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Columbia Banking System Announces Fourth Quarter and Full Year 2012 Earnings; Increased Quarterly Cash Dividend

Highlights for the quarter include strong loan growth, exceptional core deposit levels and continued improving credit quality

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TACOMA, Wash., Jan. 24, 2013 /PRNewswire/ -- Melanie Dressel, President and Chief Executive Officer of Columbia Banking System and Columbia Bank (NASDAQ: COLB) ("Columbia") said today upon the release of Columbia's fourth quarter 2012 earnings, "Our core performance measures continue their positive trend, the result of our ongoing strategic initiatives.   These initiatives have resulted in solid loan growth, improved credit quality metrics, as well as increased levels of noninterest income, coupled with reduced expenses."

Ms. Dressel continued, "In general, our core performance measures for the fourth quarter 2012 and the full year 2012 are improved when compared to the results of the same periods in the prior year.  Prior period comparisons are distorted by the favorable impact resulting from one of our FDIC-assisted acquisitions, which bolstered earnings during the fourth quarter of 2011 by $0.15 per share, or $6 million. With loan growth of 8%, our high level of core deposits and the pending merger with West Coast Bancorp, we feel we are well-positioned heading into 2013."

Columbia's net income was $13.5 million for the quarter ended December 31, 2012 compared to net income of $14.8 million for the same quarter of 2011.  Earnings per diluted common share were $0.34 for the fourth quarter, compared with earnings of $0.37 per diluted common share a year earlier. The decline in earnings was due to the enhanced benefits realized in the fourth quarter of 2011 from Columbia's FDIC-assisted transactions.     

Significant Influences on the Quarter Ended December 31, 2012         

Net Interest Margin

Columbia's net interest margin decreased to 5.15% for the fourth quarter of 2012, down from 7.14% for the same period last year and down from 5.52% for the third quarter of 2012.  Columbia's net interest margin is impacted significantly by the accounting for acquired loans. The net interest margin for the current quarter reflects a moderating trend in the incremental accretion income related to the acquired loans, which peaked during the last six months of 2011.

Columbia's net interest margin, excluding incremental accretion income, interest reversals on nonaccrual loans and prepayment charge on Federal Home Loan Bank advances, decreased to 4.14% for the fourth quarter of 2012, down from 4.68% for the same period last year and down from 4.40% for the third quarter of 2012.  The net interest margin, excluding incremental accretion income, was negatively impacted during the fourth quarter of 2012 by the overall decreasing trend in rates, impacting both the loan and investment portfolios.  The average yield on investments declined as portfolio cash flows were reinvested at lower prevailing rates.  Also contributing to the lower net interest margin was the additional cash held in overnight funds in anticipation of payment of the cash portion of the West Coast Bancorp merger consideration.

Ms. Dressel commented, "Our operating net interest margin compressed during the current quarter at a similar rate as much of the industry experienced in the previous quarter.  During the fourth quarter, we executed on several initiatives to supplement the net interest margin in 2013, the results of which were beginning to be realized in December." 

The following table shows the impact to interest income and the related impact to the net interest margin resulting from accretion of income on acquired loan portfolios for the periods presented.

 



Three Months Ended


Year Ended



December 31, 2012


December 31, 2011


December 31, 2012


December 31, 2011



(dollars in thousands)

Interest income as recorded


$

19,719



$

38,722



$

98,583



$

109,581


Less: Interest income at stated note rate


7,848



12,316



37,406



42,221


Incremental accretion income


$

11,871



$

26,406



$

61,177



$

67,360


Incremental accretion income due to:









Acquired impaired loans


$

10,850



$

17,222



$

55,305



$

53,079


Other acquired loans


1,021



9,184



5,872



14,281


Incremental accretion income


$

11,871



$

26,406



$

61,177



$

67,360


Reported net interest margin


5.15

%


7.14

%


5.77

%


6.29

%

Net interest margin excluding incremental accretion income, interest reversals on nonaccrual loans and prepayment charge on FHLB advances


4.14

%


4.68

%


4.36

%


4.53

%

 

Impact of Acquired Loan Accounting

The following table illustrates the significant impact to earnings associated with Columbia's acquired loan portfolios:

 

Acquired Loan Portfolio Activity












Three Months Ended


Year Ended



December 31, 2012


December 31, 2011


December 31, 2012


December 31, 2011



(in thousands)

Incremental accretion income on acquired impaired loans


$

10,850



$

17,222



$

55,305



$

53,079


Incremental accretion income on other acquired loans


1,021



9,184



5,872



14,281


(Provision) recapture for losses on covered loans


(2,511)

 



3,960



(25,892)



1,648


Change in FDIC loss-sharing asset


(9,680)



(17,448)



(24,467)



(49,496)


Claw back liability benefit (expense)


154



(362)



54



(3,656)


Pre-tax earnings impact


$

(166)



$

12,556



$

10,872



$

15,856


 

The incremental accretion income in the table above represents the amount of income recorded on acquired loans above the contractual rate stated in the individual loan notes and stems from the discount established at the time these loan portfolios were acquired.  At December 31, 2012, the accretable yield on acquired impaired loans was $166.9 million and the net discount on other acquired loans was $2.4 million.  The accretable yield and net discount represent income to be recorded by Columbia over the remaining life of the acquired loans.   Accretable yield is subject to change based upon expected future loan cash flows, which are re-measured by Columbia on a quarterly basis. 

The $2.5 million net provision for losses on covered loans in the current period is partially offset by an 80%, or $2.0 million, benefit to the change in the FDIC loss-sharing asset, resulting in a negative net pre-tax earnings impact of $502 thousand. The provision for losses on covered loans was primarily due to decreased expected future cash flows as re-measured during the current quarter when compared to the prior quarter's re-measurement. 

The $9.7 million change in the FDIC loss-sharing asset in the current quarter negatively affected noninterest income and consists of $9.5 million of scheduled amortization expense and approximately $2.2 million of expense related to covered other real estate owned partially offset by the $2.0 million favorable adjustment described above.

Balance Sheet

Ms. Dressel commented, "Our focus on developing and enhancing customer relationships resulted in 8% growth in noncovered loans and a 12% increase in our business loans from the end of last year."  Noncovered loans were $2.53 billion at December 31, 2012, up 2% from $2.48 billion at the prior quarter and up 8% from $2.35 billion at prior year end.   Net noncovered loan growth was approximately $49 million from prior quarter and $177 million from prior year end.  The growth in noncovered loans for the quarter was centered in commercial and multifamily residential real estate loans and commercial and multifamily residential real estate construction loans. At December 31, 2012, Columbia's total assets were $4.91 billion, a 3% increase from $4.79 billion in total assets at prior year end and virtually unchanged from the prior quarter. Securities, including FHLB stock, were $1.02 billion at December 31, 2012, up 6% from $965.6 million at the prior quarter and down 3% from $1.05 billion at prior year end.

Total deposits at December 31, 2012 were $4.04 billion, a 3% increase from $3.94 billion at September 30, 2012, and a 6% increase from $3.82 billion at December 31, 2011.  Core deposits comprised 94% of total deposits, and were $3.80 billion at December 31, 2012, an increase of 3% from $3.69 billion at September 30, 2012, and an increase of 8% from $3.51 billion at December 31, 2011.

During the fourth quarter of 2012, the Company repaid $106.4 million of FHLB advances. Associated with this repayment, the Company incurred $603 thousand in prepayment expense.

Total shareholders' equity was $764.0 million at December 31, 2012, compared to $762.0 million and $759.3 million at September 30, 2012 and December 31, 2011, respectively. In accordance with the Columbia's recent capital and dividend strategies, total shareholders' equity has remained relatively unchanged over the past four quarters.            

Asset Quality

At December 31, 2012, nonperforming noncovered assets were $48.5 million, a decrease of 9% from $53.3 million at September 30, 2012, and 43% from $85.4 million at December 31, 2011.  Nonaccrual loans declined $4.2 million during the fourth quarter.  The decrease in nonaccrual loans for the quarter was driven by payments of $4.4 million, charge-offs of $2.7 million, the return of $2.5 million of nonaccrual loans to accrual status, and $935 thousand of loans transferred to OREO, partially offset by $6.3 million of new nonaccrual loans.  Noncovered other real estate owned (OREO) and other personal property owned (OPPO) were reduced by $641 thousand during the fourth quarter, as a result of $991 thousand in sales and $585 thousand in write-downs, partially offset by loan foreclosures of $935 thousandColumbia's allowance for loan losses to nonperforming, noncovered loans ratio was 140% for the quarter, up from 124% for the third quarter 2012 and 99% for the same period last year.

The following table sets forth, at the dates indicated, information with respect to noncovered nonaccrual loans and total noncovered nonperforming assets.

 



December 31, 2012


September 30, 2012


December 31, 2011



(dollars in thousands)

Nonaccrual noncovered loans:







Commercial business


$

9,299



$

12,564



$

10,243


Real estate:







One-to-four family residential


2,349



2,220



2,696


Commercial and multifamily residential


19,204



19,459



19,485


Total real estate


21,553



21,679



22,181


Real estate construction:







One-to-four family residential


4,900



5,359



10,785


Commercial and multifamily residential






7,067


Total real estate construction


4,900



5,359



17,852


Consumer


1,643



1,987



3,207


Total nonaccrual loans


37,395



41,589



53,483


Noncovered other real estate owned and other personal property owned


11,108



11,749



31,905


Total nonperforming noncovered assets


$

48,503



$

53,338



$

85,388


 

For the quarter ended December 31, 2012, net loan charge-offs were $1.6 million, compared to $2.1 million for the same period a year ago, and $3.5 million last quarter.  Net charge-offs during the current quarter were primarily centered in commercial business loans.

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

 



Three Months Ended December 31,


Year Ended December 31,



2012


2011


2012


2011



(in thousands)

Beginning balance


$

51,527



$

50,422



$

53,041



$

60,993


Charge-offs:









Commercial business


(1,903)



(1,758)



(10,173)



(7,909)


One-to-four family residential real estate


(50)





(549)



(717)


Commercial and multifamily residential real estate


(365)



(1,325)



(5,474)



(3,687)


One-to-four family residential real estate construction


(181)



(72)



(1,606)



(2,487)


Commercial and multifamily residential real estate construction




(503)



(93)



(2,213)


Consumer


(658)



(620)



(2,534)



(3,918)


Total charge-offs


(3,157)



(4,278)



(20,429)



(20,931)


Recoveries:









Commercial business


234



1,441



1,548



2,598


One-to-four family residential real estate


83



2



285



80


Commercial and multifamily residential real estate


261



363



1,599



459


One-to-four family residential real estate construction


582



168



1,488



2,091


Commercial and multifamily residential real estate construction


2





66




Consumer


362



173



1,171



351


Total recoveries


1,524



2,147



6,157



5,579


Net charge-offs


(1,633)



(2,131)



(14,272)



(15,352)


Provision charged to expense


2,350



4,750



13,475



7,400


Ending balance


$

52,244



$

53,041



$

52,244



$

53,041


 

For the fourth quarter of 2012, Columbia made a provision of $2.4 million for noncovered loan losses.  For the comparable quarter last year the company made a provision of $4.8 million.  The provision for noncovered loan losses during the current quarter was primarily driven by net charge-offs realized in the quarter and to a lesser extent by the $49 million in noncovered loan growth experienced during the quarter.

The allowance for noncovered loan losses to period end loans was 2.07% at December 31, 2012 compared to 2.08% at September 30, 2012 and 2.26% at December 31, 2011.

Fourth Quarter 2012 Operating Results

Quarter ended December 31, 2012

Net Interest Income

Net interest income for the fourth quarter of 2012 was $54.9 million, a decrease of 24% from $72.1 million for the same quarter in 2011, primarily due to the accretion income recorded during the fourth quarter of 2011 related to our acquired loan portfolios. During the fourth quarter of 2012, the Company recorded $11.9 million in incremental accretion income on acquired loans compared to $26.4 million for the fourth quarter of 2011.

Compared to the third quarter of 2012, net interest income decreased 4% from $57.3 million primarily due to lower yields on the loan and securities portfolios.

Noninterest Income (Loss)

Total noninterest income was $6.6 million for the fourth quarter of 2012, compared to a loss of $9.6 million for the fourth quarter of 2011.  The increase from the prior-year period was due to a combination of the change in the FDIC loss-sharing asset, which accounted for $7.8 million of the increase, and an increase of $6.5 million in investment securities gains.  The increase in securities gains was primarily due to the $3.0 million gain recorded in the current quarter on a municipal bond that was determined to be other than temporarily impaired in the fourth quarter of 2011. The Company received full payment on this security in the current quarter.

The following table reflects the components of the change in the FDIC loss-sharing asset for the three month periods indicated.

 



Three Months Ended


Year Ended



December 31,


December 31,



2012


2011


2012


2011



(in thousands)

Adjustments reflected in income









Amortization, net


(9,522)



(13,493)



(42,940)



(46,049)


Loan impairment (recapture)


2,009



(3,742)



20,714



(1,318)


Sale of other real estate


(2,908)



(859)



(7,789)



(4,346)


Write-downs of other real estate


687



563



5,190



1,474


Other


54



83



358



743


Change in FDIC loss-sharing asset


$

(9,680)



$

(17,448)



$

(24,467)



$

(49,496)



















Noninterest Expense

Total noninterest expense for the fourth quarter of 2012 was $37.8 million, a decrease of 9% from $41.3 million for the same quarter in 2011.  The decrease from the prior-year period was due to a decrease of $830 thousand in compensation and benefits, $642 thousand in occupancy and $992 thousand in other noninterest expense as well as an increase of $834 thousand in net benefit of operation of other real estate.  These decreases were partially offset by a $1.1 million increase in legal and professional fees, which includes $649 thousand of costs recorded during the fourth quarter of 2012 related to the announced merger with West Coast Bancorp.

Compared to the third quarter of 2012, noninterest expense decreased $3.1 million, or 8%.  The decrease was primarily attributable to a decrease of $1.0 million in advertising and promotion, $573 thousand in compensation and benefit expense, and a $489 thousand change in the FDIC clawback liability.

Organizational Update

Melanie Dressel commented, "As an important component of our ongoing effort to improve efficiencies without compromising customer service, we continually evaluate the profitability of our customer delivery channels.  A total of three branches were closed during 2012; during the fourth quarter, we consolidated our Port Townsend and Belfair branches, both located in grocery stores in Washington, into nearby, full-service locations."

Ms. Dressel continued, "As we announced last quarter, we signed a definitive merger agreement with West Coast Bancorp ("West Coast") headquartered in Lake Oswego, Oregon.  After the merger, Columbia will rank as the number one community bank in deposit market share in both Oregon and Washington, and we will have extensive coverage throughout both states with about 150 branches and over $7 billion in assets.  We expect this transaction to be completed within the next three months, subject to the approval of the shareholders of each company and the necessary regulatory approvals." 

Cash Dividend Announcement

The Board of Directors announced that a quarterly cash dividend of $0.10 per common share will be paid on February 20, 2013 to shareholders of record on February 6, 2013.  This is an increase of 11% from $0.09 paid the prior quarter.

Conference Call

Columbia's management will discuss the fourth quarter and full year 2012 results on a conference call scheduled for Thursday, January 24, 2013 at 1:00 p.m. PDT (4:00 pm EDT).   Interested parties may listen to this discussion by calling 1-866-378-3802; Conference ID code #86908552.

A conference call replay will be available from approximately 4:00 p.m. PDT on January 24, 2013 through midnight PDT on January 31, 2013.  The conference call replay can be accessed by dialing 1-855-859-2056 and entering Conference ID code #86908552.

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.  For the sixth consecutive year, the bank was named in 2012 as one of Puget Sound Business Journal's "Washington's Best Workplaces."

Columbia Banking System has 99 banking offices, including 74 branches in Washington State and 25 branches in Oregon. Columbia Bank does business under the Bank of Astoria name in Astoria, Warrenton, Seaside, Cannon Beach, Manzanita and Tillamook in Oregon. 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) the proposed merger with West Coast Bancorp may not close when expected or at all because required regulatory, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all, which may have an effect on the trading prices of Columbia's stock; (5) costs or difficulties related to the integration of acquisitions may be greater than expected; (6) competitive pressure among financial institutions may increase significantly; and (7) 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.


FINANCIAL STATISTICS












Columbia Banking System, Inc.












Unaudited



























Three Months Ended


Year Ended








December 31,


December 31,








2012


2011


2012


2011






Earnings


(dollars in thousands except per share amounts)






Net interest income


$

54,898



$

72,124



$

238,927



$

236,736







Provision for loan and lease losses


$

2,350



$

4,750



$

13,475



$

7,400







Provision (recapture) for losses on covered loans, net (1)


$

2,511



$

(3,960)



$

25,892



$

(1,648)







Noninterest income (loss)


$

6,567



$

(9,602)



$

27,058



$

(9,283)







Noninterest expense


$

37,800



$

41,314



$

162,913



$

155,759







Net income


$

13,462



$

14,754



$

46,143



$

48,037







Per Common Share














Earnings (basic)


$

0.34



$

0.37



$

1.16



$

1.22







Earnings (diluted)


$

0.34



$

0.37



$

1.16



$

1.21







Book value


$

19.25



$

19.23



$

19.25



$

19.23







Averages














Total assets


$

4,925,736



$

4,755,222



$

4,826,283



$

4,509,010







Interest-earning assets


$

4,388,487



$

4,098,603



$

4,246,724



$

3,871,424







Loans, including covered loans


$

2,926,825



$

2,817,279



$

2,900,520



$

2,607,266







Securities


$

1,007,059



$

957,727



$

1,011,294



$

928,891







Deposits


$

4,012,764



$

3,791,169



$

3,875,666



$

3,541,399







Core deposits


$

3,769,409



$

3,472,023



$

3,609,467



$

3,218,425







Interest-bearing deposits


$

2,714,292



$

2,664,133



$

2,683,630



$

2,557,179







Interest-bearing liabilities


$

2,796,155



$

2,808,497



$

2,808,968



$

2,717,243







Noninterest-bearing deposits


$

1,298,472



$

1,127,036



$

1,192,036



$

984,220







Shareholders' equity


$

767,781



$

757,696



$

761,185



$

730,726







Financial Ratios














Return on average assets


1.09

%


1.23

%


0.96

%


1.07

%






Return on average common equity


6.98

%


7.73

%


6.06

%


6.57

%






Average equity to average assets


15.59

%


15.93

%


15.77

%


16.21

%






Net interest margin


5.15

%


7.14

%


5.77

%


6.27

%






Efficiency ratio (tax equivalent)(2)


68.26

%


69.56

%


69.17

%


70.68

%






















December 31,










Period end


2012


2011










Total assets


$

4,906,335



$

4,785,945











Covered assets, net


$

407,648



$

560,055











Loans, excluding covered loans, net


$

2,525,710



$

2,348,371











Allowance for noncovered loan and lease losses


$

52,244



$

53,041











Securities


$

1,023,484



$

1,050,325











Deposits


$

4,042,085



$

3,815,529











Core deposits


$

3,802,366



$

3,510,435











Shareholders' equity


$

764,008



$

759,338











Nonperforming, noncovered assets














Nonaccrual loans


$

37,395



$

53,483











Other real estate owned ("OREO") and other personal property owned ("OPPO")


11,108



31,905











Total nonperforming, noncovered assets


$

48,503



$

85,388











Nonperforming assets to period-end noncovered loans + OREO and OPPO


1.91

%


3.59

%










Nonperforming loans to period-end noncovered loans


1.48

%


2.28

%










Nonperforming assets to period-end noncovered assets


1.08

%


2.02

%










Allowance for loan and lease losses to period-end noncovered loans


2.07

%


2.26

%










Allowance for loan and lease losses to nonperforming noncovered loans


139.71

%


99.17

%










Net noncovered loan charge-offs


$

14,272


(3)

$

15,352


(4)





































(1) Provision (recapture) for losses on covered loans was partially offset by $2.0 million in income and $3.7 million in expense recorded to Change in FDIC loss-sharing asset in the Consolidated Statements of Income for the three months ended December 31, 2012 and 2011, respectively. For the year ended December 31, 2012 and 2011, provision (recapture) for losses on covered loans was partially offset by $20.7 million in income and $1.3 million in expense, respectively.

(2)  Noninterest expense, excluding net cost of operation of other real estate, FDIC clawback liability expense and merger related expenses, divided by the sum of net interest income, excluding incremental accretion income on the acquired loan portfolio and prepayment expenses on FHLB advances, and noninterest income on a tax equivalent basis, excluding gain/loss on investment securities, gain on bank acquisition, and the change in FDIC loss-sharing asset.

(3)  For the year ended December 31, 2012.









(4)  For the year ended December 31, 2011.









 


 

FINANCIAL STATISTICS







Columbia Banking System, Inc.







Unaudited
















December 31,



December 31,




2012



2011


Loan Portfolio Composition


(dollars in thousands)


Noncovered loans:









Commercial business


$

1,155,158



45.7

%


$

1,031,721



43.9

%

Real estate:









One-to-four family residential


43,922



1.7

%


64,491



2.8

%

Commercial and multifamily residential


1,061,201



42.0

%


998,165



42.5

%

Total real estate


1,105,123



43.7

%


1,062,656



45.3

%

Real estate construction:









One-to-four family residential


50,602



2.0

%


50,208



2.1

%

Commercial and multifamily residential


65,101



2.7

%


36,768



1.6

%

Total real estate construction


115,703



4.7

%


86,976



3.7

%

Consumer


157,493



6.2

%


183,235



7.8

%

Subtotal loans


2,533,477



100.3

%


2,364,588



100.7

%

Less:  Net unearned income


(7,767)



(0.3)

%


(16,217)



(0.7)

%

Total noncovered loans, net of unearned income


2,525,710



100.0

%


2,348,371



100.0

%

Less:  Allowance for loan and lease losses


(52,244)





(53,041)




Noncovered loans, net


2,473,466





2,295,330




Covered loans, net of allowance for loan losses of ($29,157) and ($4,944), respectively


391,337





531,929




Total loans, net


$

2,864,803





$

2,827,259




Loans held for sale


$

2,563





$

2,148















December 31,



December 31,




2012



2011


Deposit Composition


(dollars in thousands)


Core deposits:









Demand and other non-interest bearing


$

1,321,171



32.7

%


$

1,156,610



30.3

%

Interest bearing demand


870,821



21.5

%


735,340



19.3

%

Money market


1,043,459



25.8

%


1,031,664



27.0

%

Savings


314,371



7.8

%


283,416



7.4

%

Certificates of deposit less than $100,000


252,544



6.2

%


303,405



8.0

%

Total core deposits


3,802,366



94

%


3,510,435



92.0

%










Certificates of deposit greater than $100,000


212,924



5.3

%


262,731



6.9

%

Certificates of deposit insured by CDARS®


26,720



0.7

%


42,080



1.1

%

Subtotal


4,042,010



100.0

%


3,815,246



100.0

%

Premium resulting from acquisition date fair value adjustment


75





283




Total deposits


$

4,042,085





$

3,815,529




 


FINANCIAL STATISTICS







Columbia Banking System, Inc.







Unaudited















December 31,


December 31,



2012


2011



OREO


OPPO


OREO


OPPO

OREO and OPPO Composition


(in thousands)

Covered


$

16,311



$

45



$

28,126



$


Noncovered


10,676



432



22,893



9,011


Total


$

26,987



$

477



$

51,019



$

9,011













Three Months Ended


Year Ended



December 31,


December 31,



2012


2011


2012


2011

OREO and OPPO Earnings Impact


(in thousands)

Net cost of operation of noncovered OREO


$

664



$

1,567



$

4,766



$

7,416


Net benefit of operation of covered OREO


(2,097)



(2,166)



(6,735)



(8,438)


Net benefit of operation of OREO


$

(1,433)



$

(599)



$

(1,969)



$

(1,022)











Noncovered OPPO cost (benefit), net


$

(271)



$

20



$

1,971



$

(1,088)


Covered OPPO benefit, net


(197)



(1)



(213)



(105)


OPPO expense, net (1)


$

(468)



$

19



$

1,758



$

(1,193)











(1) OPPO expense, net is included in Other noninterest expense in the Consolidated Statements of Income.

 



QUARTERLY FINANCIAL STATISTICS










Columbia Banking System, Inc.










Unaudited






















Three Months Ended




December 31,


September 30,


June 30,


March 31,


December 31,




2012


2012


2012


2012


2011




(dollars in thousands except per share)


Earnings




Net interest income


$

54,898



$

57,265



$

59,701



$

67,063



$

72,124



Provision for loan and lease losses


$

2,350



$

2,875



$

3,750



$

4,500



$

4,750



Provision (recapture) for losses on covered loans


$

2,511



$

(3,992)



$

11,688



$

15,685



$

(3,960)



Noninterest income (loss)


$

6,567



$

(911)



$

11,828



$

9,574



$

(9,602)



Noninterest expense


$

37,800



$

40,936



$

39,825



$

44,352



$

41,314



Net income


$

13,462



$

11,880



$

11,899



$

8,902



$

14,754



Per Common Share












Earnings (basic)


$

0.34



$

0.30



$

0.30



$

0.22



$

0.37



Earnings (diluted)


$

0.34



$

0.30



$

0.30



$

0.22



$

0.37



Book value


$

19.25



$

19.20



$

19.13



$

18.97



$

19.23



Averages












Total assets


$

4,925,736



$

4,828,102



$

4,788,723



$

4,776,186



$

4,755,222



Interest-earning assets


$

4,388,487



$

4,263,414



$

4,194,281



$

4,137,449



$

4,098,603



Loans, including covered loans


$

2,926,825



$

2,919,520



$

2,895,436



$

2,860,524



$

2,817,279



Securities


$

1,007,059



$

983,815



$

1,029,337



$

1,023,067



$

957,727



Deposits


$

4,012,764



$

3,859,284



$

3,823,985



$

3,805,324



$

3,791,169



Core deposits


$

3,769,409



$

3,599,246



$

3,555,279



$

3,512,490



$

3,472,023



Interest-bearing deposits


$

2,714,292



$

2,665,094



$

2,682,092



$

2,672,911



$

2,664,133



Interest-bearing liabilities


$

2,796,155



$

2,803,201



$

2,820,857



$

2,815,753



$

2,808,497



Noninterest-bearing deposits


$

1,298,472



$

1,194,190



$

1,141,893



$

1,132,413



$

1,127,036



Shareholders' equity


$

767,781



$

761,281



$

758,391



$

761,686



$

757,696



Financial Ratios












Return on average assets


1.09

%


0.98

%


1.00

%


0.75

%


1.23

%


Return on average common equity


6.98

%


6.21

%


6.31

%


4.70

%


7.73

%


Average equity to average assets


15.59

%


15.77

%


15.84

%


15.95

%


15.93

%


Net interest margin


5.15

%


5.52

%


5.88

%


6.67

%


7.14

%


Efficiency ratio (tax equivalent)


68.26

%


68.46

%


68.54

%


71.48

%


69.56

%


Period end












Total assets


$

4,906,335



$

4,903,049



$

4,789,413



$

4,815,432



$

4,785,945


Covered assets, net


$

407,648



$

445,797



$

482,073



$

526,043



$

560,055


Loans, excluding covered loans, net


$

2,525,710



$

2,476,844



$

2,436,961



$

2,371,818



$

2,348,371


Allowance for noncovered loan and lease losses


$

52,244



$

51,527



$

52,196



$

52,283



$

53,041


Securities


$

1,023,484



$

965,641



$

1,019,978



$

1,021,428



$

1,050,325


Deposits


$

4,042,085



$

3,938,855



$

3,830,817



$

3,865,445



$

3,815,529


Core deposits


$

3,802,366



$

3,685,844



$

3,568,307



$

3,591,663



$

3,510,435


Shareholders' equity


$

764,008



$

761,977



$

758,712



$

752,703



$

759,338


Nonperforming, noncovered assets












Nonaccrual loans


$

37,395



$

41,589



$

49,465



$

57,552



$

53,483



OREO and OPPO


11,108



11,749



17,608



21,571



31,905



Total nonperforming, noncovered assets


$

48,503



$

53,338



$

67,073



$

79,123



$

85,388



Nonperforming assets to period-end noncovered loans + OREO and OPPO


1.91

%


2.14

%


2.73

%


3.31

%


3.59

%


Nonperforming loans to period-end noncovered loans


1.48

%


1.68

%


2.03

%


2.43

%


2.28

%


Nonperforming assets to period-end noncovered assets


1.08

%


1.20

%


1.56

%


1.84

%


2.02

%


Allowance for loan and lease losses to period-end noncovered loans


2.07

%


2.08

%


2.14

%


2.20

%


2.26

%


Allowance for loan and lease losses to nonperforming noncovered loans


139.71

%


123.90

%


105.52

%


90.84

%


99.17

%


Net noncovered loan charge-offs


$

1,633



$

3,544



$

3,836



$

5,258



$

2,131





























































 

CONSOLIDATED STATEMENTS OF INCOME






Columbia Banking System, Inc.






Unaudited














Three Months Ended


Year Ended



December 31,


December 31,



2012


2011


2012


2011



(in thousands except per share)

Interest Income









Loans


$

50,558



$

66,974



$

219,433



$

218,420


Taxable securities


3,862



5,169



18,276



21,870


Tax-exempt securities


2,499



2,659



9,941



10,142


Federal funds sold and deposits in banks


290



117



854



839


Total interest income


57,209



74,919



248,504



251,271


Interest Expense









Deposits


1,208



1,909



5,887



10,478


Federal Home Loan Bank advances


379



765



2,608



2,980


Prepayment charge on Federal Home Loan Bank advances


603





603




Long-term obligations








579


Other borrowings


121



121



479



498


Total interest expense


2,311



2,795



9,577



14,535


Net Interest Income


54,898



72,124



238,927



236,736


Provision for loan and lease losses


2,350



4,750



13,475



7,400


Provision (recapture) for losses on covered loans, net


2,511



(3,960)



25,892



(1,648)


Net interest income after provision (recapture) for loan and lease losses


50,037



71,334



199,560



230,984


Noninterest Income (Loss)









Service charges and other fees


7,776



6,886



29,998



26,632


Gain on bank acquisitions, net of tax








1,830


Merchant services fees


1,987



1,992



8,154



7,385


Investment securities gains (losses), net


3,671



(2,816)



3,733



(2,816)


Bank owned life insurance


684



632



2,861



2,188


Change in FDIC loss-sharing asset


(9,680)



(17,448)



(24,467)



(49,496)


Other


2,129



1,152



6,779



4,994


Total noninterest income (loss)


6,567



(9,602)



27,058



(9,283)


Noninterest Expense









Compensation and employee benefits


20,950



21,780



85,434



81,552


Occupancy


4,721



5,363



20,031



18,963


Merchant processing


888



934



3,612



3,698


Advertising and promotion


308



636



3,650



3,686


Data processing and communications


2,451



2,452



9,714



8,484


Legal and professional fees


2,694



1,618



8,915



6,486


Taxes, licenses and fees


1,142



1,463



4,736



4,446


Regulatory premiums


824



784



3,384



4,337


Net benefit of operation of other real estate


(1,433)



(599)



(1,969)



(1,022)


Amortization of intangibles


1,083



1,203



4,445



4,319


FDIC clawback liability expense (recovery)


(154)



362



(54)



3,656


Other


4,326



5,318



21,015



17,154


Total noninterest expense


37,800



41,314



162,913



155,759


Income before income taxes


18,804



20,418



63,705



65,942


Provision for income taxes