Columbia Banking System, Inc. to Acquire Bank of Astoria for $45.8 million

    TACOMA, Wash., June 7 /PRNewswire-FirstCall/ -- Columbia Banking System,
 Inc. (Nasdaq:   COLB - $1.8 billion in assets) and Bank of Astoria, Astoria,
 Oregon (OTC Bulletin Board:   BKAO - $151.4 million in assets) today announced
 the signing of a definitive agreement for Columbia to acquire Bank of Astoria
 in a cash-and-stock deal valued at approximately $45.8 million. Upon
 completion of the transaction, Columbia's total assets will approach $2
 billion, and the combined entity will have 39 branches.
     The boards of both companies unanimously approved the transaction, which
 is subject to approval by Bank of Astoria's stockholders, as well as
 regulators and other customary conditions of closing.  The parties expect the
 transaction to close in the third quarter of 2004.
     Terms of the agreement call for Columbia to pay $18.2 million in cash and
 issue 1,277,750 shares of common stock.  Based on the June 4, 2004 closing
 price of $21.59, the value of the stock consideration is approximately $27.6
 million.  The transaction is expected to be accretive to Columbia's 2005
 earnings.  Bank of Astoria stockholders will have an opportunity to choose
 between stock and cash consideration within certain limits.  To the extent
 that Columbia shares are received, the exchange is expected to be a tax-free
 transaction to Bank of Astoria stockholders.  Based on Bank of Astoria's March
 31, 2004 financials, the price represents 296% of book value and 19.2x
 trailing-four-quarters' earnings.
     Under the agreement, Bank of Astoria will join Columbia as a separately
 operated banking subsidiary in Oregon and will continue to operate under the
 Bank of Astoria name.  This will be Columbia's initial entry into Oregon.
 Bank of Astoria operates five branches located in Clatsop and Tillamook
 counties, where it holds 34.4% and 5.7% deposit share, respectively, in those
 counties.  The five branches are located in Astoria, Warrenton, Cannon Beach,
 Seaside and Manzanita.  The bank specializes in small business financial
 services.
     Cheri Folk, President and Chief Executive Officer of Bank of Astoria
 explained, "We are very excited to join the Columbia team and leverage the
 combined resources of our franchises.  This transaction is very positive for
 Bank of Astoria shareholders, customers and employees.  Both immediate and
 long-term benefits will be realized for our current and new customer base
 through increased lending capacities, as well as an expanded line of
 competitive products and services. Both of our organizations hold as core
 values that our success depends upon the vitality of our communities and the
 satisfaction of our customers."
     Melanie J. Dressel, President and Chief Executive Officer of Columbia
 Banking System added, "We believe this is an excellent strategic transaction
 that will provide us a premier Oregon franchise with a strong business culture
 and a respected team of local bankers.  This extends our presence in
 southwestern Washington to the northern Oregon Coast.  The combined financial
 and management resources should provide a formidable platform for market share
 gains in Oregon which we believe will result in long term shareholder value."
     Columbia Banking System used RBC Capital Markets as its financial adviser,
 and Graham & Dunn served as legal counsel.  Sandler O'Neill & Partners, LP
 acted as financial adviser for Bank of Astoria, while Schwabe, Williamson &
 Wyatt provided legal counsel.
 
     About Columbia Banking System, Inc.
     Columbia Banking System, Inc. is a Tacoma-based bank holding company whose
 wholly owned bank subsidiary is Columbia Bank, a Washington state-chartered
 full-service commercial bank.  Providing products and services to individuals
 and the real estate community, Columbia Bank currently operates 34 banking
 offices in Pierce, King, Cowlitz, Kitsap and Thurston counties.
 
     About Bank of Astoria
     Bank of Astoria, which is headquartered in Astoria, Oregon, operates four
 branches in Clatsop County:  Astoria, Warrenton, Seaside, Cannon Beach and one
 branch in Tillamook County:  Manzanita.  Bank of Astoria was chartered in 1967
 by the State of Oregon and is a federally-insured commercial bank.  The Bank
 specializes in small business financial services.
 
     This news release includes forward looking statements, 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," "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 SEC, factors that may cause actual results to
 differ materially from those contemplated by such forward looking statements
 include, among others, the following possibilities:  (1) local, national and
 international economic conditions are 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
 reduce interest margins more than expected and negatively affect funding
 sources; (3) projected business increases following strategic expansion or
 opening or acquiring new branches are lower than expected; (4) costs or
 difficulties related to the integration of acquisitions are greater than
 expected; (5) competitive pressure among financial institutions increases
 significantly; (6) legislation or regulatory requirements or changes adversely
 affect the businesses in which Columbia is engaged.
 
         Contacts:                      Melanie J. Dressel
                     President and Chief Executive Officer
                             Columbia Banking System, Inc.
                                              253-305-1911
 
                                             Cheri J. Folk
                     President and Chief Executive Officer
                                           Bank of Astoria
                                              503-325-2228
 
 

SOURCE Columbia Banking System, Inc.

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