WEST COAST BANCORP AND SUBSIDIARIES
U.S. Securities And Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from N/A to N/A
COMMISSION FILE NUMBER: 0-10897
WEST COAST BANCORP
(Exact name of small business issuer as
specified in its charter)
CALIFORNIA 95-3586860
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
4770 CAMPUS DRIVE, SUITE 250
Newport Beach, California 92660-1833
(Address of principal executive offices)
(714) 442-9330
(Registrant's telephone number, including area code)
N/A
(Former name, former address, and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
YES X NO
--- ---
Number of shares outstanding of each of the issuer's
classes of common equity as of April 30, 1997:
9,168,942
Transitional Small Business Disclosure Format Yes No X
-- --
This document contains a total of 18 pages.
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WEST COAST BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
(in thousands, except share data) 1997 1996
-----------------------
ASSETS
Cash and due from bank $ 6,838 $ 7,246
Interest-bearing deposits with
financial institutions 793 1,982
Investment securities held to maturity -
approximate fair value of $2,626 in
1996 -- 2,607
Investment securities available-for-sale
at fair value 9,448 2,680
Federal funds sold 7,400 10,100
Loans 86,949 82,657
Less allowance for credit losses (2,887) (2,848)
-----------------------
Net loans 84,062 79,809
-----------------------
Real estate owned, net 1,243 1,243
Premises and equipment, net 807 932
Refundable and deferred taxes 870 870
Other assets 1,009 1,518
-----------------------
$ 112,470 $ 108,987
=======================
LIABILITIES
Deposits:
Demand, non-interest bearing $ 34,470 $ 33,983
Savings, money market & interest
bearing demand 35,655 34,342
Time certificates under $100,000 20,613 18,260
Time certificates of $100,000 or more 8,935 8,972
-----------------------
Total deposits 99,673 95,557
Other borrowed funds 822 834
Other liabilities 971 1,642
-----------------------
Total liabilities 101,466 98,033
Commitments and Contingencies
Minority interest in subsidiary 4,866 4,819
-----------------------
SHAREHOLDERS' EQUITY
Common stock, no par value - 30,000,000
shares authorized, 9,168,942 shares
issued and outstanding in 1997 and 1996 30,176 30,176
Securities valuation allowance (59) (25)
Accumulated deficit (23,979) (24,016)
-----------------------
Total shareholders' equity 6,138 6,135
-----------------------
$ 112,470 $ 108,987
=======================
(See accompanying notes to consolidated financial statements)
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WEST COAST BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
(in thousands, March 31,
except share data) 1997 1996
---------------------
INTEREST INCOME
Loans, including fees $ 2,147 $ 2,032
Investment securities 114 118
Deposits with banks 20 62
Federal funds sold 144 177
---------------------
Total interest income 2,425 2,389
INTEREST EXPENSE
Interest on deposits 519 571
Other 46 151
---------------------
Total interest expense 565 722
---------------------
Net interest income 1,860 1,667
Provision for credit losses -- (14)
---------------------
Net interest income after
provision for credit losses 1,860 1,681
Other operating income 171 282
Other operating expenses 1,901 1,919
(Loss) gain on liquidation of WCV, Inc. (1) 122
Minority interest expense 92 --
Loss on sale of Sunwest shares -- 437
---------------------
Income (loss) before income taxes 37 (271)
Income taxes -- --
---------------------
Net income (loss) $ 37 $ (271)
=====================
Net income (loss) per common share $ . - $ (.03)
=====================
Weighted average number of common
and shares outstanding 9,169 9,169
=====================
(See accompanying notes to consolidated financial statements)
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WEST COAST BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY AND CASH FLOWS
(Unaudited)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Common Stock Securities Share-
------------ Valuation Accum. holders'
(in thousands) Shares Amount Allowance Deficit Equity
--------------------------------------------------
Balance at December 31, 1996 9,169 $ 30,176 $ (25) $ (24,016) $ 6,135
Net income - - - 37 37
Change in securities
valuation allowance - - (34) - (34)
--------------------------------------------------
Balance at March 31, 1997 9,169 $ 30,176 $ (59) $ (23,979) $ 6,138
==================================================
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
(in thousands) 1997 1996
-----------------------
Cash flows from operating activities:
Net income (loss) $ 37 $ (271)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 104 139
Provision (benefit) for credit losses - (14)
Net change in receivables, payables and other assets (215) 42
Write-downs of real estate owned - 71
Minority interest expense 92 -
Loss (gain) on discontinued businesses 1 (122)
Gain on sale of B&PB shares - (93)
Expected loss on sale of Sunwest shares - 437
-----------------------
Net cash provided by operating activities 19 189
(Continued)
(See accompanying notes to consolidated financial statements)
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WEST COAST BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
(in thousands) March 31,
1997 1996
Cash flows from investing activities: ----------------------
Proceeds from maturity of interest bearing cash
with an original maturity greater than 90 days $ 1,288 $ 788
Purchases of interest bearing cash (99) (496)
Proceeds from maturity of investment securities
held to maturity - 2,536
Purchase of investment securities available for sale (4,455) (1,988)
Proceeds from maturity of investment securities
available for sale 294 -
Net (increase) decrease in loans (4,253) 1,919
Proceeds from sales of real estate owned - 96
Purchase of premises and equipment (6) (51)
----------------------
Net cash (used in) provided by investing activities (7,231) 2,804
Cash flows from financing activities:
Net increase (decrease) in deposits 4,116 (4,788)
Proceeds from sale of B&PB stock - 407
Payments for notes payable to affiliates,
subordinated debt and other borrowed funds (12) (41)
Loan proceeds from affiliate - 18
----------------------
Net cash provided by (used in) financing activities 4,104 (4,404)
----------------------
(Decrease) increase in cash and cash equivalents (3,108) 1,411
Beginning cash and cash equivalents 17,346 21,907
----------------------
Ending cash and cash equivalents $ 14,238 $ 20,496
======================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 557 $ 728
Income taxes - -
Supplemental schedule of non-cash investing
and financing activities:
Transfer of investment security from held to maturity
to available for sale $ 2,553 $ -
Transfer of loans to real estate owned - 672
Reclassification of fixed assets to other assets - 133
(See accompanying notes to consolidated financial statements)
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WEST COAST BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited)
(1) BASIS OF PRESENTATION
The unaudited consolidated financial statements reflect all
adjustments, consisting primarily of normal recurring adjustments,
which are, in the opinion of management, necessary for a fair statement
of the results of operations for the interim periods. Results for the
periods ended March 31, 1997 and 1996 are not necessarily indicative of
results that may be expected for any other interim period, or for the
year as a whole. All significant intercompany balances have been
eliminated.
On February 29, 1996, West Coast Bancorp ("West Coast") and Sunwest
Bank ("Sunwest") entered into an agreement with Western Acquisitions,
L.L.C. ("Western"), an affiliate of Hovde Financial, Inc., for West
Coast to sell 35 existing shares of Sunwest for $2,520,000 and for
Sunwest to issue and sell 15 new shares for $1,051,000. On September
13, 1996, the sale closed. West Coast and Western own approximately
56.5% and 43.5% of Sunwest, respectively.
(2) RECLASSIFICATIONS
Certain reclassifications have been made in the prior periods financial
statements to conform to the presentation in the current periods.
(3) NET INCOME (LOSS) PER SHARE
The stock options and 10% convertible subordinated debentures were not
included in the net income (loss) per share computations as the effect
would have been anti-dilutive because conversion prices exceeded the
market price during all periods. Fully diluted earnings (loss) per
share equals primary earnings (loss) per share.
(4) LOANS
A summary of loans follows:
March 31, December 31,
(in thousands) 1997 1996
------------------------
Real estate mortgage loans $ 59,699 $ 54,938
Commercial loans not secured by real estate 24,875 25,300
Personal loans not secured by real estate 2,701 2,728
Less unearned income, discounts and fees (326) (309)
------------------------
$ 86,949 $ 82,657
========================
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WEST COAST BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited)
(5) OTHER OPERATING INCOME
A summary of other operating income follows:
Three Months Ended
March 31,
(in thousands) 1997 1996
-------------------------
Depositor charges $ 142 $ 150
Service charges, commissions & fees 11 12
Gain on sale of B&PB stock - 93
Other income 18 27
-------------------------
$ 171 $ 282
=========================
(6) OTHER OPERATING EXPENSES
A summary of other operating expenses is as follows:
Three Months Ended
March 31,
(in thousands) 1997 1996
-----------------------
Salaries and employee benefits $ 889 $ 919
Occupancy 300 229
Depreciation and amortization 104 139
Customer service 119 93
Data processing 117 58
Advertising and promotion 67 37
Professional services 48 87
Director fees 39 17
Printing & postage 23 30
Telephone and telefax 23 21
Stationary and supplies 19 37
Regulatory fees and assessments 15 48
Net cost of operation of real estate owned 4 68
Miscellaneous 134 136
-----------------------
$ 1,901 $ 1,919
=======================
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WEST COAST BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1997
The following presents management's discussion and analysis of the consolidated
financial condition and operating results of West Coast Bancorp (as a separate
entity "West Coast" and together with its subsidiaries the "Company") for the
three month periods ended March 31, 1997 and 1996. The discussion should be read
in conjunction with the Company's consolidated financial statements and the
accompanying notes appearing elsewhere in this report.
Certain statements in this Report on Form 10-QSB constitute "forward-looking
statements" under the Private Securities Litigation Reform Act of 1995 which
involve risk and uncertainties. The Company's actual results may differ
significantly from the results discussed in such forward-looking statements.
Factors that might cause such a difference include but are not limited to
economic conditions, competition in the geographic and business areas in which
the Company conducts its operations, fluctuations in interest rates, credit
quality and government regulation. For additional information concerning these
factors, see "Item 1. Business - Summary of Business Considerations and Certain
Factors that May Affect Future Results of Operations and/or Stock Price"
contained in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996.
GENERAL
The Company recorded net income of $37,000, or less than 1 cent per share,
during the three months ended March 31, 1997, as compared with a loss of
$271,000, or $.03 per share, during the same period in 1996. The income in 1997
versus the loss in 1996 occurred primarily because Sunwest had higher earnings
and West Coast had no interest expense from the 10% convertible subordinated
debentures that were repaid in October 1996.
During 1996 Western Acquisitions, L.L.C. ("Western"), an affiliate of Hovde
Financial, Inc., purchased 43.5% of Sunwest's common stock and purchased West
Coast's remaining shares of Business & Professional Bank. See note 1 of the
"Notes to the Consolidated Financial Statements" for additional information on
these transactions.
The Company had total assets, loans and deposits as follows:
March 31, December 31, March 31, December 31,
1997 1996 1996 1995
(in thousands) -----------------------------------------------------
Total assets $ 112,470 $ 108,987 $ 109,171 $ 113,654
Loans 86,949 82,657 76,528 79,000
Deposits 99,673 95,557 97,874 102,662
The $10 million increase in loans from March 31, 1996 to March 31, 1997,
occurred from the increased marketing effort and improved loan demand in
Sunwest's market area.
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WEST COAST BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1997
RESULTS OF OPERATIONS
GENERAL
Net income was $37,000 for the quarter ended March 31, 1997, compared to a loss
of $271,000 for the same period in 1996. The increase in 1997 first quarter net
income resulted from a $76,000 increase in earnings at its 56.5 percent owned
subsidiary, Sunwest Bank and $103,000 of lower interest expense from reduced
debt levels at West Coast. These increases were offset by recognition of $92,000
of minority interest expense in Sunwest earnings resulting from the sale of
Sunwest shares in September 1996, and certain non-recurring items recorded
during 1996. The 1996 non-recurring items consisted of a $437,000 estimated loss
on the sale of Sunwest shares, a $122,000 gain on liquidation of a subsidiary of
West Coast (WCV, Inc.) resulting from a reimbursement received from the State of
California's Underground Storage Tank Cleanup Fund, and a $93,000 gain on the
sale of Business & Professional Bank stock.
NET INTEREST INCOME
Net interest income increased $193,000 or 12% from the first quarter of 1996 to
the same period in 1997. Sunwest increased its net interest income by $84,000 by
increasing interest income $36,000 from an increase in loans (the highest
yielding earning asset) and decreasing interest expense $48,000 from lower use
of time deposits (the highest cost deposits) as a funding source. West Coast
increased its net interest income by $109,000 from paying off its 10%
subordinated debentures and other notes payable in October 1996.
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WEST COAST BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1997
The following table sets forth the Company's average balance sheets, yields on
earning assets, rates paid on interest-bearing liabilities, net interest margins
and net yields on interest-earning assets for the three month periods ended
March 31, 1997 and 1996 (dollars in millions):
1997 1996
Average Yields/ Average Yields/
Balance Rates Balance Rates
--------------------------------------
ASSETS
Loans, net of unearned income,
discounts and fees $ 83.3 10.30% $ 77.0 10.55%
Investment securities 7.2 6.36 7.9 6.00
Federal funds sold 10.8 5.30 12.9 5.49
Interest-bearing deposits
with financial institutions 1.5 5.31 3.9 6.43
--------------------------------------
Total interest-earning assets 102.8 9.43 101.7 9.40
Allowance for credit losses (2.8) (3.9)
Cash and due from banks 6.3 5.8
Other assets 4.1 6.9
--------------------------------------
$ 110.4 $ 110.5
======================================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Time deposits $ 27.0 5.25% $ 28.5 5.41%
Savings deposits 4.7 1.92 5.0 1.99
Interest-bearing demand deposits 30.5 1.85 32.7 1.97
Other 1.0 22.17 4.6 13.19
--------------------------------------
Total interest-bearing liabilities 63.2 3.57 70.8 4.08
Minority interest 4.8 .-
Demand deposits 34.5 33.3
Other liabilities 1.6 1.0
Shareholders' equity 6.3 5.4
--------------------------------------
$ 110.4 $ 110.5
======================================
Net interest margin 5.85% 5.32%
Net yield on interest-earning assets 7.23 6.56
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WEST COAST BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1997
The increases (decreases) in interest income and expense and net interest income
resulting from changes in average assets, liabilities and interest rates for the
1997 versus 1996 periods are summarized as follows (in thousands):
Three Months Ended March 31,
------------------------------
Asset/ Interest
Liability Rate
Changes Changes Total
------------------------------
Changes in:
Interest income $ 92 $ (56) $ 36
Interest expense (84) (73) (157)
------------------------------
Net interest income $ 176 $ 17 $ 193
==============================
The increase in net interest income resulted primarily from volume and rate
declines in average interest bearing liabilities. These declines were caused
primarily by West Coast paying off its subordinated debentures and notes payable
to affiliates, and Sunwest decreasing its use of time deposits (the highest cost
deposits) as a funding source. The net interest margin and net yield on
interest-earning assets increased 53 and 67 basis points, respectively from the
items described above.
Loans on which the accrual of interest had been discontinued at March 31, 1997
and 1996 amounted to $1,001,000 and $3,903,000, respectively. If these loans had
been current throughout their terms, it is estimated that net interest income
would have increased by approximately $12,000 and $116,000 in the first quarters
of 1997 and 1996, respectively. This would have raised the net yield on
interest-earning assets and the net interest margin by approximately 5 and 46
basis points during the first quarters of 1997 and 1996, respectively.
Impaired loans have not changed significantly from the amounts reported at
December 31, 1996.
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<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1997
NONPERFORMING ASSETS AND PROVISION FOR CREDIT LOSSES
The following table summarizes the activity in the allowance for credit losses
during the periods indicated (in thousands):
Three Months Ended
March 31,
1997 1996
--------------------------
Allowance for credit losses
balance at beginning of period $ 2,848 $ 3,820
Charge-offs (5) (48)
Recoveries 44 167
--------------------------
Net recovery 39 119
Provision (benefit) for credit losses - (14)
--------------------------
Allowance for credit losses
balance at end of period $ 2,887 $ 3,925
==========================
All the above charge-offs and recoveries were at Sunwest. The net recoveries
during the first quarters 1997 and 1996 are a result of improved asset quality
and the high levels of charge-offs in previous years.
Management believes that the allowance for credit losses at March 31, 1997 of
$2,887,000 or 3.32% of loans was adequate to absorb known and inherent risks in
the Company's credit portfolio. The ultimate collectibility of a substantial
portion of the Company's loans, as well as its financial condition, is affected
by general economic conditions and the real estate market in California.
California has experienced, and may continue to experience, volatile economic
conditions. These conditions have adversely affected certain borrowers' ability
to repay loans. While Southern California and Orange County economies have
recently exhibited positive trends, there is no assurance that such trends will
continue. A deterioration in economic conditions could result in a deterioration
in the quality of the loan portfolio and high levels of nonperforming assets,
classified assets and charge-offs, which would require increased provisions for
possible credit losses and would adversely affect the financial condition and
results of operations of the Company.
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WEST COAST BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1997
A summary of nonperforming assets follows (dollars in thousands):
March 31, December 31, March 31, December 31,
1997 1996 1996 1995
-------------------------------------------------
Nonaccrual loans $ 1,001 $ 931 $ 3,903 $ 4,153
Loans 90 days past due
and still accruing 49 43 28 25
-------------------------------------------------
Nonperforming loans 1,050 974 3,931 4,178
Real estate owned 1,243 1,243 3,138 2,637
-------------------------------------------------
Nonperforming assets $ 2,293 $ 2,217 $ 7,069 $ 6,815
=================================================
Nonperforming loans/
Total loans 1.21% 1.18% 5.14% 5.29%
Nonperforming assets/
Total assets 2.04 2.03 6.48 6.00
=================================================
Nonperforming assets have decreased from $6.8 million at December 31, 1995 to
$2.3 million at March 31, 1997. This was accomplished primarily from $3.2
million of real estate owned sales in 1996, which included $2.0 million of
nonaccrual loans transferred to real estate owned during 1996.
Restructured loans that were performing substantially in accordance with their
modified terms totaled $3,103,000 at March 31, 1997. Restructured loans totaling
$554,000 were on nonaccrual status at March 31, 1997.
OTHER OPERATING INCOME
Other operating income decreased by $111,000 for the three months ended March
31, 1997, as compared with the same period in 1996. See notes (1) and (5) of the
notes to consolidated financial statements. The decrease was a result of West
Coast recording a $93,000 gain on sale of B&PB stock in 1996.
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<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1997
OTHER OPERATING EXPENSES
Other operating expenses have remained relatively unchanged from the three
months ended March 31, 1996 to the same period in 1997. See notes (1) and (6) of
the notes to consolidated financial statements. Total other operating expenses
expressed in dollars and as a percentage of total revenues and average assets
follows (dollars in thousands):
Three Months Ended
March 31,
1997 1996
----------------------
Other operating expenses $ 1,901 $ 1,919
Other operating expenses
(annualized)/average assets 6.88% 6.95%
Other operating expenses/interest
and other operating income 73.2% 71.8%
======================
While total operating expenses remained relatively unchanged, the most
significant decreases are as follows: net cost of operation of real estate owned
decreased $64,000 from lower levels of foreclosed assets, professional services
decreased $39,000 due primarily to resolving a billing dispute with a vendor,
and depreciation & amortization decreased $35,000 from assets becoming fully
depreciated. The most significant increases included occupancy expenses
increasing $71,000 from recording $56,000 of estimated future subleases losses
during the quarter ended March 31, 1997. These losses were a result of Sunwest
subleasing excess space to unaffiliated parties. Total costs from Sunwest's
lease with its landlord, tenant improvement costs, commissions for the sublease
and expected maintenance costs for the sublease period exceeded expected rental
income on the subleases. Data processing expenses increased $59,000 primarily
due to an adjust received from a vendor in 1996.
The Company strives to decrease non-interest expenses where opportunity exists
while growing the loans and deposits of the Company. Occupancy expenses are
expected to decrease from the closure of the Santa Ana facility on April 1 and
from additional sublease rental income during the remainder of 1997.
INCOME TAXES
The Company and Sunwest did not recognize any significant income tax expense or
benefit during the three months ended March 31, 1997 or 1996. Sunwest had $4.7
million of net deferred tax assets and approximately $9.2 million of net
operating loss carryforwards at December 31, 1996. Excluding the Sunwest
amounts, the Company had $4.2 million of net operating loss carryforwards at
December 31, 1996.
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<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1997
For all the periods presented a valuation allowance has been recorded to offset
most or all of the deferred tax assets of Sunwest and the Company. The valuation
allowance was established due to uncertainty of future earnings at both Sunwest
and the Company. At December 31, 1996, Sunwest recognized a $870,000 deferred
tax asset due to its improved earnings and expected tax preference items.
Sunwest and the Company may adjust the valuation allowance and the corresponding
tax benefit in earnings in 1997 based on increases in expected earnings and
changes in tax preference items.
LIQUIDITY
The Company
Liquidity, as it relates to banking, represents the ability to obtain funds to
meet loan commitments and to satisfy demand for deposit withdrawals.
The principal sources of funds that provide liquidity for Sunwest are maturities
of investment securities and loans, collections on loans, increased deposits and
temporary borrowings. The Company's liquid asset ratio (the sum of cash,
investments available-for-sale, excluding pledged amounts, and Federal funds
sold divided by total assets) was 20% at March 31, 1997 and 18% at December 31,
1996. The Company believes it has sufficient liquid resources, as well as
available credit facilities, to enable it to meet its operating needs.
THE PARENT COMPANY
West Coast's sources of liquidity are limited. West Coast has relied on sales of
assets and borrowings from officers/directors as sources of liquidity. Dividends
from subsidiaries ordinarily provide a source of liquidity to a bank holding
company. Sunwest is prohibited from paying cash dividends without prior
regulatory consent.
During the first quarter of 1997 West Coast did not receive any dividends from
its subsidiaries. West Coast does not expect to receive dividends from its
subsidiaries during 1997.
West Coast received $493,000 in February 1997 from the purchase price adjustment
that originated from the sale of 15 shares of Sunwest stock. No significant cash
receipts are expected for the remainder of 1997. At March 31, 1997, West Coast
had cash totaling $782,000.
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<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1997
West Coast paid $120,000 of accrued directors' fees in February 1997. These fees
were accrued for the period October 1994 through January 1997. Directors' fees
are now paid at the rate of $250 per director per meeting attended. West Coast
anticipates other cash expenditures during 1997 to consist of debt service
payments and other operating expenses. West Coast's projected debt service for
the remainder of 1997 includes quarterly payments on the notes payable of
$12,000 each. Principal and interest outstanding under these notes totaled
$468,000 at March 31, 1997. Unpaid principal and interest is also due June 30,
1999. West Coast anticipates that other operating expenses will be approximately
$100,000 during the remainder of 1997 plus $40,000 of salary to the President of
West Coast. The President's salary and incentives was reduced from $158,000 to
$60,000 effective May 1, 1997, at which time the deferral of his salary will be
discontinued. Prior deferred salaries and incentives payable to the President
totaled $514,000 at April 30, 1997. This amount cannot be paid without approval
by the Federal Reserve Board. Funds to repay the notes payable and deferred
salaries will come from current cash resources supplemented by sales of assets
and possibly dividends from Sunwest.
CAPITAL RESOURCES AND DIVIDENDS
Sunwest had a 12.72%, 13.99% and 10.25% Tier 1 risk-based capital, total
risk-based capital and leverage ratio at March 31, 1997, respectively. These are
above the regulatory minimums of 4.00%, 8.00% and 4.00%, respectively. Sunwest
is considered "well capitalized" under the regulatory capital guidelines.
The Company had no material commitments for capital expenditures as of March 31,
1997.
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<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
MARCH 31, 1997
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
- -------------------------------
NONE
Item 2. Changes in Securities
- -----------------------------------
NONE
Item 3. Defaults Upon Senior Securities
- ---------------------------------------------
NONE
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------------
NONE
Item 5. Other Information
- -------------------------------
NONE
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------------
(a) Exhibits
Exhibit 27 - Financial Data Schedule for March 31, 1997
(b) Reports on Form 8-K
None
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<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
WEST COAST BANCORP
/s/John B. Joseph May 13, 1997
----------------------------------------- ----------------------
John B. Joseph Date
Chief Executive Officer
/s/Frank E. Smith May 13, 1997
----------------------------------------- ----------------------
Frank E. Smith Date
Chief Financial Officer
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<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<CASH> 6838
<INT-BEARING-DEPOSITS> 793
<FED-FUNDS-SOLD> 7400
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 9448
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 86949
<ALLOWANCE> 2887
<TOTAL-ASSETS> 112470
<DEPOSITS> 99673
<SHORT-TERM> 0
<LIABILITIES-OTHER> 971
<LONG-TERM> 822
0
0
<COMMON> 30176
<OTHER-SE> (24038)
<TOTAL-LIABILITIES-AND-EQUITY> 112470
<INTEREST-LOAN> 2147
<INTEREST-INVEST> 278
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 2425
<INTEREST-DEPOSIT> 519
<INTEREST-EXPENSE> 565
<INTEREST-INCOME-NET> 1860
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1901
<INCOME-PRETAX> 37
<INCOME-PRE-EXTRAORDINARY> 37
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
<YIELD-ACTUAL> 7.23
<LOANS-NON> 1001
<LOANS-PAST> 49
<LOANS-TROUBLED> 3130
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2848
<CHARGE-OFFS> 5
<RECOVERIES> 44
<ALLOWANCE-CLOSE> 2887
<ALLOWANCE-DOMESTIC> 2887
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
