Columbia Banking System Announces Earnings of $6.8 Million for First Quarter 2010; Declares Cash Dividend

Highlights for the Quarter

- Net Income applicable to common shareholders of $6.8 million, or $0.24 per common share

- Remains well capitalized at 17.80% total risk-based capital ratio

- Strong core deposits at 85% of total deposits

- Net interest margin increased 48 basis points linked-quarter to 4.78% from 4.30% for the quarter ended December 31, 2009

- Assets increase to $4.13 billion, up from $3.20 billion at December 31, 2009

- Deposits increase to $3.37 billion, up from $2.48 billion at December 31, 2009

- Assets and liabilities of Columbia River Bank, The Dalles, Oregon, acquired on January 22, 2010 in FDIC-assisted transaction

- Assets and liabilities of American Marine Bank, Bainbridge Island, Washington, acquired on January 29, 2010 in FDIC-assisted transaction

- Substantial retail network of 85 branches in Washington and Oregon.

Apr 28, 2010, 16:01 ET from Columbia Banking System, Inc.

TACOMA, Wash., April 28 /PRNewswire-FirstCall/ -- Columbia Banking System, Inc. (Nasdaq: COLB) today announced net income applicable to common shareholders of $6.8 million for the first quarter of 2010 compared to net income applicable to common shareholders of $419,000 for the same quarter of 2009.  On a diluted per common share basis, net income for the quarter was $0.24, an increase from earnings per common share of $0.02 in the first quarter of 2009.  Included in the first quarter 2010 result was a $9.8 million pre-tax gain on the acquisition of the former American Marine Bank, which was offset by a $15.0 million provision for loan losses due to the challenging Pacific Northwest economy, particularly the continued decline in real estate values.

"We are pleased that our capital strength has allowed us to implement strategic initiatives to increase our presence in the Pacific Northwest and benefit from market disruptions," said Melanie Dressel, President & Chief Executive Officer. "Although we are seeing signs of improvement in the regional economy, it has not translated into robust loan demand.  In the interim, our focus continues to be to position ourselves for the future through geographic expansion and selective hiring of high quality business bankers, while still looking for opportunities to fine tune our operations to efficiently accommodate our anticipated growth over the next several years. Our two FDIC-assisted transactions in the first quarter moved us considerably closer to our often-stated goal of growing into a true Pacific Northwest regional community bank as we increased our branch system by over 60% and significantly improved our presence in important markets for us."

Significant Influences on the Quarter ended March 31, 2010

Acquisition of Columbia River Bank

On January 22, 2010, Columbia State Bank acquired certain assets and assumed certain liabilities of Columbia River Bank from the Federal Deposit Insurance Corporation ("FDIC"), which had been appointed receiver of the institution, including 21 branches located in Oregon and Washington. Columbia State Bank acquired tangible assets with a fair value of approximately $884.9 million, including $480.3 million of loans, an FDIC indemnification asset of $143.6 million, $100.7 million of investment securities, $98.1 million of cash and cash equivalents and $62.2 million of other assets.  Columbia State Bank assumed liabilities with a fair value of approximately $912.9 million, including $893.4 million of insured and uninsured deposits, $18.4 million of Federal Home Loan Bank ("FHLB") advances and $1.1 million of other liabilities.  In connection with this acquisition, Columbia State Bank entered into loss-sharing agreements with the FDIC which cover approximately $676.1 million in face value of Columbia River Bank's loans. The transaction resulted in goodwill of $14.5 million and a core deposit intangible of $13.4 million.  The Company adjusted the initially reported goodwill related to the Columbia River Bank acquisition, increasing it from $8.6 million to $14.5 million, as a result of corresponding adjustments to the fair value of loans acquired from the FDIC at the date of acquisition.  

Acquisition of American Marine Bank

On January 29, 2010, Columbia State Bank acquired substantially all of the deposits and assets of American Marine Bank from the FDIC, which had been appointed receiver of the institution, including  11 branches located in western Washington.  Columbia State Bank acquired tangible assets with a fair value of approximately $303.5 million, including $176.3 million of loans, an FDIC indemnification asset of $66.8 million, $28.6 million of investment securities, $14.5 million of cash and cash equivalents and $17.3 million of other assets.   Columbia State Bank assumed liabilities with a fair value of approximately $292.6 million, including $254.0 million of insured and uninsured deposits, $37.7 million of FHLB advances and $974,000 of other liabilities. In connection with this acquisition, Columbia State Bank entered into loss-sharing agreements with the FDIC which cover approximately $243.8 million in face value of American Marine Bank's loans.  In addition, as part of this acquisition, Columbia State Bank received regulatory approval to exercise trust powers and intends to continue to operate the Trust and Wealth Management Division of American Marine Bank.  The transaction resulted in a bargain purchase gain of $9.8 million, and a core deposit intangible of $4.3 million.

The assets acquired and liabilities assumed in these two FDIC-assisted transactions have been accounted for under the acquisition method of accounting (formerly the purchase method).  The assets acquired and liabilities assumed, both tangible and intangible, were recorded at their estimated fair values as of their respective acquisition dates. .

As a result of the loss-sharing agreements with the FDIC, the loans and foreclosed assets acquired in the FDIC-assisted transactions are presented separately in the Company's balance sheet as "covered loans" and "covered other real estate owned." These assets were recorded at fair value without a corresponding allowance for credit losses. Additionally, in connection with both transactions, the Company has recorded on its balance sheet a $210.4 million FDIC indemnification asset, which is the present value of the cash flows the Company expects to collect from the FDIC under the loss-sharing agreements.  

Capital Strength

The Company's total risk-based capital ratio at March 31, 2010 was 17.80%, well in excess of the minimum of 10% required to be "well-capitalized" under applicable regulatory standards.  Our excess capital over and above the 10% minimum to be well-capitalized was roughly $195 million at March 31, 2010.  At the end of the first quarter 2010, our tangible common equity to tangible assets ratio stood at 8.3% as compared to 11.4% at December 31, 2009.  The decline was reflective of adding tangible assets with a fair value of approximately $1.2 billion in the two FDIC-assisted acquisitions announced in the first quarter.

Net Interest Margin

Columbia's net interest margin increased to 4.78% in the first quarter of 2010, up from 4.26% for the same quarter last year and 4.30% in the fourth quarter of 2009. The net interest margin was positively impacted by the repricing to current market rates of the assets acquired and liabilities assumed in our two acquisitions and the associated purchase accounting marks.  This was offset by interest reversals for the quarter ended March 31, 2010 related to nonaccrual loans totaling $364,000.  

Asset Quality

The majority of assets acquired in both FDIC-assisted transactions during the first quarter 2010 are covered under FDIC loss-sharing agreements, and loan valuations incorporate estimated losses.  As a result, a large portion of our covered loan portfolio has minimal loss exposure.  Loans that were classified as nonperforming loans by Columbia River Bank and American Marine Bank are no longer classified as nonperforming.  At acquisition, the carrying value of these loans was adjusted to reflect fair value, and are covered under the FDIC loss sharing agreements.  The new book value reflects an amount that management believes will ultimately be collected.

Total nonperforming assets at March 31, 2010 were $126.6 million,  up $4.9 million, or 4% from  $121.7 million at March 31, 2009 and down $3.0  million, or 2%, from $129.5 million at December 31, 2009. The ratio of nonperforming assets to total assets at March 31, 2010 was 3.62%, compared to 3.99% at March 31, 2009 and 4.05% at December 31, 2009.

Balance Sheet

At March 31, 2010, the Company's total assets were $4.13 billion, an increase of 29% from $3.2 billion at December 31, 2009.  Total shareholders' equity at March 31, 2010 was $538.7 million, an increase of 30%, from $415.7 million at March 31, 2009, and total market capitalization was $573.4 million at March 31, 2010, up from $370.7 million at March 31, 2009.

Loans

Loans not covered under the FDIC loss-sharing agreements ("non-covered loans") were $1.95 billion at March 31, 2010, down 3.0% from $2.00 billion at December 31, 2009.  The average yield on non-covered loans for the quarter ended March 31, 2010 was 6.16%.  The non-covered loan portfolio continues to be diversified, mitigating risk by avoiding concentration in any one segment.  The portfolio includes 38% commercial business loans, 6% total construction including commercial and residential, 46% real estate and 10% consumer.  Net loans covered under the FDIC-loss sharing agreements ("covered loans"), which provide protection against credit risk on those covered loans, totaled $625.3 million at March 31, 2010.  

Deposits

Total deposits at March 31, 2010 increased 44% to $3.37 billion from $2.34 billion at March 31, 2009, and 36% from $2.48 billion at December 31, 2009.  Core deposits, defined as demand, savings, money market accounts and certificates of deposit under $100,000, increased 52%, from $1.87 billion at March 31, 2009 to $2.86 billion at March 31, 2010.  The average cost of deposits for the quarter ended March 31, 2010 was 0.64%.

Operating Results

Quarter ended March 31, 2010

Net Interest Income

Net interest income for the first quarter of 2010 was $38.3 million, an increase of 37% from $27.9 million for the same quarter in 2009, primarily due to the impact of the addition of Columbia River Bank and American Marine Bank loan portfolios. The Company's net interest margin increased to 4.78% in the first quarter of 2010, from 4.26% for the same quarter last year. The net interest margin was negatively impacted by interest reversals for the quarter ended March 31, 2010 related to nonaccrual loans totaling $364,000.  However, the net interest margin was also positively impacted by accretion of the discount on the loan portfolios acquired in the two FDIC-assisted transactions.

Average interest-earning assets were $3.37 billion during the quarter, an increase of 22% compared with $2.77 billion during the same quarter of 2009.   The yield on average interest-earning assets increased 6 basis points (a basis point equals 1/100 of 1%) to 5.51% during the quarter compared with 5.45% during the same quarter of 2009.  During the same period, average interest-bearing liabilities increased to $2.57 billion, or 20%, from $2.14 billion in the first quarter of 2009. The cost of average interest-bearing liabilities decreased 59 basis points to 0.95% during the quarter, from 1.54% in the same quarter of 2009.

Noninterest Income

Noninterest income was $18.5 million, compared to $7.0 million in the first quarter of last year.  The increase was primarily due to the $9.8 million gain on the American Marine Bank acquisition, and an increase of $1.8 million in service charges and other fees primarily resulting from the impact of the normal operations of Columbia River Bank and American Marine Bank.

Noninterest Expense

Total noninterest expense for the first quarter of 2010 was $33.9 million, an increase of 46% from $23.2 million for the same quarter in 2009.   The increase was primarily due to the addition of operating expenses of Columbia River Bank and American Marine Bank in January 2010.  In addition to the normalized operating expenses for these two acquisitions, we expect expenses to be elevated for the next two quarters as we convert systems and incur other acquisition-related expenses.  

Income Taxes

Although Columbia had pre-tax earnings of $7.9 million in the first quarter of 2010, the Company recorded an income tax benefit of $66,000 due to the significant portion of pre-tax earnings flowing from tax-exempt assets.

Nonperforming Assets and Loan Loss Provision

At March 31, 2010, nonperforming assets were $126.6 million, compared to $121.7 million at March 31, 2009 and $129.5 million at December 31, 2009.

The table below sets forth information with respect to our nonaccrual loans, restructured loans, total nonperforming loans and total nonperforming assets.  

March 31,

December 31,

(in thousands)

2010

2009

Nonaccrual noncovered loans:

Commercial business

$   18,422

$           18,979

Real estate:

One-to-four family residential

2,839

1,860

Commercial and five or more family residential real estate

28,626

24,354

Total real estate

31,465

26,214

Real estate construction:

One-to-four family residential

37,850

47,653

Commercial and five or more family residential real estate

13,635

16,230

Total real estate construction

51,485

63,883

Consumer

4,193

1,355

Total nonaccrual noncovered loans

105,565

110,431

Restructured noncovered loans:

One-to-four family residential construction

287

60

Total nonperforming noncovered loans

105,852

110,491

Noncovered real estate owned and other personal property owned

20,726

19,037

Total nonperforming noncovered assets

$ 126,578

$         129,528

For the quarter ended March 31, 2010, net loan charge-offs were approximately $11.5 million, compared to $9.5 million for the same period a year ago, and $13.2 million during the fourth quarter of 2009.  Charge-offs in the 1-4 family residential loan and residential construction portfolios of $4.7 million for the first quarter of 2010 were centered in residential land and lot development loans.  

The following table provides an analysis of the Company's allowance for loan and lease losses at the dates and the periods indicated:

Three Months Ended March 31,

(in thousands)

2010

2009

Beginning balance

$      53,478

$      42,747

Charge-offs:

Residential, construction, land & acquisitions

(4,662)

(6,285)

Commercial business

(2,216)

(2,557)

Commercial real estate

(4,836)

(703)

Consumer

(1,139)

(162)

Total charge-offs

(12,853)

(9,707)

Recoveries

One-to-four family residential

-

68

Residential construction, land & acquisitions

767

39

Commercial business

523

42

Commercial real estate:

39

22

Consumer

27

38

Total recoveries

1,356

209

Net charge-offs

(11,497)

(9,498)

Provision charged to expense

15,000

11,000

Ending balance

$      56,981

$      44,249

Total noncovered loans, net at end of period

$ 1,949,609

$ 2,185,755

Allowance for loan losses to period-end noncovered loans

2.92%

2.02%

For the first quarter 2010, the provision for loan losses was $15.0 million compared to $11.0 million for the same quarter last year and $15.0 million for the fourth quarter of 2009.  The elevated provision levels are related to continued weakness in the Pacific Northwest economy.  The allowance for loan losses to non-covered period-end loans was 2.92% at March 31, 2010 compared to 2.66% and 2.02% at December 31, 2009 and March 31, 2009, respectively.

Columbia's provision for loan losses reflects management's continuing evaluation of the loan portfolio's credit quality, which is affected by a broad range of economic factors.  Additional factors affecting the provision include but are not limited to net-loan charge offs, non-accrual loans, specific reserves and risk-rating migration.

Non-covered past due loans were $16.4 million at March 31, 2010, or 0.84% of total non-covered loans compared to $9.1 million, or 0.45% of total loans, at December 31, 2009.

"Overall credit quality for the quarter was stable, and in line with our expectations," Ms. Dressel commented.  "We continue to make progress in reducing our level of nonperforming assets associated with our non-covered construction loans, and saw modest negative migration in our non-covered commercial real estate perm portfolio and non-covered consumer loans. We continue to be very proactive in managing our loan portfolio."

Organizational Update

Ms. Dressel commented, "We are pleased with the reception we have received from the customers of the former Columbia River Bank and the former American Marine Bank   The transitions continue to go smoothly, and we are very pleased with the teamwork and dedication of our new team members as we move toward our conversions, which are scheduled for the second quarter for Columbia River Bank and the third quarter for American Marine Bank.  The opening of our Portland office, which will house business bankers and a full-service branch in Fox Tower, has been slightly delayed, and is scheduled to open during the second quarter of this year."

Ms. Dressel continued, "I am also very pleased that readers of South Sound Magazine voted Columbia Bank as the best bank in their "2010 Best of the South Sound" spring edition."

Cash Dividend Announcement

The Board of Directors has announced a quarterly cash dividend of $0.01 per common share, which will be paid on May 26, 2010 to shareholders of record as of the close of business on May 12, 2010.  

About Columbia

Headquartered in Tacoma, Washington, Columbia Banking System, Inc. is the holding company of Columbia State Bank, a Washington state-chartered full-service commercial bank which was awarded second place in the large employer category by Seattle Business Magazine's 100 Best Companies to Work For 2009 and was designated one of  Puget Sound Business Journal's "Washington's Best Workplaces 2009".  

With the January 2010 FDIC-assisted acquisitions of Columbia River Bank and American Marine Bank, Columbia Banking System has 85 banking offices, including 60 branches in Washington State and 25 branches in Oregon. Columbia State Bank does business under the Bank of Astoria name at the Bank of Astoria's former branches located in Astoria, Warrenton, Seaside, Cannon Beach, Manzanita and Tillamook. More information about Columbia can be found on its website at www.columbiabank.com.

Note Regarding Forward-Looking Statements

This news release includes forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders.  These forward looking statements describe Columbia's management's expectations regarding future events and developments such as future operating results, growth in loans and deposits, continued success of Columbia's style of banking and the strength of the local economy.  The words "will," "believe," "expect," "intend," "should," and "anticipate" and words of similar construction are intended in part to help identify forward looking statements.   Future events are difficult to predict, and the expectations described above are necessarily subject to risk and uncertainty that may cause actual results to differ materially and adversely.  In addition to discussions about risks and uncertainties set forth from time to time in Columbia's filings with the Securities and Exchange Commission, available at the SEC's website at www.sec.gov and the Company's website at www.columbiabank.com, including the "Risk Factors," "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of our annual reports on Form 10-K and quarterly reports on Form 10-Q, factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following:  (1) local, national and international economic conditions may be less favorable than expected or have a more direct and pronounced effect on Columbia than expected and adversely affect Columbia's ability to continue its internal growth at historical rates and maintain the quality of its earning assets; (2) changes in interest rates may reduce interest margins more than expected and negatively affect funding sources; (3) projected business increases following strategic expansion or opening or acquiring new branches may be lower than expected; (4) costs or difficulties related to the integration of acquisitions may be greater than expected; (5) competitive pressure among financial institutions may increase significantly; and (6) legislation or regulatory requirements or changes may adversely affect the businesses in which Columbia is engaged.  We believe the expectations reflected in our forward-looking statements are reasonable, based on information available to us on the date hereof. However, given the described uncertainties and risks, we cannot guarantee our future performance or results of operations and you should not place undue reliance on these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The factors noted above and the risks and uncertainties described in our SEC filings should be considered when reading any forward-looking statements in this release.

Contacts:

Melanie J. Dressel, President and

Chief Executive Officer

(253) 305-1911

Gary R. Schminkey, Executive Vice President

and Chief Financial Officer

(253) 305-1966

FINANCIAL STATISTICS

Columbia Banking System, Inc.

Three Months Ended

Unaudited

March 31,

(in thousands except per share)

2010

2009

Earnings

Net interest income

$      38,274

$      27,903

Provision for loan and lease losses

$      15,000

$      11,000

Noninterest income

$      18,473

$        6,974

Noninterest expense

$      33,897

$      23,181

Net income

$        7,916

$        1,512

Net income applicable to common shareholders

$        6,809

$           419

Per Common Share

Net income (basic)

$          0.24

$          0.02

Net income (diluted)

$          0.24

$          0.02

Averages

Total assets

$ 3,945,042

$ 3,057,861

Interest-earning assets

$ 3,368,241

$ 2,774,259

Loans

$ 2,440,415

$ 2,217,908

Securities

$    710,648

$    543,403

Deposits

$ 3,135,949

$ 2,324,853

Core deposits

$ 2,608,279

$ 1,867,001

Interest-bearing deposits

$ 2,395,562

$ 1,869,155

Interest-bearing liabilities

$ 2,571,588

$ 2,135,045

Noninterest-bearing deposits

$    740,387

$    455,698

Shareholders' equity

$    539,856

$    419,752

Financial Ratios

Return on average assets

0.81%

0.20%

Return on average common equity

5.93%

0.49%

Average equity to average assets

13.68%

13.73%

Net interest margin

4.78%

4.26%

Efficiency ratio (tax equivalent)(1)

67.03%

63.59%

March 31,

December 31,

Period end

2010

2009

2009

Total assets, including covered assets

$ 4,133,812

$ 3,045,757

$     3,200,930

Covered assets

$    634,443

$              -

$                  -

Loans, excluding covered loans

$ 1,949,609

$ 2,185,755

$     2,008,884

Allowance for loan and lease losses

$      56,981

$      44,249

$          53,478

Securities

$    736,939

$    555,974

$        631,645

Deposits

$ 3,371,165

$ 2,344,406

$     2,482,705

Core deposits

$ 2,856,186

$ 1,873,626

$     2,072,821

Shareholders' equity

$    538,721

$    415,717

$        528,139

Book value per common share

$        16.44

$        18.73

$            16.13

Nonperforming assets

Nonaccrual loans, excluding covered assets

$    105,565

$    117,340

$        110,431

Restructured loans accruing interest, excluding covered assets

287

-

60

Noncovered real estate owned and other personal property owned

20,726

4,312

19,037

Total nonperforming assets, excluding covered assets

$    126,578

$    121,652

$        129,528

Nonperforming loans to period-end loans, excluding covered loans

5.43%

5.37%

5.50%

Nonperforming assets to period-end assets, excluding covered assets

3.62%

3.99%

4.05%

Allowance for loan and lease losses to period-end loans, excluding covered loans

2.92%

2.02%

2.66%

Allowance for loan and lease losses to nonperforming loans, excluding covered loans

53.83%

37.71%

48.40%

Allowance for loan and lease losses to nonperforming assets, excluding covered assets

45.02%

36.37%

41.29%

Net loan charge-offs

$      11,497

(2)

$        9,498

(3)

$          52,769

(4)

(1)  Noninterest expense divided by the sum of net interest income and noninterest income on a tax equivalent basis,

     excluding gain/loss on sale of investment securities, net cost of operation of other real estate, proceeds from redemption

     of Visa and Mastercard shares, reversal of previously accrued Visa litigation expense and gain on bank acquisition.

(2)  For the three months ended March 31, 2010.

(3)  For the three months ended March 31, 2009.

(4)  For the twelve months ended December 31, 2009.

FINANCIAL STATISTICS

Columbia Banking System, Inc.

Unaudited

March 31,

(in thousands)

2010

2009

Loan Portfolio Composition

Loans not covered under FDIC loss share agreements:

Commercial business

$    736,018

37.8%

$    812,557

37.2%

Real Estate:

One-to-four family residential

56,409

2.9%

54,831

2.5%

Five or more family residential and commercial

839,251

43.0%

861,531

39.4%

Total Real Estate

895,660

45.9%

916,362

41.9%

Real Estate Construction:

One-to-four family residential

93,788

4.8%

186,307

8.5%

Five or more family residential and commercial

33,422

1.7%

64,712

3.0%

Total Real Estate Construction

127,210

6.5%

251,019

11.5%

Consumer

194,972

10.0%

209,882

9.6%

Subtotal loans

1,953,860

100.2%

2,189,820

100.2%

Less:  Deferred loan fees

(4,251)

-0.2%

(4,065)

-0.2%

Total loans not covered under FDIC loss share agreements, net of deferred fees

1,949,609

100.0%

2,185,755

100.0%

Loans covered under FDIC loss share agreements:

Covered loans

874,929

-

Total discount resulting from acquisition date fair value adjustment

(249,598)

-

Net covered loans under loss share agreements

625,331

-

Total loans, net

$ 2,574,940

$ 2,185,755

Loans held for sale

$              -

$        3,747

March 31,

2010

2009

Deposit Composition

Core deposits:

Demand and other non-interest bearing

$    756,060

22.4%

$    474,736

20.2%

Interest bearing demand

651,351

19.3%

454,723

19.4%

Money market

902,176

26.8%

528,990

22.6%

Savings

204,801

6.1%

133,517

5.7%

Certificates of deposit less than $100,000

341,798

10.1%

281,660

12.0%

Total core deposits

2,856,186

84.8%

1,873,626

79.9%

Certificates of deposit greater than $100,000

407,002

12.1%

314,721

13.4%

Wholesale certificates of deposit (CDARS®)

82,781

2.5%

95,817

4.1%

Wholesale certificates of deposit

23,155

0.7%

60,242

2.6%

Subtotal

3,369,124

100.0%

2,344,406

100.0%

Premium resulting from acquisition date fair value adjustment

2,041

-

Total Deposits

$ 3,371,165

$ 2,344,406

FINANCIAL STATISTICS

Columbia Banking System, Inc.

Unaudited

March 31,

(in thousands)

2010

Loan Portfolio Composition

Loans not covered under FDIC loss share agreements:

Commercial business

$    736,018

37.8%

Real Estate:

One-to-four family residential

56,409

2.9%

Five or more family residential and commercial

Retail

$ 104,529

5.4%

Office

154,542

7.9%

Multi-family

51,764

2.7%

Condos

6,862

0.4%

Warehouse

190,770

9.8%

Manufacturing & Industrial

43,200

2.2%

Acquisition and development

529

0.0%

Land

25,302

1.3%

Hotel / Motel

60,084

3.1%

Healthcare

12,168

0.6%

Residential

25,649

1.3%

Recreational

17,091

0.9%

Other

146,761

7.5%

Total Five Or More Family Residential And Commercial Real Estate

839,251

43.0%

Real Estate Construction:

One-to-four family residential

Single family residential (vertical)

38,266

2.0%

Lots

25,751

1.3%

Acquisition and development

19,098

1.0%

Land

10,673

0.5%

Total One-To-Four Family Residential Construction

93,788

4.8%

Five or more family residential and commercial

Condos

5,892

0.3%

Warehouse

2,733

0.1%

Other

11,065

0.6%

Retail

7,743

0.4%

Office

5,989

0.3%

Total Five Or More Family Residential And Commercial Construction

33,422

1.7%

Consumer

194,972

10.0%

Subtotal loans

1,953,860

100.2%

Less:  Deferred loan fees

(4,251)

-0.2%

Total loans not covered under FDIC loss share agreements, net of deferred fees

1,949,609

100.0%

Net covered loans under loss share agreements

625,331

Total loans

$ 2,574,940

QUARTERLY FINANCIAL STATISTICS

Columbia Banking System, Inc.

Three Months Ended

Unaudited

Mar 31

Dec 31

Sep 30

Jun 30

Mar 31

(in thousands except per share)

2010

2009

2009

2009

2009

Earnings

Net interest income

$      38,274

$      29,800

$      29,118

$      28,531

$      27,903

Provision for loan and lease losses

$      15,000

$      15,000

$      16,500

$      21,000

$      11,000

Noninterest income

$      18,473

$        8,526

$        7,190

$        7,000

$        6,974

Noninterest expense

$      33,897

$      22,847

$      23,146

$      25,314

$      23,181

Net income (loss)

$        7,916

$        1,552

$      (1,502)

$      (5,530)

$        1,512

Net income (loss) applicable to common shareholders

$        6,809

$           447

$      (2,605)

$      (6,631)

$           419

Per Common Share

Net income (loss) (basic)

$          0.24

$          0.02

$        (0.11)

$        (0.37)

$          0.02

Net income (loss) (diluted)

$          0.24

$          0.02

$        (0.11)

$        (0.37)

$          0.02

Book value

$        16.44

$        16.13

$        16.15

$        18.50

$        18.73

Averages

Total assets, including covered assets

$ 3,945,042

$ 3,177,098

$ 3,077,005

$ 3,024,491

$ 3,057,861

Interest-earning assets

$ 3,368,241

$ 2,872,842

$ 2,783,121

$ 2,728,086

$ 2,774,259

Loans, including covered loans

$ 2,440,415

$ 2,034,903

$ 2,088,478

$ 2,159,415

$ 2,217,908

Securities

$    710,648

$    643,716

$    593,516

$    554,270

$    543,403

Deposits

$ 3,135,949

$ 2,453,553

$ 2,395,311

$ 2,337,385

$ 2,324,853

Core deposits

$ 2,608,279

$ 2,039,533

$ 1,977,977

$ 1,893,419

$ 1,867,001

Interest-bearing deposits

$ 2,395,562

$ 1,890,479

$ 1,857,708

$ 1,850,193

$ 1,869,155

Interest-bearing liabilities

$ 2,571,588

$ 2,041,761

$ 2,019,051

$ 2,073,750

$ 2,135,045

Noninterest-bearing deposits

$    740,387

$    563,074

$    537,603

$    487,192

$    455,698

Shareholders' equity

$    539,856

$    530,804

$    478,589

$    417,961

$    419,752

Financial Ratios

Return on average assets

0.81%

0.19%

(0.19)%

(0.73%)

0.20%

Return on average common equity

5.93%

0.39%

(2.56)%

(7.73%)

0.49%

Average equity to average assets

13.68%

16.71%

15.55%

13.82%

13.73%

Net interest margin

4.78%

4.30%

4.34%

4.38%

4.26%

Efficiency ratio (tax equivalent)

67.03%

58.12%

60.85%

63.79%

63.59%

Period end

Total assets, including covered assets

$ 4,133,812

$ 3,200,930

$ 3,167,028

$ 3,021,857

$ 3,045,757

Covered assets

$    634,443

$              -

$              -

$              -

$              -

Loans, excluding covered loans

$ 1,949,609

$ 2,008,884

$ 2,063,398

$ 2,119,443

$ 2,185,755

Allowance for loan and lease losses

$      56,981

$      53,478

$      51,688

$      48,880

$      44,249

Securities

$    736,939

$    631,645

$    658,227

$    558,011

$    555,974

Deposits

$ 3,371,165

$ 2,482,705

$ 2,443,567

$ 2,353,326

$ 2,344,406

Core deposits

$ 2,856,186

$ 2,072,821

$ 2,027,482

$ 1,932,771

$ 1,873,626

Shareholders' equity

$    538,721

$    528,139

$    527,920

$    411,871

$    415,717

Nonperforming assets

Nonaccrual loans and leases not covered under FDIC loss share agreements

$    105,565

$    110,431

$    130,718

$    127,767

$    117,340

Restructured loans accruing interest, excluding covered assets

287

60

-

-

-

Noncovered real estate owned and other personal property owned

20,726

19,037

18,137

8,369

4,312

Total nonperforming assets, excluding covered assets

$    126,578

$    129,528

$    148,855

$    136,136

$    121,652

Nonperforming loans to period-end loans, excluding covered loans

5.43%

5.50%

6.34%

6.03%

5.37%

Nonperforming assets to period-end assets, excluding covered assets

3.62%

4.05%

4.70%

4.51%

3.99%

Allowance for loan and lease losses to period-end loans, excluding covered loans

2.92%

2.66%

2.50%

2.31%

2.02%

Allowance for loan and lease losses to nonperforming loans, excluding covered loans

53.83%

48.40%

39.54%

38.26%

37.71%

Allowance for loan and lease losses to nonperforming assets, excluding covered assets

45.02%

41.29%

34.72%

35.91%

36.37%

Net loan charge-offs

$      11,497

$      13,210

$      13,692

$      16,369

$        9,498

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

Columbia Banking System, Inc.

Three Months Ended

(Unaudited)

March 31,

(in thousands except per share)

2010

2009

Interest Income

Loans

$ 36,947

$ 29,801

Taxable securities

4,745

4,208

Tax-exempt securities

2,446

2,013

Federal funds sold and deposits in banks

149

7

Total interest income

44,287

36,029

Interest Expense

Deposits

4,941

6,892

Federal Home Loan Bank and Federal Reserve Bank borrowings

705

765

Long-term obligations

249

351

Other borrowings

118

118

Total interest expense

6,013

8,126

Net Interest Income

38,274

27,903

Provision for loan and lease losses

15,000

11,000

Net interest income after provision for loan and lease losses

23,274

16,903

Noninterest Income

Gain on bank acquisition

9,818

-

Service charges and other fees

5,424

3,614

Merchant services fees

1,739

1,770

Gain on sale of investment securities, net

58

-

Bank owned life insurance ("BOLI")

504

501

Other

930

1,089

Total noninterest income

18,473

6,974

Noninterest Expense

Compensation and employee benefits

14,283

11,852

Occupancy

3,969

3,045

Merchant processing

1,100

814

Advertising and promotion

838

692

Data processing

1,296

961

Legal and professional fees

1,498

967

Taxes, licenses and fees

564

796

Regulatory premiums

1,496

1,007

Net cost of operation of other real estate

1,312

47

Other

7,541

3,000

Total noninterest expense

33,897

23,181

Income before income taxes

7,850

696

Income tax benefit

(66)

(816)

Net Income

$   7,916

$   1,512

Net Income Applicable to Common Shareholders

$   6,809

$      419

Earnings per common share

Basic

$     0.24

$     0.02

Diluted

$     0.24

$     0.02

Dividends paid per common share

$     0.01

$     0.04

Weighted average number of common shares outstanding

27,886

17,980

Weighted average number of diluted common shares outstanding

28,098

17,987

CONSOLIDATED CONDENSED BALANCE SHEETS

Columbia Banking System, Inc.

(Unaudited)

March 31,

December 31,

(in thousands)

2010

2009

ASSETS

Cash and due from banks

$      73,801

$          55,802

Interest-earning deposits with banks

      232,670

          249,272

Total cash and cash equivalents

      306,471

          305,074

Securities available for sale at fair value (amortized cost of $696,220 and $602,675, respectively)

      719,031

          620,038

Federal Home Loan Bank stock at cost

        17,908

            11,607

Loans, net of deferred loan fees of ($4,251) and ($4,033), respectively

   1,949,609

       2,008,884

Less: allowance for loan and lease losses

        56,981

            53,478

Noncovered loans, net

   1,892,628

       1,955,406

Loans covered under FDIC loss share agreements

      625,331

                    -  

Total loans, net

   2,517,959

       1,955,406

FDIC indemnification asset

      210,405

                    -  

Interest receivable

        16,236

            10,335

Premises and equipment, net

        61,537

            62,670

Other real estate owned, covered under FDIC loss share agreement

          9,112

                    -  

Other real estate owned

        19,432

            19,037

Total other real estate owned

        28,544

            19,037

Goodwill

      110,013

            95,519

Core deposit intangible, net

        21,831

              4,863

Other assets

      123,877

          116,381

Total Assets

$ 4,133,812

$     3,200,930

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:

Noninterest-bearing

$    756,060

$        574,687

Interest-bearing

   2,615,105

       1,908,018

Total deposits

   3,371,165

       2,482,705

Federal Home Loan Bank and Federal Reserve Bank borrowings

      125,951

          100,000

Securities sold under agreements to repurchase

        25,000

            25,000

Other borrowings

                -  

                   86

Long-term subordinated debt

        25,686

            25,669

Other liabilities

        47,289

            39,331

Total liabilities

   3,595,091

       2,672,791

Commitments and contingent liabilities

March 31,

December 31,

2010

2009

Preferred stock (no par value, 76,898 aggregate liquidation preference)

Authorized shares

2,000

2,000

Issued and outstanding

77

77

74,447

74,301

Common Stock (no par value)

Authorized shares

63,033

63,033

Issued and outstanding

28,242

28,129

349,546

348,706

Retained earnings

99,843

93,316

Accumulated other comprehensive income

14,885

11,816

Total shareholders' equity

538,721

528,139

Total Liabilities and Shareholders'                Equity

$ 4,133,812

$     3,200,930

SOURCE Columbia Banking System, Inc.



RELATED LINKS

http://www.columbiabank.com