Nearly four months after the departure of its chief executive, Oregon's West Coast Bancorp is showing signs of operational wear, with earnings weakening at a clip that has analysts scrambling to keep pace.
The Lake Oswego institution, the largest banking company headquartered in Oregon, missed consensus third-quarter earnings per share estimates by 15% when it reported in late October that earnings had fallen 6.5%, to $4.24 million, or 27 cents per share. Analysts responded last week by cutting 1999 earnings estimates as low as $1.13 per share, the third downward revision since August.
Few expect matters to improve until the top job is filled. "The company is without a leader at a crucial point in time," said Melba Bartels, a bank analyst at Ragen MacKenzie Inc. in Seattle. Ms. Bartels recently cut her 1999 estimate from $1.32 per share to $1.14 per share.
West Coast, which has $1.3 billion of assets and 42 branches in Oregon and Washington, is finishing a year-long restructuring that consolidated four of its bank charters, eliminated about 75 jobs, and folded four loan centers into one.
The company's last chief executive officer, Victor L. Bartruff, resigned in July, citing personal reasons. West Coast expects to complete its search for a successor by Dec. 1.
Donald A. Kalkofen, executive vice president and chief financial officer, cited a declining net interest margin, lack of fee income from loan sales on the secondary market, and rising interest rates that stunted the growth of mortgage banking operations. Loan growth was also scant, rising 1.8% from the second quarter. He emphasized the company's 15.09% return on equity and 1.41% return on assets.
Some observers see an upside. If West Coast hired an experienced CEO, the company could regain momentum, or could become an attractive acquisition target.
With revenues in decline for three straight quarters, observers said the clock is ticking.
"If the company keeps performing like this through the next quarter, there will be more pressure to sell," said Beth Ruckwardt, a bank analyst at Pacific Crest Securities in Portland, Ore., who cut her 1999 earnings estimate from $1.18 per share to $1.13.
Mr. Kalkofen denied the company is struggling.
"We're still a strong company," he said. "We haven't had the phenomenal growth that we had expected, but we're still quite pleased."