EX-99.1 2 v137395_ex99-1.htm Unassociated Document
 
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 2008 Fourth Quarter Results and Improved Capital Ratios for West Coast Bank
 
·
West Coast Bank’s total capital ratio increased to 10.93% at December 31, 2008 from 10.54% at year end 2007.  West Coast Bank continues to be well capitalized.
   
·
Fourth quarter loss per diluted share of $.53 largely resulted from continued elevated provision for credit losses and OREO valuation adjustments.
   
·
Full year 2008 loss per diluted share of $.38 compared to earnings of $1.05 in 2007.
   
·
Full year core* loss per diluted share was $.11 in 2008 versus earnings of $1.05 in 2007.

Lake Oswego, OR – January 19, 2009 – West Coast Bancorp (NASDAQ: WCBO) today announced a quarterly loss of $8.2 million or $.53 per diluted share for the fourth quarter of 2008, compared to a fourth quarter 2007 loss of $7.5 million or $.48 per diluted share.  For the full year 2008 the Company reported a loss of $5.8 million or $.38 per diluted share, compared to net income of $16.8 million or $1.05 per diluted share for the same period in 2007.
 
   
GAAP
          
CORE*
        
(Dollars in thousands,
  
December 31,
          
December 31,
        
  except per share data, unaudited)
  
2008
    
2007
    
Change
    
2008
    
2007
    
Change
  
                                     
For the three months ended:
                                    
Net loss
   $ (8,197 )   $ (7,487 )     -9 %   $ (8,197 )   $ (7,487 )     -9 %
Net loss per diluted share
   $ (0.53 )   $ (0.48 )     -10 %   $ (0.53 )   $ (0.48 )     -10 %
                                                 
Return on average equity
     -16.3 %     -13.5 %     -2.8 %     -16.3 %     -13.5 %     -2.8 %
                                                 
For the twelve months ended:
                                                
Net income (loss)
   $ (5,829 )   $ 16,842       -135 %   $ (1,709 )   $ 16,842       -110 %
Net income (loss) per diluted share
   $ (0.38 )   $ 1.05       -136 %   $ (0.11 )   $ 1.05       -110 %
                                                 
West Coast Bancorp Tier 1 capital ratio
     9.95 %     9.88 %     0.07 %                        
West Coast Bancorp Total capital ratio
     11.20 %     11.15 %     0.05 %                        
                                                 
West Coast Bank Tier 1 capital ratio
     9.68 %     9.28 %     0.40 %                        
West Coast Bank Total capital ratio
     10.93 %     10.54 %     0.39 %                        
                                                 
Total period end loans
   $ 2,064,796     $ 2,172,669       -5 %                        
Total period end deposits
   $ 2,024,379     $ 2,094,832       -3 %                        
 
*Core net income (loss) for the periods shown, and numbers derived using core net income (loss), including core earnings (loss) 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 net income (loss) to remove the negative impact of third quarter 2008 impairment charges of approximately $4.1 million, after tax, or $.27 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 operating performance as compared to prior periods.  See financial tables 1 and 2 below for a reconciliation to the GAAP measure.
 
WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 2 of 23
 
"Despite a very challenging environment, West Coast Bank improved its total capital ratio to approximately 10.93% at December 31, 2008, and remained well capitalized for regulatory purposes despite incurring an operating loss in the fourth quarter of 2008,” said Robert D. Sznewajs, President and CEO. “Careful management of risk-weighted assets during the year coupled with a fourth quarter $9.8 million capital contribution from Bancorp to the Bank related to an inter-company tax settlement enabled our Bank to build this important ratio throughout 2008. In response to the current situation, many cost-saving initiatives were put in place during the last half of 2008 to reduce the Bank's operating expenses and to offset some of the additional expenses associated with operating in this environment. The annual benefit associated with these cost-saving initiatives is expected to be in excess of $10 million in 2009. The recession has had a dramatic impact on the residential housing market and affected our residential construction loan portfolio, including two-step and non-standard mortgages. However, the credit quality in the remaining $1.84 billion loan portfolio, which represents 89% of total loans, has performed relatively well in these difficult economic conditions. The ratio of non-performing assets to total assets was only 1.09% in the remainder of the portfolio at year end 2008.”

Financial Results:

The year end 2008 total loan balance of $2.065 billion declined $108 million or 5% from December 31, 2007.  Excluding the $210 million or 80% reduction in two-step loan balances, year-over-year loan growth was 5% or $102 million, with expansion centered in the commercial real estate and residential mortgage loan categories. At year end 2008, the remaining two-step loan balance of $53 million represented less than 3% of total loans, down from $263 million or 12%, respectively, a year ago. Fourth quarter 2008 average total deposits of $2.027 billion declined 4% from the final quarter of 2007, with lower average per account demand deposit and money market balances causing the majority of the decline. The fourth quarter average loan to average deposit ratio of 103% remained consistent with the ratio in the same quarter of 2007.
 
Fourth quarter 2008 net interest income declined $7.1 million to $21.1 million from the fourth quarter last year predominantly due to the 92 basis point compression in the net interest margin to 3.70% and from lower earning assets. The net interest margin contracted as a result of the declining benefit from non-interest bearing demand deposits, and a 52 basis point contraction in the net interest spread. Lower real estate construction loan fees and higher interest reversals negatively impacted the net interest margin by 18 and 14 basis points, respectively, in the final quarter of 2008 relative to the same quarter in 2007. The remaining net interest margin contraction resulted from an inability to match the larger than anticipated decline in the Federal Funds rate with a corresponding reduction in funding costs due to market conditions.
 
Full year 2008 net interest income decreased $23 million, primarily due to a 96 basis point decline in the net interest margin and also from a lower earning asset base.
 
WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 3 of 23
 
Total non-interest income of $4.3 million in the fourth quarter 2008 declined $4.3 million from the same period in 2007. OREO valuation adjustments totaling $3.7 million were recorded during the most recent quarter compared to no such charges in the final quarter of 2007. Re-appraisal of two-step OREO properties accounted for $3.2 million of this amount. We also recognized a $.3 million OREO loss upon disposition of 28 two-step OREO properties. Including 13 short sales, we disposed of a total of 41 two-step related properties during the fourth quarter with total proceeds of $11.9 million. During the second and third quarters of 2008 we sold 23 and 31 properties, respectively. At year end 2008 there were 251 properties in the two-step OREO portfolio.  (See table 8 for details.)

As a result of the 6% growth in the number of consumer and business deposit transaction accounts over the past 12 months, fourth quarter 2008 total deposit service charge and payment system revenues improved 4% and 1%, respectively, from the same quarter in 2007. Likely related to the slowing economy, the transaction volumes per account declined in the most recent quarter. The uncertainty surrounding the economy and equity markets contributed to a $.5 million reduction in trust and investment revenues year-over-year fourth quarter. Gain on sales of loans declined $.2 million in the most recent quarter primarily from the secondary market for SBA loans effectively being shut down.

Fourth quarter 2008 total non-interest expense of $21.8 million increased $1.7 million or 8% from the same period of 2007. Personnel expense fell 6% or $.7 million from lower salary, incentive and benefit costs despite a $.6 million decline in deferred construction loan origination costs. The primary negative year-over-year fourth quarter non-interest expense variances included a $.5 million increase in FDIC insurance premium expense and a $1.2 million increase in two-step property collection and disposition expenses during the most recent quarter. There were no such two-step expenses in the final quarter of 2007.  The fourth quarter of 2007 also included a reversal of an accrued contingent legal liability of $1.4 million, which reduced other non-interest expense in that period.
 
Capital:
West Coast Bank continued to be well capitalized for regulatory purposes. West Coast Bank’s total capital ratios ended 2008 at 10.93% up from 10.78% at the end of the third quarter of 2008 and up from 10.54% at December 31, 2007.  West Coast Bank’s tier 1 capital ratio at 9.68% and leverage ratio of 9.19% also improved during 2008 and were significantly above the well capitalized regulatory threshold at year end 2008. The enhanced Bank capital ratios were primarily accomplished by reducing the Bank’s loan portfolio and management of risk-weighted assets throughout 2008. In the fourth quarter of 2008, Bancorp also made a capital contribution to the Bank of $9.8 million associated with an inter-company tax settlement related to current and prior periods, which also helped improve the Bank capital ratios. The following table shows the Company’s capital ratios for the indicated periods.
 
Risked based capital ratios
Capital Ratios
 
(Unaudited)
  
12/31/08
    
12/31/07
    
09/30/08
  
West Coast Bancorp
  
Ratio
    
Well capitalized minimum
    
Excess over well capitalized minimum
    
Ratio
    
Ratio
  
  Tier 1 capital ratio
     9.95 %     6.00 %     3.95 %     9.88 %     10.16 %
  Total capital ratio
     11.20 %     10.00 %     1.20 %     11.15 %     11.42 %
  Leverage ratio
     9.45 %     5.00 %     4.45 %     9.41 %     9.56 %
Tangible common equity to tangible assets
     7.35 %                     7.36 %        
                                         
West Coast Bank
                                        
  Tier 1 capital ratio
     9.68 %     6.00 %     3.68 %     9.28 %     9.52 %
  Total capital ratio
     10.93 %     10.00 %     0.93 %     10.54 %     10.78 %
  Leverage ratio
     9.19 %     5.00 %     4.19 %     8.83 %     8.91 %
 
WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 4 of 23
 
Credit Quality:
The Company recorded a fourth quarter 2008 total provision for credit losses of $16.5 million, compared to $30.0 million in the same quarter of 2007, and $9.1 million in the third quarter of 2008. The provision related to the two-step portfolio was $4.8 million in the final quarter of 2008 compared to $27.7 million in the fourth quarter of 2007, and $2.0 million in the third quarter of 2008. The probability of default and severity of loss upon default for two-step loans were impacted by the current weak economic environment and declining real estate values in our market areas. There was only $3.1 million in accruing two-step loans at year end 2008. The future provision requirements and OREO valuation adjustments associated with two-step loans will be driven by future re-appraisals of properties. Each two-step property is re-appraised within 45 days of its expected foreclosure date.

The provision for credit losses associated with loans other than two-step loans was $11.7 million in the fourth quarter compared to $2.2 million in the same quarter of 2007 and $7.1 million in the third quarter of 2008.  The combination of negative risk rating changes and higher net charge-offs during the most recent quarter increased the quarterly provision requirement in our allowance model.

At December 31, 2008, total non two-step residential land and construction loans measured $160 million.  This portfolio consisted of $23 million in land, $65 million in site development, and $71 million in construction of residences (vertical construction). Delinquent but accruing non two-step residential land and construction loans at year end 2008 amounted to $.9 million or .54% of such loans, a decline from $7.7 million and 4.56%, respectively, at September 30, 2008. Year end 2008 nonaccrual non two-step residential land and construction loans increased to $42.6 million or 26.7% of the related residential construction loans from $26.3 million or 15.6% at the end of the third quarter. Loans to borrowers involved in residential site development exhibited the most deterioration in credit quality. At December 31, 2008, accruing residential site development loans were $37.2 million, representing less than 2% of our total loan portfolio. Nonaccrual non two-step residential construction loans are largely located in Clark County in the state of Washington, and in Marion and Deschutes counties in the state of Oregon.

Total loan net charge-offs in fourth quarter 2008 were $21.0 million, of which $5.9 million related to the two-step portfolio. The net charge-offs for loans other than two-step loans were $15.1 million compared to $1.7 million in the final quarter of 2007 and $6.0 million in the third quarter of 2008. The higher level of net charge-off activity for loans other than two-step loans was mainly associated with residential construction loans, and to a lesser extent, nonstandard residential mortgage loans and commercial loans.

For the full year 2008, the provision for credit losses for other than two-step loans measured $30.9 million and exceeded 2008 loan net charge-offs of $25.2 million. In 2007 such provision and net charge-offs amounted to $8.0 million and $4.5 million, respectively.
 
The following table summarizes key trends in the two-step loan portfolio and its allowance for credit losses.
 
Additional information regarding the two-step loan portfolio
(Dollars in thousands, unaudited)
                                
Period ended
  
Total two-step loans
    
Nonaccrual two-step loans
    
Accruing two-step loans
    
Total accruing two-step loan commitments
    
Allowance for credit losses on two-step loans
    
Allowance for credit losses on two-step loans as a % of accruing two-step loans
    
Allowance for credit losses on two-step loans as a % of total accruing two-step loan commitments
  
12/31/2007
   $ 262,952     $ 20,545     $ 242,407     $ 320,991     $ 31,065       12.8 %     9.7 %
3/31/2008
     211,406       88,784       122,622       156,823       11,812       9.6 %     7.5 %
6/30/2008
     145,703       98,728       46,975       59,603       5,280       11.2 %     8.9 %
9/30/2008
     97,894       82,990       14,904       16,943       1,502       10.1 %     8.9 %
12/31/2008
     53,084       49,960       3,124       3,276       421       13.5 %     12.9 %
 
 WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 5 of 23
 
The allowance for credit losses associated with loans other than two-step loans was $29.5 million or 1.47% of such outstanding loan balances at year end 2008 compared to $32.9 million or 1.64% at September 30, 2008 and $23.8 million or 1.25% at December 31, 2007. Charge-offs during fourth quarter 2008 of loans with a specific reserve at September 30, 2008 substantially explain the decline in the allowance percentage during the fourth quarter.

Total non-performing assets were $198 million or 7.9% of total assets at December 31, 2008, up from $183 million and 7.1%, respectively, as of September 30, 2008 and $30 million and 1.1% at year end 2007. Non-performing assets related to the two-step loan portfolio were $110 million or 4.4% of total assets at December 31, 2008, a decrease of $18 million from the end of third quarter 2008. The $110 million balance of nonperforming two-step assets at December 31, 2008 reflected prior write-downs of approximately 23% from the original balance of these loans. During the fourth quarter the nonaccrual two-step loan balance declined by $33 million to $50 million while the two-step OREO balance increased from $45 million at September 30, 2008 to $60 million at year end 2008, in line with our expectations. Two-step nonperforming assets are anticipated to continue to decline in future periods.

Nonperforming assets, excluding the two-step portfolio, increased by $32 million to $88 million or 3.49% of total assets at December 31, 2008, from $56 million and 2.16% at September 30, 2008, and $6 million and .22% at year end 2007. The fourth quarter 2008 $25 million increase in nonaccrual non two-step loans was largely linked to the $20 million growth in non accrual loans to residential builders and developers and the $3 million increase in nonaccrual nonstandard mortgage loans. Nearly 40% of the $15 million in nonstandard mortgage loans on nonaccrual status were not delinquent at year end.

The loan portfolio, excluding residential construction loans (which includes all two-step loans) and nonstandard mortgage loans, continued to perform satisfactorily at year end 2008, considering the economic situation. This portfolio, which includes the commercial, commercial real estate, commercial construction, standard mortgage, home equity, and consumer portfolios, totaled $1.84 billion and represented 89% of total loans at December 31, 2008. The nonperforming assets to total assets ratio for these loans measured 1.09% at year end 2008, as compared to .86% and .16% at September 30, 2008 and December 31, 2007, respectively. At December 31, 2008, all nonaccrual loans, including all non two-step loans, had been measured for impairment and written down to the appraised fair value, less expected selling costs, of the underlying collateral.

At year end 2008 the total non two-step delinquent loans were $6.9 million or .34% of total non two-step loans, down from $10.9 million and .54% at September 30, 2008, and from $7.7 million and .40% at year end 2007. The decline in delinquent non two-step loans in the most recent quarter was primarily due to lower delinquencies in residential construction loans to builders and developers and was partly offset by higher commercial loan delinquencies. For more detailed credit quality information, see tables 4 through 14.

Other:
The Company will hold a Webcast conference call Tuesday, January 20, 2009, at 8:00 a.m. Pacific Time, during which the Company will discuss fourth quarter 2008 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 “4th Quarter 2008 Earnings Conference Call” tab. The conference call may also be accessed by dialing (877) 811-4715 Conference ID#: 76229771 a few minutes prior to 8:00 a.m. PDT. 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, one of Oregon Business Magazine’s 100 Best Companies to Work For, 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. 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, 2007, including under the heading "Forward Looking Statement Disclosure" and in Item 1A, “Risk Factors,” all as updated in our Quarterly Report on Form 10-Q.
 
 WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 6 of 23
 
   
West Coast Bancorp
  
   
Consolidated Statements of Income (Loss)
  
                               
 (Unaudited)
  
Three months ended
    
Twelve months ended
  
 (Dollars and shares in thousands, except per share data)
  
December 31,
    
Sept. 30,
    
December 31,
  
   
2008
    
2007
    
2008
    
2008
    
2007
  
 Net interest income
                              
   Interest and fees on loans
   $ 29,605     $ 42,115     $ 32,013     $ 129,517     $ 169,180  
   Interest on investment securities
     2,388       3,178       2,686       10,951       13,446  
   Other interest income
     24       235       73       378       564  
 Total interest income
     32,017       45,528       34,772       140,846       183,190  
 Interest expense on deposit accounts
     8,562       14,020       8,310       37,549       55,036  
 Interest on borrowings and subordinated debentures
     2,318       3,233       2,739       11,147       13,434  
 Total interest expense
     10,880       17,253       11,049       48,696       68,470  
   Net interest income
     21,137       28,275       23,723       92,150       114,720  
                                         
 Provision for credit losses
     16,517       29,956       9,125       40,367       38,956  
                                         
 Non-interest income
                                        
   Service charges on deposit accounts
     3,853       3,698       4,176       15,547       12,932  
   Payment systems related revenue
     2,225       2,197       2,337       9,033       8,009  
   Trust and investment services revenues
     1,053       1,587       1,241       5,413       6,390  
   Gains on sales of loans
     244       443       455       2,328       3,364  
   OREO valuation adjustments and gain (loss) on sale
     (3,701 )     -       (1,422 )     (5,386 )     27  
   Other
     633       690       621       3,252       2,843  
   Loss on impairment of debt and equity securities
     -       -       (6,338 )     (6,338 )     -  
   Gain (loss) on sales of securities
     3       -       -       780       (67 )
 Total non-interest income
     4,310       8,615       1,070       24,629       33,498  
 Non-interest expense
                                        
   Salaries and employee benefits
     10,763       11,418       11,017       46,780       49,787  
   Equipment
     1,808       1,852       1,793       7,117       6,544  
   Occupancy
     2,414       2,242       2,354       9,440       8,548  
   Payment systems related expense
     935       810       952       3,622       3,143  
   Professional fees
     1,235       621       1,334       4,317       2,072  
   Postage, printing and office supplies
     877       1,079       991       3,834       3,896  
   Marketing
     773       1,233       1,009       3,583       4,524  
   Communications
     456       421       437       1,722       1,624  
   Other non-interest expense
     2,554       484       2,334       9,188       5,161  
 Total non-interest expense
     21,815       20,160       22,221       89,603       85,299  
 Income (loss) before income taxes
     (12,885 )     (13,226 )     (6,553 )     (13,191 )     23,963  
 Provision (benefit) for income taxes
     (4,688 )     (5,739 )     (4,237 )     (7,362 )     7,121  
 Net income (loss)
   $ (8,197 )   $ (7,487 )   $ (2,316 )   $ (5,829 )   $ 16,842  
                                         
 Earnings (loss) per share:
                                        
     Basic
   $ (0.53 )   $ (0.48 )   $ (0.15 )   $ (0.38 )   $ 1.09  
     Diluted
   $ (0.53 )   $ (0.48 )   $ (0.15 )   $ (0.38 )   $ 1.05  
                                         
 Weighted average common shares
     15,489       15,445       15,487       15,472       15,507  
 Weighted average diluted shares
     15,489       15,445       15,487       15,472       16,045  
                                         
 Tax equivalent net interest income
   $ 21,558     $ 28,732     $ 24,154     $ 93,901     $ 116,361  
 
 WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 7 of 23
 
   
West Coast Bancorp
  
   
Consolidated Balance Sheets
  
                   
   
December 31,
    
December 31,
    
September 30,
  
(Dollars and shares in thousands, unaudited)
  
2008
    
2007
    
2008
  
Assets:
                  
Cash and cash equivalents
   $ 64,778     $ 113,802     $ 101,614  
Investments
     198,515       269,425       205,987  
Total loans
     2,064,796       2,172,669       2,109,517  
Allowance for loan losses
     (28,920 )     (46,917 )     (33,498 )
Loans, net
     2,035,876       2,125,752       2,076,019  
OREO, net
     70,110       3,255       48,121  
Goodwill and other intangibles
     14,054       14,491       14,153  
Other assets
     132,571       119,889       127,152  
     Total assets
   $ 2,515,904     $ 2,646,614     $ 2,573,046  
                         
Liabilities and Stockholders' Equity:
                        
Demand
   $ 478,292     $ 501,506     $ 486,540  
Savings and interest-bearing demand
     346,206       364,971       337,472  
Money market
     615,588       678,090       672,690  
Time deposits
     584,293       550,265       564,717  
Total deposits
     2,024,379       2,094,832       2,061,419  
Borrowings and subordinated debentures
     274,059       301,100       282,059  
Reserve for unfunded commitments
     1,014       7,986       946  
Other liabilities
     18,501       34,455       24,400  
     Total liabilities
     2,317,953       2,438,373       2,368,824  
Stockholders' equity
     197,951       208,241       204,222  
     Total liabilities and stockholders' equity
   $ 2,515,904     $ 2,646,614     $ 2,573,046  
                         
Common shares outstanding period end
     15,696       15,593       15,702  
Book value per common share
   $ 12.61     $ 13.35     $ 13.01  
Tangible book value per common share
   $ 11.72     $ 12.42     $ 12.10  
 
WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 8 of 23
 
   
West Coast Bancorp
  
   
Summary Financial Information
  
                               
   
Fourth
    
Fourth
    
Third
              
(Dollars in thousands except for per share data, unaudited)
  
Quarter
    
Quarter
    
Quarter
    
Year to date
    
Year to date
  
(all rates have been annualized where appropriate)
  
2008
    
2007
    
2008
    
2008
    
2007
  
PERFORMANCE RATIOS
                              
 - Return on average assets
     (1.30 %)     (1.14 %)     (0.36 %)     (0.23 %)     0.66 %
 - Return on average common equity
     (16.25 %)     (13.51 %)     (4.47 %)     (2.82 %)     7.93 %
 - Return on average tangible equity
     (17.34 %)     (14.31 %)     (4.66 %)     (2.88 %)     8.69 %
 - Non-interest income to average assets
     0.68 %     1.31 %     0.17 %     0.96 %     1.32 %
 - Non-interest expense to average assets
     3.46 %     3.06 %     3.45 %     3.49 %     3.36 %
 - Efficiency ratio, tax equivalent
     84.4 %     54.0 %     70.4 %     72.2 %     56.9 %
                                         
NET INTEREST MARGIN
                                        
 - Yield on average interest-earning assets
     5.57 %     7.39 %     5.85 %     5.92 %     7.72 %
 - Rate on average interest-bearing liabilities
     2.36 %     3.66 %     2.36 %     2.60 %     3.76 %
 - Net interest spread
     3.21 %     3.73 %     3.49 %     3.32 %     3.96 %
 - Net interest margin
     3.70 %     4.62 %     4.02 %     3.90 %     4.86 %
                                         
AVERAGE ASSETS
                                        
 - Investment securities
   $ 212,900     $ 273,328     $ 228,382     $ 229,478     $ 284,582  
                                         
 - Commercial loans
     491,663       504,330       502,781       507,641       497,975  
 - Real estate construction loans
     311,117       525,110       371,687       403,823       477,055  
 - Real estate mortgage loans
     392,570       314,497       383,214       371,365       296,859  
 - Commercial real estate loans
     875,211       804,585       851,849       840,496       798,383  
 - Installment and other consumer loans
     22,364       23,320       23,220       23,545       24,705  
 - Total loans
     2,092,925       2,171,842       2,132,751       2,146,870       2,094,977  
                                         
 - Total interest earning assets
     2,318,140       2,468,863       2,393,207       2,409,896       2,394,958  
 - Other assets
     190,705       140,963       170,466       159,723       142,760  
 - Total assets
   $ 2,508,845     $ 2,609,826     $ 2,563,673     $ 2,569,619     $ 2,537,718  
                                         
AVERAGE LIABILITIES & EQUITY
                                        
 - Demand deposits
   $ 467,768     $ 492,636     $ 482,780     $ 470,601     $ 479,311  
 - Savings and Interest bearing demand
     338,584       367,359       348,008       350,769       351,521  
 - Money market
     636,013       676,908       672,051       658,360       665,037  
 - Time deposits
     584,137       573,967       543,451       566,195       554,263  
 - Total deposits
     2,026,502       2,110,870       2,046,290       2,045,925       2,050,132  
                                         
 - Borrowings and subordinated debentures
     276,336       251,868       300,258       300,759       250,478  
                                         
 - Total interest bearing liabilities
     1,835,069       1,870,103       1,863,768       1,876,083       1,821,299  
 - Other liabilities
     473,061       519,833       493,545       487,010       504,070  
 - Total liabilities
     2,308,130       2,389,936       2,357,313       2,363,093       2,325,369  
 - Common equity
     200,715       219,890       206,360       206,526       212,349  
 - Total average liabilities and common equity
   $ 2,508,845     $ 2,609,826     $ 2,563,673     $ 2,569,619     $ 2,537,718  
                                         
AVERAGE ASSET/LIABILITY RATIOS
                                        
 - Stockholders' equity to total assets
     8.00 %     8.43 %     8.05 %     8.04 %     8.37 %
 - Interest earning assets to interest bearing liabilities
     126.3 %     137.4 %     128.4 %     128.5 %     131.5 %
 - Total loans to total assets
     83.4 %     83.2 %     83.2 %     83.6 %     82.6 %
 - Interest bearing deposits to total assets
     62.1 %     59.2 %     61.0 %     61.3 %     59.0 %
 
WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 9 of 23
 
The following table reconciles GAAP net income to core earnings, including per-share figures.
 
Table 1
  
West Coast Bancorp
  
   
GAAP net income (loss) to core earnings reconciliation
  
                         
   
For the three months ended Dec. 31,
    
For the twelve months ended Dec. 31,
  
(Dollars in thousands, unaudited)
  
2008
    
2007
    
2008
    
2007
  
Net income (loss)
   $ (8,197 )   $ (7,487 )   $ (5,829 )   $ 16,842  
  Add: impairment charge on securities, net of tax*
     -       -       4,120       -  
Core earnings (loss)
   $ (8,197 )   $ (7,487 )   $ (1,709 )   $ 16,842  
*Federal income tax provision applied at 35%.
                                
                                 
Earnings (loss) per diluted share
                                
GAAP
   $ (0.53 )   $ (0.48 )   $ (0.38 )   $ 1.05  
Core
   $ (0.53 )   $ (0.48 )   $ (0.11 )   $ 1.05  
 
The following table reconciles return on average equity to return on average equity, tangible.
 
Table 2
  
West Coast Bancorp
  
   
Return on average equity tangible reconciliation1
  
                         
   
For the three months ended Dec. 31,
    
For the twelve months ended Dec. 31,
  
(Dollars in thousands, unaudited)
  
2008
    
2007
    
2008
    
2007
  
Net income (loss)
   $ (8,197 )   $ (7,487 )   $ (5,829 )   $ 16,842  
  Add: intangible asset amortization, net of tax*
     64       77       284       351  
Net income (loss), tangible
   $ (8,133 )   $ (7,410 )   $ (5,545 )   $ 17,193  
                                 
Average shareholders' equity
   $ 200,715     $ 219,890     $ 206,526     $ 212,349  
  Less: average intangibles
     (14,102 )     (14,549 )     (14,259 )     (14,740 )
Average shareholders' equity, tangible
   $ 186,613     $ 205,341     $ 192,267     $ 197,609  
*Federal income tax provision applied at 35%.
                                
                                 
Return on average equity
     -16.2 %     -13.5 %     -2.8 %     7.9 %
Return on average equity, tangible
     -17.3 %     -14.3 %     -2.9 %     8.7 %
 
1 Management uses return on equity, tangible internally and has disclosed it to investors based on its belief that the figure makes it easier to compare the Company's performance to other financial institutions that do not have merger-related intangible assets and is commonly used in the industry. Ratios have been annualized where appropriate.
 
 WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 10 of 23
 
The following table presents information with respect to the Company’s loan portfolio.
 
Table 3
  
West Coast Bancorp
  
   
Period End Loan Portfolio By Category
  
   
Dec. 31,
    
% of
    
Dec. 31,
    
% of
    
Change
    
Sept. 30,
    
% of
  
(Dollars in thousands, unaudited)
  
2008
    
loans
    
2007
    
loans
    
Amount
    
%
    
2008
    
loans
  
Commercial loans
   $ 482,405       23 %   $ 504,101       23 %   $ (21,696 )     -4 %   $ 498,715       24 %
  Comercial real estate construction
     92,414       4 %     90,671       4 %     1,743       2 %     88,717       4 %
  Residential real estate construction
     192,735       9 %     427,317       20 %     (234,582 )     -55 %     242,116       11 %
Total real estate construction loans
     285,149       14 %     517,988       24 %     (232,839 )     -45 %     330,833       16 %
    Standard mortgages
     87,628       4 %     86,901       4 %     727       1 %     89,348       4 %
    Nonstandard mortgages
     32,597       2 %     7,495       0 %     25,102       335 %     33,820       2 %
    Home equity
     272,983       13 %     236,407       11 %     36,576       15 %     266,385       13 %
Total real estate mortgage
     393,208       19 %     330,803       15 %     62,405       19 %     389,553       18 %
Commercial real estate loans
     882,092       43 %     796,622       37 %     85,470       11 %     867,902       41 %
Installment and other consumer loans
     21,942       1 %     23,155       1 %     (1,213 )     -5 %     22,514       1 %
 Total loans
   $ 2,064,796             $ 2,172,669             $ (107,873 )     -5 %   $ 2,109,517          
                                                                 
Two-step residential construction
                                                                
    loans
   $ 53,084       3 %   $ 262,952       12 %   $ (209,868 )     -80 %   $ 97,894       5 %
Total loans other than two-step loans
     2,011,712       97 %     1,909,717       88 %     101,995       5 %     2,011,623       95 %
  Total loans
   $ 2,064,796       100 %   $ 2,172,669       100 %   $ (107,873 )     -5 %   $ 2,109,517       100 %
 
 WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 11 of 23
 
The following tables present information with respect to the change in the Company’s total allowance for credit losses.
 
Table 4
  
West Coast Bancorp
  
   
Total Loan Portfolio
  
   
Allowance For Credit Losses and Net Charge-offs
  
   
Quarter ended
    
Quarter ended
    
Quarter ended
  
   
December 31,
    
December 31,
    
September 30,
  
(Dollars in thousands, unaudited)
  
2008
    
2007
    
2008
  
Allowance for credit losses, beginning of period
   $ 34,444     $ 28,506     $ 37,045  
  Provision for credit losses
     16,517       29,956       9,125  
                         
Loan charge-offs:
                        
  Commercial
     3,208       1,332       515  
    Commercial real estate construction
     1,422       -       -  
    Residential real estate construction
     11,475       1,867       10,691  
  Total real estate construction
     12,897       1,867       10,691  
    Standard mortgages
     1,640       -       76  
    Nonstandard mortgages
     2,495       -       405  
    Home equity
     121       64       100  
  Total real estate mortgage
     4,256       64       581  
  Commercial real estate
     782       -       44  
  Installment and consumer
     29       72       383  
  Overdraft
     401       302       322  
  Total loan charge-offs
     21,573       3,637       12,536  
Loan recoveries:
                        
  Commercial
     122       1       49  
    Commercial real estate construction
     -       -       -  
    Residential real estate construction
     319       -       715  
  Total real estate construction
     319       -       715  
    Standard mortgages
     -       -       -  
    Nonstandard mortgages
     38       -       -  
    Home equity
     2       -       (22 )
  Total real estate mortgage
     40       -       (22 )
  Commercial real estate
     -       -       -  
  Installment and consumer
     15       23       9  
  Overdraft
     50       54       59  
  Total loan recoveries
     546       78       810  
    Net charge-offs
     21,027       3,559       11,726  
                         
Total allowance for credit losses
   $ 29,934     $ 54,903     $ 34,444  
Components of allowance for credit losses:
                        
  Allowance for loan losses
   $ 28,920     $ 46,917     $ 33,498  
  Reserve for unfunded commitments
     1,014       7,986       946  
Total allowance for credit losses
   $ 29,934     $ 54,903     $ 34,444  
                         
Net loan charge-offs to average loans (annualized)
     4.00 %     0.65 %     2.19 %
Allowance for loan losses to total loans
     1.40 %     2.16 %     1.59 %
Allowance for credit losses to total loans
     1.45 %     2.53 %     1.63 %
Allowance for loan losses to nonperforming loans
     23 %     178 %     25 %
Allowance for credit losses to nonperforming loans
     23 %     208 %     25 %
 
WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 12 of 23
 
Table 5
  
West Coast Bancorp
  
   
Total Loan Portfolio
  
   
Allowance For Credit Losses and Net Charge-offs
  
   
Year ended
    
Year ended
  
   
December 31,
    
December 31,
  
(Dollars in thousands, unaudited)
  
2008
    
2007
  
Allowance for credit losses, beginning of period
   $ 54,903     $ 23,017  
  Provision for credit losses
     40,367       38,956  
                 
Loan charge-offs:
                
  Commercial
     6,464       3,798  
    Commercial real estate construction
     1,422       -  
    Residential real estate construction
     52,588       2,540  
  Total real estate construction
     54,010       2,540  
    Standard mortgages
     1,811       -  
    Nonstandard mortgages
     3,036       -  
    Home equity
     249       71  
  Total real estate mortgage
     5,096       71  
  Commercial real estate
     826       -  
  Installment and consumer
     531       254  
  Overdraft
     1,328       1,050  
  Total loan charge-offs
     68,255       7,713  
Loan recoveries:
                
  Commercial
     203       269  
    Commercial real estate construction
     -       -  
    Residential real estate construction
     2,339       7  
  Total real estate construction
     2,339       7  
    Standard mortgages
     -       -  
    Nonstandard mortgages
     38       -  
    Home equity
     32       33  
  Total real estate mortgage
     70       33  
  Commercial real estate
     -       2  
  Installment and consumer
     78       112  
  Overdraft
     229       220  
  Total loan recoveries
     2,919       643  
    Net charge-offs
     65,336       7,070  
                 
Total allowance for credit losses
   $ 29,934     $ 54,903  
Components of allowance for credit losses:
                
  Allowance for loan losses
   $ 28,920     $ 46,917  
  Reserve for unfunded commitments
     1,014       7,986  
Total allowance for credit losses
   $ 29,934     $ 54,903  
                 
Net loan charge-offs to average loans
     3.04 %     0.34 %
Allowance for loan losses to total loans
     1.40 %     2.16 %
Allowance for credit losses to total loans
     1.45 %     2.53 %
Allowance for loan losses to nonperforming loans
     23 %     178 %
Allowance for credit losses to nonperforming loans
     23 %     208 %
 
WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 13 of 23
 
The following table presents information about the Company’s total nonperforming assets and delinquent loans.
 
Table 6
  
West Coast Bancorp
  
   
Total Loan Portfolio
  
   
Nonperforming Assets and Delinquencies
  
                   
   
December 31,
    
December 31,
    
September 30,
  
(Dollars in thousands, unaudited)
  
2008
    
2007
    
2008
  
Loans on nonaccrual status:
                  
Commercial
   $ 6,250     $ 2,401     $ 6,650  
Real estate construction:
                        
  Commercial real estate construction
     2,922       -       -  
  Residential real estate construction
     90,712       22,121       104,015  
Total real estate construction
     93,634       22,121       104,015  
Real estate mortgage:
                        
  Standard mortgage
     8,283       552       6,384  
  Nonstandard mortgage
     15,229       -       11,834  
  Home equity
     1,043       -       644  
Total real estate mortgage
     24,555       552       18,862  
Commercial real estate
     3,145       1,353       5,636  
Installment and consumer
     6       -       14  
Total nonaccrual loans
     127,590       26,427       135,177  
90 days past due not on nonaccrual
     -       -       -  
  Total non-performing loans
     127,590       26,427       135,177  
                         
Other real estate owned
     70,110       3,255       48,121  
Total non-performing assets
   $ 197,700     $ 29,682     $ 183,298  
                         
Non-performing loans to total loans
     6.18 %     1.22 %     6.41 %
Non-performing assets to total assets
     7.86 %     1.12 %     7.12 %
 
                       
   
Total Loan Portfolio
  
   
Delinquent loans 30-89 days past due as a % of loan category
  
                         
   
December 31,
    
December 31,
    
September 30,
  
(Dollars in thousands, unaudited)
  
2008
    
2007
    
2008
  
Commercial loans
     0.58 %     1.21 %     0.06 %
Real estate construction loans
     0.68 %     7.13 %     3.69 %
Real estate mortgage loans
     0.49 %     0.16 %     0.53 %
Commercial real estate loans
     0.15 %     0.10 %     0.04 %
Installment and other consumer loans
     0.36 %     0.58 %     0.49 %
                         
Delinquent loans 30-89 days past due:
                        
Two-step residential construction loans
   $ 1,242     $ 36,778     $ 4,089  
Total loans other than two-step loans
     6,850       7,706       10,919  
 Total delinquent loans 30-89 days past due, not in nonaccrual status
   $ 8,092     $ 44,484     $ 15,008  
 
WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 14 of 23
 
The following table presents information about the Company’s activity in other real estate owned.
 
Table 7
  
West Coast Bancorp
  
   
Other real estate owned ("OREO") activity
  
   
Three months
          
Three months
          
Three months
        
   
ended Dec. 31,
    
Number
    
ended Dec. 31,
    
Number
    
ended Sept. 30,
    
Number
  
(Dollars in thousands, unaudited)
  
2008
    
of properties
    
2007
    
of properties
    
2008
    
of properties
  
Beginning balance
   $ 48,121       189     $ 1,183       6     $ 27,892       108  
  Additions to OREO1
     34,066       129       2,072       9       26,965       103  
  Disposition of OREO
     (8,655 )     (30 )     -       -       (5,618 )     (22 )
  Valuation adjustments to OREO
     (3,422 )             -               (1,118 )        
Ending balance
   $ 70,110       288     $ 3,255       15     $ 48,121       189  
                                                 
   
OREO activity related to two-step loans
  
   
Three months
            
Three months
            
Three months
          
   
ended Dec. 31,
    
Number
    
ended Dec. 31,
    
Number
    
ended Sept. 30,
    
Number
  
(Dollars in thousands, unaudited)
  
2008
    
of properties
    
2007
    
of properties
    
2008
    
of properties
  
Beginning balance
   $ 44,675       173     $ 1,183       5     $ 26,460       101  
  Additions to OREO1
     26,541       106       2,072       9       24,200       91  
  Disposition of OREO
     (8,271 )     (28 )     -       -       (4,867 )     (19 )
  Valuation adjustments to OREO
     (2,923 )             -               (1,118 )        
Ending balance
   $ 60,022       251     $ 3,255       14     $ 44,675       173  
                                                 
   
OREO activity related to loans other than two-step loans
  
   
Three months
            
Three months
            
Three months
          
   
ended Dec. 31,
    
Number
    
ended Dec. 31,
    
Number
    
ended Sept. 30,
    
Number
  
(Dollars in thousands, unaudited)
  
2008
    
of properties
    
2007
    
of properties
    
2008
    
of properties
  
Beginning balance
   $ 3,446       16     $ -       1     $ 1,432       7  
  Additions to OREO1
     7,525       23       -       -       2,765       12  
  Disposition of OREO
     (384 )     (2 )     -       -       (751 )     (3 )
  Valuation adjustments to OREO
     (499 )             -       -       -          
Ending balance
   $ 10,088       37     $ -       1     $ 3,446       16  
 
1 Includes capitalized cost of OREO.
 
 WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 15 of 23
 
The following table presents information with respect to two-step residential construction related OREO activity and two-step short sales.
 
Table 8
                                    
(Dollars in thousands)
  
Two-step related OREO activity
    
Two-step short sales
    
Total two-step OREO property sales and short sales
  
Quarterly 2008:
  
Amount
    
Number
    
Amount
    
Number
    
Amount
    
Number
  
Beginning balance January 1
   $ 3,255       14                          
  Additions to OREO
     2,461       10                          
  Capitalized improvements
     246                                  
  Valuation adjustments
     -                                  
  Disposition of OREO properties and short sales
     (274 )     (1 )   $ (286 )     (1 )   $ (560 )     (2 )
Ending balance March 31
   $ 5,688       23                                  
                                                 
  Additions to OREO
     23,546       87                                  
  Capitalized improvements
     188                                          
  Valuation adjustments
     (245 )                                        
  Disposition of OREO properties and short sales
     (2,717 )     (9 )   $ (4,368 )     (14 )   $ (7,085 )     (23 )
Ending balance June 30
   $ 26,460       101                                  
                                                 
  Additions to OREO
     24,025       91                                  
  Capitalized improvements
     175                                          
  Valuation adjustments
     (1,118 )                                        
  Disposition of OREO properties and short sales
     (4,867 )     (19 )   $ (3,200 )     (12 )   $ (8,067 )     (31 )
Ending balance September 30
   $ 44,675       173                                  
                                                 
  Additions to OREO
     25,831       106                                  
  Capitalized improvements
     710                                          
  Valuation adjustments
     (2,923 )                                        
  Disposition of OREO properties and short sales
     (8,271 )     (28 )   $ (3,594 )     (13 )   $ (11,865 )     (41 )
Ending balance December 31
   $ 60,022       251                                  
                                                 
Full year 2008:
                                                
Beginning balance January 1
   $ 3,255       14                                  
  Additions to OREO
     75,863       294                                  
  Capitalized improvements
     1,319                                          
  Valuation adjustments
     (4,286 )                                        
  Disposition of OREO properties and short sales
     (16,129 )     (57 )   $ (11,448 )     (40 )   $ (27,577 )     (97 )
Ending balance December 31
   $ 60,022       251                                  
 
WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 16 of 23
 
The following table presents information with respect to the change in the Company’s allowance for credit losses in the two-step residential construction loan portfolio.
 
Table 9
  
West Coast Bancorp
  
   
Two-Step Loan Portfolio
  
   
Allowance For Credit Losses and Net Charge-offs Two-Step Portfolio
  
   
Quarter ended
    
Quarter ended
    
Quarter ended
  
   
December 31,
    
December 31,
    
September 30,
  
(Dollars in thousands, unaudited)
  
2008
    
2007
    
2008
  
Allowance for credit losses, beginning of period
   $ 1,502     $ 5,196     $ 5,280  
  Provision for credit losses
     4,776       27,736       1,997  
  Charge-offs
     6,176       1,867       6,490  
  Recoveries
     319       -       715  
    Net charge-offs
     5,857       1,867       5,775  
                         
Total allowance for credit losses
   $ 421     $ 31,065     $ 1,502  
                         
Components of allowance for credit losses
                        
  Allowance for loan losses
   $ 420     $ 23,917     $ 1,472  
  Reserve for unfunded commitments
     1       7,148       30  
Total allowance for credit losses
   $ 421     $ 31,065     $ 1,502  
                         
Net loan charge-offs to average total loans (annualized)
     1.11 %     0.34 %     1.08 %
Allowance for two-step loan losses to nonperforming two-step loans1
     0.84 %     116.41 %     1.77 %
Allowance for two-step credit losses to total two-step loans
     0.79 %     11.81 %     1.53 %
Allowance for two-step loan losses to total two-step loans
     0.79 %     9.10 %     1.50 %
 
1 Two-step nonaccrual loans are net of chargeoffs previously taken against the balance.
 
   
Year to date
    
Year to date
          
   
December 31,
    
December 31,
          
(Dollars in thousands, unaudited)
  
2008
    
2007
          
Allowance for credit losses, beginning of period
   $ 31,065     $ 2,618          
  Provision for credit losses
     9,500       30,980          
  Charge-offs
     42,483       2,540          
  Recoveries
     2,339       7          
    Net Charge-offs
     40,144       2,533          
                         
Total allowance for credit losses
   $ 421     $ 31,065          
                         
Components of allowance for credit losses
                        
  Allowance for loan losses
   $ 420     $ 23,917          
  Reserve for unfunded commitments
     1       7,148          
Total allowance for credit losses
   $ 421     $ 31,065          
                         
Net loan charge-offs to average total loans      1.87 %     0.12 %        
 
 
WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 17 of 23
 
The following table presents information about the Company’s nonperforming assets and delinquencies in the two-step residential construction loan portfolio.
 
Table 10
  
West Coast Bancorp
  
   
Two-Step Residential Construction Loans
  
   
Nonperforming Assets and Delinquencies
  
                   
   
December 31,
    
December 31,
    
September 30,
  
(Dollars in thousands, unaudited)
  
2008
    
2007
    
2008
  
Nonaccrual two-step loans
   $ 49,960     $ 20,545     $ 82,990  
90 day past due and accruing interest
     -       -       -  
  Total nonperforming two-step loans
     49,960       20,545       82,990  
                         
Other real estate owned two-step
     60,022       3,255       44,675  
Total nonperforming two-step assets
   $ 109,982     $ 23,800     $ 127,665  
                         
Delinquent two-step loans 30-89 days past due, not in nonaccrual status
   $ 1,242     $ 36,778     $ 4,089  
                         
Nonperforming two-step loans to total two-step loans
     94.11 %     7.81 %     84.78 %
Nonperforming two-step assets to total assets
     4.37 %     0.90 %     4.96 %
Delinquent two-step loans to total two-step loans
     2.34 %     13.99 %     4.18 %
 
WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 18 of 23
 
The following table presents information with respect to the change in the Company’s allowance for credit losses for the loans other than two-step residential construction loans.
 
Table 11
  
West Coast Bancorp
  
   
Other than two-step loan portfolio
  
   
Allowance For Credit Losses and Net Charge-offs other than two-step loans
  
   
Quarter ended
    
Quarter ended
    
Quarter ended
  
   
December 31,
    
December 31,
    
September 30,
  
(Dollars in thousands, unaudited)
  
2008
    
2007
    
2008
  
Allowance for credit losses, beginning of period
   $ 32,942     $ 23,310     $ 31,765  
  Provision for credit losses
     11,741       2,220       7,128  
                         
Loan charge-offs:
                        
  Commercial
     3,208       1,332       515  
    Commercial real estate construction
     1,422       -       -  
    Residential real estate construction
     5,299       -       4,201  
  Total real estate construction
     6,721       -       4,201  
    Standard mortgages
     1,640       -       76  
    Nonstandard mortgages
     2,495       -       405  
    Home equity
     121       64       100  
  Total real estate mortgage
     4,256       64       581  
  Commercial real estate
     782       -       44  
  Installment and consumer
     29       72       383  
  Overdraft
     401       302       322  
  Total loan charge-offs
     15,397       1,770       6,046  
Loan recoveries:
                        
  Commercial
     122       1       49  
    Commercial real estate construction
     -       -       -  
    Residential real estate construction
     -       -       -  
  Total real estate construction
     -       -       -  
    Standard mortgages
     -       -       -  
    Nonstandard mortgages
     38       -       -  
    Home equity
     2       -       (22 )
  Total real estate mortgage
     40       -       (22 )
  Commercial real estate
     -       -       -  
  Installment and consumer
     15       23       9  
  Overdraft
     50       54       59  
  Total loan recoveries
     227       78       95  
    Net charge-offs
     15,170       1,692       5,951  
                         
Total allowance for credit losses
   $ 29,513     $ 23,838     $ 32,942  
Components of allowance for credit losses:
                        
  Allowance for loan losses
   $ 28,500     $ 23,000     $ 32,026  
  Reserve for unfunded commitments
     1,013       838       916  
Total allowance for credit losses
   $ 29,513     $ 23,838     $ 32,942  
                         
Net loan charge-offs to average loans (annualized)
     2.88 %     0.31 %     1.11 %
Allowance for loan losses to total loans
     1.42 %     1.20 %     1.59 %
Allowance for credit losses to total loans
     1.47 %     1.25 %     1.64 %
Allowance for loan losses to nonperforming loans
     37 %     391 %     61 %
Allowance for credit losses to nonperforming loans
     38 %     405 %     63 %
 
WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 19 of 23
 
Table 12
  
West Coast Bancorp
  
   
Other than two-step loan portfolio
  
   
Allowance For Credit Losses and Net Charge-offs other than two-step loans
  
   
Year ended
    
Year ended
  
   
December 31,
    
December 31,
  
(Dollars in thousands, unaudited)
  
2008
    
2007
  
Allowance for credit losses, beginning of period
   $ 23,838     $ 20,399  
  Provision for credit losses
     30,867       7,976  
                 
Loan charge-offs:
                
  Commercial
     6,464       3,798  
    Commercial real estate construction
     1,422       -  
    Residential real estate construction
     10,105       -  
  Total real estate construction
     11,527       -  
    Standard mortgages
     1,811       -  
    Nonstandard mortgages
     3,036       -  
    Home equity
     249       71  
  Total real estate mortgage
     5,096       71  
  Commercial real estate
     826       -  
  Installment and consumer
     531       254  
  Overdraft
     1,328       1,050  
  Total loan charge-offs
     25,772       5,173  
Loan recoveries:
                
  Commercial
     203       269  
    Commercial real estate construction
     -       -  
    Residential real estate construction
     -       -  
  Total real estate construction
     -       -  
    Standard mortgages
     -       -  
    Nonstandard mortgages
     38       -  
    Home equity
     32       33  
  Total real estate mortgage
     70       33  
  Commercial real estate
     -       2  
  Installment and consumer
     78       112  
  Overdraft
     229       220  
  Total loan recoveries
     580       636  
    Net charge-offs
     25,192       4,537  
                 
Total allowance for credit losses
   $ 29,513     $ 23,838  
Components of allowance for credit losses:
                
  Allowance for loan losses
   $ 28,500     $ 23,000  
  Reserve for unfunded commitments
     1,013       838  
Total allowance for credit losses
   $ 29,513     $ 23,838  
                 
Net loan charge-offs to average loans
     1.17 %     0.22 %
Allowance for loan losses to total loans
     1.42 %     1.20 %
Allowance for credit losses to total loans
     1.47 %     1.25 %
Allowance for loan losses to nonperforming loans
     37 %     391 %
Allowance for credit losses to nonperforming loans
     38 %     405 %
 
WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 20 of 23
 
The following table presents information about the Company’s nonperforming assets and delinquencies in the loan portfolio excluding two-step residential construction loans.
 
Table 13
  
West Coast Bancorp
  
   
Loans Other than Two-Step Loans
  
   
Nonperforming Assets and Delinquencies
  
                   
   
December 31,
    
December 31,
    
September 30,
  
(Dollars in thousands, unaudited)
  
2008
    
2007
    
2008
  
Loans on nonaccrual status:
                  
Commercial
   $ 6,250     $ 2,401     $ 6,650  
Real estate construction:
                        
  Commercial real estate construction
     2,922       -       -  
  Residential real estate construction
     40,752       1,576       21,025  
Total real estate construction
     43,674       1,576       21,025  
Real estate mortgage:
                        
  Standard mortgage
     8,283       552       6,384  
  Nonstandard mortgage
     15,229       -       11,834  
  Home equity
     1,043       -       644  
Total real estate mortgage
     24,555       552       18,862  
Commercial real estate
     3,145       1,353       5,636  
Installment and consumer
     6       -       14  
Total nonaccrual loans
     77,630       5,882       52,187  
90 days past due not on nonaccrual
     -       -       -  
  Total non-performing loans
     77,630       5,882       52,187  
                         
Other real estate owned
     10,088       -       3,446  
Total non-performing assets
   $ 87,718     $ 5,882     $ 55,633  
                         
Delinquent non two-step loans 30-89 days past due, not in nonaccrual status
   $ 6,850     $ 7,706     $ 10,919  
                         
Nonperforming non two-step loans to total non two-step loans
     3.86 %     0.31 %     2.59 %
Nonperforming non two-step assets to total assets
     3.49 %     0.22 %     2.16 %
Delinquent non two-step loans to total non two-step loans
     0.34 %     0.40 %     0.54 %
 
WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 21 of 23
 
The following table shows the components of our construction and land loans outside the two-step portfolio as of the dates shown:
 
Table 14
  
West Coast Bancorp
  
   
Construction and land loans outside the two-step portfolio
  
                                     
(Dollars in thousands, unaudited)
  
December 31, 2008
    
December 31, 2007
    
September 30, 2008
  
   
Amount
    
Percent2
    
Amount
    
Percent2
    
Amount
    
Percent2
  
Land loans1
   $ 46,286       17 %   $ 44,508       15 %   $ 44,805       16 %
Residential construction loans other than two-step loans
     136,024       49 %     165,359       55 %     144,517       52 %
Commercial construction loans
     92,616       34 %     90,671       30 %     88,630       32 %
  Total construction and land loans other than two-step loans
   $ 274,926       100 %   $ 300,538       100 %   $ 277,952       100 %
                                                 
Components of residential construction and land loans other than two-step loans:
                                          
Land loans1
   $ 23,495       15 %   $ 23,461       12 %   $ 24,038       14 %
Site development
     64,728       40 %     84,620       45 %     71,125       42 %
Vertical construction
     71,296       45 %     80,739       43 %     73,392       44 %
  Total residential construction and land loans other than two-step loans
   $ 159,519       100 %     188,820       100 %   $ 168,555       100 %
                                                 
Components of commercial construction and land loans:
                                                
Land loans1
   $ 22,791       20 %   $ 21,047       19 %   $ 20,767       19 %
Site development
     607       1 %     -       0 %     77       0 %
Vertical construction
     92,009       79 %     90,671       81 %     88,553       81 %
  Total commercial construction and land loans
   $ 115,407       100 %   $ 111,718       100 %   $ 109,397       100 %
                                                 
Components of total construction and land loans other than two-step loans:
                                          
Land loans1
   $ 46,286       17 %   $ 44,508       15 %   $ 44,805       16 %
Site development
     65,335       24 %     84,620       28 %     71,202       26 %
Vertical construction
     163,305       59 %     171,410       57 %     161,945       58 %
  Total construction and land loans other than two-step loans
   $ 274,926       100 %   $ 300,538       100 %   $ 277,952       100 %
 
1 Land loans represent balances that are carried in the Company's residential real estate mortgage commercial real estate loan portfolios.
2 Calculations have been based on more detailed information and therefore may not recompute exactly due to rounding.
 
WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 22 of 23
 
The following table shows the components of our nonaccrual construction and land loans outside the two-step portfolio as of the dates shown.
 
Table 15
  
West Coast Bancorp
   
Nonaccrual construction and land loans oustide the two-step portfolio
  
(Dollars in thousands, unaudited)
  
December 31, 2008
    
December 31, 2007
    
September 30, 2008
  
   
Amount
    
Percent of
 loan
category2
  
Amount
    
Percent of loan category2
    
Amount
    
Percent of loan category2
  
Land loans1
   $ 5,794       2.11 %   $ 306       0.10 %   $ 5,308       1.91 %
Residential construction loans other than two-step loans
     36,994       13.46 %     1,576       0.52 %     21,025       7.56 %
Commercial construction loans
     2,922       1.06 %     -       0.00 %     -       0.00 %
  Total nonaccrual construction and land loans other than two-step loans
   $ 45,710       16.63 %   $ 1,882       0.63 %   $ 26,333       9.47 %
                                                 
Components of nonaccrual residential construction and land loans other than two-step loans:
                                
Land loans1
   $ 5,608       3.52 %   $ 306       0.16 %   $ 5,308       3.15 %
Site development
     27,291       17.11 %     -       0.00 %     13,731       8.15 %
Vertical construction
     9,703       6.08 %     1,576       0.83 %     7,294       4.33 %
  Total nonaccrual residential construction and land loans other than two-step loans
   $ 42,602       26.71 %   $ 1,882       1.00 %   $ 26,333       15.63 %
                                                 
Components of nonaccrual commercial construction and land loans:
                                          
Land loans1
     186       0.16 %     -       0.00 %     -       0.00 %
Site development
     -       0.00 %     -       0.00 %     -       0.00 %
Vertical construction
     2,922       2.53 %     -       0.00 %     -       0.00 %
  Total nonaccrual commercial construction and land loans
   $ 3,108       2.69 %   $ -       0.00 %   $ -       0.00 %
                                                 
Components of total nonaccrual construction and land loans other than two-step loans:
                                  
Land loans1
   $ 5,794       2.11 %   $ 306       0.10 %   $ 5,308       1.91 %
Site development
     27,291       9.93 %     -       0.00 %     13,731       4.94 %
Vertical construction
     12,625       4.59 %     1,576       0.52 %     7,294       2.62 %
  Total nonaccrual construction and land loans other than two-step loans
   $ 45,710       16.63 %   $ 1,882       0.63 %   $ 26,333       9.47 %
 
1 Land loans represent balances that are carried in the Company's residential real estate mortgage and commercial real estate loan portfolios.
2 Calculations have been based on more detailed information and therefore may not recompute exactly due to rounding.
 
 
 
WEST COAST BANCORP REPORTS FOURTH QUARTER 2008 EARNINGS
JANUARY 19, 2008
Page 23 of 23
 
The following table shows the components of our delinquent construction and land loans outside the two-step portfolio as of the dates shown.
 
Table 16
  
West Coast Bancorp
  
   
Delinquent construction and land loans outside the two-step loan portfolio
  
(Dollars in thousands, unaudited)
  
December 31, 2008
    
December 31, 2007
    
September 30, 2008
  
   
Amount
    
Percent of loan category2
    
Amount
    
Percent of loan category2
    
Amount
    
Percent of loan category2
  
Land loans1
   $ 638       0.23 %   $ 487       0.16 %   $ 461       0.17 %
Residential construction loans other than two-step loans
     698       0.50 %     163       0.06 %     7,241       2.61 %
Commercial construction loans
     -       0.00 %     -       0.00 %     807       0.29 %
Total 30-89 days past due construction loans other than two-step loans
   $ 1,336       0.49 %   $ 650       0.22 %   $ 8,509       3.07 %
                                                 
Components of 30-89 days past due residential construction and land loans other than two-step loans:
                          
Land loans1
   $ 165       0.10 %   $ 487       0.26 %   $ 461       0.27 %
Site development
     131       0.08 %     -       0.00 %     5,586       3.31 %
Vertical construction
     567       0.36 %     163       0.09 %     1,655       0.98 %
Total 30-89 days past due residential construction and land loans other than two-step loans
   $ 863       0.54 %   $ 650       0.34 %   $ 7,702       4.56 %
                                                 
Components of 30-89 days past due commercial construction and land loans:
                                  
Land loans1
   $ 473       0.41 %   $ -       0.00 %   $ -       0.00 %
Site development
     -       0.00 %     -       0.00 %     -       0.00 %
Vertical construction
     -       0.00 %     -       0.00 %     807       0.74 %
Total 30-89 days past due commercial construction and land loans
   $ 473       0.41 %   $ -       0.00 %   $ 807       0.74 %
                                                 
Components of total 30-89 days past due construction and land loans other than two-step loans:
                          
Land loans1
   $ 638       0.23 %   $ 487       0.16 %   $ 461       0.17 %
Site development
     131       0.05 %     -       0.00 %     5,586       2.01 %
Vertical construction
     567       0.21 %     163       0.05 %     2,462       0.89 %
Total 30-89 days past due construction and land loans other than two-step loans
   $ 1,336       0.49 %   $ 650       0.22 %   $ 8,509       3.07 %
 
1 Land loans represent balances that are carried in the Company's residential real estate mortgage and commercial real estate loan portfolios.
2 Calculations have been based on more detailed information and therefore may not recompute exactly due to rounding.