1st QUARTER 2008 HIGHLIGHTS
- Earnings of $11 million, up 51% from $7.3 million for the 1st quarter
2007
- Diluted earnings per share of $0.61, a 36% increase from $0.45 for the
1st quarter 2007
- Core earnings of $8.6 million, or $0.48 per diluted share
- Net interest margin increased to 4.38% from 4.37% in the 1st quarter of
2007 and from 4.29% in the 4th quarter of 2007
- Non-performing assets to total assets remained at 0.46% from December
2007
TACOMA, Wash., April 23 /PRNewswire-FirstCall/ -- Columbia Banking
System, Inc. (Nasdaq: COLB) today announced earnings for the first quarter
2008 of $11.0 million, an increase of 51% from $7.3 million for the first
quarter of 2007. Diluted earnings per share were $0.61, an increase of 36%
from $0.45 per share one year ago. The increase in net income for first
quarter 2008 as compared to the same period last year is primarily due to
higher net interest income, and a 64% increase in noninterest income
coupled with only a 15% increase in noninterest expense. Return on average
assets and return on average equity for the first quarter 2008 were 1.39%
and 12.60%, respectively, compared to 1.14% and 11.52%, respectively, for
the same period in 2007. Revenue (net interest income plus noninterest
income) was $40.5 million for the first quarter of 2008, up 31% from $30.9
million one year ago. Results for the first quarter reflect the financial
consolidation of Mountain Bank Holding Company and Town Center Bancorp,
which were both acquired on July 23, 2007; consequently, the first quarter
2007 financial information does not include the results of the two
organizations. Additionally, first quarter 2008 earnings per diluted share
were impacted due to an increase in the total number of shares outstanding
as a result of shares issued in conjunction with the 2007 acquisitions.
Core Earnings
(A non-GAAP measure of income from customary business activities)
(Dollars in thousands, except per share data)
Three months ended March 31,
2008 2007
Net Income $10,977 $7,283
Deduct:
Gain on sale of investment securities,
net of tax 573 -
Redemption of Visa Shares, net of tax 1,275 -
Recapture of previously accrued Visa
litigation expense, net of tax 578 -
Core Earnings $8,551 $7,283
Earnings per Diluted Share:
GAAP earnings $0.61 $0.45
Core earnings $0.48 $0.45
Core Net Interest Margin 4.30% 4.37%
During the first quarter, Columbia recorded a gain of $881,872
($573,000 net of tax) on the sale of investment securities. The gain
resulted from the execution of a strategy to extend the weighted average
life of approximately $50 million of the portfolio that was maturing in 18
months or less. In March 2008, Visa Inc ("Visa") completed its initial
public offering ("IPO") and as a result Columbia received 118,637 shares of
Visa Inc. Class B stock which were subject to a partial mandatory
redemption. On March 28, 2008 Visa redeemed 45,866 shares of Columbia's
stock for net cash proceeds of $1.96 million ($1.3 million net of tax). In
conjunction with the completion of Visa's IPO, Columbia also recognized a
pre-tax recapture of previously accrued Visa litigation expense in the
amount of $889,200 ($578,000 net of tax). For comparative purposes, the
amounts contained in the above table have been tax affected by the
statutory tax rate of 35% to illustrate their impact on net income. The
first quarter 2008 net interest margin was impacted by a dividend received
from a U.S. government-sponsored enterprise preferred security. Excluding
this dividend, the first quarter 2008 net interest margin was 4.30 %
compared to 4.37% for the first quarter 2007.
Melanie J. Dressel, President and Chief Executive Officer, commented,
"We are pleased with the results of our continued focus on fundamentals and
on attracting and expanding our customer relationships. Our core results
reflect our stable net interest margin and effective control of our
noninterest expense, which continues to be a high priority for us. Our
concentration on fundamental business practices and core strategies has
positioned us well for the softening economy and extremely competitive
banking environment."
Ms. Dressel noted, "We increased our net interest margin, a significant
achievement in light of the 200 basis point drop in short-term rates during
the first quarter and the margin compression that many of our peers are
experiencing. Our net interest margin for the first quarter 2008 was 4.38%
compared to 4.37% in the first quarter of 2007, and 4.29% in the fourth
quarter of 2007. We were able to mitigate the impact of decreasing loan
rates through appropriate deposit repricing and reduced wholesale funding
costs. We will maintain our focus on actively managing our balance sheet to
minimize contraction of our net interest margin if we see additional
lowering of short-term interest rates."
At March 31, 2008, Columbia's total assets were $3.25 billion, an
increase of 2% from $3.18 billion at December 31, 2007. Total loans were
$2.30 billion at March 31, 2008, up slightly from $2.28 billion at year-end
2007. Total deposits were $2.53 billion at March 31, 2008, a slight
increase from $2.50 billion at December 31, 2007. Core deposits were $1.68
billion at the end of the first quarter of 2008, up 11% from $1.52 billion
at year-end 2007. Core deposits were 67% of total deposits at March 31,
2008.
Mark W. Nelson, Executive Vice President and Chief Operating Officer,
said, "Our average loans for the first quarter 2008 were up $62.7 million
over the fourth quarter 2007, although first quarter growth was moderated
by loan payoffs late in the quarter. Period-end loans grew a net of $17.7
million for the first quarter 2008, primarily from commercial business
loans, which rose $17.8 million, or 2.3% from year-end 2007, followed by an
increase of $13.7 million primarily in advances under pre-existing
relationships in our one-to-four family residential construction portfolio,
and finally, from a $3.5 million increase in consumer loans. These
increases were tempered by declines in our real estate and commercial
construction loans, which declined by $17.3 million, due to contractual
repayment and refinancing activity."
Mr. Nelson further noted, "We are pleased with the positive trends in
our deposit growth, despite tough competition for low-cost deposits. While
historically we experience seasonal reductions in business-related balances
during the first quarter, our period-end core deposit balances have
regenerated quickly, increasing nearly $11 million since year-end 2007. We
attribute this success to both our retail and commercial focus on building
relationships and incentives for deposit generation. We continue to benefit
from our long-term strategy to strengthen and deepen our relationships with
our customers, bringing in lower cost core deposits and making it easier to
manage our net interest margin."
Revenue (net interest income plus noninterest income) was $40.5 million
at March 31, 2008, up 31% from $30.9 million for the quarter ended March
31, 2007. Return on average assets and return on average equity for the
first quarter 2008 increased to 1.39% and 12.60%, respectively, compared to
1.14% and 11.52%, respectively, for the first quarter of the prior year.
The efficiency ratio improved to 62.36% at March 31, 2008, compared to
63.39% for the same period in 2007.
First Quarter 2008 Operating Results
Note: First quarter 2007 financial information does not include the
results of Mountain Bank Holding Company and Town Center Bancorp, which
were both acquired on July 23, 2007.
Net Interest Income
Net interest income increased $5.6 million to $30.3 million, in the
first quarter 2008 compared to the first quarter 2007, primarily due to
loan growth. The Company's net interest margin increased slightly to 4.38%
in the first quarter 2008, compared with 4.37% in the first quarter 2007
and with 4.29% during the fourth quarter of 2007.
Average interest-earning assets increased to $2.91 billion, or 21%,
during the first quarter of 2008, compared with $2.39 billion during the
first quarter 2007. The yield on average interest-earning assets decreased
27 basis points to 6.89% at March 31, 2008, from 7.16% at March 31, 2007.
Average interest-bearing liabilities increased 24% to $2.34 billion from
$1.89 billion last year. The cost of average interest-bearing liabilities
decreased 42 basis points to 3.11% in the first quarter of 2008, compared
to 3.53% in the first quarter of 2007.
Noninterest income
Total noninterest income for the first quarter 2008 increased to $10.2
million, or 64%, from $6.2 million a year ago. The increase in noninterest
income during the first quarter of 2008 as compared to first quarter 2007
was primarily due to the gain recognized from both the Visa IPO and the
sale of investment securities.
Noninterest expense
Noninterest expense for the first quarter of 2008 was $23.6 million, an
increase of 15% from $20.4 million for the same period in 2007. This
increase was primarily due to increased compensation and employee benefits
as well as occupancy expenses. Legal and professional services were
positively impacted in the current quarter as a result of the partial
reversal of legal expenses accrued in the fourth quarter of 2007 related to
Visa litigation expenses. The Company's efficiency ratio improved to 62.36%
for the first quarter 2008, compared with 63.39% for the same period in
2007.
Nonperforming Assets and Loan Loss Provision
The Company added $2.1 million to its provision for loan losses in the
first quarter, compared to $1.4 million in the fourth quarter of 2007 and
$638,000 in the first quarter of 2007. The allowance for loan and lease
losses at quarter-end totaled $27.9 million, representing 1.21% of total
loans outstanding. Non-performing assets were $15.0 million, or 0.46% of
total assets, at March 31, 2008, compared to $14.6 million, or 0.46%, at
year-end 2007, and $3.4 million or 0.13% at March 31, 2007. The Company's
net charge-offs in the current quarter totaled $761,000, or 0.03% of
average loans.
The increasing provision for loan and lease losses is a reflection of
the continuing weakness in the for-sale housing industry and the economy in
general. While the Pacific Northwest continues to outperform the rest of
the nation, Columbia is not immune to the challenges faced outside the
Northwest region as many customers are engaged in business activities which
are impacted by the national economy as a whole. Thus, the increase in the
provision expense in comparison to 2007 is reflective of the slowing
economy and weakening credit quality. However, management considers that
the net charge-offs remain reasonable and will continue to build reserves
for possible loan losses.
Conference Call
Columbia will discuss the quarterly results on a conference call on
Thursday, April 24, 2008 at 8:00 a.m. PDT (11:00 a.m. EDT). Ms. Dressel
noted, "Although we do not typically conduct a conference call with each
earnings release, we intend to hold them on a quarterly basis for the
foreseeable future in light of the rapidly changing and challenging
economy." Interested investors, analysts, media representatives and the
public are invited to listen to this discussion by calling 1-888-318-7969;
Conference ID code 43670620. A conference call replay will be available
from approximately 11:00 a.m. PDT on April 24 through midnight PDT on
Thursday, May 1, 2008. The conference call replay can be accessed by
dialing 1-800-642-1687 and entering Conference ID code 43670620.
About Columbia
Headquartered in Tacoma, Washington, Columbia Banking System, Inc. is
the holding company of Columbia Bank, a Washington state-chartered
full-service commercial bank. With the 2007 acquisitions of Mountain Bank
Holding Company and Town Center Bancorp and the 2008 internal merger of its
subsidiary, Bank of Astoria, into Columbia Bank, Columbia Banking System
has 55 banking offices in Pierce, King, Cowlitz, Kitsap, Thurston and
Whatcom counties in Washington State, and Clackamas, Clatsop, Tillamook and
Multnomah counties in Oregon. Included in Columbia Bank are former branches
of Mt. Rainier National Bank, doing business as Mt. Rainier Bank, with 7
branches in King and Pierce counties. Columbia Bank does business under the
Bank of Astoria name at the Bank of Astoria's former branches located in
Astoria, Warrenton, Seaside and Cannon Beach in Clatsop County and in
Manzanita in Tillamook County. More information about Columbia can be found
on its website at http://www.columbiabank.com.
Note Regarding Forward Looking Statements
This news release includes forward looking statements, which management
believes are a benefit to shareholders. These forward looking statements
describe management's expectations regarding future events and developments
such as future operating results, growth in loans and deposits, continued
success of our 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
our 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 and national
economic conditions are less favorable than expected or have a more direct
and pronounced effect on us than expected and adversely affect our ability
to continue internal growth at historical rates and maintain the quality of
our earning assets; (2) a continued decline in the housing/real estate
market; (3) changes in interest rates significantly reduce interest margins
and negatively affect funding sources; (4) deterioration of credit quality
that could, among other things, increase defaults and delinquency risks in
the Banks' loan portfolios (5) projected business increases following
strategic expansion activities are lower than expected; (6) competitive
pressure among financial institutions increases significantly; (7)
legislation or regulatory requirements or changes adversely affect the
businesses in which we are engaged; and (8) our ability to realize the
efficiencies we expect to receive from our investments in personnel,
acquisitions and infrastructure
Contacts: Melanie J. Dressel, President and
Chief Executive Officer
(253) 305-1911
Gary R. Schminkey, Executive Vice President
and Chief Financial Officer
(253) 305-1966
FINANCIAL STATISTICS
Columbia Banking System, Inc. Three Months Ended
Unaudited March 31,
(in thousands, except per share amounts) 2008 2007
Earnings
Net interest income $30,327 $24,703
Provision for loan and lease losses $2,076 $638
Noninterest income $10,157 $6,177
Noninterest expense $23,554 $20,402
Net income $10,977 $7,283
Per Share
Net income(basic) $0.61 $0.45
Net income(diluted) $0.61 $0.45
Averages
Total assets $3,186,013 $2,586,025
Interest-earning assets $2,906,172 $2,392,372
Loans $2,304,588 $1,765,692
Securities $582,056 $597,952
Deposits $2,455,190 $2,001,136
Core deposits $1,610,345 $1,444,210
Shareholders' equity $350,271 $256,292
Financial Ratios
Return on average assets 1.39% 1.14%
Return on average equity 12.60% 11.52%
Return on average tangible equity(1) 18.33% 13.38%
Average equity to average assets 10.99% 9.91%
Net interest margin 4.38% 4.37%
Efficiency ratio (tax equivalent) (2) 62.36% 63.39%
March 31, December 31,
Period end 2008 2007 2007
Total assets $3,246,586 $2,676,204 $3,178,713
Loans $2,300,465 $1,833,852 $2,282,728
Allowance for loan and
lease losses $27,914 $20,819 $26,599
Securities $598,470 $599,306 $572,973
Deposits $2,526,514 $2,081,026 $2,498,061
Core deposits $1,682,255 $1,518,797 $1,671,659
Shareholders' equity $351,667 $261,329 $341,731
Book value per share $19.45 $16.17 $19.03
Tangible book value per share $13.77 $14.16 $13.29
Nonperforming assets
Nonaccrual loans $14,368 $2,580 $14,005
Restructured loans 468 806 456
Other personal property owned 187 -- --
Other real estate owned -- -- 181
Total nonperforming assets $15,023 $3,386 $14,642
Nonperforming loans to period-
end loans 0.64% 0.18% 0.63%
Nonperforming assets to period-
end assets 0.46% 0.13% 0.46%
Allowance for loan and lease
losses to period-end loans 1.21% 1.14% 1.17%
Allowance for loan and lease
losses to nonperforming loans 188.15% 614.86% 183.94%
Allowance for loan and lease
losses to nonperforming assets 185.81% 614.86% 181.66%
Net loan charge-offs $761(3) $1(4) $380(5)
(1) Annualized net income, excluding core deposit intangible asset
amortization, divided by average daily shareholders' equity,
excluding average goodwill and average core deposit intangible
asset.
(2) Noninterest expense divided by the sum of net interest income and
noninterest income on a tax equivalent basis, excluding gain/loss
on sale of investment securities, net cost (gain) of OREO, gain on
redemption of Visa shares, and recapture of previously accrued Visa
litigation expense
(3) For the three months ended March 31, 2008.
(4) For the three months ended March 31, 2007.
(5) For the twelve months ended December 31, 2007.
Columbia Banking System, Inc. Period End
Unaudited March 31, December 31,
(in thousands) 2008 2007 2007
Loan Portfolio Composition
Commercial business $780,177 $681,534 $762,365
Real Estate:
One-to-four family
residential 62,733 47,876 60,991
Five or more family
residential and commercial 843,148 691,758 852,139
Total Real Estate 905,881 739,634 913,130
Real Estate Construction:
One-to-four family
residential 282,797 139,806 269,115
Five or more family
residential and commercial 155,362 128,728 165,490
Total Real Estate
Construction 438,159 268,534 434,605
Consumer 180,016 147,435 176,559
Subtotal loans 2,304,233 1,837,137 2,286,659
Less: Deferred loan fees (3,768) (3,285) (3,931)
Total loans $2,300,465 $1,833,852 $2,282,728
Loans held for sale $5,944 $2,999 $4,482
Deposit Composition
Demand and other noninterest
bearing $508,955 $447,052 $468,237
Interest bearing demand 471,980 430,967 478,596
Money market 584,834 530,542 609,502
Savings 116,486 110,236 115,324
Certificates of deposit 844,259 562,229 826,402
Total deposits $2,526,514 $2,081,026 $2,498,061
QUARTERLY FINANCIAL STATISTICS
Columbia Banking System, Inc.
Unaudited
(in thousands,
except per Three Months Ended
share Mar 31 Dec 31 Sept 30 Jun 30 Mar 31
amounts) 2008 2007 2007 2007 2007
Earnings
Net interest
income $30,327 $29,562 $28,860 $25,695 $24,703
Provision
for loan
and lease
losses $2,076 $1,407 $1,231 $329 $638
Noninterest
income $10,157 $7,199 $7,631 $6,741 $6,177
Noninterest
expense $23,554 $25,736 $22,425 $20,266 $20,402
Net income $10,977 $7,298 $9,256 $8,544 $7,283
Per Share
Net income
[basic] $0.61 $0.41 $0.53 $0.53 $0.45
Net income
[diluted] $0.61 $0.41 $0.53 $0.53 $0.45
Averages
Total
assets $3,186,013 $3,131,122 $2,969,197 $2,654,863 $2,586,025
Interest-
earning
assets $2,906,172 $2,836,045 $2,702,487 $2,460,603 $2,392,372
Loans $2,304,588 $2,241,893 $2,102,281 $1,846,163 $1,765,692
Securities $582,056 $572,412 $572,124 $582,378 $597,952
Deposits $2,455,190 $2,487,356 $2,382,881 $2,090,273 $2,001,136
Core
deposits $1,610,345 $1,632,722 $1,610,523 $1,485,966 $1,444,210
Shareholders'
equity $350,271 $335,510 $301,499 $262,905 $256,292
Financial Ratios
Return on
average
assets 1.39% 0.92% 1.24% 1.29% 1.14%
Return on
average
equity 12.60% 8.63% 12.18% 13.04% 11.52%
Return on
average
tangible
equity 18.33% 13.08% 15.81% 15.04% 13.38%
Average
equity to
average
assets 10.99% 10.72% 10.15% 9.90% 9.91%
Net interest
margin 4.38% 4.29% 4.40% 4.36% 4.37%
Efficiency
ratio (tax
equivalent) 62.36% 62.83% 59.23% 60.04% 63.39%
Period end
Total
assets $3,246,586 $3,178,713 $3,122,744 $2,660,946 $2,676,204
Loans $2,300,465 $2,282,728 $2,212,751 $1,859,592 $1,833,852
Allowance
for loan
and lease
losses $27,914 $26,599 $25,380 $21,339 $20,819
Securities $598,470 $572,973 $577,712 $570,742 $599,306
Deposits $2,526,514 $2,498,061 $2,477,794 $2,117,325 $2,081,026
Core
deposits $1,682,255 $1,671,659 $1,637,530 $1,472,206 $1,518,797
Shareholders'
equity $351,667 $341,731 $329,969 $259,773 $261,329
Book value per
share $19.45 $19.03 $18.45 $16.07 $16.17
Tangible book
value per
share $13.77 $13.29 $12.79 $14.06 $14.16
Nonperforming assets
Nonaccrual
loans $14,368 $14,005 $9,983 $4,972 $2,580
Restructured
loans 468 456 257 985 806
Other personal
property owned 187 -- -- 32 --
Other real
estate owned -- 181 181 -- --
Total
nonper-
forming
assets $15,023 $14,642 $10,421 $5,989 $3,386
Nonperforming
loans to period-
end loans 0.64% 0.63% 0.46% 0.32% 0.18%
Nonperforming
assets to period-
end assets 0.46% 0.46% 0.33% 0.23% 0.13%
Allowance for
loan and lease
losses to period-
end loans 1.21% 1.17% 1.15% 1.15% 1.14%
Allowance for
loan and lease
losses to non-
performing
loans 188.15% 183.94% 247.85% 358.22% 614.86%
Allowance for
loan and lease
losses to non-
performing
assets 185.81% 181.66% 243.55% 356.30% 614.86%
Net loan
charge-offs
(recoveries) $761 $188 $382 $(191) $1
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
Columbia Banking System, Inc.
(Unaudited) Three Months Ended
March 31,
(in thousands except per share) 2008 2007
Interest Income
Loans $41,303 $34,030
Taxable securities 4,429 4,774
Tax-exempt securities 2,001 1,960
Dividends 551 11
Federal funds sold and deposits with banks 149 371
Total interest income 48,433 41,146
Interest Expense
Deposits 14,835 12,159
Federal Home Loan Bank advances 2,582 3,179
Long-term obligations 487 507
Other borrowings 202 598
Total interest expense 18,106 16,443
Net Interest Income 30,327 24,703
Provision for loan and lease losses 2,076 638
Net interest income after provision for loan
and lease losses 28,251 24,065
Noninterest Income
Service charges and other fees 3,568 2,959
Merchant services fees 1,916 1,969
Gain on sale of investment securities, net 882 - -
Gain on redemption of Visa shares 1,962 - -
Bank owned life insurance ("BOLI") 505 426
Other 1,324 823
Total noninterest income 10,157 6,177
Noninterest Expense
Compensation and employee benefits 13,396 11,358
Occupancy 3,259 2,837
Merchant processing 866 823
Advertising and promotion 581 547
Data processing 815 567
Legal & professional services (51) 823
Taxes, licenses & fees 751 613
Net gain of other real estate owned (23) - -
Other 3,960 2,834
Total noninterest expense 23,554 20,402
Income before income taxes 14,854 9,840
Provision for income taxes 3,877 2,557
Net Income $10,977 $7,283
Net income per common share:
Basic $0.61 $0.45
Diluted $0.61 $0.45
Dividend paid per common share $0.17 $0.15
Average number of common shares outstanding 17,850 16,104
Average number of diluted common shares
outstanding 17,978 16,262
CONSOLIDATED CONDENSED BALANCE SHEETS
Columbia Banking System, Inc.
(Unaudited)
(in thousands) March 31, December 31,
2008 2007
Assets
Cash and due from banks $82,950 $82,735
Interest-earning deposits with banks 9,165 11,240
Federal funds sold 31,500 - -
Total cash and cash equivalents 123,615 93,975
Securities available for sale at fair value
(amortized cost of $576,372 and $558,685,
respectively) 582,029 561,366
Federal Home Loan Bank stock at cost 16,441 11,607
Loans held for sale 5,944 4,482
Loans, net of deferred loan fees of ($3,768)
and ($3,931), respectively 2,300,465 2,282,728
Less: allowance for loan and lease losses 27,914 26,599
Loans, net 2,272,551 2,256,129
Interest receivable 14,200 14,622
Premises and equipment, net 56,291 56,122
Other real estate owned - - 181
Goodwill 95,981 96,011
Core deposit intangible, net 6,754 7,050
Other assets 72,780 77,168
Total Assets $3,246,586 $3,178,713
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing $508,955 $468,237
Interest-bearing 2,017,559 2,029,824
Total deposits 2,526,514 2,498,061
Short-term borrowings:
Federal Home Loan Bank advances 256,400 257,670
Securities sold under agreements to repurchase 25,000 - -
Other borrowings 5,321 5,061
Total short-term borrowings 286,721 262,731
Long-term subordinated debt 25,540 25,519
Other liabilities 56,144 50,671
Total liabilities 2,894,919 2,836,982
Shareholders' equity:
Preferred stock (no par value)
Authorized, 2 million shares;
none outstanding - - - -
March 31, December 31,
Common stock 2008 2007
(no par value)
Authorized shares 63,034 63,034
Issued and
outstanding 18,084 17,953 228,156 226,550
Retained earnings 115,932 110,169
Accumulated other
comprehensive income 7,579 5,012
Total shareholders'
equity 351,667 341,731
Total Liabilities and
Shareholders' Equity $3,246,586 $3,178,713
SOURCE Columbia Banking System, Inc.
 back to top
Related links:
http://www.columbiabank.com
CONTACT:
Melanie J. Dressel, President and Chief
Executive Officer, +1-253-305-1911, or Gary R. Schminkey,
Executive Vice President and Chief Financial Officer,
+1-253-305-1966, both of Columbia Banking System, Inc.
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