West Coast Bancorp Announces 23% Increase in 1998 Adjusted Operating Income; Northwest Bank Holding Company Reports Strong Growth Following Consolidation Announcement

Business Wire, Jan 27, 1999

LAKE OSWEGO, Ore.--(BUSINESS WIRE)--Jan. 27, 1999--West Coast Bancorp (Nasdaq:WCBO), the Northwest-based community bank holding company, reported net income of $3,653,000 or $.25 per diluted share in the fourth quarter of 1998, compared to $3,643,000 or $.25 per diluted share in the fourth quarter of 1997.

The 1998 fourth quarter results include a one-time $1.9 million restructuring charge ($1.2 million after income taxes) resulting from the company's previously announced consolidation of its subsidiary banks. The 1997 fourth quarter results were impacted by non-recurring merger related costs of $598,000 ($460,000 after income taxes). After adjusting for these fourth quarter non-recurring events, adjusted operating net income was $4,855,000, or $.33 per diluted share, up 18% compared to adjusted operating net income of $4,103,000, or $.28 per diluted share, in the like quarter of 1997.

West Coast also reported consolidated net income of $14,059,000, or $.96 per diluted share, for the year ended December 31, 1998, compared to consolidated net income of $14,439,000, or $1.01 per diluted share, for the year ended 1997. West Coast's 1998 net income was impacted by one-time, merger-related costs of $1,060,000, and the 1997 results were favorably impacted by $190,000 for certain one-time, non-recurring items. Adjusting for these non-recurring items and the non-recurring 1998 restructuring charges of $3,768,000 ($2,449,000 after income taxes), the 1998 operating net income was $17,568,000, or $1.20 per diluted share, an increase of 23 percent over 1997 adjusted operating net income of $14,249,000, or $1.00 per diluted share.

Total deposits grew to $1.108 billion at December 31, 1998, up $59 million or 6 percent in the quarter from $1.049 billion at September 30, 1998, and up $150 million or 16 percent for the year from $958 million at December 31, 1997. Noninterest bearing demand deposits ended the year at $205 million up $15 million or 8 percent from $190 million at September 30, 1998, and up $42 million or 26 percent from $163 million at December 31, 1997. Noninterest bearing demand deposits represented 18.5 percent of the total deposits at the end of the fourth quarter of 1998.

Total loans increased to $862 million at December 31, 1998, up $35 million or 4 percent in the quarter from $827 million at September 30, 1998, and up $85 million or 11 percent for the year from $777 million at December 31, 1997. West Coast Bancorp had total assets of $1.255 billion and loans, net of the allowance for loan losses, of $850 million, representing 68 percent of total assets at December 31, 1998.

West Coast Bank has continued its expansion and opened its latest branch in McMinnville, Oregon, in January and has applications pending for a planned expansion in the Vancouver, Washington, area.

"We experienced significant growth in the fourth quarter of the year, following our restructuring announcement and it is our strategic intent to continue to expand our company," stated Victor L. Bartruff, president and chief executive officer of West Coast Bancorp and West Coast Bank. "As we have been in touch with our communities and customers, the one message that keeps being repeated to us is `not to act like a big bank.' People that bank with us like the personalized customer service that we offer which they feel they can no longer get from the mega-banks. Our plans and efforts are focused on our customers needs and we will continue our emphases of providing high service quality and the personalized approach we are known for," concluded Bartruff.

West Coast Bancorp earned $15.5 million in net interest income during the fourth quarter of 1998, up from $15.2 million in the fourth quarter of 1997. The net interest margin declined to 5.60% during the fourth quarter of 1998, compared to 5.81% in the third quarter of 1998 and 6.19% in the fourth quarter of 1997. The company could see further declines in its interest margin, caused from continued refinance activity due to the current, low interest rate environment, continued strong competition for loans and deposits in the markets it serves, and other economic factors that could impact the company's net interest margin.

Noninterest income increased to $5.45 million, up from $4.60 million in the third quarter of 1998 and up from $3.88 million in the fourth quarter of 1997. Noninterest income was up $1.57 million or 40 percent over the fourth quarter of 1997, due mainly to strong increases in loan sale volume assisted by the low interest rate environment, and increases in other service charge and trust income reported in the quarter. Noninterest expenses increased to $15.2 million ($13.4 million net of the restructuring costs) in the fourth quarter of 1998, compared to $14.9 ($12.9 million net of the restructuring costs) in the third quarter 1998 and $12.7 million ($12.1 million net of nonrecurring merger expenses) in the fourth quarter of 1997. The efficiency ratio was 71.13 percent (62.47 percent, net of the one-time restructuring costs) for the quarter ended December 31, 1998, compared to 71.84 percent (62.56 percent, net of the one-time restructuring costs) for the prior quarter ended September 30, 1998. The efficiency ratio was 64.89 percent (61.83 percent, net of non-recurring items) in the fourth quarter of 1997. To account for the company's tax beneficial municipal income the efficiency ratio is reported on a tax equivalent basis, all reported periods now use this method.