Bank of the West 2007 Annual Report Download - page 4

The unfavorable economic environment of the past year
overshadowed Bank of the West’s otherwise good
performance in 2007. We saw robust asset generation,
reflecting strong loan and equipment finance growth.
We continued efforts to deepen our deposit customer
relationships, and our cross-sale efforts met with growing
success. Restrained by low net interest margins, the bank
worked to diversify its revenue streams.
Surpassing $60 billion in assets for the first time, the
bank’s assets grew 11.1% over year-end 2006 to $61.8
billion. Loans and leases at year’s end 2007 totaled
$43.7 billion, a 10.4% increase over the 2006 total of
$39.6 billion. Net income for the year was $417.3
million, a decline of 27.1% from net income of $572.0
million in 2006.
Two factors negatively impacted our earnings. First, we
recorded impairment charges of $189.5 million in the
final quarter of the year to address exposure to mortgage-
backed securities and related vehicles. Second, we set aside
larger reserves than anticipated in the second half of 2007
to cover expected losses in the homebuilder industry as
well as deterioration of consumer credit. As it has for our
peers and competitors, net income suffered accordingly.
Bank of the West has experienced dramatic growth in
recent years, especially with acquisitions in 2004 and 2005
that served to introduce our brand in 13 states new to us.
Recognizing this growth and determined to continue
to make decisions swiftly and close to the customer, we
reorganized the bank in 2006 to decentralize and flatten
the organization.
This was our first full year implementing a decentralized
business model that made the bank’s array of products
available to both commercial and individual customers in
most of our 700-location footprint stretching from
California to Wisconsin. Our business model, aptly named
Business Empowerment to Achieve Results, reinforces
effective teamwork in providing more solutions for
more customers.
In 2007, we fine-tuned our new structure, developed and
offered new products, opened seven new retail branches
and launched 14 commercial sales offices in key growth
markets, including representative offices in New York
City and Taiwan. We successfully increased product
distribution in our credit card, mortgage, home equity
lending and insurance businesses. Net operating earnings
in our BW Insurance Agency subsidiary increased by 26%.
New prime mortgage lending rose by 10%, and our
Consumer Finance loan and lease production increased,
with indirect lending rising 12% for the year.
Our new commercial offices contributed to a 14%
increase in loans and leases over 2006 and a 7% increase
in commercial deposits. New cash management relation-
ships developed steadily throughout the year, and we
expect continued growth in commercial and industrial
relationships in 2008. On the small business end of the
commercial spectrum, we increased loan commitments
by 64% in 2007.
The Year In Review
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