- Return on Average Assets Was .98% in the First Quarter 2012, an Increase From .84% in the Same Quarter Last Year.
- Pre-Tax Income of $8.9 Million in the First Quarter 2012 Increased 54% From $5.8 Million in the Same Quarter Last Year.
- Efficiency Ratio Improved to 69.7% in First Quarter Of 2012 From 74.1% in the Same Quarter Of 2011.
- Provision for Credit Losses of $ .1 Million in the First Quarter of 2012 Declined From $2.1 Million in the Same Quarter Last Year.
LAKE OSWEGO, Ore., April 23, 2012 (GLOBE NEWSWIRE) -- West Coast Bancorp (Nasdaq:WCBO) ("Bancorp" or "Company"), the parent company of West Coast Bank ("Bank") and West Coast Trust Company, Inc., today announced net income of $5.8 million or $.27 per diluted share for the first quarter of 2012 compared to net income of $5.1 million or $.24 per diluted share in the same quarter of 2011.
"Net income of $5.8 million for the quarter ended March 31, 2012, represented a 13% improvement from the same period a year ago," said Robert D. Sznewajs, President and Chief Executive Officer. The improved operating results primarily reflect the impact of cost reduction actions taken in 2011 and the reduction in the provision for credit losses in the current period compared to first quarter of 2011. The Company's return on average assets continues to improve, reaching .98 % in the first quarter of 2012 compared to .84 % in the same period in 2011."
Table 1 below shows summary financial information for the quarters ended March 31, 2012, and 2011, and December 31, 2011. Net income for the quarter ended December 31, 2011, reflected the benefit from the reversal of the Company's deferred tax asset valuation allowance in the fourth quarter of 2011.
| Table 1 | |||||
| SUMMARY FINANCIAL INFORMATION | |||||
| Qtr. ended | Qtr. ended | Qtr. ended | |||
| March 31, | March 31, | Dec. 31, | |||
| (Dollars and shares in thousands) | 2012 | 2011 | Change | 2011 | Change |
| Net income | $ 5,789 | $ 5,105 | $ 684 | $ 17,762 | $ (11,973) |
| Net income available to common stockholders 1 | $ 5,393 | $ 4,740 | $ 653 | $ 16,532 | (11,139) |
| Selective quarterly performance ratios | |||||
| Return on average assets, annualized | 0.98% | 0.84% | 0.14 | 2.88% | -1.90% |
| Return on average equity, annualized | 7.34% | 7.56% | (0.22) | 23.68% | -16.34% |
| Efficiency ratio2 | 69.76% | 74.14% | (4.38) | 93.02% | -23.26% |
| Share and Per Share Figures-Actual | |||||
| Common shares outstanding at period end | 19,295 | 19,283 | 12 | 19,298 | (3) |
| Weighted average diluted shares3 | 21,348 | 21,246 | 102 | 21,175 | 173 |
| Weighted average diluted shares-two class method 4 | 20,054 | 19,939 | 115 | 19,911 | 143 |
| Net income per diluted share | $ 0.27 | $ 0.24 | $ 0.03 | $ 0.83 | $ (0.56) |
| Book value per common share | $ 15.54 | $ 13.27 | $ 2.27 | $ 15.20 | $ 0.34 |
| 1 Adjusted for the impact of allocating net income to participating instruments, restricted stock and Series B preferred stock. | |||||
| 2 The efficiency ratio has been computed as noninterest expense divided by the sum of net interest income on a tax equivalent basis and noninterest income excluding gains/losses on sales of securities. | |||||
| 3 Reflects the average dilutive impacts of Series B preferred stock (1,213), warrants (995), options (21), and restricted stock (81). | |||||
| 4 Reflects the calculation of diluted shares under the two-class method which includes average common (19,038), options (21), and warrants (995). | |||||
Balance Sheet Overview
First quarter 2012 average total loan balances of $1.48 billion declined $47 million or 3% from same quarter of 2011. The decline was principally as a result of continued loan payoffs prior to maturity, reflecting the effect of the current interest rate environment and economic conditions. Modest growth in the commercial real estate loan category was more than offset by declines in commercial, residential real estate construction and mortgage loan categories. Total average loans declined 1% or $16 million from fourth quarter 2011.
Yield on total loans of 5.20% declined 18 basis points year-over-year first quarter as higher yielding loans paid off and new loan originations were at lower yields reflecting current market interest rates. The yield on total average loans was nearly unchanged from the prior quarter.
| Table 2 | ||||||||
| AVERAGE LOANS FOR THE QUARTER | ||||||||
| (Dollars in thousands) | March 31, | % of | March 31, | % of | Change | December 31, | % of | |
| 2012 | Total | 2011 | total | Amount | % | 2011 | Total | |
| Commercial loans | $ 288,395 | 19% | $ 304,704 | 20% | $ (16,309) | -5% | $ 293,583 | 20% |
| Commercial real estate construction | 18,547 | 1% | 17,509 | 1% | 1,038 | 6% | 14,730 | 1% |
| Residential real estate construction | 12,680 | 1% | 22,698 | 1% | (10,018) | -44% | 13,613 | 1% |
| Total real estate construction loans | 31,227 | 2% | 40,207 | 2% | (8,980) | -22% | 28,343 | 2% |
| Mortgage | 66,125 | 5% | 78,366 | 5% | (12,241) | -16% | 67,579 | 5% |
| Home equity | 254,883 | 17% | 266,846 | 18% | (11,963) | -4% | 260,849 | 17% |
| Total real estate mortgage | 321,008 | 22% | 345,212 | 23% | (24,204) | -7% | 328,428 | 22% |
| Commercial real estate loans | 828,681 | 56% | 823,818 | 54% | 4,863 | 1% | 834,362 | 55% |
| Installment and other consumer loans | 13,211 | 1% | 15,349 | 1% | (2,138) | -14% | 13,721 | 1% |
| Total loans | $ 1,482,522 | $ 1,529,290 | $ (46,768) | -3% | $ 1,498,437 | |||
| Yield on loans | 5.20% | 5.38% | (0.18) | 5.19% | ||||
The 2012 first quarter average balance of total cash equivalents and investment securities of $748 million declined $36 million or 5% from the first quarter of 2011; however, the Company's liquidity position remained solid. The Company reduced its average cash equivalents balance by $73 million in the first quarter of 2012 from the same quarter of 2011 while increasing its investment securities portfolio by $37 million in an effort to improve its net interest income and margin. Over the past year, the Company has increased its investments in U.S. government agency, U.S government agency mortgage-backed, and municipal securities. The purchases consisted principally of U.S. government agency securities with 3-5-year maturities and 10- and 15-year fully amortizing U.S. government agency mortgage-backed securities. The expected duration of the investment portfolio was approximately 2.6 years at March 31, 2012, compared to approximately 3.1 years at March 31, 2011.
The 2012 first quarter yield on total cash equivalents and investment securities balance was 2.36%, a decline of 16 basis points from the same quarter of 2011. This reflected the investment securities purchases over the past twelve months at yields lower than those in the existing portfolio. The yield did increase 12 basis points from the fourth quarter of 2011 due to lower accelerated premium amortization on mortgage-backed securities during the most recent quarter, offsetting the declining yield on the remaining investment portfolio.
| Table 3 | |||||
| AVERAGE CASH EQUIVALENTS AND INVESTMENT SECURITIES FOR THE QUARTER | |||||
| (Dollars in thousands) | March 31, | March 31, | Change | December 31, | |
| 2012 | 2011 | Amount | % | 2011 | |
| Cash equivalents: | |||||
| Federal funds sold | $ 2,601 | $ 3,947 | $ (1,346) | -34% | $ 3,184 |
| Interest-bearing deposits in other banks | 35,334 | 106,794 | (71,460) | -67% | 20,530 |
| Total cash equivalents | 37,935 | 110,741 | (72,806) | -66% | 23,714 |
| Investment securities: | |||||
| U.S. Treasury securities | 202 | 10,774 | (10,572) | -98% | 204 |
| U.S. Government Agency securities | 213,035 | 183,419 | 29,616 | 16% | 254,030 |
| Corporate securities | 8,507 | 9,397 | (890) | -9% | 8,854 |
| Mortgage-backed securities | 414,198 | 404,143 | 10,055 | 2% | 445,422 |
| Obligations of state and political sub. | 61,337 | 53,189 | 8,148 | 15% | 62,712 |
| Equity investments and other securities | 12,721 | 12,527 | 194 | 2% | 12,726 |
| Total investment securities | 710,000 | 673,449 | 36,551 | 5% | 783,948 |
| Total cash equivalents and investment securities | $ 747,935 | $ 784,190 | $ (36,255) | -5% | $ 807,662 |
| Tax equivalent yield on cash equivalents and investment securities | 2.36% | 2.52% | (0.16) | 2.24% | |
First quarter 2012 average total deposits of $1.87 billion declined 3% or $66 million from the same period in 2011. During the most recent quarter, the Company continued to reduce higher cost time deposit balances which declined $102 million or 38% from the corresponding quarter in 2011. Time deposits represented 9% of the Company's average total deposits in the most recent quarter compared to 14% during the same quarter of 2011.
| Table 4 | ||||||||
| AVERAGE DEPOSITS, BORROWINGS AND SUBORDINATED DEBENTURES FOR THE QUARTER | ||||||||
| (Dollars in thousands) | Q1 | % of | Q1 | % of | Change | Q4 | % of | |
| 2012 | Total | 2011 | Total | Amount | % | 2011 | Total | |
| Demand deposits | $ 585,749 | 31% | $ 552,229 | 28% | $ 33,520 | 6% | $ 622,741 | 33% |
| Interest-bearing demand | 366,635 | 20% | 344,090 | 18% | 22,545 | 7% | 375,922 | 19% |
| Total checking deposits | 952,384 | 51% | 896,319 | 46% | 56,065 | 6% | 998,663 | 52% |
| Savings | 123,725 | 7% | 106,309 | 6% | 17,416 | 16% | 117,619 | 6% |
| Money market | 623,111 | 33% | 660,672 | 34% | (37,561) | -6% | 640,247 | 33% |
| Total non-time deposits | 1,699,220 | 91% | 1,663,300 | 86% | 35,920 | 2% | 1,756,529 | 91% |
| Time deposits | 167,418 | 9% | 269,038 | 14% | (101,620) | -38% | 179,288 | 9% |
| Total deposits | $ 1,866,638 | 100% | $ 1,932,338 | 100% | $ (65,700) | -3% | $ 1,935,817 | 100% |
| Average rate on total deposits | 0.12% | 0.38% | (0.26) | 0.14% | ||||
| Average borrowings and subordinated debentures | $ 171,505 | $ 219,599 | $ (48,094) | -22% | $ 189,635 | |||
| Rate on borrowings and subordinated debentures 1 | 1.46% | 2.95% | (1.49) | 1.94% | ||||
| 1 Excludes the impact of FHLB prepayment in Q4 2011. | ||||||||
Total average checking balances of $952 million in the first quarter of 2012 grew $56 million or 6% from the first quarter of 2011 and represented 51% of the Company's average total deposits in the quarter. The continuing shift in the mix of deposit balances from time deposits to non-time deposits over the past year helped reduce the average rate paid on total deposits to .12% in the most recent quarter, a decline of 26 basis points from the same quarter in 2011 and a decline of two basis points from the fourth quarter of 2011.
In the second half of 2011, the Company elected to prepay its Federal Home Loan Bank ("FHLB") term borrowings of $169 million and to enter into $120 million in new term borrowings with the FHLB in order to maintain its interest rate sensitivity position. The rate on the new term borrowings is 1.05%, a reduction from 3.17% on the amount prepaid. At March 31, 2012, the average duration of the new term borrowings was 2.6 years.
Capital Position
The Company continued to improve its capital position as a result of profitability and slightly lower total assets. As shown in Table 5 below, at March 31, 2012, the Company's tier 1 and total risk-based capital ratios measured 20.34% and 21.60%, respectively, while its leverage ratio was 15.41%.
| Table 5 | |||||
| CAPITAL RATIOS | |||||
| March 31, | March 31, | December 31, | |||
| 2012 | 2011 | Change | 2011 | Change | |
| West Coast Bancorp | |||||
| Tier 1 risk-based capital ratio | 20.34% | 17.72% | 2.62 | 19.36% | 0.98 |
| Total risk-based capital ratio | 21.60% | 18.98% | 2.62 | 20.62% | 0.98 |
| Leverage ratio | 15.41% | 13.40% | 2.01 | 14.61% | 0.80 |
| West Coast Bank | |||||
| Tier 1 risk-based capital ratio | 19.62% | 17.02% | 2.60 | 18.66% | 0.96 |
| Total risk-based capital ratio | 20.88% | 18.28% | 2.60 | 19.92% | 0.96 |
| Leverage ratio | 14.85% | 12.87% | 1.98 | 14.09% | 0.76 |
Operating Results
Pre-tax income in the first quarter of 2012 was $8.9 million, an increase of $3.1 million or 54% from the first quarter 2011. The improvement was the result of the favorable impact from the declines in provision for credit losses and noninterest expenses, which were partly offset by lower noninterest income. The Company recorded a provision for income taxes of $3.1 million in the most recent quarter, up from $.7 million in the same quarter last year, when the Company maintained a deferred tax asset valuation allowance. As shown in Table 6 below, first quarter 2012 net income of $5.8 million increased $.7 million or 13% from $5.1 million in the corresponding quarter of 2011.
| Table 6 | |||||||
| SUMMARY INCOME STATEMENT | |||||||
| (Dollars in thousands) | Q1 | Q1 | Change | Q4 | Change | ||
| 2012 | 2011 | $ | % | 2011 | $ | % | |
| Net interest income | $ 22,133 | $ 21,512 | $ 621 | 3% | $ 17,940 | $ 4,193 | 23% |
| Provision for credit losses | 89 | 2,076 | (1,987) | -96% | 1,499 | (1,410) | -94% |
| Noninterest income | 7,887 | 8,916 | (1,029) | -12% | 6,419 | 1,468 | 23% |
| Noninterest expense | 21,025 | 22,553 | (1,528) | -7% | 22,744 | (1,719) | -8% |
| Income before income taxes | 8,906 | 5,799 | 3,107 | 54% | 116 | 8,790 | 7578% |
| Provision (benefit) for income taxes | 3,117 | 694 | 2,423 | 349% | (17,646) | 20,763 | 118% |
| Net income | $ 5,789 | $ 5,105 | $ 684 | 13% | $ 17,762 | $ (11,973) | -67% |
First quarter 2012 net interest income of $22.1 million increased $.6 million from the same quarter in 2011. This was a result of the combined favorable effect from FHLB prepayments in 2011 and lower rates on interest-bearing deposits in the most recent quarter more than offsetting the unfavorable impact of lower loan balances and declining yield on earning assets. For the same reasons, the first quarter 2012 net interest margin of 4.04% increased 23 basis points from the corresponding quarter last year.
| Table 7 | |||||
| NET INTEREST SPREAD AND MARGIN | |||||
| (Annualized, tax-equivalent basis) | Q1 | Q1 | Q41 | ||
| 2012 | 2011 | Change | 2011 | Change | |
| Yield on average interest-earning assets | 4.25% | 4.41% | (0.16) | 4.16% | 0.09 |
| Rate on average interest-bearing liabilities 1 | 0.33% | 0.86% | (0.53) | 1.58% | (1.25) |
| Net interest spread | 3.92% | 3.55% | 0.37 | 2.58% | 1.34 |
| Net interest margin | 4.04% | 3.81% | 0.23 | 3.13% | 0.91 |
| 1 Fourth quarter 2011 rate on average interest-bearing liabilities includes 75 basis points of expense associated with the prepayment of FHLB borrowings. | |||||
As shown in Table 8 below, first quarter 2012 total noninterest income of $7.9 million declined $1.0 million from the same quarter of 2011, primarily due to the 23% or $.8 million decline in deposit service charges. This reduction in deposit service charges was principally caused by the ongoing impact related to the implementation of Federal Deposit Insurance Corporation's ("FDIC") guidance on overdraft protection programs. Compared to the fourth quarter of 2011, deposit service charges decreased $.2 million or 6%.
While payment systems-related revenues increased $.1 million or 5% from the first quarter of 2011, trust and investment services revenues declined $.2 million or 19% over the same period. The total net loss on OREO of $.6 million in the quarter ended March 31, 2012, increased from a $.3 million net loss in the first quarter 2011, but declined from $2.0 million in the fourth quarter of 2011. Gains on sales of loans grew $.2 million year-over-year in the first quarter as a result of increased sales of Small Business Administration loans. Excluding the total net loss on OREO, the Company's noninterest income was substantially unchanged over the last two quarters.
| Table 8 | |||||||
| NONINTEREST INCOME | |||||||
| (Dollars in thousands) | Q1 | Q1 | Change | Q4 | Change | ||
| 2012 | 2011 | $ | % | 2011 | $ | % | |
| Noninterest income | |||||||
| Service charges on deposit accounts | $ 2,818 | $ 3,644 | $ (826) | -23% | $ 3,005 | $ (187) | -6% |
| Payment systems-related revenue | 3,073 | 2,930 | 143 | 5% | 3,081 | (8) | 0% |
| Trust and investment services revenues | 935 | 1,148 | (213) | -19% | 1,114 | (179) | -16% |
| Gains on sales of loans | 735 | 513 | 222 | 43% | 300 | 435 | 145% |
| Gains on sales of securities | 147 | 267 | (120) | -45% | 192 | (45) | -23% |
| Other-than-temporary impairment losses | (49) | -- | (49) | 0% | -- | (49) | 0% |
| Other | 802 | 748 | 54 | 7% | 708 | 94 | 13% |
| Total | 8,461 | 9,250 | (789) | -9% | 8,400 | 61 | 1% |
| OREO gains (losses) on sale | (53) | 323 | (376) | -116% | (57) | 4 | -7% |
| OREO valuation adjustments | (521) | (657) | 136 | 21% | (1,924) | 1,403 | 73% |
| Total net loss on OREO | (574) | (334) | (240) | -72% | (1,981) | 1,407 | 71% |
| Total noninterest income | $ 7,887 | $ 8,916 | $ (1,029) | -12% | $ 6,419 | $ 1,468 | 23% |
As shown in Table 9 below, the Company's total noninterest expense of $21.0 million in the first quarter of 2012 declined by $1.5 million or 7% from the same quarter in 2011. The efficiency ratio declined to 69.8% from 74.1% in first quarter of 2011. As a result of cost savings initiatives implemented in 2011, salaries and employee benefits declined $.4 million or 3%. The first quarter 2012 reduction in marketing expense of $.3 million compared to the corresponding quarter in 2011 was related to the Company's introduction of a new consumer deposit product marketing strategy in 2012. Additionally, the other noninterest expense category declined $.8 million the first quarter of 2012 compared to the same period a year ago, with $.5 million of the decline resulting from a lower FDIC deposit insurance premium assessment.
| Table 9 | |||||||
| NONINTEREST EXPENSE | |||||||
| (Dollars in thousands) | Q1 | Q1 | Change | Q4 | Change | ||
| 2012 | 2011 | $ | % | 2011 | $ | % | |
| Noninterest expense | |||||||
| Salaries and employee benefits | $ 11,478 | $ 11,877 | $ (399) | -3% | $ 12,614 | $ (1,136) | -9% |
| Equipment | 1,662 | 1,528 | 134 | 9% | 1,560 | 102 | 7% |
| Occupancy | 2,075 | 2,165 | (90) | -4% | 2,162 | (87) | -4% |
| Payment systems-related expense | 1,119 | 1,247 | (128) | -10% | 1,265 | (146) | -12% |
| Professional fees | 1,111 | 982 | 129 | 13% | 1,122 | (11) | -1% |
| Postage, printing and office supplies | 819 | 810 | 9 | 1% | 821 | (2) | 0% |
| Marketing | 312 | 651 | (339) | -52% | 659 | (347) | -53% |
| Communications | 380 | 378 | 2 | 1% | 395 | (15) | -4% |
| Other noninterest expense | 2,069 | 2,915 | (846) | -29% | 2,146 | (77) | -4% |
| Total noninterest expense | $ 21,025 | $ 22,553 | $ (1,528) | -7% | $ 22,744 | $ (1,719) | -8% |
Income Taxes
First quarter 2012 provision for income taxes was $3.1 million, an increase of $2.4 million from $.7 million in the same quarter of 2011. The first quarter 2012 provision for income taxes is the result of an effective tax rate of 35% on pre-tax income. The provision for taxes in the first quarter last year reflected the impact of the Company's deferred tax asset valuation allowance at that time, which was subsequently fully reversed in the fourth quarter of 2011.
Credit Quality
The Company recorded a first quarter 2012 provision for credit losses of $.1 million, a significant decline from $2.1 million in the first quarter 2011 and $1.5 million in the previous quarter. First quarter 2012 net charge-offs of $1.4 million, or .39% of average loans on an annualized basis, declined from the corresponding quarter in 2011 and on a linked-quarter basis. As shown in the table below, net charge-offs declined across nearly every category. Net charge-offs in dollars and as a percentage of average loans in the most recent quarter represented the lowest level of quarterly net charge-off activity since the third quarter of 2007.
| Table 10 | ||||||
| ALLOWANCE FOR CREDIT LOSSES AND NET CHARGEOFFS | ||||||
| Charge-offs as | Charge-offs as | Charge-offs as | ||||
| (Dollars in thousands) | Q1 | a % of average | Q1 | a % of average | Q4 | a % of average |
| 2012 | loan balance | 2011 | loan balance | 2011 | loan balance | |
| Allowance for credit losses, beginning of period | $ 35,983 | $ 41,067 | $ 37,016 | |||
| Total provision for credit losses | 89 | 2,076 | 1,499 | |||
| Loan net charge-offs: | ||||||
| Commercial | (5) | 0.00% | 263 | 0.09% | 292 | 0.10% |
| Commercial real estate construction | -- | 0.00% | 65 | 0.37% | 48 | 0.33% |
| Residential real estate construction | 1 | 0.00% | 311 | 1.37% | 140 | 1.03% |
| Total real estate construction | 1 | 0.00% | 376 | 0.94% | 188 | 0.66% |
| Mortgage | 534 | 0.81% | 520 | 0.66% | 177 | 0.26% |
| Home equity | 542 | 0.21% | 853 | 0.32% | 723 | 0.28% |
| Total real estate mortgage | 1,076 | 0.34% | 1,373 | 0.40% | 900 | 0.27% |
| Commercial real estate | 41 | 0.00% | 326 | 0.04% | 812 | 0.10% |
| Installment and consumer | 165 | 1.25% | 168 | 1.09% | 119 | 0.87% |
| Overdraft | 160 | 0.00% | 208 | 0.00% | 221 | 0.00% |
| Total loan net charge-offs | 1,438 | 0.10% | 2,714 | 0.18% | 2,532 | 0.17% |
| Total allowance for credit losses | $ 34,634 | $ 40,429 | $ 35,983 | |||
| Components of allowance for credit losses: | ||||||
| Allowance for loan losses | $ 33,854 | $ 39,692 | $ 35,212 | |||
| Reserve for unfunded commitments | 780 | 737 | 771 | |||
| Total allowance for credit losses | $ 34,634 | $ 40,429 | $ 35,983 | |||
| Net loan charge-offs to average loans (annualized) | 0.39% | 0.72% | 0.67% | |||
| Allowance for loan losses to total loans | 2.30% | 2.58% | 2.35% | |||
| Allowance for credit losses to total loans | 2.35% | 2.63% | 2.40% | |||
| Allowance for loan losses to nonperforming loans | 80% | 74% | 87% | |||
| Allowance for credit losses to nonperforming loans | 82% | 75% | 89% | |||
The allowance for credit losses was $34.6 million or 2.35% of total loans at March 31, 2012, compared to an allowance for credit losses of $40.4 million or 2.63% of total loans a year earlier and $36.0 million or 2.40% of total loans at year end 2011. The decline in the allowance for credit losses relative to total loans reflected the improving trend in the overall risk profile of the loan portfolio. The allowance for credit losses declined largely due to lower overall loan balances as well as additional impaired loans moving from the general valuation allowance to individually being measured for impairment. The allowance for credit losses relative to nonperforming loans increased from 75% a year ago to 82% at March 31, 2012. The Company's estimate of an appropriate allowance for credit losses will continue to be closely related to the loan portfolio's credit quality performance trends and the region's economic conditions.
Total nonperforming assets at March 31, 2012, were $69.7 million or 2.9% of total assets compared to $93.3 million or 3.8% of total assets a year ago and $71.4 million or 2.9% at year end 2011.
| Table 11 | |||||
| NONPERFORMING ASSETS | |||||
| (Dollars in thousands) | Mar. 31, | Dec. 31, | Sept. 30, | June 30, | Mar. 31, |
| 2012 | 2011 | 2011 | 2011 | 2011 | |
| Loans on nonaccrual status: | |||||
| Commercial | $ 6,482 | $ 7,750 | $ 9,987 | $ 9,280 | $ 12,803 |
| Real estate construction: | |||||
| Commercial real estate construction | 3,749 | 3,750 | 3,886 | 4,357 | 4,032 |
| Residential real estate construction | 1,981 | 2,073 | 3,311 | 3,439 | 4,093 |
| Total real estate construction | 5,730 | 5,823 | 7,197 | 7,796 | 8,125 |
| Real estate mortgage: | |||||
| Mortgage | 10,744 | 9,624 | 10,877 | 11,527 | 12,165 |
| Home equity | 2,528 | 2,325 | 3,285 | 2,755 | 1,426 |
| Total real estate mortgage | 13,272 | 11,949 | 14,162 | 14,282 | 13,591 |
| Commercial real estate | 16,648 | 15,070 | 21,513 | 19,263 | 19,424 |
| Installment and consumer | 1 | 5 | 6 | 1 | -- |
| Total nonaccrual loans | 42,133 | 40,597 | 52,865 | 50,622 | 53,943 |
| 90 days past due not on nonaccrual | -- | -- | -- | -- | -- |
| Total nonperforming loans | 42,133 | 40,597 | 52,865 | 50,622 | 53,943 |
| Other real estate owned | 27,525 | 30,823 | 30,234 | 35,374 | 39,329 |
| Total nonperforming assets | $ 69,658 | $ 71,420 | $ 83,099 | $ 85,996 | $ 93,272 |
| Nonperforming loans to total loans | 2.86% | 2.70% | 3.52% | 3.33% | 3.51% |
| Nonperforming assets to total assets | 2.89% | 2.94% | 3.30% | 3.49% | 3.80% |
| Total delinquent loans 30-89 days past due | $ 4,095 | $ 4,273 | $ 5,556 | $ 9,961 | $ 4,901 |
| Delinquent loans to total loans | 0.28% | 0.28% | 0.37% | 0.65% | 0.32% |
Over the past twelve months, total nonaccrual loans declined $11.8 million or 22% to $42.1 million at March 31, 2012, with declines centered in commercial, residential real estate construction, and commercial real estate categories. Home equity nonaccrual loans increased over the same period, reflecting the continued pressures on the residential real estate market over the past year and high level of unemployment.
As indicated in Table 12 below, during the quarter the Company disposed of 27 OREO properties with a book value of $3.6 million while acquiring 9 properties with a book value of less than $1 million and recording OREO valuation adjustments totaling $.5 million. The combination of these actions resulted in a $3.3 million or 11% net reduction in total OREO in first quarter of 2012 from year end 2011. The OREO balance reflected write-downs of 54% from original loan principal, an increase from 48% a year ago. The largest balance in the OREO portfolio at March 31, 2012, was in the income-producing properties category followed by homes and land, all of which are located within the Company's footprint.
| Table 12 | ||||||
| OTHER REAL ESTATE OWNED ACTIVITY | ||||||
| (Dollars in thousands) | Q1 2012 | Q1 2011 | Q4 2011 | |||
| Amount | # | Amount | # | Amount | # | |
| Beginning balance | $ 30,823 | 264 | $ 39,459 | 402 | $ 30,234 | 308 |
| Additions to OREO | 810 | 9 | 6,479 | 25 | 9,241 | 15 |
| Dispositions of OREO | (3,587) | (27) | (5,952) | (28) | (6,728) | (59) |
| OREO valuation adjustment | (521) | -- | (657) | -- | (1,924) | -- |
| Ending balance | $ 27,525 | 246 | $ 39,329 | 399 | $ 30,823 | 264 |
| Table 13 | ||||||
| OTHER REAL ESTATE OWNED BY PROPERTY TYPE | ||||||
| (Dollars in thousands) | Mar. 31, | # of | Mar. 31, | # of | Dec. 31, | # of |
| 2012 | properties | 2011 | properties | 2011 | properties | |
| Income-producing properties | $ 9,352 | 15 | $ 6,613 | 9 | $ 10,282 | 15 |
| Homes | 5,228 | 16 | 15,093 | 64 | 6,008 | 17 |
| Land | 4,710 | 14 | 4,427 | 11 | 5,049 | 16 |
| Residential site developments | 3,367 | 136 | 6,973 | 236 | 3,506 | 146 |
| Lots | 2,453 | 49 | 3,758 | 56 | 2,932 | 51 |
| Condominiums | 1,641 | 6 | 1,792 | 12 | 2,252 | 9 |
| Multifamily | 408 | 4 | 673 | 11 | 428 | 4 |
| Commercial site developments | 366 | 6 | -- | -- | 366 | 6 |
| Total | $ 27,525 | 246 | $ 39,329 | 399 | $ 30,823 | 264 |
Other
The Company will hold a Webcast conference call Monday, April 23, 2012, at 1:00 p.m. Pacific Time, during which the Company will discuss first quarter 2012 results and current activities. To access the conference call via a live Webcast, go to www.wcb.com and click on Investor Relations and the "1st Quarter 2012 Earnings Conference Call" tab. The conference call may also be accessed by dialing (866) 394-3464 Conference ID#: 66605108 a few minutes prior to 1:00 p.m. Pacific Time. The call will be available for replay by accessing the Company's website at www.wcb.com and following the same instructions.
West Coast Bancorp is a publicly held, Northwest bank holding company headquartered in Oregon with $2.4 billion in assets, and the parent company of West Coast Bank and West Coast Trust Company, Inc. West Coast Bank operates 60 branches in Oregon and Washington. The Company serves clients who seek the resources, sophisticated products and expertise of larger financial institutions, along with the local decision-making, market knowledge, and customer service orientation of a community bank. The Company offers a broad range of banking, investment, fiduciary and trust services. For more information, please visit the Company web site at www.wcb.com.
The West Coast Bancorp logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=12530
Forward Looking Statements
Statements in this release regarding future events, performance or results are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA") and are made pursuant to the safe harbors of the PSLRA. These statements can often be identified by words such as "expects," "believes," "projects," "anticipates," or "will," or other words of similar meaning, and specifically include in this release all statements regarding the expected future benefits of our ongoing cost-cutting initiatives. Actual results could be quite different from those expressed or implied by the forward-looking statements, which give our current expectations about the future and are not guarantees. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them to reflect changes that occur after that date.
A number of factors could cause results to differ significantly from our expectations, including, among others, the effects of (i) market conditions in our service areas on our efforts to continue to reduce our levels of nonperforming assets and increase loan originations, (ii) cost reduction initiatives, as well as (iii) all risk factors identified in our Annual Report on Form 10-K for the year ended December 31, 2011, including under the heading "Forward Looking Statement Disclosure" and in the section "Risk Factors".
| Table 14 | |||||||
| INCOME STATEMENT | |||||||
| (Dollars in thousands) | Q1 | Q1 | Change | Q4 | Full year | Full year | |
| 2012 | 2011 | $ | % | 2011 | 2011 | 2010 | |
| Net interest income | |||||||
| Interest and fees on loans | $ 19,209 | $ 20,299 | $ (1,090) | -5% | $ 19,647 | $ 80,237 | $ 88,409 |
| Interest on investment securities | 4,099 | 4,548 | (449) | -10% | 4,266 | 18,251 | 16,668 |
| Other interest income | 25 | 71 | (46) | -65% | 19 | 187 | 499 |
| Total interest income | 23,333 | 24,918 | (1,585) | -6% | 23,932 | 98,675 | 105,576 |
| Interest expense on deposit accounts | 577 | 1,809 | (1,232) | -68% | 702 | 4,973 | 12,130 |
| Interest on borrowings and subordinated debentures | 623 | 1,597 | (974) | -61% | 925 | 5,808 | 7,813 |
| Borrowings prepayment charge | -- | -- | -- | 0% | 4,365 | 7,140 | 2,326 |
| Total interest expense | 1,200 | 3,406 | (2,206) | -65% | 5,992 | 17,921 | 22,269 |
| Net interest income | 22,133 | 21,512 | 621 | 3% | 17,940 | 80,754 | 83,307 |
| Provision for credit losses | 89 | 2,076 | (1,987) | -96% | 1,499 | 8,133 | 18,652 |
| Noninterest income | |||||||
| Service charges on deposit accounts | 2,818 | 3,644 | (826) | -23% | 3,005 | 13,353 | 15,690 |
| Payment systems related revenue | 3,073 | 2,930 | 143 | 5% | 3,081 | 12,381 | 11,393 |
| Trust and investment services revenues | 935 | 1,148 | (213) | -19% | 1,114 | 4,503 | 4,267 |
| Gains on sales of loans | 735 | 513 | 222 | 43% | 300 | 1,335 | 1,197 |
| Net OREO valuation adjustments and gains (losses) on sales | (574) | (334) | (240) | -72% | (1,981) | (3,236) | (4,415) |
| Other-than-temporary impairment losses | (49) | -- | (49) | -- | -- | (179) | -- |
| Gain on sales of securities | 147 | 267 | (120) | -45% | 192 | 713 | 1,562 |
| Other | 802 | 748 | 54 | 7% | 708 | 2,949 | 3,003 |
| Total noninterest income | 7,887 | 8,916 | (1,029) | -12% | 6,419 | 31,819 | 32,697 |
| Noninterest expense | |||||||
| Salaries and employee benefits | 11,478 | 11,877 | (399) | -3% | 12,614 | 48,587 | 45,854 |
| Equipment | 1,662 | 1,528 | 134 | 9% | 1,560 | 6,113 | 6,247 |
| Occupancy | 2,075 | 2,165 | (90) | -4% | 2,162 | 8,674 | 8,894 |
| Payment systems related expense | 1,119 | 1,247 | (128) | -10% | 1,265 | 5,141 | 4,727 |
| Professional fees | 1,111 | 982 | 129 | 13% | 1,122 | 4,118 | 3,991 |
| Postage, printing and office supplies | 819 | 810 | 9 | 1% | 821 | 3,265 | 3,148 |
| Marketing | 312 | 651 | (339) | -52% | 659 | 3,003 | 3,086 |
| Communications | 380 | 378 | 2 | 1% | 395 | 1,549 | 1,525 |
| Other noninterest expense | 2,069 | 2,915 | (846) | -29% | 2,146 | 10,425 | 12,865 |
| Total noninterest expense | 21,025 | 22,553 | (1,528) | -7% | 22,744 | 90,875 | 90,337 |
| Income before income taxes | 8,906 | 5,799 | 3,107 | 54% | 116 | 13,565 | 7,015 |
| Provision (benefit) for income taxes | 3,117 | 694 | 2,423 | 349% | (17,646) | (20,212) | 3,790 |
| Net income | $ 5,789 | $ 5,105 | $ 684 | 13% | $ 17,762 | $ 33,777 | $ 3,225 |
| Net income per share: | |||||||
| Basic | $ 0.28 | $ 0.25 | $ 0.03 | $ 0.87 | $ 1.65 | $ 0.16 | |
| Diluted | $ 0.27 | $ 0.24 | $ 0.03 | $ 0.83 | $ 1.58 | $ 0.16 | |
| Weighted average common shares | 19,038 | 18,960 | 78 | 19,032 | 19,007 | 17,460 | |
| Weighted average diluted shares | 20,054 | 19,939 | 115 | 19,911 | 19,940 | 18,059 | |
| Tax equivalent net interest income | $ 22,398 | $ 21,770 | $ 628 | $ 18,223 | $ 81,870 | $ 84,478 | |
| Table 15 | |||||
| BALANCE SHEETS | |||||
| (Dollars in thousands) | Mar. 31, | Mar. 31, | Change | Dec. 31, | |
| 2012 | 2011 | $ | % | 2011 | |
| Assets: | |||||
| Cash and due from banks | $ 59,146 | $ 50,865 | $ 8,281 | 16% | $ 59,955 |
| Federal funds sold | 1,803 | 1,966 | (163) | -8% | 4,758 |
| Interest-bearing deposits in other banks | 108,735 | 122,224 | (13,489) | -11% | 27,514 |
| Total cash and cash equivalents | 169,684 | 175,055 | (5,371) | -3% | 92,227 |
| Investment securities | 670,534 | 643,705 | 26,829 | 4% | 729,844 |
| Loans | 1,470,848 | 1,535,700 | (64,852) | -4% | 1,501,301 |
| Allowance for loan losses | (33,854) | (39,692) | 5,838 | 15% | (35,212) |
| Loans, net | 1,436,994 | 1,496,008 | (59,014) | -4% | 1,466,089 |
| Total interest earning assets | 2,254,019 | 2,305,780 | (51,761) | -2% | 2,267,446 |
| OREO, net | 27,525 | 39,329 | (11,804) | -30% | 30,823 |
| Other assets | 104,550 | 97,760 | 6,790 | 7% | 110,904 |
| Total assets | $ 2,409,287 | $ 2,451,857 | $ (42,570) | -2% | $ 2,429,887 |
| Liabilities and Stockholders' Equity: | |||||
| Demand | $ 620,015 | $ 561,995 | $ 58,020 | 10% | $ 621,962 |
| Savings and interest-bearing demand | 503,829 | 461,542 | 42,287 | 9% | 495,117 |
| Money market | 614,831 | 661,327 | (46,496) | -7% | 625,373 |
| Time deposits | 155,830 | 243,567 | (87,737) | -36% | 173,117 |
| Total deposits | 1,894,505 | 1,928,431 | (33,926) | -2% | 1,915,569 |
| Borrowings and subordinated debentures | 171,000 | 219,599 | (48,599) | -22% | 171,000 |
| Reserve for unfunded commitments | 780 | 737 | 43 | 6% | 771 |
| Other liabilities | 22,020 | 26,102 | (4,082) | -16% | 28,068 |
| Total liabilities | 2,088,305 | 2,174,869 | (86,564) | -4% | 2,115,408 |
| Stockholders' equity | 320,982 | 276,988 | 43,994 | 16% | 314,479 |
| Total liabilities and stockholders' equity | $ 2,409,287 | $ 2,451,857 | $ (42,570) | -2% | $ 2,429,887 |
| Table 16 | ||||||||
| PERIOD END LOANS | ||||||||
| (Dollars in thousands) | Mar. 31, | % of | Mar. 31, | % of | Change | Dec. 31, | % of | |
| 2012 | Total | 2011 | total | Amount | % | 2011 | Total | |
| Commercial loans | $ 278,195 | 19% | $ 306,864 | 20% | $ (28,669) | -9% | $ 299,766 | 20% |
| Commercial real estate construction | 19,839 | 1% | 17,711 | 1% | 2,128 | 12% | 17,438 | 1% |
| Residential real estate construction | 12,082 | 1% | 19,896 | 1% | (7,814) | -39% | 12,724 | 1% |
| Total real estate construction loans | 31,921 | 2% | 37,607 | 2% | (5,686) | -15% | 30,162 | 2% |
| Mortgage | 65,063 | 5% | 74,920 | 5% | (9,857) | -13% | 66,610 | 5% |
| Home equity | 252,990 | 17% | 266,606 | 17% | (13,616) | -5% | 258,384 | 17% |
| Total real estate mortgage | 318,053 | 22% | 341,526 | 22% | (23,473) | -7% | 324,994 | 22% |
| Commercial real estate loans | 830,053 | 56% | 834,880 | 55% | (4,827) | -1% | 832,767 | 55% |
| Installment and other consumer loans | 12,626 | 1% | 14,823 | 1% | (2,197) | -15% | 13,612 | 1% |
| Total loans | $ 1,470,848 | $ 1,535,700 | $ (64,852) | -4% | $ 1,501,301 | |||
| Table 17 | |||||
| AVERAGE BALANCE SHEETS | |||||
| (Dollars in thousands) | Q1 | Q1 | Q4 | Full Year | Full Year |
| 2012 | 2011 | 2011 | 2011 | 2010 | |
| Cash and due from banks | $ 50,017 | $ 48,698 | $ 53,829 | $ 52,258 | $ 48,976 |
| Federal funds sold | 2,601 | 3,947 | 3,184 | 3,796 | 6,194 |
| Interest-bearing deposits in other banks | 35,334 | 106,794 | 20,530 | 67,332 | 188,925 |
| Total cash and cash equivalents | 87,952 | 159,439 | 77,543 | 123,386 | 244,095 |
| Investment securities | 710,000 | 673,449 | 783,948 | 734,893 | 606,099 |
| Total loans | 1,482,522 | 1,529,290 | 1,498,437 | 1,516,409 | 1,622,445 |
| Allowance for loan losses | (35,249) | (40,296) | (36,101) | (38,456) | (42,003) |
| Loans, net | 1,447,273 | 1,488,994 | 1,462,336 | 1,477,953 | 1,580,442 |
| Total interest earning assets | 2,232,288 | 2,314,612 | 2,309,396 | 2,324,016 | 2,425,073 |
| Other assets | 132,951 | 128,986 | 122,493 | 124,562 | 145,235 |
| Total assets | $ 2,378,176 | $ 2,450,868 | $ 2,446,320 | $ 2,460,794 | $ 2,575,871 |
| Demand | $ 585,749 | $ 552,229 | $ 622,741 | $ 592,630 | $ 540,280 |
| Savings and interest-bearing demand | 490,361 | 450,399 | 493,541 | 474,719 | 438,665 |
| Money market | 623,111 | 660,672 | 640,247 | 654,329 | 659,542 |
| Time deposits | 167,417 | 269,038 | 179,288 | 217,149 | 388,500 |
| Total deposits | 1,866,638 | 1,932,338 | 1,935,817 | 1,938,827 | 2,026,987 |
| Borrowings and subordinated debentures | 171,505 | 219,599 | 189,635 | 212,237 | 264,589 |
| Total interest bearing liabilities | 1,452,394 | 1,599,708 | 1,502,711 | 1,558,434 | 1,751,296 |
| Other liabilities | 22,782 | 24,983 | 23,245 | 23,332 | 18,486 |
| Stockholders' equity | 317,251 | 273,948 | 297,623 | 286,398 | 265,809 |
| Total liabilities and stockholders' equity | $ 2,378,176 | $ 2,450,868 | $ 2,446,320 | $ 2,460,794 | $ 2,575,871 |