EX-99 2 wcb8-k41806expr.htm 99.1, PRESS RELEASE

Exhibit 99.1

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 STRONG FIRST QUARTER 2006 EARNINGS

• DILUTED EARNINGS PER SHARE OF $.44 INCREASED 26% OVER CORE EARNINGS PER DILUTED SHARE OF $.35 FOR THE FIRST QUARTER 2005
• RETURN ON AVERAGE EQUITY OF 17.2% IN THE FIRST QUARTER OF 2006
• SINCE 1ST QUARTER 2005:
  » AVERAGE TOTAL LOANS AND DEPOSITS INCREASED 11% EACH
  » 14% GROWTH IN AVERAGE NON-INTEREST BEARING DEMAND DEPOSITS
  » NON-INTEREST INCOME GROWTH STRONG IN TARGET CATEGORIES
• MID-VALLEY BANK ACQUISITION IS EXPECTED TO CLOSE BY JUNE 2006

Lake Oswego, OR – April 18, 2006 – West Coast Bancorp (NASDAQ: WCBO) today announced quarterly earnings of $6.7 million or $.44 per diluted share for the first quarter of 2006, compared to first quarter 2005 earnings of $4.5 million or $.29 per diluted share. Core earnings and earnings per diluted share were $5.3 million and $.35, respectively, in the first quarter of 2005.

Three months ended
March 31,
GAAP
Core*
($'s in 000's except per share data)
 2006
 2005
 2005
Diluted Earnings Per Share     $ .44   $ .29   $ .35  
Return On Average Equity    17.2 %  12.4 %  14.6 %
Total Period End Loans   $ 1,612,562   $ 1,432,446    5555  
Total Period End Deposits   $ 1,675,084   $ 1,509,288    5555  

*Core earnings for the quarter ended March 31, 2005, and numbers derived using core earnings for the quarter, including core earnings per diluted share and core return on average equity, are non-GAAP (Generally Accepted Accounting Principles) financial measures derived by adjusting the Company’s GAAP earnings for the negative impact of a first quarter impairment charge of approximately $.8 million or $.06 per diluted share. Management uses this non-GAAP information internally and has disclosed it to investors based on its belief that the information provides additional, valuable information relating to its core operating performance as compared to prior periods.

“I am extremely pleased with our first quarter results as the earnings performance of the Company continues to be very strong. Both average total loans and deposits increased by 11% in the first quarter of 2006 from the same quarter a year ago,” said Robert D. Sznewajs, President and Chief Executive Officer. “The continued solid growth in the balance sheet and non-interest income improved the return on average equity to 17% for the first quarter of 2006.”

The following table reconciles GAAP net income to core earnings, including per-share figures:

WEST COAST BANCORP REPORTS FIRST QUARTER 2006 EARNINGS
April 18, 2006
Page 2 of 7

(Dollars in thousands, except per share data) Three months ended March 31,
2006
2005
 Change %
Net income     $ 6,747   $ 4,519    49 %
Add back: Impairment charge on securities,  
  net of tax    —  803
  Core earnings   $ 6,747   $ 5,322    27 %
Diluted Earnings per Share   
GAAP earnings   $ 0.44   $ 0.29    52 %
Core earnings   $ 0.44   $ 0.35    26 %

Financial Results:

For the quarter ended March 31, 2006, net interest income was $23.2 million, increasing $3.3 million or 17% from the same quarter in 2005. Average non-interest bearing demand deposits constituted approximately 26% of total average deposits in the first quarter of 2006. While the net interest spread has remained substantially flat since first quarter 2005, the net interest margin improved 24 basis points over the same period due to the rising value of non-interest bearing deposits in the higher interest rate environment.

First quarter 2006 total non-interest income of $6.0 million grew 41% or $1.8 million from the first quarter 2005. The first quarter 2005 non-interest income included a $1.3 million pre-tax, other than temporary impairment charge for a security, and excluding this charge, total non-interest income increased nearly 8%. As a result of a continued strategic focus and emphasis, deposit service charges and payment systems revenues experienced increases of 34% and 26%, respectively, or $.9 million combined for the first quarter of 2006. Consistent with the improving stock market, trust and investment revenue was up 13% or $.1 million, while gain on sales of loans declined by $.1 million. The Company realized $.5 million in losses on investment securities in the quarter compared to no investment security losses in the same quarter of 2005.

Total non-interest expense increased $1.1 million or 6% in the first three months of 2006 from the same quarter in 2005. Personnel expense grew nearly 15% or $1.4 million primarily as a function of higher performance-based variable compensation and the addition of new team members over the past year. In addition, the Company recorded pre-tax stock option expense of $.1 million from implementation of Statement of Financial Accounting Standards No. 123 (Revised), “Share- Based Payment,” in the first quarter of 2006, compared to no stock option expense for the same period in 2005. Marketing expense grew $.4 million in the first quarter of 2006 due to increased direct mailing activity and print advertising. Due to a $.8 million litigation settlement in the first quarter of 2005, other non-interest expense decreased $.7 million in the first quarter of 2006, while professional fees declined $.5 million from lower legal fees in the most recent quarter.

Because of significantly higher loan growth during the first quarter this year compared to same quarter in 2005, the provision for loan losses was $.4 million, up from no provision in the first quarter in 2005.

Annualized loan net charge-offs continued to remain low at 0.06% of average loans in the first quarter 2006, compared to net recoveries of 0.01% in the same quarter a year ago. Non-performing assets at March 31, 2006, declined to a very modest $1.0 million or 0.05% of total assets from $4.4 million or 0.24% a year ago.

WEST COAST BANCORP REPORTS FIRST QUARTER 2006 EARNINGS
April 18, 2006
Page 3 of 7

During the first quarter of 2006, consistent with its capital plan and an anticipated slower pace of stock repurchases in 2006, the Company repurchased approximately 25,000 shares at an average cost of $26.67 per share. At March 31, 2006, approximately 327,000 shares remained available for future repurchases under the Company’s share repurchase program.

West Coast Bancorp also announces that it issued $15 million in trust preferred securities on April 17, 2006. The proceeds will be used in part to fund the cash portion of the acquisition of Mid-Valley Bank announced in February 2006. The securities will qualify as Tier 1 capital for the Company and will reprice quarterly at a competitive spread over LIBOR.

Other:

The Company will hold a ebcast conference call Wednesday, April 19th, at 8:30 a.m. Pacific Time, during which the Company will discuss first quarter 2006 results, review its strategic progress, and provide management’s current expectations for 2006.

To access the conference call via a live webcast, go to www.wcb.com and click on Investor Relations/Conference Call/West Coast Bancorp Webcast. The conference call may also be accessed by dialing 877-604-2074 a few minutes prior to 8:30 a.m. PDT. The call will be available for replay by accessing the Company’s website at www.wcb.com and clicking on Investor Relations/Conference Call/Archived Conference Call (Replay).

West Coast Bancorp is a Northwest bank holding company with $2 billion in assets, operating 53 offices in Oregon and Washington. West Coast Bancorp, the parent company of West Coast Bank and West Coast Trust, is headquartered in Oregon. West Coast Bank 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. Actual results could be quite different from those expressed or implied by the forward-looking statements. Do not unduly rely on forward-looking statements. They give our expectations about the future and are not guarantees. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them to reflect changes that occur after that date.

A number of factors could cause results to differ significantly from our expectations, including, among others, factors identified in our Annual Report on Form 10-K for the year ended December 31, 2005, including under the heading “Forward Looking Statement Disclosure” and in Item 1A. Risk Factors.

WEST COAST BANCORP REPORTS FIRST QUARTER 2006 EARNINGS
April 18, 2006
Page 4 of 7

West Coast Bancorp
Consolidated Income Statements
Three months ended
 Twelve months ended
March 31,
 Dec. 31,
 December 31,
(Unaudited)
(Dollars and shares in thousands)
 2006
 2005
 2005
 2005
 2004
Net interest income                        
  Interest and fees on loans   $ 29,099   $ 22,471   $ 28,018   $ 101,419   $ 79,903  
  Interest on investment securities    3,176    2,692    3,029    10,920    12,889  
  Other interest income    73    39    263    652    196  
Total interest income    32,348    25,202    31,310    112,991    92,988  
Interest expense on deposit accounts    7,156    3,761    6,566    20,497    11,214  
Interest on borrowings including subordinated debentures    2,005    1,567    1,357    5,933    6,901  
Total interest expense    9,161    5,328    7,923    26,430    18,115  
  Net interest income    23,187    19,874    23,387    86,561    74,873  
Provision for loan losses    408    —    950    2,175    2,260  
Non-interest income  
  Service charges on deposit accounts    2,536    1,891    2,459    8,686    7,474  
  Payment systems related revenue    1,359    1,076    1,352    4,900    3,878  
  Trust and investment services revenues    1,267    1,125    1,424    5,151    4,558  
  Gains on sales of loans    701    775    628    3,046    3,906  
  Other    648    721    706    3,348    2,667  
  Loss on impairment of securities    —    (1,316 )  —    (1,316 )  —  
  Losses on sales of securities    (479 )  —    —    (716 )  (20 )
Total non-interest income    6,032    4,272    6,569    23,099    22,463  
Non-interest expense  
  Salaries and employee benefits    11,107    9,674    10,247    40,606    36,297  
  Equipment    1,242    1,135    1,317    4,837    4,917  
  Occupancy    1,612    1,539    1,667    6,267    5,722  
  Payment systems related expense    528    379    515    1,739    1,449  
  Professional fees    548    1,099    801    2,984    2,314  
  Postage, printing and office supplies    762    629    785    2,833    2,616  
  Marketing    1,021    601    1,202    3,830    2,402  
  Communications    316    272    310    1,210    1,182  
  Other non-interest expense    1,441    2,146    2,717    8,328    6,472  
Total non-interest expense    18,577    17,474    19,561    72,634    63,371  
Income before income taxes    10,234    6,672    9,445    34,851    31,705  
Provision for income taxes    3,487    2,153    2,983    11,011    9,697  
Net income   $ 6,747   $ 4,519   $ 6,462   $ 23,840   $ 22,008  
    Basic earnings per share   $ 0.46   $ 0.31   $ 0.44   $ 1.63   $ 1.48  
    Diluted earnings per share   $ 0.44   $ 0.29   $ 0.42   $ 1.55   $ 1.42  
Weighted average common shares    14,582    14,726    14,607    14,658    14,849  
Weighted average diluted shares    15,284    15,422    15,299    15,344    15,526  
Tax equivalent net interest income   $ 23,561   $ 20,238   $ 23,758   $ 88,026   $ 76,526  

WEST COAST BANCORP REPORTS FIRST QUARTER 2006 EARNINGS
April 18, 2006
Page 5 of 7

West Coast Bancorp
Consolidated Balance Sheets
(Dollars and shares in thousands, unaudited)
 March 31,
2006
 March 31,
2005
 Dec. 31,
2005
Assets:                
Cash and cash equivalents   $ 78,972   $ 58,968   $ 88,369  
Investments    277,999    258,181    292,664  
Total loans    1,612,562    1,432,446    1,554,454  
Allowance for loan losses    (20,642 )  (18,997 )  (20,469 )
Loans, net    1,591,920    1,413,449    1,533,985  
Other assets    81,291    75,704    82,120  
     Total assets   $ 2,030,182   $ 1,806,302   $ 1,997,138  
Liabilities and Stockholders' Equity:  
Demand   $ 439,441   $ 395,323   $ 456,760  
Savings and interest-bearing demand    844,085    758,783    827,909  
Certificates of deposits    391,558    355,182    364,793  
Total deposits    1,675,084    1,509,288    1,649,462  
Borrowings and subordinated debentures    173,148    135,142    170,450  
Other liabilities    19,909    15,038    20,103  
     Total liabilities    1,868,141    1,659,468    1,840,015  
Stockholders' equity    162,041    146,834    157,123  
     Total liabilities and stockholders' equity   $ 2,030,182   $ 1,806,302   $ 1,997,138  
Common shares outstanding period end    14,726    14,775    14,692  
Book value per common share   $ 11.00   $ 9.94   $ 10.69  
Tangible book value per common share   $ 11.00   $ 9.91   $ 10.68  


West Coast Bancorp
Period End Loan Portfolio By Category
(Dollars in thousands, unaudited)
 March 31,
2006
 March 31,
2005
 Change
Amount
 %
 Dec. 31,
2005
Commercial loans     $ 395,464   $ 357,505   $ 37,959    11 % $ 364,604  
Real estate construction loans    238,480    125,959    112,521    89 %  210,828  
Real estate mortgage loans    249,521    215,580    33,941    16 %  242,015  
Real estate commercial loans    702,409    698,864    3,545    1 %  709,176  
Installment and other consumer loans    26,688    34,538    (7,850 )  -23 %  27,831  
 Total loans   $ 1,612,562   $ 1,432,446   $ 180,116    13 % $ 1,554,454  
(Reconciliation to GAAP financial measures)*  
Total loans excluding real estate commercial loans   $ 910,153   $ 733,582   $ 176,571    24 % $ 845,278  
Real estate commercial loans    702,409    698,864    3,545    1 %  709,176  
  Total loans   $ 1,612,562   $ 1,432,446   $ 180,116    13 % $ 1,554,454  

*Management uses this non-GAAP information internally, and has disclosed it to investors, based on its belief that the information provides additional, valuable information relating to its operating results in light of its business strategies.


WEST COAST BANCORP REPORTS FIRST QUARTER 2006 EARNINGS
April 18, 2006
Page 6 of 7

West Coast Bancorp
Financial Information
(Dollars in thousands except for per share data, unaudited
(all rates have been annualized where appropriate)
 First
Quarter
2006
 First
Quarter
2005
 Fourth
Quarter
2005
 Full year
2005
 Full year
2004
PERFORMANCE RATIOS                        
 - Return on average assets    1.37 %  1.02 %  1.31 %  1.28 %  1.28 %
 - Return on average common equity    17.18 %  12.38 %  16.49 %  15.76 %  15.45 %
 - Non-interest income to average assets    1.23 %  0.97 %  1.34 %  1.24 %  1.31 %
 - Non-interest expense to average assets    3.78 %  3.95 %  3.98 %  3.88 %  3.69 %
 - Efficiency ratio, tax equivalent    61.8 %  67.7 %  64.5 %  64.2 %  64.0 %

NET INTEREST MARGIN		  
 - Yield on interest-earning assets    7.05 %  6.12 %  6.83 %  6.49 %  5.84 %
 - Rate on interest-bearing liabilities    2.68 %  1.73 %  2.38 %  2.06 %  1.50 %
 - Net interest spread    4.37 %  4.39 %  4.45 %  4.43 %  4.34 %
 - Net interest margin    5.08 %  4.84 %  5.12 %  4.99 %  4.72 %

AVERAGE ASSETS		  
 - Investment securities   $ 289,096   $ 264,062   $ 279,625   $ 262,134   $ 302,200  
 - Commercial loans   $ 379,027   $ 352,067   $ 361,158   $ 360,898   $ 277,882  
 - Real estate construction loans    225,525    118,194    202,030    157,785    117,413  
 - Real estate mortgage loans    245,096    213,969    225,543    219,422    196,698  
 - Real estate commercial loans    705,250    702,705    713,634    710,119    672,295  
 - Installment and other consumer loans    27,353    35,359    28,551    31,708    37,159  
 - Total loans   $ 1,582,251   $ 1,422,294   $ 1,530,916   $ 1,479,932   $ 1,301,447  
 - Total interest earning assets   $ 1,881,206   $ 1,695,109   $ 1,840,939   $ 1,764,209   $ 1,621,683  
 - Other assets    112,421    99,299    110,692    105,551    95,999  
 - Total assets   $ 1,993,627   $ 1,794,408   $ 1,951,631   $ 1,869,760   $ 1,717,682  

AVERAGE LIABILITIES & EQUITY		  
 - Demand deposits   $ 431,060   $ 378,054   $ 459,201   $ 421,766   $ 351,432  
 - Interest bearing demand,  
    savings, and money market    827,166    755,550    842,663    789,054    737,409  
 - Certificates of deposits    385,011    347,852    360,717    362,035    336,623  
 - Total deposits   $ 1,643,237   $ 1,481,456   $ 1,662,581   $ 1,572,855   $ 1,425,464  
 - Borrowings and subordinated debentures   $ 173,960   $ 148,118   $ 116,020   $ 130,352   $ 136,259  
 - Total interest bearing liabilities   $ 1,386,137   $ 1,251,519   $ 1,319,400   $ 1,281,441   $ 1,210,290  
 - Other liabilities    448,216    394,847    476,809    437,056    364,965  
 - Total liabilities   $ 1,834,353   $ 1,646,366   $ 1,796,209   $ 1,718,497   $ 1,575,255  
 - Average common equity    159,274    148,042    155,422    151,263    142,427  
 - Total average liabilities and common equity   $ 1,993,627   $ 1,794,408   $ 1,951,631   $ 1,869,760   $ 1,717,682  

AVERAGE ASSET/LIABILITY RATIOS		  
 - Average stockholders' equity to average assets    7.99 %  8.25 %  7.96 %  8.09 %  8.29 %
 - Average int. earning assets to int. bearing liabilities    135.7 %  135.4 %  139.5 %  137.7 %  134.0 %
 - Average loans to average assets    79.4 %  79.3 %  78.4 %  79.2 %  75.8 %
 - Interest bearing deposits to assets    60.8 %  61.5 %  61.7 %  61.6 %  62.5 %

WEST COAST BANCORP REPORTS FIRST QUARTER 2006 EARNINGS
April 18, 2006
Page 7 of 7

West Coast Bancorp
Allowance For Loan Losses and Net Charge-offs
(Dollars in thousands, unaudited)
 Quarter ended
March 31,
2006
 Quarter ended
March 31,
2005
 Quarter ended
Dec. 31,
2005
Allowance for loan losses, beginning of period     $ 20,469   $ 18,971   $ 19,728  
  Provision for loan losses    408    —    950  
  Charge-offs    505    195    412  
  Recoveries    270    221    203  
    Net (recoveries) charge-offs    235    (26 )  209  
Total allowance for loan losses   $ 20,642   $ 18,997   $ 20,469  
Net loan charge-offs to average loans (annualized)    0.06 %  -0.01 %  0.05 %

(Dollars in thousands, unaudited)
 Full year
Dec. 31,
2005
 Full year
Dec. 31,
2004
Allowance for loan losses, beginning of period     $ 18,971   $ 18,131  
  Provision for loan losses    2,175    2,260  
  Charge-offs    1,624    2,374  
  Recoveries    947    954  
    Net Charge-offs    677    1,420  
Total allowance for loan losses   $ 20,469   $ 18,971  
Net loan charge-offs to average loans    0.05 %  0.11 %

West Coast Bancorp
Non-performing Assets
(Dollars in thousands, unaudited)
 March 31,
2006
 March 31,
2005
 Dec. 31,
2005
Non-accruing loans     $ 996   $ 3,695   $ 1,088  
90 day delinquencies    —    301    —  
  Total non-performing loans    996    3,996    1,088  
Other real estate owned    —    384    —  
Total non-performing assets   $ 996   $ 4,380   $ 1,088  
Allowance for loan losses to total loans    1.28 %  1.33 %  1.32 %
Non-performing loans to total loans    0.06 %  0.28 %  0.07 %
Allowance for loan losses to non-performing loans    2073 %  475 %  1882 %
Non-performing assets to total assets    0.05 %  0.24 %  0.05 %
Allowance for loan losses to non-performing assets    2073 %  434 %  1882 %