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, 1998
[ ] 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, 1998:
9,168,942
Transitional Small Business Disclosure Format Yes No X
This document contains a total of 20 pages.
1
<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
(in thousands, except share data) 1998 1997
-----------------------------
ASSETS
Cash and due from bank $ 10,486 $ 7,041
Federal funds sold 18,400 1,500
Interest-bearing deposits with
financial institutions -- 99
Investment securities available-for-sale
at fair value 16,304 17,345
Loans 97,554 102,877
Less allowance for loan losses (2,367) (2,364)
-----------------------------
Net loans 95,187 100,513
-----------------------------
Real estate owned, net 1,127 1,151
Premises and equipment, net 709 711
Deferred taxes 1,209 1,153
Other assets 1,083 1,108
-----------------------------
$ 144,505 $ 130,621
=============================
LIABILITIES
Deposits:
Demand, non interest-bearing $ 45,096 $ 42,920
Savings, money market & interest-bearing demand 39,690 36,745
Time certificates under $100,000 28,139 22,169
Time certificates of $100,000 or more 15,630 13,136
-----------------------------
Total deposits 128,555 114,970
Other borrowed funds 1,274 779
Other liabilities 646 1,363
-----------------------------
Total liabilities 130,475 117,112
Commitments and Contingencies
Minority interest in subsidiary 6,294 6,041
-----------------------------
SHAREHOLDERS' EQUITY
Common stock, no par value - 30,000,000
shares authorized, 9,168,942 shares
issued and outstanding in 1998 and 1997 30,176 30,176
Accumulated deficit (22,473) (22,747)
Accumulated other comprehensive income:
Net unrealized gain on available-for-sale
investments 33 39
-----------------------------
Total shareholders' equity 7,736 7,468
-----------------------------
$ 144,505 $ 130,621
=============================
(See accompanying notes to consolidated financial statements)
2
<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
(Unaudited)
Three Months Ended
(in thousands, March 31,
except share data) 1998 1997
----------------------------
INTEREST INCOME:
Loans, including fees $ 2,573 $ 2,147
Investment securities 242 114
Federal funds sold 169 144
Deposits with banks 2 20
----------------------------
Total interest income 2,986 2,425
INTEREST EXPENSE:
Interest on deposits 729 519
Other 49 46
----------------------------
Total interest expense 778 565
----------------------------
Net interest income 2,208 1,860
Provision for loan losses -- --
----------------------------
Net interest income after
provision for loan losses 2,208 1,860
Other operating income 181 171
Other operating expenses 1,860 1,901
Minority interest in net income of Subsidiary 257 92
Gain (loss) on liquidation of WCV, Inc. 2 (1)
----------------------------
Income before income taxes 274 37
Income tax expense -- --
----------------------------
Net income $ 274 $ 37
============================
Basic and diluted earnings per share $ . 03 $ . -
============================
(See accompanying notes to consolidated financial statements)
3
<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
For the Three Months Ended
March 31,
(in thousands) 1998 1997
----------------------------
Net income $ 274 $ 37
Other comprehensive income, net of tax:
Unrealized gain/(loss)on
available-for-sale investments
arising during period (6) (34)
----------------------------
Other comprehensive income (loss) (6) (34)
----------------------------
Comprehensive income $ 268 $ 3
============================
(See accompanying notes to consolidated financial statements)
4
<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY AND CASH FLOWS
(Unaudited)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Accumulated
Common Stock Other Share-
------------- Comprehensive Accum. holders'
(in thousands) Shares Amount Income Deficit Equity
------------------------------------------------
Balance at December 31, 1997 9,169 $30,176 $ 39 $ (22,747) $ 7,468
Net income -- -- -- 274 274
Change in net unrealized gain
(loss) on available-for-sale
investments -- -- (6) -- (6)
------------------------------------------------
Balance at March 31, 1998 9,169 $30,176 $ 33 $ (22,473) $ 7,736
================================================
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
March 31,
(in thousands) 1998 1997
----------------------
Cash flows from operating activities:
Net income $ 274 $ 37
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 85 104
Provision for loan losses -- --
Net change in receivables, payables and other assets (729) (215)
Write-downs of real estate owned 25 --
Minority interest expense 257 92
(Gain) loss on discontinued businesses (2) 1
----------------------
Net cash provided by operating activities (90) 19
(Continued)
(See accompanying notes to consolidated financial statements)
5
<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
(in thousands) March 31,
1998 1997
Cash flows from investing activities: ----------------------
Proceeds from maturity of interest bearing cash
with an original maturity greater than 90 days $ 99 $ 1,288
Purchases of interest bearing deposits with
financial institutions -- (99)
Purchase of investment securities available-for-sale (1,586) (4,455)
Proceeds from maturity of investment securities
available-for-sale 2,599 294
Net decrease(increase)in loans 5,326 (4,253)
Purchase of premises and equipment (83) (6)
----------------------
Net cash provided by (used in) investing activities 6,355 (7,231)
Cash flows from financing activities:
Net increase in deposits 13,585 4,116
Transfer of note payable and Payments of
other borrowed funds 495 (12)
----------------------
Net cash provided by financing activities 14,080 4,104
----------------------
Increase(decrease) in cash and cash equivalents 20,345 (3,108)
Beginning cash and cash equivalents 8,541 17,346
----------------------
Ending cash and cash equivalents $28,886 $14,238
======================
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 737 $ 557
Income taxes 70 -
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 note payable from accrued liabilities
to note payable to affiliate 514 -
(See accompanying notes to consolidated financial statements)
6
<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(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, 1998 and 1997 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.
Certain reclassifications have been made in the prior period financial
statements to conform to the presentation in the current period.
(2) RECENT ACCOUNTING PRONOUNCEMENTS
The Company has adopted SFAS No. 130, "Reporting Comprehensive Income."
This statement establishes standards for all entities for reporting
comprehensive income and its components in financial statements. This
statement requires that all items which are required to be recognized
under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same
prominence as other financial statements. Comprehensive income is equal
to net income plus the change in "other comprehensive income", as
defined by SFAS No. 130. The only component of other comprehensive
income currently applicable to the Company is the net unrealized gain
or loss on available-for-sale investments. SFAS No. 130 requires that
an entity: (a) classify items of other comprehensive income by their
nature in a financial statement, and (b) report the accumulated balance
of other comprehensive income separately from common stock and retained
earnings in the equity section of the balance sheet. This statement is
effective for financial statements issued for fiscal years beginning
after December 15, 1997.
7
<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(Unaudited)
(3) EARNINGS PER SHARE
The following is a reconciliation of basic earnings per share (EPS) to
diluted EPS for the three month periods ended March 31, 1998 and 1997.
(dollars and shares in thousands, Net Per Share
except per share amounts) Income Shares Amount
-----------------------------
Three months ended March 31, 1998:
Basic EPS:
Income available to common shareholders $ 274 9,169 $ 0.03
Effect of Dilutive Securities:
Stock options 86
-----------------------------
Diluted EPS:
Income available to common shareholders
plus assumed conversions $ 274 9,255 $ 0.03
=============================
Three months ended March 31, 1997:
Basic EPS:
Income available to common shareholders $ 37 9,169 $ 0.00
Effect of Dilutive Securities:
Stock options - - -
-----------------------------
Diluted EPS:
Income available to common shareholders
plus assumed conversions $ 37 9,169 $ 0.00
=============================
(4) LOANS
A summary of loans follows:
March 31, December 31,
(in thousands) 1998 1997
-----------------------------
Real estate mortgage loans $ 63,226 $ 67,970
Commercial loans not secured by real estate 29,400 29,425
Personal loans not secured by real estate 5,150 5,755
Less unearned income, discounts and fees (222) (273)
-----------------------------
$ 97,554 $ 102,877
=============================
8
<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(Unaudited)
(5) OTHER OPERATING INCOME
A summary of other operating income follows:
Three Months Ended
March 31,
(in thousands) 1998 1997
-----------------------------
Depositor charges $ 139 $ 142
Service charges, commissions & fees 12 11
Other income 30 18
-----------------------------
$ 181 $ 171
=============================
(6) OTHER OPERATING EXPENSES
A summary of other operating expenses is as follows:
Three Months Ended
March 31,
(in thousands) 1998 1997
-----------------------------
Salaries and employee benefits $ 972 $ 889
Occupancy 173 300
Data processing 129 117
Customer service 103 119
Depreciation and amortization 85 104
Professional services 66 48
Advertising and promotion 66 67
Director fees 50 39
Net cost of operation of real estate owned 29 4
Printing & postage 23 23
Stationary and supplies 20 19
Telephone and telefax 19 23
Regulatory fees and assessments 8 15
Miscellaneous 117 134
-----------------------------
$ 1,860 $ 1,901
=============================
9
<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(Unaudited)
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, 1998 and 1997. 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 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 area 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, 1997.
GENERAL
The Company recorded net income of $274,000, or $.03 per share, during the three
months ended March 31, 1998, as compared with income of $37,000, or less than 1
cent per share, during the same period in 1997. The higher income in 1998 versus
1997 occurred primarily because Sunwest had higher earnings in 1998. Sunwest's
higher earnings were primarily due to increased growth in net interest income
from growth in assets and deposits.
The Company had total assets, loans and deposits as follows:
March 31, December 31, March 31, December 31,
1998 1997 1997 1996
(in thousands) -------------------------------------------------------------
Total assets $ 144,505 $ 130,621 $ 112,470 $ 108,987
Loans 97,554 102,877 86,949 82,657
Deposits 128,555 114,970 99,673 95,557
The $32 million increase in total assets from March 31, 1997 to March 31, 1998,
occurred primarily due to a $29 million increase in deposits at Sunwest from
increased marketing efforts and due to the expanding economy in Orange County,
California.
10
<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1998
(Unauditied)
RESULTS OF OPERATIONS
NET INTEREST INCOME
Net interest income increased $348,000 or 19% from the first quarter of 1997 to
the same period in 1998. Sunwest increased its net interest income by $357,000
by increasing interest income $560,000 from an increase in loans, the highest
yielding earning asset, partially offset by a $203,000 increase in interest
expense on time deposits (the highest cost deposits). Net interest margin
declined from 5.85% in 1997 to 5.41% in 1998 primarily due to a decline in the
percentage of loans to earning assets from 81% in 1997 to 77% in 1998. An
increase in time deposits as a percentage of deposits from 28% in 1997 to 33% in
1998 also contributed to a decline in the net interest margin. Net interest
income is expected to increase in the future as Sunwest increases its earning
assets through its marketing efforts and the expanding economy in Orange County,
California. Increased competition in the Company's market area for loans and
deposits may result in a lower net interest margin.
11
<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1998
(Unaudited)
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, 1998 and 1997 (dollars in millions):
1998 1997
Average Yields/ Average Yields/
Balance Rates Balance Rates
----------------------------------------------
ASSETS
Loans, net of unearned income,
discounts and fees $ 100.0 10.29% $ 83.3 10.30%
Investment securities 16.5 5.85 7.2 6.36
Federal funds sold 12.6 5.36 10.8 5.30
Interest-bearing deposits
with financial institutions .1 14.29 1.5 5.31
----------------------------------------------
Total interest-earning assets 129.2 9.24 102.8 9.43
Allowance for loan losses (2.3) (2.8)
Cash and due from banks 7.8 6.3
Other assets 3.7 4.1
----------------------------------------------
$ 138.4 $ 110.4
==============================================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Time deposits $ 40.1 5.44% $ 27.0 5.25%
Savings deposits 4.9 1.94 4.7 1.92
Interest-bearing demand deposits 34.8 1.84 30.5 1.85
Other 1.2 15.22 1.0 22.17
----------------------------------------------
Total interest-bearing liabilities 81.0 3.83 63.2 3.57
Minority interest 6.1 4.8
Demand deposits 42.6 34.5
Other liabilities 1.0 1.6
Shareholders' equity 7.7 6.3
----------------------------------------------
$ 138.4 $ 110.4
==============================================
Net interest margin 5.41% 5.85%
Net yield on interest-earning assets 6.83 7.23
12
<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1998
(Unaudited)
The increases (decreases) in interest income and expense and net interest income
resulting from changes in average assets, liabilities and interest rates for the
1998 versus 1997 periods are summarized as follows (in thousands):
Three Months Ended March 31,
---------------------------------------
Asset/ Interest
Liability Rate
Changes Changes Total
---------------------------------------
Changes in:
Interest income $ 559 $ 2 $ 561
Interest expense 199 14 213
---------------------------------------
Net interest income $ 360 $ (12) $ 348
=======================================
Loans on which the accrual of interest had been discontinued at March 31, 1998
and 1997 amounted to $0 and $1,001,000, respectively. If these loans had been
current throughout their terms, it is estimated that net interest income would
have increased by approximately $0 and $12,000 in the first quarters of 1998 and
1997, respectively. This would have raised the net yield on interest-earning
assets and the net interest margin by approximately 0 and 5 basis points during
the first quarters of 1998 and 1997, respectively.
Impaired loans have not changed significantly from the amounts reported at
December 31, 1997.
13
<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1998
(Unaudited)
NONPERFORMING ASSETS AND PROVISION FOR LOAN LOSSES
The following table summarizes the activity in the allowance for loan losses
during the periods indicated (in thousands):
Three Months Ended
March 31,
1998 1997
----------------------------------
Allowance for loan losses
balance at beginning of period $ 2,364 $ 2,848
Charge-offs (14) (5)
Recoveries 17 44
----------------------------------
Net recovery 3 39
Provision for loan losses - -
----------------------------------
Allowance for loan losses
balance at end of period $ 2,367 $ 2,887
==================================
All the above charge-offs and recoveries were at Sunwest. The net recoveries
during the first quarters 1998 and 1997 are a result of improved asset quality
and the high levels of charge-offs in previous years.
Management believes that the allowance for loan losses at March 31, 1998 of
$2,367,000 or 2.43% of loans was adequate to absorb known and inherent risks in
the Company's loan 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.
14
<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1998
(Unaudited)
A summary of nonperforming assets follows (dollars in thousands):
March 31, December 31, March 31, December 31,
1998 1997 1997 1996
----------------------------------------------------
Nonaccrual loans $ - $ - $ 1,001 $ 931
Loans 90 days past due
and still accruing 31 31 49 43
----------------------------------------------------
Nonperforming loans 31 31 1,050 974
Real estate owned 1,127 1,151 1,243 1,243
----------------------------------------------------
Nonperforming assets $ 1,158 $ 1,182 $ 2,293 $ 2,217
====================================================
Nonperforming loans/
Total loans .03% .03% 1.21% 1.18%
Nonperforming assets/
Total assets .80 .90 2.04 2.03
====================================================
Nonperforming assets have decreased from $2.2 million at December 31, 1996 to
$1.2 million at March 31, 1998 due to a decline in nonperforming loans.
Restructured loans that were performing substantially in accordance with their
modified terms totaled $3.0 million at March 31, 1998. No restructured loans
were on nonaccrual status at March 31, 1998.
OTHER OPERATING INCOME
Other operating income increased by $10,000 for the three months ended March 31,
1998, as compared with the same period in 1997. See note (5) of the notes to
consolidated financial statements.
15
<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1998
(Unaudited)
OTHER OPERATING EXPENSES
Other operating expenses decreased $41,000 in the three months ended March 31,
1998 from the same period in 1997. The largest decline was in occupancy expense
which decreased $127,000 due to the closure of the Santa Ana facility in April
1997. See note (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,
1998 1997
----------------------------
Other operating expenses $ 1,860 $ 1,901
Other operating expenses
(annualized)/average assets 5.38% 6.88%
Other operating expenses/interest
and other operating income 58.7% 73.2%
============================
The decline in the other expense ratios is primarily a result of the increases
in assets and income exceeding the decline of expenses. As the Company grows it
is likely that operating expenses will also increase.
The Company strives to decrease non-interest expenses where opportunity exists
while growing the loans and deposits of the Company.
INCOME TAXES
The Company and Sunwest did not recognize any income tax expense or benefit
during the three months ended March 31, 1998 or 1997. Sunwest had $3.1 million
of net deferred tax assets and approximately $7.3 million of net operating loss
carryforwards at December 31, 1997. Excluding the Sunwest amounts, the Company
had $3.8 million of net operating loss carryforwards at December 31, 1997.
16
<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1998
(Unaudited)
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, 1997, Sunwest recognized a $1.2 million
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 1998 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 27% at March 31, 1998 and 16% at December 31,
1997. 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 1998 West Coast did not receive any dividends from
its subsidiaries. West Coast does not expect to receive dividends from its
subsidiaries during 1998.
At March 31, 1998, West Coast had cash and short term investments totaling
$519,000. No significant cash receipts are expected for the remainder of 1998.
17
<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MARCH 31, 1998
(Unaudited)
West Coast anticipates cash expenditures during 1998 to consist of debt service
payments and other operating expenses. West Coast's projected debt service for
the remainder of 1998 is expected to total $72,000. West Coast anticipates that
other operating expenses will be approximately $178,000 during the remainder of
1998. Funds to meet cash needs will come from current cash resources
supplemented by sales of assets and possibly dividends from Sunwest.
CAPITAL RESOURCES AND DIVIDENDS
Sunwest had a 13.14%, 14.39% and 10.42% Tier 1 risk-based capital, total
risk-based capital and leverage ratio at March 31, 1998, 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,
1998.
18
<PAGE>
WEST COAST BANCORP AND SUBSIDIARIES
MARCH 31, 1998
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, 1998
(b) Reports on Form 8-K
None
19
<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 15, 1998
----------------------------------------- ----------------------
John B. Joseph Date
Chief Executive Officer
/s/Frank E. Smith May 15, 1998
----------------------------------------- ----------------------
Frank E. Smith Date
Chief Financial Officer
20
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1998
<CASH> 10486
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 18400
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 16304
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 97554
<ALLOWANCE> 2367
<TOTAL-ASSETS> 144505
<DEPOSITS> 128555
<SHORT-TERM> 0
<LIABILITIES-OTHER> 646
<LONG-TERM> 1274
0
0
<COMMON> 30176
<OTHER-SE> (22440)
<TOTAL-LIABILITIES-AND-EQUITY> 144505
<INTEREST-LOAN> 2573
<INTEREST-INVEST> 413
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 2986
<INTEREST-DEPOSIT> 729
<INTEREST-EXPENSE> 778
<INTEREST-INCOME-NET> 2208
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1860
<INCOME-PRETAX> 274
<INCOME-PRE-EXTRAORDINARY> 274
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 274
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
<YIELD-ACTUAL> 6.83
<LOANS-NON> 0
<LOANS-PAST> 31
<LOANS-TROUBLED> 3048
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2364
<CHARGE-OFFS> 14
<RECOVERIES> 17
<ALLOWANCE-CLOSE> 2367
<ALLOWANCE-DOMESTIC> 2367
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
