West Coast Bancorp in Lake Oswego, Ore., said Monday that first-quarter earnings fell 75% from a year earlier, to $2 million, as losses in its residential construction loan portfolio continued to mount.
The $2.6 billion-asset West Coast said that nonperforming loans rose more than 25-fold, to $99 million, and that the ratio of nonperforming loans to total loans was 4.51%, compared with 0.19% a year earlier.
The net interest margin shrank 107 basis points, to 3.92%, and net interest income fell 15%, to $35 million.
West Coast more than tripled its loan-loss provision from a year earlier, to $8.7 million.
In the fourth quarter, it recorded a $30 million provision for bad residential construction loans, resulting in a $7.6 million loss for the quarter. Analysts have speculated that the bulk of the loss may have been related to fraud committed by customers who took out loans for the construction of custom-built homes.
For the first quarter, West Coast said that the bulk of its provision was for nonperforming loans to developers of tract homes and, to a lesser extent, other types of commercial loans.
By late Monday, West Coast's shares had dropped 9% from Friday's close, to $13.29.
