West Coast Bancorp Reports Termination of Regulatory Order and Second Quarter 2010 Results
- On July 15, 2010, the Federal Deposit Insurance Corporation ("FDIC") and the State of Oregon provided notice that West Coast Bank's October 2009 cease and desist order has been terminated.
- As of June 30, 2010, the Company has raised $172.9 million of capital since October 2009, including approximately $7.9 million through the recently announced discretionary equity issuance program.
- Regulatory capital ratios at West Coast Bank have improved significantly, including an increase in its total risk based capital ratio to 17.10% at June 30, 2010, from 10.81% a year earlier.
- Second quarter 2010 net loss was $3.8 million, a reduction from a $6.3 million net loss in the same quarter in 2009.
- Nonperforming assets of $116.2 million continued to decline and have been reduced by $94.4 million or 45% since June 30, 2009.
- Second quarter 2010 average rate paid on total deposits declined to .64% from 1.23% in the same period in 2009.
LAKE OSWEGO, Ore., July 16 /PRNewswire-FirstCall/ -- West Coast Bancorp (Nasdaq: WCBO) ("Bancorp" or "Company") today announced a net loss of $3.8 million or $.04 per diluted share for the second quarter of 2010 compared to a net loss for second quarter 2009 of $6.3 million or $.41 per diluted share.
"The key operating metrics of the Company continued to improve in the second quarter of 2010 as nonperforming assets continued their decline, the allowance for loan losses as a percentage of loans increased, and the quarterly trend in the net interest margin, excluding the term borrowing prepayment fee, continued to improve. Also, with the additional common equity sold during the quarter, the capital ratios continued to improve from prior periods", said Robert D. Sznewajs, President and CEO. "The consistent improving trend of these and other operating metrics over the past several quarters support our belief that the Company is well on the way to recovery in spite of a very difficult operating environment. The removal of the Order by the regulators is further validation of the favorable trends the Company is experiencing. The Company will continue to take actions that will enhance future operating performance which may include loan sales and raising additional capital," says Sznewajs.
The improved year-over-year second quarter was primarily a result of lower credit costs, including a $3.6 million decrease in the provision for credit losses and a $3.5 million decline in Other Real Estate Owned ("OREO") valuation adjustments and losses upon OREO dispositions. Also, noninterest expense declined by $2.3 million year-over year second quarter, which was partly due to a $1.2 million special FDIC assessment in second quarter last year. These improvements were partly offset by a $2.3 million prepayment fee incurred in connection with prepaying $99 million Federal Home Loan Bank of Seattle ("FHLB") borrowings in the most recent quarter and a $5.8 million increase in the Company's tax expense, which was $1.7 million in the most recent quarter compared to a tax benefit of $4.1 million in the second quarter last year.
Capital
On June 24, 2010, the Company announced the commencement of a discretionary equity issuance program pursuant to which the Company will offer shares of its common stock from time to time for aggregate gross sale proceeds of up to $30 million. As of June 30, 2010, the Company had issued 2.8 million shares through this program with aggregate gross sales proceeds of approximately $7.9 million. The Company contributed $6.0 million in proceeds to West Coast Bank ("Bank") in the second quarter. There is no certainty that the Company will raise the $30 million maximum amount in the discretionary equity issuance program.
Table 1 below shows regulatory capital ratios for Bancorp and the Bank at June 30, 2009 and 2010, and at March 31, 2010, illustrating significant improvement as a result of capital raising activities and continued material reduction in risk-weighted assets.
Table 1 |
||||||||
SELECTED INFORMATION |
||||||||
Capital Ratios |
||||||||
June 30, |
June 30, |
March 31, |
||||||
2010 |
2009 |
Change |
2010 |
Change |
||||
West Coast Bancorp |
||||||||
Tier 1 capital ratio |
16.50% |
9.85% |
6.65 |
15.88% |
0.62 |
|||
Total capital ratio |
17.76% |
11.10% |
6.66 |
17.14% |
0.62 |
|||
Leverage ratio |
11.90% |
8.65% |
3.25 |
11.57% |
0.33 |
|||
West Coast Bank |
||||||||
Tier 1 capital ratio |
15.84% |
9.56% |
6.28 |
15.24% |
0.60 |
|||
Total capital ratio |
17.10% |
10.81% |
6.29 |
16.50% |
0.60 |
|||
Leverage ratio |
11.43% |
8.39% |
3.04 |
11.16% |
0.27 |
|||
Selective quarterly performance ratios |
||||||||
Return on average equity, annualized |
-5.92% |
-14.61% |
8.69 |
-1.42% |
(4.50) |
|||
Return on average assets, annualized |
-0.58% |
-0.99% |
0.41 |
-0.13% |
(0.45) |
|||
Efficiency ratio for the quarter to date |
80.83% |
97.46% |
16.63 |
78.41% |
(2.42) |
|||
Share and Per Share Figures |
||||||||
Quarter ended |
Quarter ended |
Quarter ended |
||||||
(Shares in thousands) |
June 30, 2010 |
June 30, 2009 |
Change |
March 31, 2010 |
Change |
|||
Common shares outstanding at period end (1) |
96,421 |
15,660 |
80,761 |
92,077 |
4,344 |
|||
Weighted average diluted shares |
92,123 |
15,522 |
76,601 |
67,125 |
24,998 |
|||
Loss per diluted share |
$ (0.04) |
$ (0.41) |
$ 0.37 |
$ (0.01) |
$ (0.03) |
|||
Book value per common share |
$ 2.55 |
$ 10.77 |
$ (8.22) |
$ 2.60 |
$ (0.05) |
|||
(1) For additional information regarding outstanding shares please see table 20. |
||||||||
Balance Sheet Overview
Total loan balances declined $315 million or 16% from June 30, 2009 to $1.60 billion at June 30, 2010. The decline reflects the prolonged weakness in the economy, which continues to negatively impact loan demand, as well as the Company's on-going strategies to reduce risk exposure in selective loan segments. As a result, the real estate construction loan portfolio contracted $127 million or 63% over the past 12 months and measured 5% of total loans at quarter end compared to 11% at June 30, 2009. The Company also continued to exit a number of higher risk rated commercial loans in the most recent quarter, which contributed to the $117 million or 27% contraction in the commercial loan category from June 30 a year ago. Additionally, commercial credit line commitment utilization at most recent quarter end remained low compared to the historical levels.
Table 2 |
|||||||||||
PERIOD END LOANS |
|||||||||||
(Dollars in thousands) |
June 30, |
% of |
June 30, |
% of |
Change |
Mar. 31, |
% of |
||||
2010 |
total |
2009 |
total |
Amount |
% |
2010 |
total |
||||
Commercial loans |
$ 312,170 |
19% |
$ 428,852 |
22% |
$ (116,682) |
-27% |
$ 342,385 |
21% |
|||
Commercial real estate construction |
22,096 |
1% |
71,945 |
4% |
(49,849) |
-69% |
23,554 |
1% |
|||
Residential real estate construction |
52,062 |
3% |
129,588 |
7% |
(77,526) |
-60% |
60,879 |
4% |
|||
Total real estate construction loans |
74,158 |
5% |
201,533 |
11% |
(127,375) |
-63% |
84,433 |
5% |
|||
Mortgage |
73,867 |
5% |
83,941 |
4% |
(10,074) |
-12% |
74,613 |
4% |
|||
Nonstandard mortgage |
14,348 |
1% |
23,916 |
1% |
(9,568) |
-40% |
18,233 |
1% |
|||
Home equity |
274,072 |
17% |
280,366 |
15% |
(6,294) |
-2% |
277,527 |
17% |
|||
Total real estate mortgage |
362,287 |
23% |
388,223 |
20% |
(25,936) |
-7% |
370,373 |
22% |
|||
Commercial real estate loans |
837,033 |
52% |
878,379 |
46% |
(41,346) |
-5% |
853,180 |
51% |
|||
Installment and other consumer loans |
16,384 |
1% |
20,041 |
1% |
(3,657) |
-18% |
16,562 |
1% |
|||
Total |
$ 1,602,032 |
$ 1,917,028 |
$ (314,996) |
-16% |
$ 1,666,933 |
||||||
Yield on loans |
5.46% |
5.33% |
0.13 |
5.44% |
|||||||
Over the past twelve months the Company's total cash equivalents and investment securities balances collectively grew $300 million to $769 million at June 30, 2010. The majority of the growth occurred in U.S. Government Agency and mortgage-backed securities. These securities were purchased to manage the Company's interest rate sensitivity position while providing sufficient cash flows for future loan growth. The expected duration of the investment securities portfolio, excluding FHLB stock, was 1.8 years at quarter end.
Total cash equivalents at June 30, 2010, declined $119 million or nearly 50% since March 31, 2010. This occurred primarily as a consequence of the second quarter prepayment of the FHLB term borrowings, which were originally scheduled to mature between September 2010 and May 2012.
Table 3 |
|||||||||||
PERIOD END CASH EQUIVALENTS AND INVESTMENT SECURITIES |
|||||||||||
(Dollars in thousands) |
June 30, |
% of |
June 30, |
% of |
Change |
Mar. 31, |
% of |
||||
2010 |
total |
2009 |
total |
Amount |
% |
2010 |
total |
||||
Cash equivalents: |
|||||||||||
Federal funds sold |
$ 13,431 |
2% |
$ 6,643 |
1% |
$ 6,788 |
102% |
$ 3,859 |
1% |
|||
Interest-bearing deposits in other banks |
109,781 |
14% |
92,458 |
20% |
17,323 |
19% |
238,680 |
29% |
|||
Total cash equivalents |
123,212 |
16% |
99,101 |
21% |
24,111 |
24% |
242,539 |
30% |
|||
Investment securities: |
|||||||||||
U.S. Treasury securities |
14,688 |
2% |
45,292 |
10% |
(30,604) |
-68% |
24,849 |
3% |
|||
U.S. Government Agency securities |
250,848 |
32% |
38,943 |
8% |
211,905 |
544% |
136,208 |
17% |
|||
Corporate securities |
9,674 |
1% |
9,302 |
2% |
372 |
4% |
10,231 |
1% |
|||
Mortgage-backed securities |
300,485 |
39% |
196,969 |
42% |
103,516 |
53% |
330,849 |
41% |
|||
Obligations of state and political sub. |
58,564 |
8% |
70,144 |
15% |
(11,580) |
-17% |
60,111 |
7% |
|||
Equity investments and other securities |
11,972 |
2% |
9,264 |
2% |
2,708 |
29% |
9,352 |
1% |
|||
Total investment securities |
646,231 |
84% |
369,914 |
79% |
276,317 |
75% |
571,600 |
70% |
|||
Total cash equivalents and investment securities |
$ 769,443 |
100% |
$ 469,015 |
100% |
$ 300,428 |
64% |
$ 814,139 |
100% |
|||
Tax equivalent yield on cash equivalents and investment securities |
2.27% |
3.11% |
(0.84) |
2.34% |
|||||||
Second quarter 2010 average total deposits of $2.05 billion declined 1% or $28 million from the same quarter in 2009. With excess balance sheet liquidity, we elected to reduce higher cost time deposit balances, which declined $183 million or 30% from average time deposit balances in the second quarter last year. Time deposits represented just 21% of the Company's average total deposits in the most recent quarter. The combination of the Company's favorable deposit mix and recent deposit pricing strategies helped reduce the average rate paid on total deposits to .64% in second quarter 2010, representing a decline of 59 basis points from 1.23% in same quarter 2009.
Table 4 |
|||||||||||
QUARTERLY AVERAGE DEPOSITS BY CATEGORY |
|||||||||||
(Dollars in thousands) |
Q2 |
% of |
Q2 |
% of |
Change |
Q1 |
% of |
||||
2010 |
total |
2009 |
total |
Amount |
% |
2010 |
total |
||||
Demand deposits |
$ 523,298 |
26% |
$ 478,289 |
23% |
$ 45,009 |
9% |
$ 519,492 |
25% |
|||
Interest bearing demand |
332,850 |
16% |
298,012 |
14% |
34,838 |
12% |
321,070 |
15% |
|||
Savings |
104,052 |
5% |
87,624 |
4% |
16,428 |
19% |
98,075 |
5% |
|||
Money market |
657,454 |
32% |
599,417 |
29% |
58,037 |
10% |
642,594 |
31% |
|||
Time deposits |
431,669 |
21% |
614,472 |
30% |
(182,803) |
-30% |
507,706 |
24% |
|||
Total |
$ 2,049,323 |
100% |
$ 2,077,814 |
100% |
$ (28,491) |
-1% |
$ 2,088,937 |
100% |
|||
Average rate on total deposits |
0.64% |
1.23% |
(0.59) |
0.83% |
|||||||
The number of checking accounts, which are the foundation from which to build broader client relationships, grew by 2,100 during the second quarter of 2010, and as a result, the Company's total checking accounts surpassed 100,000 by June 30, 2010.
Table 5 |
||||||||||
NUMBER OF DEPOSIT ACCOUNTS |
||||||||||
(In thousands) |
June 30, |
% of |
June 30, |
% of |
Change |
March 31, |
% of |
|||
2010 |
total |
2009 |
total |
$ |
% |
2010 |
total |
|||
Demand deposits |
50,340 |
32% |
46,544 |
31% |
3,796 |
8% |
49,230 |
32% |
||
Interest bearing demand |
51,465 |
34% |
47,568 |
32% |
3,897 |
8% |
50,465 |
32% |
||
Savings |
28,488 |
18% |
25,356 |
17% |
3,132 |
12% |
27,773 |
18% |
||
Money market |
14,575 |
9% |
15,367 |
10% |
(792) |
-5% |
14,629 |
9% |
||
Time deposits |
11,681 |
7% |
14,921 |
10% |
(3,240) |
-22% |
13,850 |
9% |
||
Total |
156,549 |
100% |
149,756 |
100% |
6,793 |
5% |
155,947 |
100% |
||
Also, the Bank has recently been advised by the FHLB and the Federal Reserve Bank ("FRB") that it will again be able to borrow from these funding sources on more favorable terms.
Operating Results Improved Significantly from Second Quarter 2009
As shown in table 6 below, the second quarter 2010 pretax loss of $2.1 million declined $8.3 million from $10.5 million in the same quarter of 2009. Furthermore, excluding the FHLB prepayment fee and effects of taxes, the Company's adjusted net income in the second quarter of 2010 would have been $.2 million. See reconciliation below.
Table 6 |
||||||||||
SUMMARY INCOME STATEMENT |
||||||||||
(Dollars in thousands) |
Q2 |
Q2 |
Change |
Q1 |
Change |
|||||
2010 |
2009 |
$ |
% |
2010 |
$ |
% |
||||
Net interest income |
$ 18,910 |
$ 20,214 |
$ (1,304) |
-6% |
$ 20,633 |
$ (1,723) |
-8% |
|||
Provision for credit losses |
7,758 |
11,393 |
3,635 |
32% |
7,634 |
(124) |
-2% |
|||
Noninterest income |
9,625 |
5,958 |
3,667 |
62% |
6,408 |
3,217 |
50% |
|||
Noninterest expense |
22,909 |
25,244 |
2,335 |
9% |
21,095 |
(1,814) |
-9% |
|||
Loss before income taxes |
(2,132) |
(10,465) |
8,333 |
80% |
(1,688) |
(444) |
-26% |
|||
Provision (benefit) for income taxes |
1,717 |
(4,126) |
(5,843) |
-142% |
(800) |
(2,517) |
-315% |
|||
Net income (loss) |
$ (3,849) |
$ (6,339) |
$ 2,490 |
39% |
$ (888) |
$ (2,961) |
-333% |
|||
Reconciliation of adjusted net income to GAAP |
||||||||||
Net loss |
$ (3,849) |
$ (6,339) |
$ 2,490 |
39% |
$ (888) |
$ (2,961) |
-333% |
|||
Less FHLB prepayment fee (1) |
(2,326) |
- |
(2,326) |
- |
(2,326) |
|||||
Less: Impact of taxes: |
||||||||||
Unrealized gain on securities |
(1,798) |
- |
(1,798) |
(800) |
(998) |
|||||
Increase in deferred tax assets-tax return adjustments |
3,515 |
- |
3,515 |
- |
3,515 |
|||||
Benefit for income taxes |
- |
(4,126) |
(4,126) |
- |
- |
|||||
Net income (loss) excluding FHLB prepayment fee and taxes (2) |
$ 194 |
$ (10,465) |
$ 10,659 |
102% |
$ (1,688) |
$ 1,882 |
111% |
|||
(1) No tax benefit was recognized for FHLB prepayment fee. |
||||||||||
(2) 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. |
||||||||||
As a consequence of the $2.3 million fee associated with prepayment of $99 million in FHLB borrowings with an average rate of 2.93%, the second quarter 2010 net interest margin compressed 39 basis points from second quarter 2009 to 3.11%. Without the prepayment fee, the net interest margin would have been 3.48%, or relatively unchanged from second quarter 2009 and up 10 basis points from first quarter 2010. The considerable year-over-year shift in average earning assets from higher yielding loan balances to cash equivalents and investment securities balances, which collectively earned 319 basis points less than the loan portfolio, was substantially offset by a 73 basis points reduction in the rate paid on interest bearing deposits from the same quarter of 2009. Reflecting an underlying positive operational trend, the year-over-year second quarter spread between the yield earned on loans and rate paid on deposits expanded 86 basis points. As a result of prepaying higher cost FHLB borrowings and current market conditions, we anticipate the third quarter net interest margin will improve over the second quarter margin excluding the FHLB prepayment fee.
Second quarter 2010 net interest income of $18.9 million declined $1.3 million from the same quarter in 2009. This decline was caused by the $2.3 million FHLB prepayment fee.
Table 7 |
||||||||
NET INTEREST SPREAD AND MARGIN |
||||||||
(Annualized, tax-equivalent basis) |
Q2 |
Q2 |
Q1 |
|||||
2010 |
2009 |
Change |
2010 |
Change |
||||
Yield on average interest-earning assets |
4.39% |
4.97% |
(0.58) |
4.44% |
(0.05) |
|||
Rate on average interest-bearing liabilities |
1.72% |
1.83% |
(0.11) |
1.41% |
0.31 |
|||
Net interest spread |
2.67% |
3.14% |
(0.47) |
3.03% |
(0.36) |
|||
Net interest margin |
3.11% |
3.50% |
(0.39) |
3.38% |
(0.27) |
|||
Impact of FHLB prepayment fee in Q2 2010 |
-0.37% |
0.00% |
(0.37) |
0.00% |
(0.37) |
|||
Net interest margin excluding FHLB prepayment fee |
3.48% |
3.50% |
(0.02) |
3.38% |
0.10 |
|||
As shown in table 8 below, second quarter 2010 total noninterest income of $9.6 million increased $3.7 million or 62% from the same quarter last year. The increase was mainly due to a $3.5 million improvement in OREO valuation adjustments and gains or losses associated with OREO dispositions. During the second quarter 2010, the Company recorded a $1.0 million gain on sales of OREO properties compared to a loss of $.6 million in second quarter 2009.
Excluding OREO valuation adjustments and gain or losses from both quarters, the Company's noninterest income increased $.2 million year-over-year second quarter. The $.5 million or 22% growth in payment system revenues and $.2 million or 20% increase in trust and investment services revenues more than offset the $.5 million decline in gains on sales of loans. Gains on sales of loans decreased compared to second quarter 2009 due to a significant decline in originations and sales of residential mortgage loans. The Company recognized gains on sales of securities of $.5 million during the most recent quarter compared to $.6 million in same quarter last year.
Table 8 |
||||||||||
NONINTEREST INCOME |
||||||||||
(Dollars in thousands) |
Q2 |
Q2 |
Change |
Q1 |
Change |
|||||
2010 |
2009 |
$ |
% |
2010 |
$ |
% |
||||
Noninterest income |
||||||||||
Service charges on deposit accounts |
$ 4,213 |
$ 4,133 |
$ 80 |
2% |
$ 3,596 |
$ 617 |
17% |
|||
Payment systems related revenue |
2,875 |
2,359 |
516 |
22% |
2,536 |
339 |
13% |
|||
Trust and investment services revenues |
1,167 |
971 |
196 |
20% |
979 |
188 |
19% |
|||
Gains on sales of loans |
306 |
756 |
(450) |
-60% |
141 |
165 |
117% |
|||
Other |
785 |
787 |
(2) |
0% |
757 |
28 |
4% |
|||
Gain on sales of securities |
488 |
635 |
(147) |
-23% |
457 |
31 |
7% |
|||
Total |
9,834 |
9,641 |
193 |
2% |
8,466 |
1,368 |
16% |
|||
OREO gains (losses) on sale |
1,047 |
(620) |
1,667 |
269% |
301 |
746 |
248% |
|||
OREO valuation adjustments |
(1,256) |
(3,063) |
1,807 |
59% |
(2,359) |
1,103 |
-47% |
|||
Total |
(209) |
(3,683) |
3,474 |
94% |
(2,058) |
1,849 |
-90% |
|||
Total noninterest income |
$ 9,625 |
$ 5,958 |
$ 3,667 |
62% |
$ 6,408 |
$ 3,217 |
50% |
|||
As presented in table 9 below, second quarter 2010 total noninterest expense of $22.9 million decreased $2.3 million from the same quarter in 2009. The primary factors in this decline were a $1.2 million special FDIC assessment that increased other noninterest expense in the second quarter last year and lower OREO, equipment, and professional expenses in the most recent quarter. Personnel cost remained unchanged over the two periods while payment system related expenses grew $.2 million or 21% related to increased transaction activity.
Table 9 |
||||||||||
NONINTEREST EXPENSE |
||||||||||
(Dollars in thousands) |
Q2 |
Q2 |
Change |
Q1 |
Change |
|||||
2010 |
2009 |
$ |
% |
2010 |
$ |
% |
||||
Noninterest expense |
||||||||||
Salaries and employee benefits |
$ 11,322 |
$ 11,267 |
$ (55) |
0% |
$ 11,175 |
$ (147) |
-1% |
|||
Equipment |
1,606 |
1,850 |
244 |
13% |
1,576 |
(30) |
-2% |
|||
Occupancy |
2,249 |
2,295 |
46 |
2% |
2,184 |
(65) |
-3% |
|||
Payment systems related expense |
1,212 |
998 |
(214) |
-21% |
1,004 |
(208) |
-21% |
|||
Professional fees |
1,161 |
1,371 |
210 |
15% |
861 |
(300) |
-35% |
|||
Postage, printing and office supplies |
737 |
826 |
89 |
11% |
804 |
67 |
8% |
|||
Marketing |
738 |
696 |
(42) |
-6% |
687 |
(51) |
-7% |
|||
Communications |
381 |
404 |
23 |
6% |
382 |
1 |
0% |
|||
Other noninterest expense |
3,503 |
5,537 |
2,034 |
37% |
2,422 |
(1,081) |
-45% |
|||
Total |
22,909 |
25,244 |
2,335 |
9% |
21,095 |
(1,814) |
-9% |
|||
Income Taxes and Deferred Tax Asset Valuation Allowance
Second quarter 2010 income tax expense was $1.7 million compared to a tax benefit of $4.1 million in the same quarter 2009. The provision for income taxes for the second quarter 2010 was primarily the result of adjustments made to the Company's 2009 tax estimates in conjunction with finalizing its 2009 income tax return which increased the deferred tax asset valuation allowance by $3.5 million. This tax expense was partially offset by a $1.8 million tax benefit associated with an increase in the unrealized gain on our investment securities. Looking forward, such unrealized gain will fluctuate and be subject to changing interest rate environments.
The Company maintained a valuation allowance of $22.8 million against the deferred tax asset balance of $27.7 million as of June 30, 2010, for a net deferred tax asset of $4.9 million. This represented a $1.8 million increase from the March 31, 2010 net deferred tax asset balance of $3.1 million.
Table 10 |
||||||||
PROVISION (BENEFIT) FOR INCOME TAXES |
||||||||
(Dollars in thousands) |
Q2 |
Q2 |
Q1 |
|||||
2010 |
2009 |
Change |
2010 |
Change |
||||
Benefit for income taxes excluding deferred tax asset |
||||||||
valuation allowance |
$ - |
$ (4,126) |
$ 4,126 |
$ - |
$ - |
|||
Provision (benefit) for taxes from deferred |
||||||||
tax asset valuation allowance: |
||||||||
Unrealized gain on securities |
(1,798) |
- |
(1,798) |
(800) |
(998) |
|||
Increase in deferred tax assets-tax return adjustments |
3,515 |
- |
3,515 |
- |
3,515 |
|||
Total provision (benefit) for income taxes |
$ 1,717 |
$ (4,126) |
$ 5,843 |
$ (800) |
$ 2,517 |
|||
Credit Quality
The Company recorded a second quarter 2010 provision for credit losses of $7.8 million, a decline from $11.4 million in the same quarter of 2009. Consistent with the first quarter of 2010, the latest quarter marked a reduction in loan net charge-offs compared to the corresponding quarter a year ago. Second quarter 2010 net charge-offs of $4.7 million or 1.15% of average loans on an annualized basis, decreased $6.6 million from $11.3 million in the second quarter 2009, and was at the lowest level since the fourth quarter 2007. The reduction in net charge-offs from second quarter 2009 was primarily attributable to a $6.6 million decline in real estate construction loan net charge-offs. The Company's future provisioning will be heavily dependent on the local real estate market, level of market interest rates, and general economic conditions nationally and in the areas in which we do business.
Table 11 |
|||||||
ALLOWANCE FOR CREDIT LOSSES AND NET CHARGEOFFS |
|||||||
(Dollars in thousands) |
Q2 |
Q1 |
Q4 |
Q3 |
Q2 |
||
2010 |
2010 |
2009 |
2009 |
2009 |
|||
Allowance for credit losses, beginning of period |
$ 41,299 |
$ 39,418 |
$ 40,036 |
$ 38,569 |
$ 38,463 |
||
Provision for credit losses loans other than two-step loans |
7,569 |
7,539 |
35,149 |
19,575 |
9,004 |
||
Provision for credit losses two-step loans |
189 |
95 |
84 |
725 |
2,389 |
||
Total provision for credit losses |
7,758 |
7,634 |
35,233 |
20,300 |
11,393 |
||
Loan net charge-offs: |
|||||||
Commercial |
1,684 |
839 |
13,271 |
5,744 |
1,333 |
||
Commercial real estate construction |
248 |
487 |
- |
324 |
- |
||
Residential real estate construction |
432 |
734 |
10,538 |
8,536 |
7,266 |
||
Total real estate construction |
680 |
1,221 |
10,538 |
8,860 |
7,266 |
||
Mortgage |
478 |
909 |
4,734 |
3,018 |
1,244 |
||
Nonstandard mortgage |
641 |
1,497 |
692 |
725 |
320 |
||
Home equity |
627 |
914 |
1,346 |
203 |
529 |
||
Total real estate mortgage |
1,746 |
3,320 |
6,772 |
3,946 |
2,093 |
||
Commercial real estate |
275 |
95 |
4,733 |
(79) |
172 |
||
Installment and consumer |
146 |
137 |
285 |
128 |
251 |
||
Overdraft |
179 |
141 |
252 |
234 |
172 |
||
Total loan net charge-offs |
4,710 |
5,753 |
35,851 |
18,833 |
11,287 |
||
Total allowance for credit losses |
$ 44,347 |
$ 41,299 |
$ 39,418 |
$ 40,036 |
$ 38,569 |
||
Components of allowance for credit losses: |
|||||||
Allowance for loan losses |
$ 43,329 |
$ 40,446 |
$ 38,490 |
$ 39,075 |
$ 37,700 |
||
Reserve for unfunded commitments |
1,018 |
853 |
928 |
961 |
869 |
||
Total allowance for credit losses |
$ 44,347 |
$ 41,299 |
$ 39,418 |
$ 40,036 |
$ 38,569 |
||
Net loan charge-offs to average loans (annualized) |
1.15% |
1.37% |
7.94% |
4.01% |
2.30% |
||
Allowance for loan losses to total loans |
2.70% |
2.43% |
2.23% |
2.14% |
1.97% |
||
Allowance for credit losses to total loans |
2.77% |
2.48% |
2.29% |
2.20% |
2.01% |
||
Allowance for loan losses to nonperforming loans |
55% |
47% |
39% |
30% |
30% |
||
Allowance for credit losses to nonperforming loans |
56% |
48% |
40% |
30% |
30% |
||
The June 30, 2010 allowance for credit losses of $44.3 million or 2.77% of total outstanding loan balances expanded from $38.6 million or 2.01% of loan balances a year ago. The combination of higher general valuation allowances in the June 30, 2010 allowance model, an unfavorable loan risk rating migration over the past year, and a larger unallocated allowance, caused the increase in the allowance for credit losses relative to total loan balances. At June 30, 2010, the unallocated portion of the allowance for loan losses amounted to $6.7 million or 15% of the total allowance for credit losses, an increase from $3.8 million or 10% at the end of the second quarter 2009. As a result of provision for credit losses exceeding net charge-offs by $3.0 million in the second quarter and lower June 30, 2010 loan balances, the allowance for credit losses as a percentage of total loans increased 29 basis points to 2.77% from 2.48% at March 31, 2010. As shown in table 17, year-to-date provision for credit losses exceeded net charge-offs by $5.0 million. The Company's estimate of appropriate reserve amounts will continue to be primarily dependent on the loan portfolio's credit quality performance trends, including net charge-offs, which will be heavily dependent on economic conditions.
Total nonperforming assets were $116.2 million or 4.6% of total assets as of June 30, 2010, which represented the fifth consecutive quarterly decline. The balance of nonperforming loans had decreased 45% or $94.4 million from $210.6 million at June 30, 2009, at which time nonperforming assets represented 8.1% of total assets. The balance of total nonperforming assets at quarter end reflected write-downs totaling $63 million or 36% from the original principal loan balance compared to write-downs of 27% twelve months ago. Total nonperforming assets fell $14.5 million or 11% during the most recent quarter. The allowance for credit losses represented 56% of nonperforming loans at June 30, 2010, an increase from 30% from twelve months ago.
At June 30, 2010, total delinquent loans 30-89 days past due were $2.7 million or .17% of total loans, a reduction from $16.1 million and .84% a year ago. For further details see table 18.
Table 12 |
|||||||
NONPERFORMING ASSETS |
|||||||
(Dollars in thousands) |
June 30, |
March 31, |
Dec. 31, |
Sept. 30, |
June 30, |
||
2010 |
2010 |
2009 |
2009 |
2009 |
|||
Loans on nonaccrual status: |
|||||||
Commercial |
$ 15,317 |
$ 24,856 |
$ 36,211 |
$ 49,871 |
$ 34,396 |
||
Real estate construction: |
|||||||
Commercial real estate construction |
3,391 |
3,939 |
1,488 |
2,449 |
2,922 |
||
Residential real estate construction |
19,465 |
19,776 |
22,373 |
42,277 |
56,507 |
||
Total real estate construction |
22,856 |
23,715 |
23,861 |
44,726 |
59,429 |
||
Real estate mortgage: |
|||||||
Mortgage |
14,535 |
9,829 |
11,563 |
12,498 |
14,179 |
||
Nonstandard mortgage |
6,121 |
9,327 |
8,752 |
10,810 |
10,486 |
||
Home equity |
2,198 |
2,248 |
2,036 |
1,599 |
1,259 |
||
Total real estate mortgage |
22,854 |
21,404 |
22,351 |
24,907 |
25,924 |
||
Commercial real estate |
17,542 |
15,322 |
16,778 |
12,463 |
6,905 |
||
Installment and consumer |
74 |
172 |
144 |
39 |
69 |
||
Total nonaccrual loans |
78,643 |
85,469 |
99,345 |
132,006 |
126,723 |
||
90 days past due not on nonaccrual |
- |
- |
- |
- |
- |
||
Total nonperforming loans |
78,643 |
85,469 |
99,345 |
132,006 |
126,723 |
||
Other real estate owned |
37,578 |
45,238 |
53,594 |
76,570 |
83,830 |
||
Total nonperforming assets |
$ 116,221 |
$ 130,707 |
$ 152,939 |
$ 208,576 |
$ 210,553 |
||
Nonperforming loans to total loans |
4.91% |
5.13% |
5.76% |
7.25% |
6.61% |
||
Nonperforming assets to total assets |
4.64% |
4.91% |
5.60% |
7.86% |
8.06% |
||
Over the past year total nonaccrual loans declined $48.1 million or 38% to $78.6 million at June 30, 2010. This reduction was largely due to the Company taking ownership of additional residential site development and construction properties related to loans which previously were on nonaccrual status, nonaccrual loan payoffs, and the disposition of certain large nonaccrual commercial loans. At June 30, 2010, the total nonaccrual loan portfolio had been written down 25% from the original principal balance compared to 21% at the end of the second quarter a year ago.
As indicated in table 13 below, the Company's OREO property disposition activities continued at a consistent pace. During the most recent quarter, the Company disposed of 170 OREO properties with a book value of $13.6 million. At June 30, 2010, the OREO portfolio consisted of 446 properties valued at $37.6 million. The quarter end OREO balance reflected write-downs totaling 52% from the original loan principal compared to 34% twelve months ago. The largest segments of the OREO balance at June 30, 2010 were completed homes followed by residential site development projects. In the quarter just ended, the Company sold two residential site development properties with a total of 109 lots and a book value of $4.7 million for a $.4 million gain upon final disposition. The site development projects remaining as of quarter end are primarily located in Vancouver and Washougal, Washington and in Beaverton and Salem, Oregon.
Table 13 |
||||||||||||
OTHER REAL ESTATE OWNED ACTIVITY |
||||||||||||
(Dollars in thousands) |
Q2 2010 |
Q1 2010 |
Q4 2009 |
Q3 2009 |
Q2 2009 |
|||||||
Amount |
# |
Amount |
# |
Amount |
# |
Amount |
# |
Amount |
# |
|||
Beginning balance |
$ 45,238 |
596 |
$ 53,594 |
672 |
$ 76,570 |
301 |
$ 83,830 |
335 |
$ 87,189 |
349 |
||
Additions to OREO |
7,209 |
20 |
5,003 |
15 |
26,293 |
536 |
12,064 |
36 |
14,819 |
48 |
||
Dispositions of OREO |
(13,612) |
(170) |
(11,000) |
(91) |
(42,329) |
(165) |
(15,527) |
(70) |
(15,114) |
(62) |
||
OREO valuation adjustments |
(1,257) |
- |
(2,359) |
- |
(6,940) |
- |
(3,797) |
- |
(3,064) |
- |
||
Ending balance |
37,578 |
446 |
45,238 |
596 |
$ 53,594 |
672 |
$ 76,570 |
301 |
$ 83,830 |
335 |
||
Table 14 |
||||||||
OTHER REAL ESTATE OWNED BY PROPERTY TYPE |
||||||||
(Dollars in thousands) |
June 30, |
# of |
Mar. 31, |
# of |
Dec. 31, |
# of |
||
2010 |
properties |
2010 |
properties |
2009 |
properties |
|||
Homes |
$ 17,254 |
75 |
$ 21,040 |
91 |
$ 29,435 |
118 |
||
Residential site developments |
7,296 |
265 |
13,488 |
400 |
14,851 |
453 |
||
Lots |
4,750 |
67 |
5,114 |
71 |
5,235 |
71 |
||
Land |
3,474 |
10 |
2,682 |
7 |
1,607 |
7 |
||
Income producing properties |
2,996 |
6 |
1,094 |
4 |
1,255 |
4 |
||
Condominiums |
1,111 |
12 |
1,111 |
12 |
982 |
12 |
||
Multifamily |
697 |
11 |
709 |
11 |
229 |
7 |
||
Total |
$ 37,578 |
446 |
$ 45,238 |
596 |
$ 53,594 |
672 |
||
Future financial results will be impacted by the Company's ability to dispose of its OREO properties at prices that are in line with current valuation expectations.
Other:
The Company will hold a Webcast conference call Friday, July 16, 2010, at 11:00 a.m. Pacific Time, during which the Company will discuss second quarter 2010 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 "2nd Quarter 2010 Earnings Conference Call" tab. The conference call may also be accessed by dialing (877) 247-4281 Conference ID#: 83069438 a few minutes prior to 11:00 a.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 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. These statements can often be identified by words such as "expects," "believes," "anticipates," or "will," or other words of similar meaning. 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 as well as (ii) all risk factors identified in our Annual Report on Form 10-K for the year ended December 31, 2009, including under the headings "Forward Looking Statement Disclosure" and in the section "Risk Factors," and in our most recent Quarterly Report on Form 10-Q.
Table 15 |
||||||||||
INCOME STATEMENT |
||||||||||
(Dollars in thousands) |
Q2 |
Q2 |
Change |
Q1 |
Year to date |
Year to date |
||||
2010 |
2009 |
$ |
% |
2010 |
2010 |
2009 |
||||
Net interest income |
||||||||||
Interest and fees on loans |
$ 22,416 |
$ 26,247 |
$ (3,831) |
-15% |
$ 22,843 |
$ 45,259 |
$ 52,364 |
|||
Interest on investment securities |
4,237 |
2,572 |
1,665 |
65% |
4,207 |
8,444 |
5,050 |
|||
Other interest income |
163 |
50 |
113 |
226% |
148 |
311 |
63 |
|||
Total interest income |
26,816 |
28,869 |
(2,053) |
-7% |
27,198 |
54,014 |
57,477 |
|||
Interest expense on deposit accounts |
3,275 |
6,359 |
3,084 |
48% |
4,293 |
7,568 |
12,844 |
|||
Interest on borrowings and subordinated debentures |
4,631 |
2,296 |
(2,335) |
-102% |
2,272 |
6,903 |
4,289 |
|||
Total interest expense |
7,906 |
8,655 |
749 |
9% |
6,565 |
14,471 |
17,133 |
|||
Net interest income |
18,910 |
20,214 |
(1,304) |
-6% |
20,633 |
39,543 |
40,344 |
|||
Provision for credit losses |
7,758 |
11,393 |
3,635 |
32% |
7,634 |
15,392 |
34,524 |
|||
Noninterest income |
||||||||||
Service charges on deposit accounts |
4,213 |
4,133 |
80 |
2% |
3,596 |
7,809 |
7,938 |
|||
Payment systems related revenue |
2,875 |
2,359 |
516 |
22% |
2,536 |
5,411 |
4,496 |
|||
Trust and investment services revenues |
1,167 |
971 |
196 |
20% |
979 |
2,146 |
1,890 |
|||
Gains on sales of loans |
306 |
756 |
(450) |
-60% |
141 |
447 |
1,099 |
|||
OREO valuation adjustments and gains/(losses) on sale |
(209) |
(3,683) |
3,474 |
94% |
(2,058) |
(2,267) |
(8,487) |
|||
Other |
785 |
787 |
(2) |
0% |
757 |
1,542 |
2,729 |
|||
Other-than-temporary impairment losses |
- |
- |
- |
0% |
- |
- |
(192) |
|||
Gain on sales of securities |
488 |
635 |
(147) |
-23% |
457 |
945 |
833 |
|||
Total noninterest income |
9,625 |
5,958 |
3,667 |
62% |
6,408 |
16,033 |
10,306 |
|||
Noninterest expense |
||||||||||
Salaries and employee benefits |
11,322 |
11,267 |
(55) |
0% |
11,175 |
22,497 |
22,462 |
|||
Equipment |
1,606 |
1,850 |
244 |
13% |
1,576 |
3,182 |
3,742 |
|||
Occupancy |
2,249 |
2,295 |
46 |
2% |
2,184 |
4,433 |
4,661 |
|||
Payment systems related expense |
1,212 |
998 |
(214) |
-21% |
1,004 |
2,216 |
1,917 |
|||
Professional fees |
1,161 |
1,371 |
210 |
15% |
861 |
2,022 |
2,298 |
|||
Postage, printing and office supplies |
737 |
826 |
89 |
11% |
804 |
1,541 |
1,621 |
|||
Marketing |
738 |
696 |
(42) |
-6% |
687 |
1,425 |
1,326 |
|||
Communications |
381 |
404 |
23 |
6% |
382 |
763 |
797 |
|||
Goodwill impairment |
- |
- |
- |
0% |
- |
- |
13,059 |
|||
Other noninterest expense |
3,503 |
5,537 |
2,034 |
37% |
2,422 |
5,925 |
8,735 |
|||
Total noninterest expense |
22,909 |
25,244 |
2,335 |
9% |
21,095 |
44,004 |
60,618 |
|||
Loss before income taxes |
(2,132) |
(10,465) |
8,333 |
80% |
(1,688) |
(3,820) |
(44,492) |
|||
Provision (benefit) for income taxes |
1,717 |
(4,126) |
(5,843) |
-142% |
(800) |
917 |
(14,554) |
|||
Net loss |
$ (3,849) |
$ (6,339) |
$ 2,490 |
39% |
$ (888) |
$ (4,737) |
$ (29,938) |
|||
Loss per share: |
||||||||||
Basic |
$ (0.04) |
$ (0.41) |
$ 0.37 |
$ (0.01) |
$ (0.06) |
$ (1.91) |
||||
Diluted |
$ (0.04) |
$ (0.41) |
$ 0.37 |
$ (0.01) |
$ (0.06) |
$ (1.91) |
||||
Weighted average common shares |
92,123 |
15,522 |
76,601 |
67,125 |
79,693 |
15,504 |
||||
Weighted average diluted shares |
92,123 |
15,522 |
76,601 |
67,125 |
79,693 |
15,504 |
||||
Tax equivalent net interest income |
$ 19,205 |
$ 20,580 |
$ (1,375) |
$ 20,954 |
$ 40,159 |
$ 41,125 |
||||
Table 16 |
||||||
BALANCE SHEETS |
||||||
(Dollars in thousands) |
June 30, |
June 30, |
Dec. 31, |
Dec. 31, |
||
2010 |
2009 |
2009 |
2008 |
|||
Assets: |
||||||
Cash and due from banks |
$ 45,685 |
$ 49,181 |
$ 47,708 |
$ 58,046 |
||
Federal funds sold |
13,431 |
6,643 |
20,559 |
6,682 |
||
Interest-bearing deposits in other banks |
109,781 |
92,458 |
234,830 |
50 |
||
Total cash and cash equivalents |
168,897 |
148,282 |
303,097 |
64,778 |
||
Investment securities |
646,231 |
369,914 |
562,277 |
198,515 |
||
Total loans |
1,602,032 |
1,917,028 |
1,724,842 |
2,064,796 |
||
Allowance for loan losses |
(43,329) |
(37,700) |
(38,490) |
(28,920) |
||
Loans, net |
1,558,703 |
1,879,328 |
1,686,352 |
2,035,876 |
||
OREO, net |
37,578 |
83,830 |
53,594 |
70,110 |
||
Goodwill and other intangibles |
477 |
796 |
637 |
14,054 |
||
Other assets |
93,600 |
131,333 |
127,590 |
132,807 |
||
Total assets |
$ 2,505,486 |
$ 2,613,483 |
$ 2,733,547 |
$ 2,516,140 |
||
Liabilities and Stockholders' Equity: |
||||||
Demand |
$ 533,865 |
$ 483,397 |
$ 542,215 |
$ 478,292 |
||
Savings and interest-bearing demand |
433,001 |
396,100 |
422,838 |
346,206 |
||
Money market |
661,913 |
606,349 |
657,306 |
615,588 |
||
Time deposits |
375,321 |
623,521 |
524,525 |
584,293 |
||
Total deposits |
2,004,100 |
2,109,367 |
2,146,884 |
2,024,379 |
||
Borrowings and subordinated debentures |
215,199 |
314,299 |
314,299 |
274,059 |
||
Reserve for unfunded commitments |
1,018 |
869 |
928 |
1,014 |
||
Other liabilities |
17,757 |
20,282 |
22,378 |
18,501 |
||
Total liabilities |
2,238,074 |
2,444,817 |
2,484,489 |
2,317,953 |
||
Stockholders' equity |
267,412 |
168,666 |
249,058 |
198,187 |
||
Total liabilities and stockholders' equity |
$ 2,505,486 |
$ 2,613,483 |
$ 2,733,547 |
$ 2,516,140 |
||
AVERAGE BALANCE SHEETS |
||||||
(Dollars in thousands) |
QTD June 30, |
QTD June 30, |
QTD Mar. 31, |
Year to date |
Year to date |
|
2010 |
2009 |
2010 |
2010 |
2009 |
||
Cash and due from banks |
$ 48,232 |
$ 48,611 |
$ 46,480 |
$ 47,361 |
$ 46,183 |
|
Federal funds sold |
3,605 |
5,781 |
12,912 |
8,233 |
4,854 |
|
Interest-bearing deposits in other banks |
249,007 |
69,216 |
227,278 |
238,203 |
41,383 |
|
Total cash and cash equivalents |
300,844 |
123,608 |
286,670 |
293,797 |
92,420 |
|
Investment securities |
578,669 |
297,662 |
557,378 |
568,082 |
249,536 |
|
Total loans |
1,645,189 |
1,971,467 |
1,702,763 |
1,673,816 |
2,003,077 |
|
Allowance for loan losses |
(42,895) |
(38,393) |
(39,957) |
(41,434) |
(34,331) |
|
Loans, net |
1,602,294 |
1,933,074 |
1,662,806 |
1,632,382 |
1,968,746 |
|
Total interest earning assets |
2,477,349 |
2,360,328 |
2,513,313 |
2,489,191 |
2,314,210 |
|
Other assets |
158,604 |
212,360 |
170,521 |
164,279 |
215,250 |
|
Total assets |
2,640,411 |
2,566,705 |
2,677,375 |
2,658,540 |
2,525,952 |
|
Demand |
$ 523,298 |
$ 478,289 |
$ 519,492 |
$ 521,405 |
$ 474,002 |
|
Savings and interest-bearing demand |
436,902 |
385,636 |
419,145 |
428,073 |
366,927 |
|
Money market |
657,454 |
599,417 |
642,594 |
650,065 |
596,777 |
|
Time deposits |
431,669 |
614,472 |
507,706 |
469,477 |
592,384 |
|
Total deposits |
2,049,323 |
2,077,814 |
2,088,937 |
2,069,020 |
2,030,090 |
|
Borrowings and subordinated debentures |
313,210 |
297,951 |
314,299 |
313,752 |
293,702 |
|
Total interest bearing liabilities |
1,839,235 |
1,897,476 |
1,883,744 |
1,861,367 |
1,849,790 |
|
Other liabilities |
17,118 |
16,883 |
19,762 |
18,182 |
16,624 |
|
Stockholders' equity |
260,760 |
174,057 |
254,377 |
257,586 |
185,536 |
|
Total liabilities and stockholders' equity |
$ 2,640,411 |
$ 2,566,705 |
$ 2,677,375 |
$ 2,658,540 |
$ 2,525,952 |
|
The following table presents information with respect to the Company's allowance for credit losses.
Table 17 |
||||
ALLOWANCE FOR CREDIT LOSSES |
||||
(Dollars in thousands) |
Year to date |
Year to date |
||
June 30, |
June 30, |
|||
2010 |
2009 |
|||
Allowance for credit losses, beginning of period |
$ 39,418 |
$ 29,934 |
||
Provision for credit losses loans other than two-step loans |
15,108 |
29,032 |
||
Provision for credit losses two-step loans |
284 |
5,492 |
||
Total provision for credit losses |
15,392 |
34,524 |
||
Loan charge-offs: |
||||
Commercial |
3,248 |
3,000 |
||
Commercial real estate construction |
735 |
- |
||
Residential real estate construction |
1,104 |
9,992 |
||
Two-step residential construction |
284 |
6,067 |
||
Total real estate construction |
2,123 |
16,059 |
||
Mortgage |
1,447 |
2,262 |
||
Nonstandard mortgage |
2,140 |
2,249 |
||
Home equity |
1,562 |
1,810 |
||
Total real estate mortgage |
5,149 |
6,321 |
||
Commercial real estate |
391 |
578 |
||
Installment and consumer |
349 |
399 |
||
Overdraft |
402 |
479 |
||
Total loan charge-offs |
11,662 |
26,836 |
||
Loan recoveries: |
||||
Commercial |
725 |
609 |
||
Commercial real estate construction |
- |
- |
||
Residential real estate construction |
222 |
14 |
||
Two-step residential construction |
- |
154 |
||
Total real estate construction |
222 |
168 |
||
Mortgage |
60 |
3 |
||
Nonstandard mortgage |
2 |
- |
||
Home equity |
21 |
- |
||
Total real estate mortgage |
83 |
3 |
||
Commercial real estate |
21 |
- |
||
Installment and consumer |
66 |
38 |
||
Overdraft |
82 |
129 |
||
Total loan recoveries |
1,199 |
947 |
||
Net charge-offs |
10,463 |
25,889 |
||
Total allowance for credit losses |
$ 44,347 |
$ 38,569 |
||
Components of allowance for credit losses: |
||||
Allowance for loan losses |
$ 43,329 |
$ 37,700 |
||
Reserve for unfunded commitments |
1,018 |
869 |
||
Total allowance for credit losses |
$ 44,347 |
$ 38,569 |
||
Net loan charge-offs to average loans |
1.26% |
2.61% |
||
The following table presents information about the Company's total delinquent loans.
Table 18 |
|||||
DELINQUENT LOANS 30-89 DAYS PAST DUE AS A % OF LOAN CATEGORY |
|||||
(Dollars in thousands) |
June 30, |
June 30, |
March 31, |
||
2010 |
2009 |
2010 |
|||
Commercial loans |
0.14% |
0.42% |
0.10% |
||
Real estate construction loans |
1.48% |
2.93% |
0.72% |
||
Real estate mortgage loans |
0.18% |
1.84% |
0.53% |
||
Commercial real estate loans |
0.04% |
0.13% |
0.30% |
||
Installment and other consumer loans |
1.27% |
0.50% |
0.69% |
||
Total delinquent loans 30-89 days past due |
$ 2,743 |
$ 16,082 |
$ 5,566 |
||
Delinquent loans to total loans |
0.17% |
0.84% |
0.33% |
||
The following table presents information about the Company's activity in other real estate owned.
Table 19 |
||||||||
OTHER REAL ESTATE OWNED ACTIVITY |
||||||||
(Dollars in thousands) |
||||||||
Two-step related OREO activity |
Non two-step related OREO activity |
Total OREO related activity |
||||||
Amount |
Number |
Amount |
Number |
Amount |
Number |
|||
Full year 2009: |
||||||||
Beginning balance January 1, 2009 |
$ 60,022 |
251 |
$ 10,088 |
37 |
$ 70,110 |
288 |
||
Additions to OREO |
34,724 |
114 |
39,450 |
585 |
74,174 |
699 |
||
Capitalized improvements |
4,650 |
283 |
4,933 |
|||||
Valuation adjustments |
(14,704) |
(3,858) |
(18,562) |
|||||
Disposition of OREO properties |
(59,030) |
(243) |
(18,031) |
(72) |
(77,061) |
(315) |
||
Ending balance Dec. 31, 2009 |
$ 25,662 |
122 |
$ 27,932 |
550 |
$ 53,594 |
672 |
||
Quarterly 2010 |
||||||||
Additions to OREO |
288 |
2 |
3,559 |
13 |
3,847 |
15 |
||
Capitalized improvements |
987 |
169 |
1,156 |
|||||
Valuation adjustments |
(1,846) |
(513) |
(2,359) |
|||||
Disposition of OREO properties |
(6,937) |
(27) |
(4,063) |
(64) |
(11,000) |
(91) |
||
Ending balance March 31, 2010 |
$ 18,154 |
97 |
$ 27,084 |
499 |
$ 45,238 |
596 |
||
Additions to OREO |
- |
1 |
5,924 |
19 |
5,924 |
20 |
||
Capitalized improvements |
497 |
788 |
1,285 |
|||||
Valuation adjustments |
(493) |
(764) |
(1,257) |
|||||
Disposition of OREO properties |
(5,197) |
(18) |
(8,415) |
(152) |
(13,612) |
(170) |
||
Ending balance June 30, 2010 |
$ 12,961 |
80 |
$ 24,617 |
366 |
$ 37,578 |
446 |
||
The following table presents information regarding common shares outstanding at June 30, 2010 on an actual and diluted basis.
Table 20 |
|||
COMMON SHARE AND DILUTIVE SHARE INFORMATION |
|||
(Shares in thousands) |
|||
Number |
|||
of shares |
|||
Common shares outstanding at June 30, 2010 |
96,421 |
(1) |
|
Common shares issuable on conversion of series B preferred stock (2) |
6,066 |
||
Dilutive impact of warrants (3) |
3,738 |
(4) |
|
Dilutive impact of stock options and restricted stock |
127 |
(4) |
|
Total potential dilutive shares |
106,352 |
(5) |
|
(1) Includes 71.4 million shares issued on the conversion of Series A preferred stock, 5.0 million shares related to the rights |
|||
offering and 2.8 million shares from the discretionary equity issuance program. |
|||
(2) 121,328 shares of series B preferred stock outstanding at June 30, 2010. |
|||
(3) Warrants to purchase 240,000 shares at a price of $100 per series B preferred share outstanding at June 30, 2010. |
|||
(4) The estimated dilutive impact of warrants, options, and restricted stock are shown. These figures are calculated |
|||
under the treasury method utilizing an average stock price of $2.90 for the period and do not reflect the number |
|||
of common shares that would be issued if securities were exercised in full. |
|||
(5) Assumes all shares were outstanding at January 1, 2010 for the entire period. Common stock equivalents were not |
|||
considered dilutive in the earnings per share disclosures presented due to net losses in such periods. Potential |
|||
dilutive shares is a non-GAAP figure and not the weighted average diluted shares that would have been disclosed if |
|||
the Company was not in a loss position. |
|||
SOURCE West Coast Bancorp
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