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.

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

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