The allowance for credit losses associated with loans other than two-step loans was $29.5 million or 1.47% of such outstanding loan balances at year end 2008 compared to $32.9 million or 1.64% at September 30, 2008 and $23.8 million or 1.25% at December 31, 2007. Charge-offs during fourth quarter 2008 of loans with a specific reserve at September 30, 2008 substantially explain the decline in the allowance percentage during the fourth quarter.
Total non-performing assets were $198 million or 7.9% of total assets at December 31, 2008, up from $183 million and 7.1%, respectively, as of September 30, 2008 and $30 million and 1.1% at year end 2007. Non-performing assets related to the two-step loan portfolio were $110 million or 4.4% of total assets at December 31, 2008, a decrease of $18 million from the end of third quarter 2008. The $110 million balance of nonperforming two-step assets at December 31, 2008 reflected prior write-downs of approximately 23% from the original balance of these loans. During the fourth quarter the nonaccrual two-step loan balance declined by $33 million to $50 million while the two-step OREO balance increased from $45 million at September 30, 2008 to $60 million at year end 2008, in line with our expectations. Two-step nonperforming assets are anticipated to continue to decline in future periods.
Nonperforming assets, excluding the two-step portfolio, increased by $32 million to $88 million or 3.49% of total assets at December 31, 2008, from $56 million and 2.16% at September 30, 2008, and $6 million and .22% at year end 2007. The fourth quarter 2008 $25 million increase in nonaccrual non two-step loans was largely linked to the $20 million growth in non accrual loans to residential builders and developers and the $3 million increase in nonaccrual nonstandard mortgage loans. Nearly 40% of the $15 million in nonstandard mortgage loans on nonaccrual status were not delinquent at year end.
The loan portfolio, excluding residential construction loans (which includes all two-step loans) and nonstandard mortgage loans, continued to perform satisfactorily at year end 2008, considering the economic situation. This portfolio, which includes the commercial, commercial real estate, commercial construction, standard mortgage, home equity, and consumer portfolios, totaled $1.84 billion and represented 89% of total loans at December 31, 2008. The nonperforming assets to total assets ratio for these loans measured 1.09% at year end 2008, as compared to .86% and .16% at September 30, 2008 and December 31, 2007, respectively. At December 31, 2008, all nonaccrual loans, including all non two-step loans, had been measured for impairment and written down to the appraised fair value, less expected selling costs, of the underlying collateral.
At year end 2008 the total non two-step delinquent loans were $6.9 million or .34% of total non two-step loans, down from $10.9 million and .54% at September 30, 2008, and from $7.7 million and .40% at year end 2007. The decline in delinquent non two-step loans in the most recent quarter was primarily due to lower delinquencies in residential construction loans to builders and developers and was partly offset by higher commercial loan delinquencies. For more detailed credit quality information, see tables 4 through 14.
Other:
The Company will hold a Webcast conference call Tuesday, January 20, 2009, at 8:00 a.m. Pacific Time, during which the Company will discuss fourth quarter 2008 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 “4th Quarter 2008 Earnings Conference Call” tab. The conference call may also be accessed by dialing (877) 811-4715 Conference ID#: 76229771 a few minutes prior to 8:00 a.m. PDT. 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, one of Oregon Business Magazine’s 100 Best Companies to Work For, 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. Actual results could be quite different from those expressed or implied by the forward-looking statements. Do not unduly rely on forward-looking statements. They give our 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, factors identified in our Annual Report on Form 10-K for the year ended December 31, 2007, including under the heading "Forward Looking Statement Disclosure" and in Item 1A, “Risk Factors,” all as updated in our Quarterly Report on Form 10-Q.
