1st QUARTER 2007 HIGHLIGHTS
- Earnings of $7.3 million, compared to $8.2 million for the 1st quarter
2006
- Diluted earnings per share of $0.45 from $0.51 for the 1st quarter 2006
- Total loans were $1.83 billion, an increase of $239 million, or 15% year
over year, and $125 million, or 7%, from December 31, 2006
- Total assets were $2.68 billion, an increase of 5% from December 31, 2006
- Stable core deposit ratio of 73%
- Net interest margin decreased to 4.37% from 4.65% in the 1st quarter of
2006 and from 4.43% in the 4th quarter of 2006
- Credit quality metrics remain solid; non-performing assets to total
assets at a historical low of 0.13%
- Entered into definitive merger agreements with Mountain Bank Holding
Company and Town Center Bancorp
- New Bellevue branch to open May, 2007
TACOMA, Wash., April 25 /PRNewswire-FirstCall/ -- Columbia Banking
System, Inc. ("Columbia"; Nasdaq: COLB) today announced earnings for the
first quarter 2007 of $7.3 million, or $0.45 per diluted share, compared to
net income of $8.2 million, or $0.51 per diluted share for the first
quarter of 2006. The decrease in earnings is primarily due to compression
of the net interest margin, as well as the costs associated with the hiring
of new banking teams, who are expected to enhance loan and deposit growth.
The compression of the net interest margin resulted from an increasing
reliance on higher cost deposits and borrowings to fund loan growth.
Melanie J. Dressel, President and Chief Executive Officer, commented,
"There were two major factors that impacted our earnings for the first
quarter. We face the same economic headwinds of the banking industry as a
whole in the growing competition for low cost deposits, resulting in net
interest margin compression. Due to our mix of core deposits and loans that
are tied to short-term indices, such as the prime rate, we have been
successful in delaying the full impact of margin compression, although we
are now beginning to feel some of its effects.
Ms. Dressel continued, "In addition, we recently made an investment in
high quality, very experienced commercial and builder banking teams based
in King County. These teams were solid contributors to the substantial
growth in loans, particularly during the latter part of the quarter. While
we have incurred the expense to generate the new loans, including an
appropriate provision for loan losses, we have not yet realized their full
quarter earnings benefit. Although we expect loan growth to moderate in
upcoming quarters, we are pleased that our loans ended the quarter at over
$1.8 billion, an increase of $239 million, or 15% from first quarter 2006
and $125 million, or 7% from year-end 2006. We have maintained good asset
quality, with a strong commercial business component, and a balanced
portfolio which has given us the ability to consider new lending
relationships based on their merits without the constraints created by
excessive concentrations in any single category."
Ms. Dressel continued, "Earnings growth remains a challenge in this
unusual interest rate environment, with short-term interest rates higher
than long-term interest rates. We expect this pressure on our earnings to
continue as yields on earning assets remain flat and competition for
deposits remain strong. Core deposit growth increased during the final
month of the first quarter, and comprised a healthy 73% of total deposits,
providing a stable source of funding at relatively low costs. We continue
to focus our marketing initiatives on increasing core deposits through new
customer acquisition, highlighting our breadth of products and services,
staff expertise and customer service. Because of the challenging interest
rate environment, it is incumbent upon us to balance expense control with
well considered long-term investments in growth."
At March 31, 2007, Columbia's total assets were $2.68 billion, an
increase of 9% from $2.46 billion at March 31, 2006, and 5% from $2.55
billion at December 31, 2006. Total loans were $1.83 billion at March 31,
2007, up 15% from $1.60 billion at March 31, 2006 and up 7% from $1.71
billion at year-end 2006. Total deposits were $2.1 billion at March 31,
2007, an increase of 5% from March 31, 2006, and 3% from December 31, 2006.
Most of the growth occurred in core deposits, which were $1.52 billion at
quarter-end 2007, up 4% from $1.46 billion at quarter-end 2006. Core
deposits were 73% of total deposits at March 31, 2007.
Revenue (net interest income plus noninterest income) was $30.9
million, up 2% from $30.3 billion for the quarter ended March 31, 2006.
Return on average assets and return on average equity for the first quarter
2007 were 1.14% and 11.52%, respectively, compared to 1.39% and 14.37%,
respectively, for the first quarter of the prior year. The efficiency ratio
increased to 63.39% at March 31, 2007, compared to 58.64% for the same
period in 2006.
First Quarter 2007 Operating Results
Net Interest Income
Net interest income increased to $24.7 million, or $397,000, in the
first quarter 2007 compared to the first quarter 2006, primarily due to
loan growth. The Company's net interest margin decreased to 4.37% in the
first quarter 2006, compared with 4.65% in the first quarter 2006; deposit
and borrowing costs increased faster than loan yields, adding to pressure
on the net interest margin. Net interest income decreased six basis points
at quarter- end 2007, from 4.43% during the 4th quarter of 2006. This was
primarily due to rapid loan growth during the latter part of the first
quarter 2007, while deposit growth lagged first quarter loan growth. This
difference in loan and deposit growth was funded by higher cost borrowings.
Average interest-earning assets increased to $2.39 billion, or 9%,
during the first quarter of 2007, compared with $2.19 billion at the end of
the first quarter 2006. The yield on average interest-earning assets
increased 52 basis points to 7.16% at March 31, 2007, from 6.64% at March
31, 2006. Average interest-bearing liabilities increased 12% to $1.89
billion from $1.69 billion last year. The cost of average interest-bearing
liabilities increased 94 basis points to 3.53% in the first quarter of
2007, compared to 2.59% in the first quarter of 2006.
Noninterest income
Total noninterest income for the first quarter 2007 increased to $6.2
million, or 3%, from $6.0 million a year ago. The increase in noninterest
income during the first quarter of 2007 as compared to first quarter 2006
was primarily due to increased service charges and other fees related to an
increase in customer volume, partially offset by decreased merchant
services fees. The Company expects a modest increase in noninterest income
for the remainder of 2007.
Noninterest expense
Noninterest expense for the first quarter of 2007 was $20.4 million, an
increase of 11% from $18.3 million for the same period in 2006. This
increase was partly due to expenses that have historically been heavily
weighted to the first quarter, such as increased compensation and employee
benefits, occupancy expenses, and legal and professional services. The
increase in compensation is primarily a result of the investment in
additional bankers in the retail and lending areas. Legal and professional
services were higher in the current quarter compared to the same period in
2006, primarily as a result of the recovery of previously incurred
professional expenses received in the first quarter of last year.
The Company's efficiency ratio was 63.39% for the first quarter 2007
compared with 58.64% for the same period in 2006. Melanie Dressel noted,
"As discussed previously, we experienced seasonal expenses traditionally
associated with the first quarter. We expect improvement in our efficiency
ratio as we benefit from revenue increases associated with our new banking
teams, and the resulting growth in loans and deposits."
Nonperforming Assets and Loan Loss Provision
The Company made a provision for loan losses of $638,000 for the first
quarter of 2007, compared with $215,000 for the first quarter of 2006, and
$950,000 for the quarter ending December 31, 2006. The increase in the
provision over the same period last year was primarily due to accelerating
loan growth experienced during the current quarter compared to the same
quarter last year. The provision decreased over the fourth quarter 2006
primarily due to a continuing decline in the level of non-performing assets
and the low level of net loan charge offs for the period.
The allowance for loan and lease losses as a percentage of loans
(excluding loans held for sale at each date) decreased to 1.14% at March
31, 2007 as compared to 1.18% at year-end 2006. For the quarters ended
March 31, 2007 and 2006, net charge-offs amounted to $1,000 and $353,000,
respectively.
Expansion Activity
In March, 2007, Columbia announced the signing of definitive merger
agreements with Mountain Bank Holding Company ("MBHC"), headquartered in
Enumclaw, Washington, and Town Center Bancorp ("TCB"), headquartered in
Portland, Oregon. The boards of both companies unanimously approved the
transactions, which are expected to close in the third quarter of this year
following MBHC and TCB shareholder and regulatory approvals. Ms. Dressel
commented, "We are very pleased that two well-run, profitable organizations
with whom we have remarkable cultural similarities have agreed to join
forces with us. This is a milestone in our strategy to become a Pacific
Northwest regional community bank through a combination of de novo
expansion and strategic acquisitions that will expand our geographic
footprint, and more importantly, share our commitment to the best possible
customer service."
Columbia Bank will open a new full-service branch office in Bellevue in
May, 2007. The Bellevue South branch is located along the Interstate 405
corridor with excellent freeway access, adjacent to the Bellevue Athletic
Club. The previously announced Lacey Branch, which has been delayed by
permitting issues, is currently under development and is slated to open in
the fourth quarter, 2007.
Ms. Dressel noted, "We expect the second quarter roll-out of Daily
Deposit, Columbia Bank's remote deposit capture program, to enhance deposit
growth. It gives us the ability to reach out to customers who may currently
borrow from us, but do not yet have a deposit relationship with us."
"We remain committed to growing our market share as a Pacific Northwest
community bank," Ms. Dressel continued. "Accordingly, we will continue to
build on our proven strategy of investing in growth through hiring
experienced bankers, opening new branches and acquiring well-run banking
organizations that expand our footprint."
Conference Call
Columbia will discuss the quarterly results on a conference call on
Thursday, April 26, 2007 at 1:30 PDT. Interested investors, analysts, media
representatives and the public are invited to listen to this discussion by
calling 1-866-404-2271; Conference ID code 6348598. A conference call
replay will be available from approximately 3:00 p.m. PST on April 26
through midnight PDT on Thursday, May 3, 2007. The conference call replay
can be accessed by dialing 1-800-642-1687 and entering Conference ID code
6348598.
Columbia Banking System, Inc. is a Tacoma-based bank holding company
whose wholly owned banking subsidiaries are Columbia Bank and Bank of
Astoria. Columbia Bank is a Washington state-chartered full-service
commercial bank with 35 banking offices in Pierce, King, Cowlitz, Kitsap
and Thurston counties. Bank of Astoria, a federally insured commercial bank
headquartered in Astoria, Oregon, operates four branches in Clatsop County:
Astoria, Warrenton, Seaside and Cannon Beach; and one branch 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 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.
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.
FINANCIAL STATISTICS
Columbia Banking System, Inc. Three Months Ended
Unaudited March 31,
(in thousands, except per share amounts) 2007 2006
Earnings
Net interest income $24,703 $24,306
Provision for loan and lease losses $638 $215
Noninterest income $6,177 $5,973
Noninterest expense $20,402 $18,340
Net income $7,283 $8,188
Per Share
Net income (basic) $0.45 $0.52
Net income(diluted) $0.45 $0.51
Averages
Total assets $2,586,025 $2,388,680
Interest-earning assets $2,392,372 $2,190,872
Loans $1,765,692 $1,567,615
Securities $597,952 $619,428
Deposits $2,001,136 $1,955,851
Core deposits $1,444,210 $1,425,442
Shareholders' Equity $256,292 $231,080
Financial Ratios
Return on average assets 1.14% 1.39%
Return on average equity 11.52% 14.37%
Return on average tangible equity(1) 13.38% 17.00%
Average equity to average assets 9.91% 9.67%
Net interest margin 4.37% 4.65%
Efficiency ratio (tax equivalent) (2) 63.39% 58.64%
March 31, December 31,
Period end 2007 2006 2006
Total assets $2,676,204 $2,460,453 $2,553,131
Loans $1,833,852 $1,595,262 $1,708,962
Allowance for loan and
lease losses $20,819 $20,691 $20,182
Securities $599,306 $634,620 $605,133
Deposits $2,081,026 $1,990,363 $2,023,351
Core deposits $1,518,797 $1,455,390 $1,473,701
Shareholders' equity $261,329 $231,137 $252,347
Book value per share $16.17 $14.47 $15.71
Tangible book value per share $14.16 $12.41 $13.68
Nonperforming assets
Nonaccrual loans $2,580 $5,115 $2,414
Restructured loans 806 1,146 1,066
Personal property owned -- -- --
Other real estate owned -- 18 --
Total nonperforming assets $3,386 $6,279 $3,480
Nonperforming loans to
period-end loans 0.18% 0.39% 0.20%
Nonperforming assets to
period-end assets 0.13% 0.26% 0.14%
Allowance for loan and lease
losses to period-end loans 1.14% 1.30% 1.18%
Allowance for loan and lease
losses to nonperforming loans 614.86% 330.47% 579.94%
Allowance for loan and lease
losses to nonperforming assets 614.86% 329.53% 579.94%
Net loan charge-offs $1(3) $353(4) $2,712(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 and mark-to-
market adjustments of interest rate floor instruments.
(3) For the three months ended March 31, 2007.
(4) For the three months ended March 31, 2006.
(5) For the twelve months ended December 31, 2006.
FINANCIAL STATISTICS
Columbia Banking System, Inc. Period End
Unaudited March 31, December 31,
(in thousands) 2007 2006 2006
Loan Portfolio Composition
Commercial business $673,583 $568,814 $608,636
Leases 7,951 13,415 9,263
Real Estate:
One-to-four family residential 47,876 71,249 51,277
Five or more family residential
and commercial 691,758 658,642 687,635
Total Real Estate 739,634 729,891 738,912
Real Estate Construction:
One-to-four family
residential 139,806 38,767 92,124
Five or more family
residential and commercial 128,728 101,916 115,185
Total Real Estate
Construction 268,534 140,683 207,309
Consumer 147,435 144,674 147,782
Subtotal loans 1,837,137 1,597,477 1,711,902
Less: Deferred loan fees (3,285) (2,215) (2,940)
Total loans $1,833,852 $1,595,262 $1,708,962
Loans held for sale $2,999 $1,737 $933
Deposit Composition
Demand and other noninterest
bearing $447,052 $448,664 $432,293
Interest bearing demand 430,967 350,081 414,198
Money market 530,542 535,681 516,415
Savings 110,236 120,965 110,795
Certificates of deposit 562,229 534,972 549,650
Total deposits $2,081,026 $1,990,363 $2,023,351
QUARTERLY FINANCIAL STATISTICS
Columbia Banking System, Inc. Three Months Ended
Unaudited
(in thousands, except Mar 31 Dec 31 Sept 30 Jun 30 Mar 31
per share amounts) 2007 2006 2006 2006 2006
Earnings
Net interest income $24,703 $24,750 $24,405 $24,302 $24,306
Provision for loan
and lease losses $638 $950 $650 $250 $215
Noninterest income $ 6,177 $6,324 $ 6,108 $ 6,267 $ 5,973
Noninterest expense $20,402 $18,560 $18,098 $21,136 $18,340
Net income $7,283 $8,341 $8,335 $7,239 $8,188
Per Share
Net income [basic] $ 0.45 $0.52 $ 0.52 $ 0.45 $ 0.52
Net income [diluted] $ 0.45 $0.52 $ 0.52 $ 0.45 $ 0.51
Averages
Total assets $2,586,025 $2,517,836 $2,504,371 $2,480,585 $2,388,680
Interest-earning
assets $2,392,372 $2,310,502 $2,290,351 $2,268,259 $2,190,872
Loans $1,765,692 $1,688,600 $1,647,471 $1,613,253 $1,567,615
Securities $597,952 $602,075 $627,821 $645,343 $619,428
Deposits $2,001,136 $2,024,108 $1,975,103 $1,949,608 $1,955,851
Core deposits $1,444,210 $1,459,281 $1,433,641 $1,414,455 $1,425,442
Shareholders'
Equity $256,292 $249,202 $238,272 $232,614 $231,080
Financial Ratios
Return on average
assets 1.14% 1.31% 1.32% 1.17% 1.39%
Return on average
equity 11.52% 13.28% 13.88% 12.48% 14.37%
Return on average
tangible equity 13.38% 15.49% 16.32% 14.77% 17.00%
Average equity to
average assets 9.91% 9.90% 9.51% 9.38% 9.67%
Net interest margin 4.37% 4.43% 4.41% 4.47% 4.65%
Efficiency ratio
(tax equivalent) 63.39% 57.41% 58.81% 60.97% 58.64%
Period end
Total assets $2,676,204 $2,553,131 $2,507,450 $2,544,598 $2,460,453
Loans $1,833,852 $1,708,962 $1,655,809 $1,625,255 $1,595,262
Allowance for
loan and lease
losses $20,819 $20,182 $20,926 $20,990 $20,691
Securities $599,306 $605,133 $611,497 $650,955 $634,620
Deposits $2,081,026 $2,023,351 $2,020,065 $1,962,748 $1,990,363
Core deposits $1,518,797 $1,473,701 $1,460,634 $1,418,313 $1,455,390
Shareholders'
equity $261,329 $252,347 $245,801 $232,241 $231,137
Book value per share $16.17 $15.71 $15.32 $14.49 $14.47
Tangible book
value per share $14.16 $13.68 $13.27 $12.44 $12.41
Nonperforming assets
Nonaccrual loans $2,580 $2,414 $4,101 $4,575 $5,115
Restructured loans 806 1,066 804 1,197 1,146
Personal property owned -- -- -- -- --
Real estate owned -- -- -- -- 18
Total nonperforming
assets $3,386 $3,480 $4,905 $5,772 $6,279
Nonperforming loans
to period-end loans 0.18% 0.20% 0.30% 0.36% 0.39%
Nonperforming assets
to period-end assets 0.13% 0.14% 0.20% 0.23% 0.26%
Allowance for loan
and lease losses
to period-end loans 1.14% 1.18% 1.26% 1.29% 1.30%
Allowance for loan
and lease losses
to nonperforming
loans 614.86% 579.94% 426.63% 363.65% 330.47%
Allowance for loan
and lease losses
to nonperforming
assets 614.86% 579.94% 426.63% 363.65% 329.53%
Net loan charge-offs
(recoveries) $1 $1,694 $714 $(49) $353
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
Columbia Banking System, Inc.
(Unaudited) Three Months Ended
March 31,
(in thousands except per share) 2007 2006
Interest Income
Loans $34,030 $28,644
Taxable securities 4,774 4,958
Tax-exempt securities 1,960 1,427
Dividends on Federal Home Loan Bank stock 11 --
Federal funds sold and deposits with banks 371 40
Total interest income 41,146 35,069
Interest Expense
Deposits 12,159 8,491
Federal Home Loan Bank advances 3,179 1,768
Long-term obligations 507 459
Other borrowings 598 45
Total interest expense 16,443 10,763
Net Interest Income 24,703 24,306
Provision for loan and lease losses 638 215
Net interest income after provision
for loan and lease losses 24,065 24,091
Noninterest Income
Service charges and other fees 2,959 2,834
Mortgage banking 127 147
Merchant services fees 1,969 2,038
Gain on sale of investment securities, net -- 10
Bank owned life insurance ("BOLI") 426 399
Other 696 545
Total noninterest income 6,177 5,973
Noninterest Expense
Compensation and employee benefits 11,358 9,669
Occupancy 2,837 2,648
Merchant processing 823 784
Advertising and promotion 547 652
Data processing 567 800
Legal & professional services 823 230
Taxes, licenses & fees 613 596
Other 2,834 2,961
Total noninterest expense 20,402 18,340
Income before income taxes 9,840 11,724
Provision for income taxes 2,557 3,536
Net Income $7,283 $8,188
Net income per common share:
Basic $0.45 $0.52
Diluted $0.45 $0.51
Dividend paid per common share $0.15 $0.13
Average number of common
shares outstanding 16,104 15,860
Average number of diluted common
shares outstanding 16,262 16,101
CONSOLIDATED CONDENSED BALANCE SHEETS
Columbia Banking System, Inc.
(Unaudited)
(in thousands) March 31, December 31,
2007 2006
Assets
Cash and due from banks $65,496 $76,365
Interest-earning deposits with banks 15,804 13,979
Federal funds sold 26,250 14,000
Total cash and cash equivalents 107,550 104,344
Securities available for sale at fair
value (amortized cost of $588,824 and
$598,703 respectively) 587,281 592,858
Securities held to maturity at cost
(fair value of $1,620 and $1,871 respectively) 1,572 1,822
Federal Home Loan Bank stock at cost 10,453 10,453
Loans held for sale 2,999 933
Loans, net of unearned income of
($3,285) and ($2,940), respectively 1,833,852 1,708,962
Less: allowance for loan and lease losses 20,819 20,182
Loans, net 1,813,033 1,688,780
Interest receivable 13,837 12,549
Premises and equipment, net 44,152 44,635
Goodwill 29,723 29,723
Other assets 65,604 67,034
Total Assets $2,676,204 $2,553,131
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing $447,052 $432,293
Interest-bearing 1,633,974 1,591,058
Total deposits 2,081,026 2,023,351
Short-term borrowings:
Federal Home Loan Bank advances 212,700 205,800
Securities sold under agreements to repurchase 70,000 20,000
Other borrowings 344 198
Total short-term borrowings 283,044 225,998
Long-term subordinated debt 22,395 22,378
Other liabilities 28,410 29,057
Total liabilities 2,414,875 2,300,784
Shareholders' equity:
Preferred stock (no par value)
Authorized, 2 million shares; none outstanding -- --
March 31, December 31,
Common stock (no par value) 2007 2006
Authorized shares 63,034 63,034
Issued and outstanding 16,157 16,060 168,033 166,763
Retained earnings 93,904 89,037
Accumulated other comprehensive loss (608) (3,453)
Total shareholders' equity 261,329 252,347
Total Liabilities and Shareholders' Equity $2,676,204 $2,553,131
SOURCE Columbia Banking System, Inc.
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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
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