Cowlitz Bancorporation Announces First Quarter 2010 Financial Results

LONGVIEW, Wash., May 17 /PRNewswire-FirstCall/ -- Cowlitz Bancorporation (Nasdaq: CWLZ), the holding company for Cowlitz Bank, today reported a net loss for the first quarter of 2010. The Company has continued its efforts to reduce its concentration of real estate construction and development loans by pursuing resolution of nonperforming loans, aggressively recognizing loan losses and charging off impairments. For the first quarter of 2010, the Company recorded a $9.7 million provision for credit losses which, when combined with $1.4 million of OREO and problem loan expenses and $0.5 million of deposit insurance premiums, resulted in a net loss of $12.2 million, or $23.77 per share.

Richard J. Fitzpatrick, CEO, stated, "Our Company is working through and responding to economic and industry pressures. Total nonperforming assets declined for the second quarter in a row; however, our aggressiveness in addressing problem assets has reduced our capital base significantly. We remain focused on exploring all options for raising capital for the Bank and are appreciative of the loyalty of our customers and our community."

Consistent with management's strategic actions to lower outstanding loans, at March 31, 2010, the Bank's loan portfolio declined to $322.3 million, down $95.9 million and $21.0 million from a year ago and on a linked-quarter basis, respectively. Total deposits at March 31, 2010 were down $15.8 million compared with the year ago quarter primarily due to lower brokered deposits.  As to credit quality, the first quarter provision for credit losses was $9.7 million and net charge-offs totaled $8.0 million mainly due to declining real estate values backing collateral dependent loans. The allowance for credit losses increased to 3.75 percent of total loans from 3.02 percent at year-end 2009. Nonperforming assets decreased 15 percent in the quarter and were 8.5 percent of total assets at March 31, 2010.

The Bank's short-term investments as a percentage of total assets were 24 percent as of March 31, 2010. The Bank is maintaining excess on-balance sheet liquidity, as well as borrowing capacity, as a prudent measure during these economic times.

The Company's net interest income totaled $2.6 million for the first quarter of 2010 compared with $2.7 million for the fourth quarter of 2009, a 2.6 percent decrease primarily attributable to a lower volume of interest-earning assets. The net interest margin improved to 2.15 percent for the first quarter of 2010, compared with 2.06 percent for the fourth quarter of 2009. The increase was mainly related to lower deposit costs. The net interest margin for the first quarter of 2009 was 3.25 percent. The current quarter's net interest margin reflected higher levels of nonperforming loans and low yielding cash-equivalent investments than the year ago quarter. The average cost of interest-bearing liabilities in the first quarter of 2010 declined to 2.49 percent from 3.05 percent in the year ago quarter, and 2.69 percent in the fourth quarter of 2009.

Cowlitz Bancorporation's report on Form 10-Q for the first quarter of 2010 filed with the Securities and Exchange Commission includes substantial detail and discussion as to the financial results and condition of the Company as of and for the quarter ended March 31, 2010. The Form 10-Q is available at http://www.cowlitzbancorporation.com or a copy can be requested by emailing [email protected] or by calling (800) 340-8865.

About Cowlitz Bancorporation and Cowlitz Bank

Cowlitz Bancorporation is the holding company of Cowlitz Bank (www.cowlitzbank.com), which was established in 1977. In addition to its four branches in Cowlitz County Washington, Cowlitz Bank's divisions include Bay Bank (www.bay-bank.com) located in Bellevue, Seattle, and Vancouver, Washington; Portland and Wilsonville, Oregon; and Bay Mortgage (www.bay-loans.com) in southwest Washington. Cowlitz specializes in commercial and international banking services for Northwest businesses, professionals, and retail customers, and offers trust services in Washington and Oregon.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the "Safe-Harbor" provisions of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders.  You should not place undue reliance on forward-looking statements and we undertake no obligation to update any such statements.  Statements that are not historical or current facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements are subject to risks and uncertainties. Actual results could differ materially from those discussed in this press release as a result of risk factors identified in the Company's Form 10-K for the year ended December 31, 2009, as well as the following factors: our inability to comply in a timely manner with the Consent Order with the Federal Deposit Insurance Corporation and the Washington Department of Financial Institutions, under which we are currently operating, could lead to further regulatory sanctions or orders, which could further restrict our operations and negatively affect our results of operations and financial condition; local and national economic conditions could be less favorable than expected or could have a more direct and pronounced effect on us than expected and adversely affect our results of operations and financial condition; the local housing/real estate market could continue to decline for a longer period than we anticipate; the risks presented by a continued economic recession, which could continue to adversely affect credit quality, collateral values, including real estate collateral and OREO properties, investment values, liquidity and loan originations, reserves for credit losses and charge offs of loans and loan portfolio delinquency rates and may be exacerbated by our concentration of operations in the States of Washington and Oregon generally, and the Oregon communities of Northwest Oregon, Southwest Washington and the greater Seattle area, specifically; we may be compelled to seek additional capital in the future to augment capital levels or ratios or improve liquidity, but capital or liquidity may not be available when needed or on acceptable terms; interest rate changes could significantly reduce net interest income and negatively affect funding sources; competition among financial institutions could increase significantly; competition or changes in interest rates could negatively affect net interest margin, as could other factors listed from time to time in the Company's SEC reports; the reputation of the financial services industry could further deteriorate, which could adversely affect our ability to access markets for funding and to acquire and retain customers; and current regulatory requirements, changes in regulatory requirements and legislation and our inability to meet those requirements, including capital requirements and increases in our deposit insurance premium, could adversely affect the businesses in which we are engaged, our results of operations and financial condition.

SOURCE Cowlitz Bancorporation