Columbia Banking System Announces Increased Second Quarter 2011 Earnings and Declares Increased Cash Dividend

TACOMA, Wash., July 28, 2011 /PRNewswire/ --

Highlights for the Quarter

  • Net income increased to $8.6 million, more than double net income of $3.9 million for the 2nd quarter 2010
  • Net income per diluted common share increased to $0.22, as compared to $0.11 per common share for the 2nd quarter 2010
  • Declares cash dividend of $0.06 per common share, an increase of 20% from prior quarter
  • Noncovered commercial business and real estate loans increase over 6% from year-end 2010
  • Strong core deposits at 91% of total deposits
  • Nonperforming noncovered assets decrease for third consecutive quarter
  • Very strong capital and liquidity measures
  • Assets and liabilities of Summit Bank, Burlington, Washington and First Heritage Bank, Snohomish, Washington, both acquired in May 2011 in FDIC-assisted transactions
  • Retail network expands by 8 locations to 93 branches in Washington and Oregon

Columbia Banking System, Inc. (NASDAQ: COLB) today announced net income applicable to common shareholders increased to $8.6 million, or 119%, for the second quarter of 2011 compared to $3.9 million for the same quarter of 2010.  On a diluted per common share basis, net income for the quarter rose to $0.22 compared with net income of $0.11 for the second quarter of 2010.  

Net income applicable to common shareholders for the six months ended June 30, 2011 increased to $14.4 million compared to $10.8 million for the first six months of 2010.  On a diluted per common share basis, net income for the first six months of 2011 was $0.36, compared to $0.34 a year earlier. The increase in net income did not result in a significant corresponding increase to diluted earnings per common share due to the additional shares issued in the Company's stock offering of May, 2010.

Melanie Dressel, President & Chief Executive Officer commented, "We are continuing to implement one of our primary strategies, filling in our footprint between Seattle and Bellingham by acquiring Summit Bank and First Heritage Bank during the second quarter. We are pleased with solid loan growth during a weak economy; our commercial business portfolio is up about 5% from year-end 2010, and commercial real estate loans have increased approximately 6%.  While loan generation continues to be challenging, our loan growth reflects our banking teams' emphasis on existing client relationships as well as identifying and making loans to customers in our important new markets."

Significant Influences on the Quarter Ended June 30, 2011

Acquisition of Summit Bank

On May 20, 2011, Columbia State Bank acquired all of the deposits and substantially all of the assets of Summit Bank from the Federal Deposit Insurance Corporation ("FDIC") which had been appointed receiver of the institution, including three branches located in Burlington, Concrete and Mt. Vernon, Washington.  Columbia acquired tangible assets with a fair value of approximately $127 million, including $74 million in loans and real estate owned, an FDIC indemnification asset of $27 million, $1 million in investment securities, $16 million of cash and cash equivalents, and $12 million of other assets.  Substantially all of the loans and real estate owned are subject to a loss-sharing agreement with the FDIC.  Columbia also assumed liabilities with a fair value of approximately $131 million, including $123 million of deposits and $8 million of Federal Home Loan Bank ("FHLB") advances.  The transaction resulted in goodwill of $3.8 million and a core deposit intangible of $509 thousand.

Acquisition of First Heritage Bank

On May 27, 2011, Columbia State Bank acquired all of the deposits and substantially all of the assets of First Heritage Bank from the FDIC, which was appointed receiver of the institution, including five branches in Snohomish, Everett, Monroe, Arlington and Woodinville, Washington.  Columbia acquired tangible assets with a fair value of approximately $158 million, including $90 million in loans and real estate owned, an FDIC indemnification asset of $38 million, $6 million in investment securities, $11 million of cash and cash equivalents, and $21 million of other assets.  Substantially all of the loans and real estate owned are subject to a loss-sharing agreement with the FDIC.  Columbia also assumed liabilities with a fair value of approximately $165 million, including $160 million of deposits, and $5 million of FHLB advances. The transaction resulted in goodwill of $5.9 million and a core deposit intangible of $1.3 million.

Impact of Acquired Loan Accounting

The following table illustrates the significant accounting entries associated with Columbia's acquired loan portfolios:

Acquired Loan Portfolio Activity








Three Months Ended


Six Months Ended

(in thousands)


June 30, 2011


June 30, 2011






Incremental accretion income over stated note rate


$                                  8,883


$                                21,254






Change in FDIC loss sharing asset


(6,419)


(21,193)






Clawback liability


(448)


(2,148)






Pre-tax earnings impact


$                                  2,016


$                                (2,087)



The incremental accretion income represents the amount of income recorded on the acquired loans above the contractual rate stated in the individual loan notes.  The additional income stems from the discount established at the time these loan portfolios were acquired, and increases net interest income and the net interest margin.  The change in the FDIC loss sharing asset recognizes the decreased amount that Columbia expects to collect from the FDIC under the terms of its loss sharing agreements due to lower expected losses on covered loans and other real estate owned.  The change in FDIC loss sharing asset affects noninterest income, resulting in a reported noninterest loss for the current quarter.  

The Columbia River Bank acquired loan portfolio continues to perform better than originally expected, requiring us to increase our clawback liability from $1.7 million to $2.1 million during the second quarter through a charge to noninterest expense of $448 thousand.  The $2.1 million represents the net present value of management's clawback liability estimate of $3.3 million.  The clawback liability is evaluated at the individual portfolio level each quarter and adjusted upward or downward according to the total expected losses over the loss share period.

Capital

The Company's total risk-based capital ratio at June 30, 2011 exceeded 24%.   At the end of the second quarter 2011, our tangible common equity to tangible assets ratio stood at 13.8% as compared to 13.7% at June 30, 2010, 14.25% at March 31, 2011, and 14.0% at both December 31, 2010 and September 30, 2010.  Ms. Dressel noted, "We continue to actively consider strategies to effectively utilize our strong capital."

Net Interest Margin

Columbia's net interest margin increased to 5.49% in the second quarter of 2011, up from 4.66% for the same quarter last year and 4.35% in the fourth quarter of 2010, and a decrease from 5.80% for the first quarter of 2011.  

The table below shows the effect on the net interest margin of the increased yield from the additional accretion of income over the stated contractual loan rate on the acquired loan portfolios for the second quarter and the first six months of 2011.



Three Months Ended


Six Months Ended

(in thousands)

June 30, 2011


June 30, 2011





Acquired Loan Effective Yield Income

$                                16,782


$                                38,084

Less:




Additional Accretion of Income

(8,883)


(21,254)





Stated Interest Income at Loan Note Rate

$                                  7,899


$                                16,830









Net Interest Margin Excluding Additional Accretion Income

4.53%


4.48%





Reported Net Interest Margin

5.49%


5.64%



Balance Sheet

At June 30, 2011, the Company's total assets were $4.43 billion, an increase of 4% from $4.26 billion at December 31, 2010.  Total shareholders' equity at June 30, 2011 was $727.7 million, a decrease of 6% from $775.3 million at June 30, 2010, and an increase of 3% from $706.9 million at December 31, 2010.

Loans not covered under the FDIC loss-sharing agreements ("non-covered loans") were $1.99 billion at June 30, 2011, up 2% from $1.95 billion at June 30, 2010, and up 4% from $1.92 billion at December 31, 2010.  The average yield on non-covered loans for the quarter ended June 30, 2011 was 7.32%.  

The non-covered loan portfolio continues to be diversified, mitigating risk by avoiding concentration in any one segment.  The portfolio includes 42% commercial business loans, 4% total construction including commercial and residential, 3% one-to-four family residential real estate, and 9% consumer.  The remaining 42% of the portfolio is commercial real estate, which consists of 60% income property and 40% owner occupied.   Net loans covered under the FDIC-loss sharing agreements ("covered loans"), which provide protection against credit risk on those covered loans, totaled $607.3 million at June 30, 2011.  

Total deposits at June 30, 2011 increased 6% to $3.48 billion from $3.28 billion at June 30, 2010, and 4% from $3.33 billion at December 31, 2010.  Core deposits (defined as demand, savings, money market accounts and certificates of deposit under $100,000) comprised 91% of total deposits, and were $3.14 billion at June 30, 2011, an increase of 11% from $2.83 billion at June 30, 2010 and 5% from $3.0 billion at December 31, 2010.  The average cost of deposits for the quarter ended June 30, 2011 was 0.46%.

Asset Quality

At June 30, 2011, nonperforming assets were $103.2 million, compared to $114.7 million at March 31, 2011 and $131.9 million at June 30, 2010.  The $11.5 million decrease in nonperforming assets for the quarter was primarily centered in the 1-4 family residential construction portfolios and our term commercial real estate portfolio.  Nonperforming assets declined in our commercial construction and commercial business portfolios as well.  For the quarter, the Company added $7.8 million in new nonperforming assets, experienced charge-offs associated with nonperforming assets of $4.2 million, and received payments of $8.1 million. We also reduced other real estate owned (OREO) by $4.7 million and placed $2.3 million of previously nonperforming loans back on accrual status.

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

(in thousands)

June 30, 2011


December 31, 2010


June 30, 2010

Nonaccrual noncovered loans:






Commercial business

$      11,690


$          32,367


$       17,309

Real estate:






One-to-four family residential

2,746


2,996


3,113

Commercial and five or more family residential real estate

22,810


23,192


36,097

Total real estate

25,556


26,188


39,210

Real estate construction:






One-to-four family residential

10,108


18,004


32,653

Commercial and five or more family residential real estate

5,976


7,584


14,282

Total real estate construction

16,084


25,588


46,935

Consumer

6,074


5,021


4,955

Total nonaccrual loans

59,404


89,164


108,409

Restructured noncovered loans:






   Commercial business

109


-


-

Commercial and five or more family residential real estate

5,871


5,747


-

One-to-four family residential construction

701


758


687

Total restructured noncovered loans

6,681


6,505


687

Total nonperforming noncovered loans

66,085


95,669


109,096

Noncovered real estate owned and other personal property owned

37,116


30,991


22,814

Total nonperforming noncovered assets

$    103,201


$        126,660


$     131,910

Allowance for loan losses to period-end nonperforming noncovered loans

82%


64%


55%

Allowance for loan losses to period-end nonperforming noncovered assets

52%


48%


45%



For the quarter ended June 30, 2011, net loan charge-offs were approximately $3.4 million, compared to $10.7 million for the same period a year ago, and $5.7 million during the first quarter of 2011.  Net charge-offs were primarily centered in term commercial real estate loans and commercial real estate construction loans.

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

Allowance for Possible Loan Loss

2011 Quarterly Recap by SEC Group








Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

2011

2010

2011

2010

Beginning balance

$               55,315

$               56,981

$               60,993

$               53,478

Charge-offs:






Commercial Business

(834)

(5,428)

(4,205)

(7,644)


One-to-four family residential perm

(216)

(104)

(664)

(104)


Commercial and five or more family residential real estate perm

(1,554)

(499)

(1,919)

(2,982)


One-to-four family residential construction

(805)

(3,002)

(2,232)

(7,664)


Commercial and five or more family residential real estate construction

(1,078)

(726)

(1,565)

(3,079)


Consumer

(271)

(1,314)

(1,196)

(2,453)


   Total charge-offs

(4,758)

(11,073)

(11,781)

(23,926)

Recoveries:






Commercial Business

592

132

697

656


One-to-four family residential perm

-

15

-

15


Commercial and five or more family residential real estate perm

13

3

86

41


One-to-four family residential construction

700

141

1,804

908


Commercial and five or more family residential real estate construction

-

-

-

-


Consumer

45

49

108

76


   Total recoveries

1,350

340

2,695

1,696

Net  (charge-offs)/recoveries

(3,408)

(10,733)

(9,086)

(22,230)

Provision charged to expense

2,150

13,500

2,150

28,500



For the second quarter of 2011, the company made a provision of $2.2 million for noncovered loan losses.  For the comparable quarter last year the company made a provision of $13.5 million.  The provision for noncovered loan losses was the result of the company's growth in noncovered loans for the quarter of approximately $103 million. The growth in noncovered loans was centered in term commercial real estate loans and commercial business loans.

The allowance for noncovered loan losses to noncovered period-end loans was 2.72% at June 30, 2011 compared to 3.07% at June 30, 2010 and 3.18% at December 31, 2010.  For the quarter, the Company made a provision of $2.2 million for noncovered loans.  The need for the provision was primarily driven by loan growth experienced throughout the second quarter of 2011. The allowance for noncovered loan losses to noncovered period end loans was 2.72% at June 30, 2011, compared to 3.07% at June 30, 2010 and 3.18% at December 31, 2010.  The decrease is due primarily to the previously mentioned loan growth and improved asset quality. Noncovered past due loans were $7.6 million at June 30, 2011, or 0.38% of total noncovered loans compared to $9.9 million at March 31, 2011, or 0.53% of total noncovered loans and  $10.6 million, or 0.55% of total noncovered loans, as of December 31, 2010.  As of June 30, 2010 noncovered past due loans were $12.0 million or 0.62% of total noncovered loans.

Operating Results

Quarter ended June 30, 2011

Net Interest Income

Net interest income for the second quarter of 2011 was $49.4 million, an increase of 21% from $40.7 million for the same quarter in 2010, primarily due to the impact of our FDIC-assisted transactions.  The Company's net interest margin increased to 5.49% in the second quarter of 2011, from 4.66% for the same quarter last year. The net interest margin in the second quarter was positively impacted by approximately 95 basis points (a basis point equals 1/100 of 1%) due to the $8.9 million accretion of the discount on the loan portfolios acquired in the four FDIC-assisted transactions.  The net interest margin was negatively impacted during the quarter by interest reversals relating to nonaccrual loans totaling $139,000, reducing the net interest margin by an estimated 1 basis point. Interest reversals relating to nonaccrual loans for the six months ended June 30, 2011 were approximately $415,000, reducing the net interest margin by an estimated 2 basis points.

Average interest-earning assets were $3.72 billion during the second quarter, an increase of 3% compared with $3.62 billion during the same quarter of 2010.   The yield on average interest-earning assets increased 83 basis points to 5.91% during the second quarter compared with 5.26% during the same quarter of 2010.  During the same period, average interest-bearing liabilities decreased slightly to $2.65 billion from $2.66 billion in the second quarter of 2010.  The cost of average interest-bearing liabilities decreased 20 basis points to 0.60% during the quarter, from 0.82% in the same quarter of 2010.

Noninterest Income

After removing the change in the FDIC loss sharing asset, noninterest income for the second quarter and year-to-date 2011 was virtually unchanged from the same periods in the prior year.

Noninterest Expense

Total noninterest expense for the second quarter of 2011 was $37.2 million, an increase of 7% from $34.7 million for the same quarter in 2010.   The increase is attributable to the operating expenses of the two banks acquired in May, 2011 and an increase in OREO expense.  These increases were partially mitigated by decreased data processing expense.

Organizational Update

Ms. Dressel commented, "We have received a positive response from customers in the new communities we serve in Skagit, Snohomish and King Counties of Washington resulting from the acquisitions of Summit Bank and First Heritage Bank.   The transitions continue to go smoothly, and I would like to gratefully acknowledge the teamwork and dedication of all our team members as we move toward our conversions, which should be completed toward the end of the year."

Cash Dividend Announcement

The Board of Directors announced that a quarterly cash dividend of $0.06 per common share will be paid on August 24, 2011 to shareholders of record as of the close of business on August 10, 2011. This is an increase of 20% from $0.05 paid the prior quarter.

Conference Call

Columbia's management will discuss the second quarter results on a conference call scheduled for Thursday, July 28, 2011 at 1:00 p.m. PDT (4:00 p.m. EDT).  Interested parties may listen to this discussion by calling 1-866-378-3802; Conference ID code #84977764.

A conference call replay will be available from approximately 2:00 p.m. PDT on July 28, 2011, through midnight PDT on August 4, 2011.  The conference call replay can be accessed by dialing 1-855-859-2056 and entering Conference ID code #84977764.

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 third place in the large employer category by Seattle Business Magazine's 100 Best Companies to Work For 2010 and was designated one of  Puget Sound Business Journal's "Washington's Best Workplaces 2010".  

Including the acquisitions of Summit Bank and First Heritage Bank, Columbia Banking System has 93 banking offices, including 68 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) 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.

FINANCIAL STATISTICS








Columbia Banking System, Inc.

Three Months Ended


Six Months Ended

Unaudited

June 30,


June 30,

(in thousands except per share)

2011


2010


2011


2010

Earnings








Net interest income

$               49,375


$               40,732


$               99,824


$               79,006

Provision for loan and lease losses, noncovered loans

$                 2,150


$               13,500


$                 2,150


$               28,500

Noninterest income (loss)

$                 3,542


$               13,237


$                (1,877)


$               31,710

Noninterest expense

$               37,164


$               34,745


$               74,510


$               68,642

Net income

$                 8,632


$                 5,056


$               14,411


$               12,972

Net income applicable to common shareholders

$                 8,632


$                 3,946


$               14,411


$               10,755









Per Common Share








Net income (basic)

$                   0.22


$                   0.11


$                   0.37


$                   0.34

Net income (diluted)

$                   0.22


$                   0.11


$                   0.36


$                   0.34









Averages








Total assets

$          4,324,390


$          4,327,894


$          4,296,494


$          4,137,525

Interest-earning assets

$          3,719,558


$          3,624,548


$          3,676,351


$          3,497,103

Loans, including covered loans

$          2,439,439


$          2,550,813


$          2,413,899


$          2,495,919

Securities

$             988,839


$             728,169


$             878,712


$             719,457

Deposits

$          3,382,486


$          3,303,661


$          3,344,538


$          3,220,268

Core deposits

$          3,073,068


$          2,820,378


$          3,031,677


$          2,714,914

Interest-bearing deposits

$          2,479,485


$          2,487,757


$          2,454,790


$          2,441,914

Interest-bearing liabilities

$          2,647,990


$          2,663,584


$          2,621,987


$          2,617,840

Noninterest-bearing deposits

$             903,001


$             815,904


$             889,748


$             778,354

Shareholders' equity

$             719,165


$             684,929


$             714,748


$             612,793









Financial Ratios








Return on average assets

0.80%


0.47%


0.68%


0.63%

Return on average common equity

4.81%


2.59%


4.07%


4.03%

Average equity to average assets

16.63%


15.83%


16.64%


14.81%

Net interest margin

5.49%


4.66%


5.64%


4.72%

Efficiency ratio (tax equivalent)(1)

69.49%


68.15%


71.35%


67.61%










June 30,


December 31,



Period end

2011


2010


2010



Total assets

$          4,429,143


$          4,289,115


$          4,256,363



Covered assets

$             631,549


$             599,305


$             531,504



Loans, excluding covered loans

$          1,987,474


$          1,945,972


$          1,915,754



Allowance for loan and lease losses

$               54,057


$               59,748


$               60,993



Securities

$          1,008,559


$             727,825


$             781,774



Deposits

$          3,475,167


$          3,284,947


$          3,327,269



Core deposits

$          3,142,975


$          2,831,319


$          2,998,482



Shareholders' equity

$             727,680


$             775,295


$             706,878











Book value per common share

$                 18.43


$                 17.83


$                 17.97











Nonperforming, noncovered assets








Nonaccrual loans

$               59,404


$             108,409


$               89,163



Restructured loans accruing interest

6,681


687


6,505



Other real estate owned and other personal property owned

37,116


22,814


30,991



Total nonperforming, noncovered assets

$             103,201


$             131,910


$             126,659



Nonperforming loans to period-end noncovered loans

3.33%


5.61%


4.99%



Nonperforming assets to period-end noncovered assets

2.72%


3.57%


3.40%



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

2.72%


3.07%


3.18%



Allowance for loan and lease losses to nonperforming noncovered loans

81.80%


54.77%


63.75%



Allowance for loan and lease losses to nonperforming noncovered assets

52.38%


45.29%


48.16%



Net noncovered loan charge-offs

$                 9,086

(2)

$               22,230

(3)

$               33,776

(4)










(1)  Noninterest expense, excluding net cost of operation of other real estate and FDIC clawback liability 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, gain on bank acquisition, incremental accretion income on the acquired loan portfolio and the change in FDIC indemnification asset.

(2)  For the six months ended June 30, 2011.

(3)  For the six months ended June 30, 2010.

(4)  For the twelve months ended December 31, 2010.



FINANCIAL STATISTICS








Columbia Banking System, Inc.


Unaudited

June 30,


December 31

(in thousands)

2011


2010

Loan Portfolio Composition
















Noncovered loans:








Commercial business

$         836,745


42.1%


$         795,369


41.5%









Real Estate:








One-to-four family residential

51,077


2.6%


49,383


2.6%

Five or more family residential and commercial

843,288


42.4%


794,329


41.5%

Total Real Estate

894,365


45.0%


843,712


44.1%









Real Estate Construction:








One-to-four family residential

52,368


2.7%


67,961


3.5%

Five or more family residential and commercial

29,886


1.5%


30,185


1.6%

Total Real Estate Construction

82,254


4.2%


98,146


5.1%









Consumer

177,564


8.9%


182,017


9.5%

Subtotal loans

1,990,928


100.2%


1,919,244


100.2%

Less:  Deferred loan fees

(3,454)


-0.2%


(3,490)


-0.2%

Total noncovered loans, net of deferred fees

1,987,474


100.0%


1,915,754


100.0%

Less:  Allowance for loan and lease losses

(54,057)




(60,993)



Noncovered loans, net

1,933,417




1,854,761











Covered loans, net of allowance for loan losses of ($7,948) and ($6,055), respectively

607,310




517,061











Total loans, net

$      2,540,727




$      2,371,822











Loans held for sale

$                655




$                754














June 30,


December 31


2011


2010

Deposit Composition








Core deposits:








Demand and other non-interest bearing

$         923,031


26.6%


$         895,671


26.9%

Interest bearing demand

707,554


20.3%


672,307


20.2%

Money market

933,412


26.9%


920,831


27.7%

Savings

232,633


6.7%


210,995


6.3%

Certificates of deposit less than $100,000

346,345


10.0%


298,678


9.0%

Total core deposits

3,142,975


90.5%


2,998,482


90.0%









Certificates of deposit greater than $100,000

282,766


8.1%


266,708


8.0%

Certificates of deposit insured by CDARS®

48,524


1.4%


38,312


1.2%

Wholesale certificates of deposit

396


0.0%


23,155


0.7%

Subtotal

3,474,661


100.0%


3,326,657


100.0%

Premium resulting from acquisition date fair value adjustment

506




612



Total Deposits

$      3,475,167




$      3,327,269





QUARTERLY FINANCIAL STATISTICS










Columbia Banking System, Inc.

Three Months Ended

Unaudited

Jun 30


Mar 31


Dec 31


Sep 30


Jun 30

(in thousands except per share)

2011


2011


2010


2010


2010

Earnings










Net interest income

$         49,375


$         50,449


$         38,816


$         46,965


$         40,732

Provision for loan and lease losses, noncovered loans

$           2,150


$                 -


$           3,791


$           9,000


$         13,500

Noninterest income (loss)

$           3,542


$          (5,419)


$         15,888


$           5,183


$         13,237

Noninterest expense

$         37,164


$         37,346


$         34,985


$         33,520


$         34,745

Net income

$           8,632


$           5,779


$         12,608


$           5,204


$           5,056

Net income applicable to common shareholders

$           8,632


$           5,779


$         12,608


$           2,474


$           3,946











Per Common Share










Earnings (basic)

$             0.22


$             0.15


$             0.32


$             0.06


$             0.11

Earnings (diluted)

$             0.22


$             0.15


$             0.32


$             0.06


$             0.11

Book value

$           18.43


$           18.09


$           17.97


$           17.92


$           17.83











Averages










Total assets

$    4,324,390


$    4,268,348


$    4,354,890


$    4,360,913


$    4,327,894

Interest-earning assets

$    3,719,558


$    3,632,663


$    3,682,951


$    3,654,932


$    3,624,548

Loans, including covered loans

$    2,439,439


$    2,388,076


$    2,450,793


$    2,500,302


$    2,550,813

Securities

$       988,839


$       767,360


$       726,470


$       715,201


$       728,169

Deposits

$    3,382,486


$    3,306,168


$    3,343,920


$    3,297,583


$    3,303,661

Core deposits

$    3,073,068


$    2,989,825


$    2,992,417


$    2,887,044


$    2,820,378

Interest-bearing deposits

$    2,479,485


$    2,429,821


$    2,458,466


$    2,467,763


$    2,487,757

Interest-bearing liabilities

$    2,647,990


$    2,596,833


$    2,627,804


$    2,640,738


$    2,663,584

Noninterest-bearing deposits

$       903,001


$       876,347


$       885,454


$       829,820


$       815,904

Shareholders' equity

$       719,165


$       710,282


$       707,319


$       739,155


$       684,929











Financial Ratios










Return on average assets

0.80%


0.55%


1.15%


0.47%


0.47%

Return on average common equity

4.81%


3.30%


7.07%


1.39%


2.59%

Average equity to average assets

16.63%


16.64%


16.24%


16.95%


15.83%

Net interest margin

5.49%


5.80%


4.35%


5.24%


4.66%

Efficiency ratio (tax equivalent)

69.49%


73.33%


65.33%


68.33%


68.15%











Period end










Total assets

$    4,429,143


$    4,264,319


$    4,256,363


$    4,245,260


$    4,289,115

Covered assets, net

$       631,549


$       499,872


$       531,504


$       577,817


$       599,306

Noncovered loans

$    1,987,474


$    1,884,206


$    1,915,754


$    1,934,162


$    1,945,972

Allowance for loan and lease losses

$         54,057


$         55,315


$         60,993


$         62,334


$         59,748

Securities

$    1,008,559


$       906,096


$       781,774


$       710,649


$       727,825

Deposits

$    3,475,167


$    3,336,213


$    3,327,269


$    3,306,886


$    3,284,947

Core deposits

$    3,142,975


$    3,027,898


$    2,998,482


$    2,934,451


$    2,831,319

Shareholders' equity

$       727,680


$       714,083


$       706,878


$       704,692


$       775,295





















Nonperforming, noncovered assets










Nonaccrual loans

$         59,404


$         78,692


$         89,163


$         91,406


$       108,409

Restructured loans accruing interest

6,681


6,739


6,505


6,482


687

Other real estate owned and other personal property owned

37,116


29,315


30,991


23,259


22,814

Total nonperforming, noncovered assets

$       103,201


$       114,746


$       126,659


$       121,147


$       131,910

Nonperforming loans to period-end noncovered loans

3.33%


4.53%


4.99%


5.06%


5.61%

Nonperforming assets to period-end noncovered assets

2.72%


3.05%


3.40%


3.30%


3.57%

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

2.72%


2.94%


3.18%


3.22%


3.07%

Allowance for loan and lease losses to nonperforming noncovered loans

81.80%


64.75%


63.75%


63.68%


54.77%

Allowance for loan and lease losses to nonperforming noncovered assets

52.38%


48.21%


48.16%


51.45%


45.29%

Net noncovered loan charge-offs

$           3,408


$           5,678


$           5,132


$           6,414


$         10,733



CONSOLIDATED CONDENSED STATEMENTS OF INCOME








Columbia Banking System, Inc.

Three Months Ended


Six Months Ended

(Unaudited)

June 30,


June 30,

(in thousands except per share)

2011


2010


2011


2010

Interest Income








Loans

$      44,362


$      38,940


$      91,791


$      75,887

Taxable securities

6,247


4,708


10,664


9,453

Tax-exempt securities

2,516


2,290


4,983


4,736

Federal funds sold and deposits in banks

184


210


482


359

Total interest income

53,309


46,148


107,920


90,435









Interest Expense








Deposits

2,848


4,334


5,927


9,275

Federal Home Loan Bank advances

714


710


1,408


1,415

Long-term obligations

253


254


504


503

Other borrowings

119


118


257


236

Total interest expense

3,934


5,416


8,096


11,429









Net Interest Income

49,375


40,732


99,824


79,006

Provision for loan and lease losses

2,150


13,500


2,150


28,500

Provision for losses on covered loans

2,301


-


1,879


-

Net interest income after provision

44,924


27,232


95,795


50,506









Noninterest Income (Loss)








Service charges and other fees

6,467


6,442


12,755


11,866

Gain on bank acquisition

-


-


-


9,818

Merchant services fees

1,808


1,913


3,441


3,652

Gain on sale of investment securities, net

-


-


-


58

Bank owned life insurance

528


516


1,033


1,020

Change in FDIC loss sharing asset

(6,419)


3,399


(21,193)


3,399

Other

1,158


967


2,087


1,897

Total noninterest income (loss)

3,542


13,237


(1,877)


31,710









Noninterest Expense








Compensation and employee benefits

19,459


17,497


38,380


34,483

Occupancy

4,388


4,307


8,785


8,276

Merchant processing

905


1,227


1,788


2,327

Advertising and promotion

1,012


785


1,913


1,623

Data processing and communications

1,913


2,567


3,837


4,446

Legal and professional fees

1,498


1,477


2,911


2,975

Taxes, licenses and fees

907


688


1,772


1,252

Regulatory premiums

1,279


1,462


2,979


2,918

Net cost of operation of other real estate

214


(672)


(228)


640

Amortization of intangibles

955


1,055


1,939


1,842

FDIC clawback liability

448


-


2,148


-

Other

4,186


4,352


8,286


7,860

Total noninterest expense

37,164


34,745


74,510


68,642









Income before income taxes

11,302


5,724


19,408


13,574

Income tax expense

2,670


668


4,997


602









Net Income

$        8,632


$        5,056


$      14,411


$      12,972

Net Income Applicable to Common Shareholders

$        8,632


$        3,946


$      14,411


$      10,755









Earnings per common share








Basic

$          0.22


$          0.11


$          0.37


$          0.34

Diluted

$          0.22


$          0.11


$          0.36


$          0.34

Dividends paid per common share

$          0.05


$          0.01


$          0.08


$          0.02

Weighted average number of common shares outstanding

39,107


34,829


39,073


31,376

Weighted average number of diluted common shares outstanding

39,166


35,077


39,159


31,607









Note: Certain prior period balances have been reclassified to conform to current period presentation






CONSOLIDATED CONDENSED BALANCE SHEETS 

Columbia Banking System, Inc.

(Unaudited)





June 30,


December 31,

(in thousands)





2011


2010

ASSETS








Cash and due from banks





$             89,926


$            55,492

Interest-earning deposits with banks and federal funds sold





179,573


458,638

Total cash and cash equivalents





269,499


514,130

Securities available for sale at fair value (amortized cost of $956,125 and $743,928, respectively)





989,768


763,866

Federal Home Loan Bank stock at cost





18,791


17,908

Loans held for sale





655


754

Noncovered loans, net of deferred loan fees of ($3,454) and ($3,490), respectively





1,987,474


1,915,754

Less: allowance for loan and lease losses





54,057


60,993

Noncovered loans, net





1,933,417


1,854,761

Covered loans, net of allowance for loan losses of ($7,948) and ($6,055), respectively





607,310


517,061

Total loans, net





2,540,727


2,371,822

FDIC loss sharing asset





206,238


205,991

Interest receivable





14,010


11,164

Premises and equipment, net





99,439


93,108

Other real estate owned ($24,239 and $14,443 covered by Federal Deposit Insurance Corporation loss share, respectively)





46,979


45,434

Goodwill





119,343


109,639

Core deposit intangible, net





18,602


18,696

Other assets





105,092


103,851

Total Assets





$        4,429,143


$       4,256,363

LIABILITIES AND SHAREHOLDERS' EQUITY








Deposits:








Noninterest-bearing





$           923,031


$          895,671

Interest-bearing





2,552,136


2,431,598

Total deposits





3,475,167


3,327,269

Federal Home Loan Bank advances





120,681


119,405

Securities sold under agreements to repurchase





25,000


25,000

Other borrowings





-


642

Long-term subordinated debt





25,768


25,735

Other liabilities





54,847


51,434

Total liabilities





3,701,463


3,549,485

Commitments and contingent liabilities









June 30,


December 31,






2011


2010





Common Stock (no par value)








Authorized shares

63,033


63,033





Issued and outstanding

39,475


39,338


578,046


576,905

Retained earnings





128,949


117,692

Accumulated other comprehensive income





20,685


12,281

Total shareholders' equity





727,680


706,878

Total Liabilities and Shareholders' Equity





$        4,429,143


$       4,256,363



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



SOURCE Columbia Banking System, Inc.



RELATED LINKS
http://www.columbiabank.com

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