WEST COAST BANCORP 
By
(Dollars in
thousands,
except per GAAP CORE*
share data, December 31, December 31,
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.
"Despite a very challenging environment, West Coast Bank improved its
total capital ratio to approximately 10.93% at
Financial Results:
The year end 2008 total loan balance of
Fourth quarter 2008 net interest income declined
Full year 2008 net interest income decreased
Total non-interest income of
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
Fourth quarter 2008 total non-interest expense of
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
Risk based capital ratios
Capital Ratios
(Unaudited) 12/31/08 12/31/07 09/30/08
Excess over
Well well
capitalized capitalized
West Coast Bancorp Ratio minimum 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%
Credit Quality:
The Company recorded a fourth quarter 2008 total provision for credit
losses of
The provision for credit losses associated with loans other than two-step
loans was
At
Total loan net charge-offs in fourth quarter 2008 were
For the full year 2008, the provision for credit losses for other than
two-step loans measured
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)
Total
Total Nonaccrual Accruing accruing
two-step two-step two-step two-step loan
Period ended loans loans loans commitments
12/31/2007 $262,952 $20,545 $242,407 $320,991
3/31/2008 211,406 88,784 122,622 156,823
6/30/2008 145,703 98,728 46,975 59,603
9/30/2008 97,894 82,990 14,904 16,943
12/31/2008 53,084 49,960 3,124 3,276
Allowance
for credit
Allowance losses on
for credit two-step
losses on loans as a %
Allowance two-step of total
for credit loans as a % accruing
losses on of accruing two-step loan
Period ended two-step loans two-step loans commitments
12/31/2007 $31,065 12.8% 9.7%
3/31/2008 11,812 9.6% 7.5%
6/30/2008 5,280 11.2% 8.9%
9/30/2008 1,502 10.1% 8.9%
12/31/2008 421 13.5% 12.9%
The allowance for credit losses associated with loans other than two-step
loans was
Total non-performing assets were
Nonperforming assets, excluding the two-step portfolio, increased by
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
At year end 2008 the total non two-step delinquent loans were
Other:
The Company will hold a Webcast conference call
West Coast Bancorp, one of Oregon Business Magazine's 100 Best Companies
to Work For, is a Northwest bank holding company with
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
West Coast Bancorp
Consolidated Statements of Income (Loss)
(Unaudited)
(Dollars and shares in
thousands, except per Three months ended Twelve months ended
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
Consolidated Balance Sheets
(Dollars and shares in thousands, December 31, December 31, September 30,
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
Summary Financial Information
(Dollars in thousands except for per
share data, unaudited) Fourth Fourth Third
(all rates have been annualized where Quarter Quarter Quarter
appropriate) 2008 2007 2008
PERFORMANCE RATIOS
- Return on average assets (1.30%) (1.14%) (0.36%)
- Return on average common equity (16.25%) (13.51%) (4.47%)
- Return on average tangible equity (17.34%) (14.31%) (4.66%)
- Non-interest income to average assets 0.68% 1.31% 0.17%
- Non-interest expense to average assets 3.46% 3.06% 3.45%
- Efficiency ratio, tax equivalent 84.4% 54.0% 70.4%
NET INTEREST MARGIN
- Yield on average interest-earning assets 5.57% 7.39% 5.85%
- Rate on average interest-bearing
liabilities 2.36% 3.66% 2.36%
- Net interest spread 3.21% 3.73% 3.49%
- Net interest margin 3.70% 4.62% 4.02%
AVERAGE ASSETS
- Investment securities $212,900 $273,328 $228,382
- Commercial loans 491,663 504,330 502,781
- Real estate construction loans 311,117 525,110 371,687
- Real estate mortgage loans 392,570 314,497 383,214
- Commercial real estate loans 875,211 804,585 851,849
- Installment and other consumer loans 22,364 23,320 23,220
- Total loans 2,092,925 2,171,842 2,132,751
- Total interest earning assets 2,318,140 2,468,863 2,393,207
- Other assets 190,705 140,963 170,466
- Total assets $2,508,845 $2,609,826 $2,563,673
AVERAGE LIABILITIES & EQUITY
- Demand deposits $467,768 $492,636 $482,780
- Savings and Interest bearing demand 338,584 367,359 348,008
- Money market 636,013 676,908 672,051
- Time deposits 584,137 573,967 543,451
- Total deposits 2,026,502 2,110,870 2,046,290
- Borrowings and subordinated debentures 276,336 251,868 300,258
- Total interest bearing liabilities 1,835,069 1,870,103 1,863,768
- Other liabilities 473,061 519,833 493,545
- Total liabilities 2,308,130 2,389,936 2,357,313
- Common equity 200,715 219,890 206,360
- Total average liabilities and
common equity $2,508,845 $2,609,826 $2,563,673
AVERAGE ASSET/LIABILITY RATIOS
- Stockholders' equity to total assets 8.00% 8.43% 8.05%
- Interest earning assets to interest
bearing liabilities 126.3% 137.4% 128.4%
- Total loans to total assets 83.4% 83.2% 83.2%
- Interest bearing deposits to total
assets 62.1% 59.2% 61.0%
West Coast Bancorp
Summary Financial Information
(Dollars in thousands except for per
share data, unaudited)
(all rates have been annualized where Year to date Year to date
appropriate) 2008 2007
PERFORMANCE RATIOS
- Return on average assets (0.23%) 0.66%
- Return on average common equity (2.82%) 7.93%
- Return on average tangible equity (2.88%) 8.69%
- Non-interest income to average assets 0.96% 1.32%
- Non-interest expense to average assets 3.49% 3.36%
- Efficiency ratio, tax equivalent 72.2% 56.9%
NET INTEREST MARGIN
- Yield on average interest-earning assets 5.92% 7.72%
- Rate on average interest-bearing liabilities 2.60% 3.76%
- Net interest spread 3.32% 3.96%
- Net interest margin 3.90% 4.86%
AVERAGE ASSETS
- Investment securities $229,478 $284,582
- Commercial loans 507,641 497,975
- Real estate construction loans 403,823 477,055
- Real estate mortgage loans 371,365 296,859
- Commercial real estate loans 840,496 798,383
- Installment and other consumer loans 23,545 24,705
- Total loans 2,146,870 2,094,977
- Total interest earning assets 2,409,896 2,394,958
- Other assets 159,723 142,760
- Total assets $2,569,619 $2,537,718
AVERAGE LIABILITIES & EQUITY
- Demand deposits $470,601 $479,311
- Savings and Interest bearing demand 350,769 351,521
- Money market 658,360 665,037
- Time deposits 566,195 554,263
- Total deposits 2,045,925 2,050,132
- Borrowings and subordinated debentures 300,759 250,478
- Total interest bearing liabilities 1,876,083 1,821,299
- Other liabilities 487,010 504,070
- Total liabilities 2,363,093 2,325,369
- Common equity 206,526 212,349
- Total average liabilities and common
equity $2,569,619 $2,537,718
AVERAGE ASSET/LIABILITY RATIOS
- Stockholders' equity to total assets 8.04% 8.37%
- Interest earning assets to interest bearing
liabilities 128.5% 131.5%
- Total loans to total assets 83.6% 82.6%
- Interest bearing deposits to total assets 61.3% 59.0%
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 For the twelve
(Dollars in thousands, months ended Dec. 31, months ended Dec. 31,
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
reconciliation(1)
For the three months For the twelve months
ended Dec. 31, 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.
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
(Dollars in thousands, unaudited) 2008 loans 2007 loans
Commercial loans $482,405 23% $504,101 23%
Commercial real estate construction 92,414 4% 90,671 4%
Residential real estate construction 192,735 9% 427,317 20%
Total real estate construction loans 285,149 14% 517,988 24%
Standard mortgages 87,628 4% 86,901 4%
Nonstandard mortgages 32,597 2% 7,495 0%
Home equity 272,983 13% 236,407 11%
Total real estate mortgage 393,208 19% 330,803 15%
Commercial real estate loans 882,092 43% 796,622 37%
Installment and other consumer loans 21,942 1% 23,155 1%
Total loans $2,064,796 $2,172,669
Two-step residential construction
loans $53,084 3% $262,952 12%
Total loans other than two-step loans 2,011,712 97% 1,909,717 88%
Total loans $2,064,796 100% $2,172,669 100%
Change Sept. 30, % of
(Dollars in thousands, unaudited) Amount % 2008 loans
Commercial loans $(21,696) -4% $498,715 24%
Commercial real estate construction 1,743 2% 88,717 4%
Residential real estate construction (234,582) -55% 242,116 11%
Total real estate construction loans (232,839) -45% 330,833 16%
Standard mortgages 727 1% 89,348 4%
Nonstandard mortgages 25,102 335% 33,820 2%
Home equity 36,576 15% 266,385 13%
Total real estate mortgage 62,405 19% 389,553 18%
Commercial real estate loans 85,470 11% 867,902 41%
Installment and other consumer loans (1,213) -5% 22,514 1%
Total loans $(107,873) -5% $2,109,517
Two-step residential construction
loans $(209,868) -80% $97,894 5%
Total loans other than two-step loans 101,995 5% 2,011,623 95%
Total loans $(107,873) -5% $2,109,517 100%
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 Quarter Quarter
ended ended 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%
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%
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 December September
31, 31, 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
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 Three Three
months months months
ended Number ended Number ended Number
(Dollars in thousands, Dec. 31 of Dec. 31 of Sept. 30 of
unaudited) 2008 properties 2007 properties 2008 properties
Beginning balance $48,121 189 $1,183 6 $27,892 108
Additions to OREO(1) 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 Three Three
months months months
ended Number ended Number ended Number
(Dollars in thousands, Dec. 31 of Dec. 31 of Sept. 30 of
unaudited) 2008 properties 2007 properties 2008 properties
Beginning balance $44,675 173 $1,183 5 $26,460 101
Additions to OREO(1) 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 Three Three
months months months
ended Number ended Number ended Number
(Dollars in thousands, Dec. 31 of Dec. 31 of Sept. 30 of
unaudited) 2008 properties 2007 properties 2008 properties
Beginning balance $3,446 16 $- 1 $1,432 7
Additions to OREO(1) 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.
The following table presents information with respect to two-step residential construction related OREO activity and two-step short sales.
Table 8
Total two-step
Two-step OREO property
related OREO Two-step short sales and short
(Dollars in thousands) activity sales 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
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 loans(1) 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%
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%
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 Quarter Quarter
ended ended 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
