0.01
Book value per common share		$	15.91			$	13.69			$	2.22			$	15.54			$	0.37

 

1

Adjusted for the impact of allocating net income to participating instruments, which include restricted stock and Series B preferred stock.

2

The efficiency ratio has been computed as noninterest expense divided by the sum of net interest income on a tax equivalent     basis and noninterest income excluding gains/losses on sales of securities.

3

Reflects the average dilutive impacts of Series B preferred stock (1,213), warrants (1,148), options (26), and restricted stock (78).

4

Reflects the calculation of diluted shares under the two-class method which includes average common (19,082), options (26), and warrants (1,148).

 

Balance Sheet Overview

 

Total loans at June 30, 2012, increased $25 million or 2% from March 31, 2012, with growth occurring in the commercial real estate term and construction portfolios. Second quarter 2012 average total loan balances of $1.48 billion declined $44 million or 3% from the same quarter of 2011. The decline was primarily a result of lower average commercial, mortgage, and home equity balances. Home equity loan and line production continues to reflect the effects of residential real estate market conditions. The yield on the loan portfolio of 5.08% in the most recent quarter declined 25 basis points compared to the second quarter last year as higher yielding loans paid off and new loans were originated at lower yields reflecting prevailing market interest rates. The yield on loans contracted 12 basis points in the second quarter of 2012 from the first quarter of 2012.

  

Table 2
AVERAGE LOANS FOR THE QUARTER
(Dollars in thousands)		June 30,				% of				June 30,				% of				Change								March 31,				% of
		2012				Total				2011				total				Amount				%				2012				Total
Commercial loans		$	284,473				19	%		$	301,436				20	%		$	(16,963	)			-6	%		$	288,395				19	%
Commercial real estate construction			23,200				2	%			19,029				1	%			4,171				22	%			18,547				1	%
Residential real estate construction			11,283				1	%			17,223				1	%			(5,940	)			-34	%			12,680				1	%
Total real estate construction loans			34,483				3	%			36,252				2	%			(1,769	)			-5	%			31,227				2	%
Mortgage			62,610				4	%			73,303				5	%			(10,693	)			-15	%			66,125				5	%
Home equity			252,014				17	%			266,221				17	%			(14,207	)			-5	%			254,883				17	%
Total real estate mortgage			314,624				21	%			339,524				22	%			(24,900	)			-7	%			321,008				22	%
Commercial real estate loans			832,870				56	%			831,738				55	%			1,132				0	%			828,681				56	%
Installment and other consumer loans			12,776				1	%			14,220				1	%			(1,444	)			-10	%			13,211				1	%
Total loans		$	1,479,226							$	1,523,170							$	(43,944	)			-3	%		$	1,482,522
Yield on loans			5.08	%							5.33	%							(0.25	)							5.20	%

  

The 2012 second quarter average balance of total cash equivalents and investment securities of $775 million remained relatively unchanged over the past twelve months. The Company reduced its average cash equivalents balance by $50 million in the most recent quarter from the second quarter of 2011 while increasing its investment securities portfolio by $29 million. The shift towards the investment portfolio reflected efforts to improve net interest income and margin in a period where market interest rates are expected to remain low for some time. Over the past year, the Company has increased its investments in U.S. government agency and municipal securities. During this time purchases consisted principally of U.S. government agency securities with 3-5-year maturities as well as 10-year and 15-year fully amortizing U.S. government agency mortgage-backed securities. The expected duration of the investment portfolio was approximately 2.8 years at June 30, 2012, compared to approximately 3.0 years a year ago.

 

The 2012 second quarter yield on total cash equivalents and investment securities balances was 2.29%, a decline of 31 basis points from the corresponding quarter of 2011, and down 7 basis points from the first quarter of 2012. This reflected continued investment securities purchases with yields lower than those that matured or were called in the portfolio.

  

Table 3
AVERAGE CASH EQUIVALENTS AND INVESTMENT SECURITIES FOR THE QUARTER
(Dollars in thousands)		June 30,				June 30,				Change								March 31,
		2012				2011				Amount				%				2012
Cash equivalents:
Federal funds sold		$	2,555			$	4,790			$	(2,235	)			-47	%		$	2,601
Interest-bearing deposits in other banks			45,260				93,225				(47,965	)			-51	%			35,334
Total cash equivalents			47,815				98,015				(50,200	)			-51	%			37,935
Investment securities:
U.S. Treasury securities			200				4,261				(4,061	)			-95	%			202
U.S. Government agency securities			230,509				183,601				46,908				26	%			213,035
Corporate securities			8,516				9,846				(1,330	)			-14	%			8,507
Mortgage-backed securities			407,011				427,944				(20,933	)			-5	%			414,198
Obligations of state and political sub.			67,882				59,850				8,032				13	%			61,337
Equity investments and other securities			12,735				12,614				121				1	%			12,721
Total investment securities			726,853				698,116				28,737				4	%			710,000
Total cash equivalents and investment securities		$	774,668			$	796,131			$	(21,463	)			-3	%		$	747,935
Tax equivalent yield on cash equivalents and investment securities			2.29	%			2.60	%			(0.31	)							2.36	%

 

 

Average total deposits of $1.87 billion in the second quarter 2012 declined 3% or $62 million from the same period in 2011 and were substantially unchanged from the prior quarter. Consistent with past trends, the Company continued to reduce its time deposit balances, which declined $74 million or 33% from the corresponding quarter in 2011. Time deposits represented 8% of the Company’s average total deposits in the most recent quarter compared to 12% during the same quarter of 2011.

  

Table 4
AVERAGE DEPOSITS, BORROWINGS AND SUBORDINATED DEBENTURES FOR THE QUARTER
(Dollars in thousands)		Q2				% of				Q2				% of				Change								Q1				% of
		2012				Total				2011				Total				Amount				%				2012				Total
Demand deposits		$	621,547				33	%		$	578,562				29	%		$	42,985				7	%		$	585,749				31	%
Interest-bearing demand			374,579				20	%			365,407				19	%			9,172				3	%			366,635				20	%
Total checking deposits			996,126				53	%			943,969				48	%			52,157				6	%			952,384				51	%
Savings			127,930				7	%			110,683				6	%			17,247				16	%			123,725				7	%
Money market			596,949				32	%			654,668				34	%			(57,719	)			-9	%			623,111				33	%
Total non-time deposits			1,721,005				92	%			1,709,320				88	%			11,685				1	%			1,699,220				91	%
Time deposits			151,085				8	%			224,674				12	%			(73,589	)			-33	%			167,418				9	%
Total deposits		$	1,872,090				100	%		$	1,933,994				100	%		$	(61,904	)			-3	%		$	1,866,638				100	%
Average rate on total deposits			0.09	%							0.31	%							(0.22	)							0.12	%
Average borrowings and
subordinated debentures		$	178,241							$	219,599							$	(41,358	)			-19	%		$	171,505
Rate on borrowings and
subordinated debentures			1.44	%							3.04	%							(1.60	)							1.46	%

 

 

Second quarter 2012 average total checking balances of $996 million grew $52 million or 6% from second quarter 2011 and represented 53% of the Company’s average total deposits in the quarter. The lower market interest rates and continuing shift in the mix of deposit balances from time deposits to non-time deposits over the past year reduced the average rate paid on total deposits to 9 basis points in the most recent quarter, a decline of 22 basis points from the corresponding quarter in 2011 and a decline of 3 basis points for sequential quarters.

 

Capital Position

 

As shown in Table 5 below, the Company improved its June 30, 2012, capital position compared to June 30, 2011. This was primarily due to continued profitability.

 

On June 27, 2012, the Written Agreement between the Federal Reserve Bank of San Francisco, the State of Oregon, Division of Finance and Corporate Securities (“DFCS”), and the Company was terminated. This agreement precluded Bancorp from paying cash dividends to shareholders as well as requiring Bancorp to maintain risk-based capital ratios in excess of that required for well capitalized status. The Memorandum of Understanding between the Federal Deposit Insurance Corporation (“FDIC”), DFCS and West Coast Bank remains in place and restricts payments of dividends from the Bank to Bancorp.

  

Table 5
CAPITAL RATIOS
		June 30,				June 30,								March 31,
		2012				2011				Change				2012				Change
West Coast Bancorp
Tier 1 risk-based capital ratio			20.33	%			17.99	%			2.34				20.36	%			(0.03	)
Total risk-based capital ratio			21.50	%			19.25	%			2.25				21.53	%			(0.03	)
Leverage ratio			15.55	%			13.55	%			2.00				15.41	%			0.14
West Coast Bank
Tier 1 risk-based capital ratio			19.62	%			17.30	%			2.32				19.62	%			-
Total risk-based capital ratio			20.88	%			18.56	%			2.32				20.88	%			-
Leverage ratio			15.02	%			13.04	%			1.98				14.85	%			0.17

Operating Results

 

As shown in Table 6 below, pre-tax income in the second quarter of 2012 was $9.3 million, an increase of $5.6 million or 155% from the corresponding quarter in 2011, and a $.4 million or 4% improvement from the first quarter of 2012. The improvement was principally the result of declines in the provision for credit losses and total noninterest expense. Net income of $6.0 million in the second quarter of 2012 increased $1.4 million or 30% from the corresponding quarter last year, and $.2 million or 4% from the first quarter of 2012.

 

Table 6
SUMMARY INCOME STATEMENT
(Dollars in thousands)		Q2				Q2				Change								Q1				Change
		2012				2011				$				%				2012				$				%
Net interest income		$	21,773			$	21,961			$	(188	)			-1	%		$	22,133			$	(360	)			-2	%
Provision (benefit) for credit losses			(492	)			3,426				(3,918	)			-114	%			89				(581	)			-653	%
Noninterest income			8,494				8,070				424				5	%			7,887				607				8	%
Noninterest expense			21,476				22,958				(1,482	)			-6	%			21,025				451				2	%
Income before income taxes			9,283				3,647				5,636				155	%			8,906				377				4	%
Provision (benefit) for income taxes			3,249				(987	)			4,236				429	%			3,117				132				4	%
Net income		$	6,034			$	4,634			$	1,400				30	%		$	5,789			$	245				4	%

 

 

Second quarter 2012 net interest income of $21.8 million declined $.2 million from the same quarter in 2011. This was primarily a result of lower average earning asset balances and a declining yield on those earning assets more than offsetting the lower cost of FHLB borrowings and interest-bearing deposits. The second quarter 2012 net interest margin of 3.93% increased 8 basis points from the corresponding quarter last year largely due to lower volume and cost of interest-bearing liabilities. For the sequential quarters, the net interest margin contracted 11 basis points mainly as a result of declining yield on the loan portfolio.

 

Table 7
NET INTEREST SPREAD AND MARGIN
(Annualized, tax-equivalent basis)		Q2				Q2								Q1
		2012				2011				Change				2012				Change
Yield on average interest-earning assets			4.12	%			4.39	%			(0.27	)			4.25	%			(0.13	)
Rate on average interest-bearing liabilities			0.30	%			0.80	%			(0.50	)			0.33	%			(0.03	)
Net interest spread			3.82	%			3.59	%			0.23				3.92	%			(0.10	)
Net interest margin			3.93	%			3.85	%			0.08				4.04	%			(0.11	)

 

As shown in Table 8 below, second quarter 2012 total noninterest income of $8.5 million increased $.4 million or 5% from the same quarter in 2011. The increase can be attributed to a rise in sales of Small Business Administration and residential mortgage loans, along with an increase in trust and investment services revenues. These increases were partly offset by a $.4 million or 10% decline in deposit service charges. Total noninterest income increased 8% or $.6 million from the first quarter of 2012, in large part due to growth in deposit service charges, which increased $.4 million or 14% as a result of repricing actions taken in the second quarter.

 

The total net loss on OREO of $1.0 million in the quarter ended June 30, 2012, increased slightly from a $.9 million net loss in the same quarter of 2011, and from $.6 million on a linked-quarter basis. Excluding the total net loss on OREO, the Company’s second quarter noninterest income grew both on a year-over-year and sequential quarter basis.

  

Table 8
NONINTEREST INCOME
(Dollars in thousands)		Q2				Q2				Change								Q1				Change
		2012				2011				$				%				2012				$				%
Noninterest income
Service charges on deposit accounts		$	3,212			$	3,575			$	(363	)			-10	%		$	2,818			$	394				14	%
Payment systems-related revenue			3,084				3,169				(85	)			-3	%			3,073				11				0	%
Trust and investment services revenues			1,457				1,208				249				21	%			935				522				56	%
Gains on sales of loans			722				300				422				141	%			735				(13	)			-2	%
Gains on sales of securities			228				130				98				75	%			147				81				55	%
Other-than-temporary impairment losses			-				(179	)			179				0	%			(49	)			49				0	%
Other			821				777				44				6	%			802				19				2	%
Total			9,524				8,980				544				6	%			8,461				1,063				13	%
OREO gains (losses) on sale			183				645				(462	)			-72	%			(53	)			236				445	%
OREO valuation adjustments			(1,213	)			(1,555	)			342				22	%			(521	)			(692	)			-133	%
Total net loss on OREO			(1,030	)			(910	)			(120	)			-13	%			(574	)			(456	)			-79	%
Total noninterest income		$	8,494			$	8,070			$	424				5	%		$	7,887			$	607				8	%

 

As shown in Table 9 below, the Company’s total noninterest expense of $21.5 million in the second quarter of 2012 declined by $1.5 million or 6% from the same quarter in 2011. The efficiency ratio declined to 70.9% from 76.1% during the same periods. As a result of cost savings initiatives and product changes implemented over the past year, marketing, payment system, occupancy and other noninterest expense declined. Comparing the second quarter of 2012 to the corresponding quarter in 2011, lower salary expenses were offset by higher employee benefit costs. The year-over-year second quarter reduction in marketing expense of $.6 million was related to the Company’s introduction of a new consumer deposit product marketing strategy in 2012. Additionally, the other noninterest expense category declined $.5 million in the most recent quarter of 2012 compared to the same period a year ago, with $.2 million of the decline resulting from a lower FDIC deposit insurance premium assessment. The increase in total noninterest expense in the second quarter of 2012 compared to the first quarter of 2012 was primarily attributable to the increase in employee benefit costs.

  

Table 9
NONINTEREST EXPENSE
(Dollars in thousands)		Q2				Q2				Change								Q1				Change
		2012				2011				$				%				2012				$				%
Noninterest expense
Salaries and employee benefits		$	12,081			$	12,119			$	(38	)			0	%		$	11,478			$	603				5	%
Equipment			1,584				1,564				20				1	%			1,662				(78	)			-5	%
Occupancy			2,119				2,232				(113	)			-5	%			2,075				44				2	%
Payment systems-related expense			1,075				1,350				(275	)			-20	%			1,119				(44	)			-4	%
Professional fees			1,060				976				84				9	%			1,111				(51	)			-5	%
Postage, printing and office supplies			729				862				(133	)			-15	%			819				(90	)			-11	%
Marketing			255				831				(576	)			-69	%			312				(57	)			-18	%
Communications			419				389				30				8	%			380				39				10	%
Other noninterest expense			2,154				2,635				(481	)			-18	%			2,069				85				4	%
Total noninterest expense		$	21,476			$	22,958			$	(1,482	)			-6	%		$	21,025			$	451				2	%

 

 

Income Taxes

 

Second quarter 2012 provision for income taxes was $3.2 million compared to a benefit for income taxes of $1.0 million in the same quarter of 2011. The second quarter 2012 provision for income taxes is the result of an effective tax rate of 35% on pre-tax income. The provision for taxes in the second quarter last year reflected the impact of the Company’s deferred tax asset valuation allowance maintained at that time, which was subsequently fully reversed in the fourth quarter of 2011.

 

Credit Quality

 

The Company recorded a benefit for credit losses of $.5 million in the second quarter of 2012, a significant improvement compared to a provision for credit losses of $3.4 million in the second quarter of 2011 and $.1 million in the previous quarter of 2012. Second quarter 2012 net charge-offs of $.2 million, or .07% of average loans on an annualized basis, declined from 1.22% in the corresponding quarter in 2011 and .39% on a linked-quarter basis. The net charge off and benefit for credit losses in the second quarter of 2012 were heavily influenced by a recovery of $1.1 million related to a commercial real estate loan. As shown in the table below, net charge-offs declined in every loan category from the second quarter last year.

 

Table 10
ALLOWANCE FOR CREDIT LOSSES AND NET CHARGEOFFS
						Charge-offs as								Charge-offs as								Charge-offs as
						a % of average								a % of average								a % of average
(Dollars in thousands)		Q2				loan balance				Q2				loan balance				Q1				loan balance
		2012				annualized				2011				annualized				2012				annualized
Allowance for credit losses, beginning of period		$	34,634							$	40,429							$	35,983
Total provision (benefit) for credit losses			(492	)							3,426								89
Loan net charge-offs:
Commercial			223				0.32	%			321				0.43	%			(5	)			-0.01	%
Commercial real estate construction			-				0.00	%			648				13.66	%			-				0.00	%
Residential real estate construction			(29	)			-1.03	%			213				4.96	%			1				0.03	%
Total real estate construction			(29	)			-0.34	%			861				9.53	%			1				0.01	%
Mortgage			92				0.59	%			222				1.21	%			534				3.28	%
Home equity			336				0.54	%			2,291				3.45	%			542				0.86	%
Total real estate mortgage			428				0.55	%			2,513				2.97	%			1,076				1.36	%
Commercial real estate			(580	)			-0.28	%			561				0.27	%			41				0.02	%
Installment and consumer			57				1.79	%			185				5.22	%			165				5.08	%
Overdraft			143				0.00	%			183				0.00	%			160				0.00	%
Total loan net charge-offs			242				0.07	%			4,624				1.22	%			1,438				0.39	%
Total allowance for credit losses		$	33,900							$	39,231							$	34,634
Components of allowance for credit losses:
Allowance for loan losses		$	33,132							$	38,422							$	33,854
Reserve for unfunded commitments			768								809								780
Total allowance for credit losses		$	33,900							$	39,231							$	34,634
Net loan charge-offs to average loans (annualized)			0.07	%							1.22	%							0.39	%
Allowance for loan losses to total loans			2.22	%							2.53	%							2.30	%
Allowance for credit losses to total loans			2.27	%							2.58	%							2.35	%
Allowance for loan losses to nonperforming loans			99	%							76	%							80	%
Allowance for credit losses to nonperforming loans			101	%							78	%							82	%

 

The allowance for credit losses was $33.9 million or 2.27% of total loans at June 30, 2012, compared to an allowance for credit losses of $39.2 million or 2.58% of total loans a year earlier and $34.6 million or 2.35% of total loans at March 31, 2012. The decline in the allowance for credit losses and the allowance relative to total loans reflected the improving trend in the overall risk profile of the loan portfolio. Other factors that reduced reserve requirements and the allowance for credit losses year-over-year included lower loan balances and adjustments made to the reserve percentages. The allowance for credit losses relative to nonperforming loans increased from 78% a year ago to 101% at June 30, 2012. The Company’s estimate of an appropriate allowance for credit losses will continue to be closely related to the loan portfolio’s credit quality performance trends and the region’s economic conditions.

 

Total nonperforming assets at June 30, 2012, were $59.3 million or 2.46% of total assets, and represented a 31% reduction from $86.0 million or 3.49% of total assets a year ago, and a decline of 15% from $69.7 million or 2.89% as of March 31, 2012.

 

Over the past twelve months, total nonaccrual loans declined $17.1 million or 34% to $33.6 million at June 30, 2012, with declines in all loan categories.

  

Table 11
NONPERFORMING ASSETS
(Dollars in thousands)		June 30,				Mar. 31,				Dec. 31,				Sept. 30,				June 30,
		2012				2012				2011				2011				2011
Loans on nonaccrual status:
Commercial		$	6,199			$	6,482			$	7,750			$	9,987			$	9,280
Real estate construction:
Commercial real estate construction			3,750				3,749				3,750				3,886				4,357
Residential real estate construction			1,936				1,981				2,073				3,311				3,439
Total real estate construction			5,686				5,730				5,823				7,197				7,796
Real estate mortgage:
Mortgage			7,044				10,744				9,624				10,877				11,527
Home equity			2,239				2,528				2,325				3,285				2,755
Total real estate mortgage			9,283				13,272				11,949				14,162				14,282
Commercial real estate			12,384				16,648				15,070				21,513				19,263
Installment and consumer			-				1				5				6				1
Total nonaccrual loans			33,552				42,133				40,597				52,865				50,622
90 days past due not on nonaccrual			-				-				-				-				-
Total nonperforming loans			33,552				42,133				40,597				52,865				50,622
Other real estate owned			25,726				27,525				30,823				30,234				35,374
Total nonperforming assets		$	59,278			$	69,658			$	71,420			$	83,099			$	85,996
Nonperforming loans to total loans			2.24	%			2.86	%			2.70	%			3.52	%			3.33	%
Nonperforming assets to total assets			2.46	%			2.89	%			2.94	%			3.30	%			3.49	%
Total delinquent loans 30-89 days past due		$	3,422			$	4,095			$	4,273			$	5,556			$	9,961
Delinquent loans to total loans			0.23	%			0.28	%			0.28	%			0.37	%			0.65	%

 

As indicated in Table 12 below, during the most recent quarter the Company disposed of 30 OREO properties with a book value of $3.9 million while acquiring 28 properties with a book value of $3.3 million and recording OREO valuation adjustments totaling $1.2 million. The combination of these transactions resulted in a $1.8 million or 7% net reduction in total OREO during the second quarter of 2012 to $25.7 million at June 30, 2012. The OREO balance reflected write-downs of 55% from original loan principal. The largest balance in the OREO portfolio at June 30, 2012, was in the income-producing properties category followed by homes and land, all of which are located within the Company’s footprint.

  

Table 12
OTHER REAL ESTATE OWNED ACTIVITY
(Dollars in thousands)		Q2 2012								Q2 2011								Q1 2012
		Amount				#				Amount				#				Amount				#
Beginning balance		$	27,525				246			$	39,329				399			$	30,823				264
Additions to OREO			3,304				28				4,270				18				810				9
Dispositions of OREO			(3,890	)			(30	)			(6,670	)			(51	)			(3,587	)			(27	)
OREO valuation adjustment			(1,213	)			-				(1,555	)			-				(521	)			-
Ending balance		$	25,726				244			$	35,374				366			$	27,525				246

  

 

Table 13
OTHER REAL ESTATE OWNED BY PROPERTY TYPE
(Dollars in thousands)		June 30,				# of				June 30,				# of				Mar. 31,				# of
		2012				properties				2011				properties				2012				properties
Income-producing properties		$	8,106				13			$	9,237				14			$	9,352				15
Homes			5,539				20				10,108				43				5,228				16
Land			4,780				15				4,052				11				4,710				14
Residential site developments			3,104				126				5,912				215				3,367				136
Lots			1,999				42				3,126				52				2,453				49
Multifamily			1,570				20				673				11				408				4
Condominiums			325				2				1,900				14				1,641				6
Commercial site developments			303				6				366				6				366				6
Total		$	25,726				244			$	35,374				366			$	27,525				246

  

Other

 

The Company will hold a Webcast conference call Monday, July 23, 2012, at 1:00 p.m. Pacific Time, during which the Company will discuss second quarter 2012 results and current activities. To access the conference call via a live Webcast, go to www.wcb.com and click on Investor Relations and the “2nd Quarter 2012 Earnings Conference Call” tab. The conference call may also be accessed by dialing (866) 394-3464, Conference ID#: 92767115 a few minutes prior to 1:00 p.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 is a publicly held, Northwest bank holding company headquartered in Oregon with $2.4 billion in assets, and the parent company of West Coast Bank and West Coast Trust Company, Inc. West Coast Bank operates 58 branches in Oregon and Washington. The Company serves clients who seek the resources, sophisticated products and expertise of larger financial institutions, along with the local decision-making, market knowledge, and customer service orientation of a community bank. The Company offers a broad range of banking, investment, fiduciary and trust services.  For more information, please visit the Company 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," “projects,” “anticipates,” or "will," or other words of similar meaning, and specifically include in this release all statements regarding the expected future benefits of our ongoing cost-cutting initiatives. 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, (ii) cost reduction initiatives, and (iii) risk factors identified in our Annual Report on Form 10-K for the year ended December 31, 2011, including under the heading "Forward Looking Statement Disclosure" and in the section "Risk Factors”.

 

Table 14
INCOME STATEMENT
(Dollars and shares in thousands)		Q2				Q2				Change								Q1				Year to date
		2012				2011				$				%				2012				2012				2011
Net interest income
Interest and fees on loans		$	18,699			$	20,231			$	(1,532	)			-8	%		$	19,209			$	37,908			$	40,530
Interest on investment securities			4,110				4,811				(701	)			-15	%			4,099				8,209				9,359
Other interest income			32				62				(30	)			-48	%			25				57				133
Total interest income			22,841				25,104				(2,263	)			-9	%			23,333				46,174				50,022
Interest expense on deposit accounts			431				1,476				(1,045	)			-71	%			577				1,008				3,285
Interest on borrowings and subordinated deb.			637				1,667				(1,030	)			-62	%			623				1,260				3,264
Total interest expense			1,068				3,143				(2,075	)			-66	%			1,200				2,268				6,549
Net interest income			21,773				21,961				(188	)			-1	%			22,133				43,906				43,473
Provision (benefit)  for credit losses			(492	)			3,426				(3,918	)			-114	%			89				(403	)			5,502
Noninterest income
Service charges on deposit accounts			3,212				3,575				(363	)			-10	%			2,818				6,030				7,219
Payment systems related revenue			3,084				3,169				(85	)			-3	%			3,073				6,157				6,099
Trust and investment services revenues			1,457				1,208				249				21	%			935				2,392				2,356
Gains on sales of loans			722				300				422				141	%			735				1,457				813
Net OREO valuation adjustments
and gains (losses) on sales			(1,030	)			(910	)			(120	)			-13	%			(574	)			(1,604	)			(1,244	)
Other-than-temporary impairment losses			-				(179	)			179				-				(49	)			(49	)			(179	)
Gain on sales of securities			228				130				98				75	%			147				375				397
Other			821				777				44				6	%			802				1,623				1,525
Total noninterest income			8,494				8,070				424				5	%			7,887				16,381				16,986
Noninterest expense
Salaries and employee benefits			12,081				12,119				(38	)			0	%			11,478				23,559				23,996
Equipment			1,584				1,564				20				1	%			1,662				3,246				3,092
Occupancy			2,119				2,232				(113	)			-5	%			2,075				4,194				4,397
Payment systems related expense			1,075				1,350				(275	)			-20	%			1,119				2,194				2,597
Professional fees			1,060				976				84				9	%			1,111				2,171				1,958
Postage, printing and office supplies			729				862				(133	)			-15	%			819				1,548				1,672
Marketing			255				831				(576	)			-69	%			312				567				1,482
Communications			419				389				30				8	%			380				799				767
Other noninterest expense			2,154				2,635				(481	)			-18	%			2,069				4,223				5,550
Total noninterest expense			21,476				22,958				(1,482	)			-6	%			21,025				42,501				45,511
Income before income taxes			9,283				3,647				5,636				155	%			8,906				18,189				9,446
Provision (benefit) for income taxes			3,249				(987	)			4,236				429	%			3,117				6,366				(293	)
Net income		$	6,034			$	4,634			$	1,400				30	%		$	5,789			$	11,823			$	9,739
Net income per share:
Basic		$	0.29			$	0.23			$	0.06							$	0.28			$	0.58			$	0.48
Diluted		$	0.28			$	0.22			$	0.06							$	0.27			$	0.55			$	0.45
Weighted average common shares			19,082				19,006				76								19,038				19,060				18,983
Weighted average diluted shares			20,256				20,025				231								20,054				20,161				19,982
Tax equivalent net interest income		$	22,046			$	22,249			$	(203	)						$	22,398			$	44,444			$	44,019

 

Table 15
BALANCE SHEETS
(Dollars in thousands)		June 30,				June 30,				Change								Mar. 31,
		2012				2011				$				%				2012
Assets:
Cash and due from banks		$	55,332			$	54,296			$	1,036				2	%		$	59,146
Federal funds sold			2,740				2,367				373				16	%			1,803
Interest-bearing deposits in other banks			52,815				33,583				19,232				57	%			108,735
Total cash and cash equivalents			110,887				90,246				20,641				23	%			169,684
Investment securities			708,884				760,704				(51,820	)			-7	%			670,534
Loans			1,495,797				1,521,147				(25,350	)			-2	%			1,470,848
Allowance for loan losses			(33,132	)			(38,422	)			5,290				14	%			(33,854	)
Loans, net			1,462,665				1,482,725				(20,060	)			-1	%			1,436,994
Total interest earning assets			2,261,029				2,319,332				(58,303	)			-3	%			2,254,019
OREO, net			25,726				35,374				(9,648	)			-27	%			27,525
Other assets			100,277				93,507				6,770				7	%			104,550
Total assets		$	2,408,439			$	2,462,556			$	(54,117	)			-2	%		$	2,409,287
Liabilities and Stockholders' Equity:
Demand		$	648,819			$	599,020			$	49,799				8	%		$	620,015
Savings and interest-bearing demand			497,135				465,779				31,356				7	%			503,829
Money market			585,421				658,185				(72,764	)			-11	%			614,831
Time deposits			145,510				208,013				(62,503	)			-30	%			155,830
Total deposits			1,876,885				1,930,997				(54,112	)			-3	%			1,894,505
Borrowings and subordinated debentures			178,900				219,599				(40,699	)			-19	%			171,000
Reserve for unfunded commitments			768				809				(41	)			-5	%			780
Other liabilities			23,869				25,582				(1,713	)			-7	%			22,020
Total liabilities			2,080,422				2,176,987				(96,565	)			-4	%			2,088,305
Stockholders' equity			328,017				285,569				42,448				15	%			320,982
Total liabilities and stockholders' equity		$	2,408,439			$	2,462,556			$	(54,117	)			-2	%		$	2,409,287

 

Table 16
PERIOD END LOANS
(Dollars in thousands)		June 30,				% of				June 30,				% of				Change								Mar. 31,				% of
		2012				Total				2011				total				Amount				%				2012				Total
Commercial loans		$	292,643				19	%		$	297,817				20	%		$	(5,174	)			-2	%		$	278,195				19	%
Commercial real estate construction			33,477				2	%			17,024				1	%			16,453				97	%			19,839				1	%
Residential real estate construction			10,549				1	%			15,410				1	%			(4,861	)			-32	%			12,082				1	%
Total real estate construction loans			44,026				3	%			32,434				2	%			11,592				36	%			31,921				2	%
Mortgage			59,970				4	%			72,708				5	%			(12,738	)			-18	%			65,063				5	%
Home equity			248,921				17	%			264,016				17	%			(15,095	)			-6	%			252,990				17	%
Total real estate mortgage			308,891				21	%			336,724				22	%			(27,833	)			-8	%			318,053				22	%
Commercial real estate loans			837,415				56	%			839,665				55	%			(2,250	)			0	%			830,053				56	%
Installment and other consumer loans			12,822				1	%			14,507				1	%			(1,685	)			-12	%			12,626				1	%
Total loans		$	1,495,797							$	1,521,147							$	(25,350	)			-2	%		$	1,470,848

  

 

Table 17
AVERAGE BALANCE SHEETS
(Dollars in thousands)		Q2				Q2				Q1				Year to date
		2012				2011				2012				2012				2011
Cash and due from banks		$	51,903			$	52,273			$	50,017			$	50,960			$	50,495
Federal funds sold			2,555				4,790				2,601				2,578				4,371
Interest-bearing deposits in other banks			45,260				93,225				35,334				40,297				99,972
Total cash and cash equivalents			99,718				150,288				87,952				93,835				154,838
Investment securities			726,853				698,116				710,000				718,426				685,850
Total loans			1,479,226				1,523,170				1,482,522				1,480,874				1,526,213
Allowance for loan losses			(33,699	)			(38,944	)			(35,249	)			(34,474	)			(39,616	)
Loans, net			1,445,527				1,484,226				1,447,273				1,446,400				1,486,597
Total interest earning assets			2,254,192				2,319,980				2,232,288				2,243,240				2,317,311
Other assets			123,179				127,895				132,951				127,984				128,438
Total assets		$	2,395,277			$	2,460,525			$	2,378,176			$	2,386,645			$	2,455,723
Demand		$	621,547			$	578,562			$	585,749			$	603,647			$	565,468
Savings and interest-bearing demand			502,509				476,090				490,361				496,436				463,316
Money market			596,949				654,668				623,111				610,030				657,653
Time deposits			151,085				224,674				167,417				159,251				246,733
Total deposits			1,872,090				1,933,994				1,866,638				1,869,364				1,933,170
Borrowings and subordinated debentures			178,241				219,599				171,505				174,873				219,599
Total interest bearing liabilities			1,428,784				1,575,031				1,452,394				1,440,590				1,587,301
Other liabilities			21,550				24,331				22,782				22,085				24,656
Stockholders' equity			323,396				282,601				317,251				320,323				278,298
Total liabilities and stockholders' equity		$	2,395,277			$	2,460,525			$	2,378,176			$	2,386,645			$	2,455,723