Company Remains Well Capitalized, With Ample Liquidity, Strong Core Deposit
Base and Solid Net Interest Margin
TACOMA, Wash., Oct. 23 /PRNewswire-FirstCall/ -- Columbia Banking
System, Inc. (Nasdaq: COLB) ("Columbia") today announced a net loss for the
third quarter 2008 of $8.8 million, compared with net income of $9.3
million for the third quarter of 2007. Diluted earnings per share reflect a
loss of $0.49, compared with earnings of $0.53 per share a year earlier.
The net loss for the quarter reflected the previously announced $11.9
million net of tax impairment charge related to the decline in the fair
value of an investment in preferred stock issued by the Federal Home Loan
Mortgage Corporation ("Freddie Mac") and the Federal National Mortgage
Association ("Fannie Mae").
"The fundamentals of our business remain sound during this challenging
economic environment," Melanie Dressel, President and Chief Executive
Officer said. "Our core operations remain profitable, and we are confident
that Columbia is well positioned to manage through this cycle because of
the following factors:
-- We are well-capitalized, with a total risk-based capital ratio of
approximately 11.25%, about $30 million above the threshold set by the FDIC
to be considered well-capitalized. However, we continue to explore all
appropriate means to enhance our capital position, which may include
participation in the Treasury's Capital Purchase Program as well as the
issuance of common or preferred stock.
-- Our liquidity ratio remains strong at 32%, which translates into
approximately $1 billion of available funding for the general operation of
our bank, and to meet the loan and deposit needs of our customers.
-- Our core deposits represent 83% of total deposits, and have helped
us maintain a stable net interest margin. We have increased market share in
our primary markets, resulting from our on-going commitment to deepen and
enhance the relationships we have built with our customers.
-- We maintain a diverse loan portfolio, with 35% of the total
portfolio in commercial business loans and less than 20% in real estate
construction related loans; approximately 11% is in the for-sale housing
segment.
For comparative purposes, the table below illustrates core earnings, a
non-GAAP measure removing the effect of income and expense items not
derived from customary business activities.
Core Earnings
(Dollars in thousands, Three months ended Nine months ended
except per share data) September 30, September 30,
2008 2007 2008 2007
Net Income (Loss) $(8,759) $9,256 $4,154 $25,083
Add: (amounts shown net of tax)
Preferred stock impairment
write-down $11,934 $11,934
Deduct: (amounts shown net of tax)
Gain on sale of investment
securities (568)
Redemption of Visa and MasterCard
shares (1,952)
Reversal of prev. accrued
litigation expense (573)
Insurance proceeds received on
death of former officer (395)
Core Earnings $3,175 $9,256 $12,600 $25,083
Earnings (Loss) per Diluted Share:
GAAP earnings $(0.49) $0.53 $0.23 $1.51
Core earnings $0.18 $0.53 $0.70 $1.51
The amounts contained in the above table have been tax affected to
illustrate their impact on net income (loss).
As shown above, Columbia recorded a pre-tax gain on the sale of
investment securities in the amount of $881,872 in the first quarter. The
gain resulted from repositioning the portfolio and extending its weighted
average life. In March 2008, Visa Inc. completed its initial public
offering; 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 pre-tax cash
proceeds of $1.96 million. In conjunction with the completion of Visa's
IPO, Columbia also recognized a pre-tax reversal of previously accrued Visa
litigation expense in the amount of $889,200. During the second quarter,
Columbia redeemed pre-tax $1.1 million of the MasterCard International
shares it obtained in connection with MasterCard's 2006 initial public
offering. Columbia also recognized $612,000 of pre-tax income during the
second quarter from the receipt of life insurance proceeds received in
connection with the death of a former officer covered by bank owned life
insurance ("BOLI").
On September 7, 2008 the U.S. Treasury Department ("Treasury") and
Federal Housing Finance Agency ("FHFA") placed Fannie Mae and Freddie Mac
into conservatorship. Columbia holds 400,000 shares of Series Z preferred
stock issued by Fannie Mae and 400,000 shares of Series S preferred stock
issued by Freddie Mac. During the third quarter 2008, Columbia recorded a
pre-tax impairment charge of $18.5 million, $11.9 million after-tax, on its
$20 million preferred stock investment issued by Fannie Mae and Freddie
Mac.
"Historically, banks have been significant investors in securities
issued by government sponsored entities, due to their favorable tax and
regulatory capital attributes," Ms. Dressel noted. "Our investment in
Freddie Mac and Fannie Mae is limited to the $20 million of preferred
stock. We do not have any investment in common or any other equity
securities issued by Fannie Mae or Freddie Mac. Furthermore we do not own
collateralized debt obligations, trust preferred securities, private label
collateralized mortgage obligations, or private label mortgage backed
securities in our portfolio."
During the third quarter of 2008, Columbia recorded a $10.5 million
provision for loan losses compared with $15.4 million for the second
quarter 2008, and $1.2 million for the third quarter a year ago. At
September 30, 2008, the allowance for loan losses was 1.62% of net loans.
The increase in the provision for loan losses for the third quarter 2008
was due to an increase in real estate construction-related non-accrual
loans resulting from the slowing Pacific Northwest economy. Ms. Dressel
commented, "We recognized the further deterioration of our residential
construction portfolio resulting from the effects of the weakening economy
and determined it was prudent to place an additional $10.5 million in our
provision for loan losses during the third quarter. We believe the
allowance is adequate and appropriate given our current analysis of the
loan portfolio, and the relative mix and risk of our loan portfolios."
Results for the third quarter and first nine months of 2008 reflect the
financial consolidation of Mountain Bank Holding Company and Town Center
Bancorp, which were both acquired on July 23, 2007; accordingly, the third
quarter and first nine months of 2007 financial information includes only
partial results of the two organizations. Additionally, earnings per
diluted share for the third quarter and first nine months of 2008 were
affected by an increase in the total number of shares outstanding as a
result of shares issued in conjunction with the 2007 acquisitions.
Third Quarter 2008 Operating Results
At September 30, 2008, Columbia's total assets were $3.10 billion,
compared with $3.18 billion at December 31, 2007. Total loans were $2.22
billion at September 30, 2008, compared with $2.28 billion at year-end
2007. Total deposits were $2.36 billion at September 30, 2008, compared
with $2.50 billion at December 31, 2007.
Net Income
Net income for the nine months ended September 30, 2008, was $4.2
million, compared with $25.1 million for the first nine months of 2007. On
a diluted per share basis, net income was $0.23, compared with $1.51 a year
earlier. Return on average assets and return on average equity for the
first nine months of 2008 were 0.18% and 1.59%, respectively, compared with
1.22% and 12.92%, respectively, for the same period in 2007. Return on
average tangible equity for the first nine months of 2008 was 2.71%
compared to 16.03% for the same period last year. The efficiency ratio for
the first nine months of 2008 was 60.62% compared to 60.79% for the first
nine months of 2007.
Revenue (net interest income plus noninterest income) was $18.6 million
for the third quarter of 2008, down 49% from $36.5 million a year earlier.
Revenue for the nine months ended September 30, 2008 was $98.7 million, net
of the $18.5 million impairment charge, and is a decrease of 1% from $99.8
million for the same period in 2007, reflecting a decrease in noninterest
income outlined below.
Net Interest Income
Net interest income for the third quarter of 2008 was $29.6 million, an
increase of 3% from $28.9 million for the third quarter 2007. The increase
is primarily due to an increase in earning assets from the prior year.
Columbia's net interest margin was 4.34%, a slight decrease from 4.40% for
the third quarter of 2007, primarily due to a decline in the yield on
earning assets as a result of loans placed on nonaccrual status. Columbia
reversed $355,000 of accrued interest related to loans placed on nonaccrual
status during the third quarter, 2008. On a linked quarterly basis, the net
interest margin was 4.29% for the fourth quarter of 2007, 4.38% for the
first quarter of 2008, and 4.39% for the second quarter of 2008.
Average interest-earning assets increased 5% to $2.83 billion in the
third quarter of 2008, up from $2.70 billion in the third quarter of 2007.
The yield on average interest-earning assets decreased 128 basis points to
6.13% in the third quarter of 2008, from 7.41% in the third quarter in
2007. Average interest-bearing liabilities increased to $2.26 billion from
$2.18 billion last year. The cost of average interest-bearing liabilities
decreased 150 basis points to 2.24% in the third quarter of 2008, compared
with 3.74% in the third quarter of 2007.
For the nine months ended September 30, 2008, net interest income
increased 14% to $90.2 million from $79.3 million a year earlier. This
increase for the first nine months of 2008 primarily was driven by loan
growth, coupled with a decrease in interest expense on interest-bearing
deposits.
During the first nine months of 2008, Columbia's net interest margin
decreased slightly to 4.37% from 4.38% a year earlier. Average
interest-earning assets grew to $2.88 billion in the first nine months of
2008 from $2.52 billion in the 2007 period. The yield on average
interest-earning assets decreased 81 basis points to 6.46% in the first
nine months of 2008 from 7.27% in 2007. In comparison, average
interest-bearing liabilities grew to $2.31 billion from $2.00 billion for
the first nine months of 2007. The cost of average interest-bearing
liabilities decreased 104 basis points to 2.60% in the first nine months of
2008, compared with 3.64% for the 2007 period.
Noninterest income
Total noninterest income for the third quarter 2008 reflected a loss of
$10.9 million, compared to income of $7.6 million one year earlier. This
loss was primarily a result of the $18.5 million impairment charge on
Fannie Mae and Freddie Mac investment securities. Eliminating this charge
would have resulted in relatively unchanged noninterest income from the
third quarter 2007.
For the nine months ended September 30, 2008, noninterest income was
$8.5 million, a 59% decrease from $20.5 million for the nine months ended
September 30, 2007, primarily due to the impairment charge on investment
securities mentioned above. The decrease in noninterest income was
partially offset with proceeds from the redemption of Visa and MasterCard
shares of $3.0 million and a gain on the sale of investment securities of
$882,000. Services charges and other fees increased $1.3 million, or 13% in
the first nine months of 2008 from the 2007 period, reflecting a change in
our deposit account fee structure in conjunction with an increase in the
number of deposit accounts. Other income increased $1.2 million, or 41% due
in part to the receipt of insurance proceeds received for the death of a
former officer in the amount of $612,000.
Noninterest expense
Noninterest expense for the third quarter of 2008 was $23.4 million, a
4% increase from $22.4 million a year earlier. Regulatory premiums, data
processing expenses and core deposit intangible expenses increased in the
third quarter 2008, related to a larger deposit base primarily due to the
third quarter 2007 acquisitions.
Total noninterest expense for the first nine months of 2008 was $70.3
million, an increase of 11% from $63.1 million from the 2007 period. The
increase was due to compensation, employee benefits and occupancy costs
related to the third quarter 2007 acquisitions. Regulatory premiums were
$1.2 million higher for the first nine months of 2008 over the same period
in 2007, resulting from a credit received in 2007 which offset the majority
of the FDIC premiums due and the increased deposit account base due in part
from the acquisitions.
Nonperforming Assets and Loan Loss Provision
As of September 30, 2008, non-performing assets were $78.2 million,
compared to $72.3 million at June 30, 2008, and $14.6 million at December
31, 2007. Residential construction loans continue to be the primary driver
of nonperforming assets, representing $51.6 million, or 66%, of
nonperforming assets. Commercial real estate loans account for another
$18.6 million or 24% of non-performing loans with condominium projects
representing the majority of the non-performing commercial real estate
loans. Nonperforming condominium loans were $11.0 million or 14% of
nonperforming assets. The balance of the commercial real estate
nonperforming assets are spread among a wide variety of loans of which only
two are greater than $1.0 million. One is a retail project for $3.3 million
and another is an office property for $1.6 million.
For the quarter ended September 30, 2008, net loan charge-offs were
approximately $16.4 million compared to $1.5 million for the linked quarter
and $382,000 for the same period a year ago. The increased level of net
charge-offs is in recognition of declining valuations of collateral
dependent non-performing loans primarily in the residential land
acquisition and development portfolio. Past due loans were $13.1 million,
or 0.59% of total loans, at September 30, 2008 compared to $17.7 million,
0.78% of total loans, at June 30, 2008, and $11.6 million, 0.51% of total
loans, at December 31, 2007.
Ms. Dressel noted, "The Puget Sound (King, Pierce and Snohomish
counties) and Portland markets represent 78% of our for-sale housing
exposure, which we define as our single family residential construction and
condominium development activity, and 66% of our nonperforming loans. These
markets remained weak during the third quarter as we saw a continuation in
the decline of home values as well as sales activity. Despite these weak
market conditions we are pleased to report that we reduced construction
related assets by over $105.0 million or 24% during the third quarter." Ms.
Dressel also noted, "Other segments of our loan portfolio, such as
commercial lending and term commercial real estate loans are performing in
line with expectations."
Organizational Update
Ms. Dressel said, "During the third quarter, our 30th Avenue and
Commerce branches in Longview, Washington, consolidated and relocated to a
beautiful and more visible new branch location. We believe the
consolidation helps improve efficiencies while maintaining our commitment
to customer service."
"We are very pleased that we have increased or maintained our share of
the deposits in our primary markets, including new communities resulting
from our acquisitions last year," Ms. Dressel continued. "Columbia Bank
continues to rank number one in Pierce County, Washington, with over 17% of
the deposit market as of June 30, 2008, according to the FDIC Deposit
Market Share Report. Bank of Astoria in Oregon has maintained their number
one status in their primary market as well, with 34% market share, and Mt.
Rainier Bank continues to hold the most deposits in their primary area on
the Enumclaw plateau in Washington."
Conference Call
Columbia management will discuss third quarter 2008 results on a
conference call scheduled for Thursday, October 23, 2008 at 1:00 p.m. PDT.
Interested parties may listen to this discussion by calling 1-888-318-7969;
Conference ID code #68150363. A conference call replay will be available
from approximately 4:00 p.m. PDT on October 23 through midnight PDT on
Thursday, October 30, 2008. The conference call replay can be accessed by
dialing 1- 800-642-1687 and entering Conference ID code 68150363.
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 which was selected by Washington CEO magazine
as one of 2008's "Washington's Best 100 Companies to Work For". 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 52 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 5 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.
Unaudited Three Months Ended Nine Months Ended
(in thousands except per September 30, September 30,
share) 2008 2007 2008 2007
Earnings
Net interest income $29,593 $28,860 $90,194 $79,258
Provision for loan and
lease losses $10,500 $1,231 $27,926 $2,198
Noninterest income $(10,946) $7,631 $8,516 $20,549
Noninterest expense $23,391 $22,425 $70,312 $63,093
Net income (loss) $(8,759) $9,256 $4,154 $25,083
Per Share
Net income (loss) (basic) $(0.49) $0.53 $0.23 $1.52
Net income (loss)
(diluted) $(0.49) $0.53 $0.23 $1.51
Averages
Total assets $3,106,556 $2,969,197 $3,158,293 $2,738,099
Interest-earning assets $2,830,894 $2,702,487 $2,879,660 $2,519,623
Loans $2,241,574 $2,102,281 $2,281,129 $1,905,945
Securities $558,990 $572,124 $575,215 $584,057
Deposits $2,365,222 $2,382,881 $2,411,045 $2,159,495
Core deposits $1,925,780 $1,919,330 $1,927,515 $1,862,876
Shareholders' equity $344,158 $301,499 $349,754 $273,731
Financial Ratios
Return on average assets -1.12% 1.24% 0.18% 1.22%
Return on average equity -10.10% 12.18% 1.59% 12.92%
Return on average tangible
equity(1) -13.89% 15.81% 2.71% 16.03%
Average equity to average
assets 11.08% 10.15% 11.07% 9.48%
Net interest margin 4.34% 4.40% 4.37% 4.38%
Efficiency ratio (tax
equivalent)(2) 60.34% 59.23% 60.62% 60.79%
September 30, December 31,
Period end 2008 2007 2007
Total assets $3,104,980 $3,122,744 $3,178,713
Loans $2,216,133 $2,212,751 $2,282,728
Allowance for loan and
lease losses $35,814 $25,380 $26,599
Securities $551,062 $577,712 $572,973
Deposits $2,355,821 $2,477,794 $2,498,061
Core deposits $1,944,779 $1,963,269 $1,996,393
Shareholders' equity $336,435 $329,969 $341,731
Book value per share $18.54 $18.45 $19.03
Tangible book value per share $12.94 $12.79 $13.29
Nonperforming assets
Nonaccrual loans $76,164 $9,983 $14,005
Restructured loans 746 257 456
Other personal property owned - - -
Other real estate owned 1,288 181 181
Total nonperforming assets $78,198 $10,421 $14,642
Nonperforming loans to
period-end loans 3.47% 0.46% 0.63%
Nonperforming assets to
period-end assets 2.52% 0.33% 0.46%
Allowance for loan and lease
losses to period-end loans 1.62% 1.15% 1.17%
Allowance for loan and lease
losses to nonperforming
loans 46.57% 247.85% 183.94%
Allowance for loan and lease
losses to nonperforming
assets 45.80% 243.55% 181.66%
Net loan charges-offs $18,711 (3) $192 (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, proceeds from
redemption of Visa and Mastercard shares, reversal of previously
accrued Visa litigation expense, net income from BOLI policy swap
transactions, death benefit insurance proceeds and other than
temporary security impairment charge.
(3) For the nine months ended September 30, 2008.
(4) For the nine months ended September 30, 2007.
(5) For the twelve months ended December 31, 2007.
FINANCIAL STATISTICS
Columbia Banking System, Inc. September 30, December 31,
Unaudited % of % of % of
(in thousands) 2008 Total 2007 Total 2007 Total
Loan Portfolio
Composition
Commercial business $780,450 35.2% $732,195 33.2% $762,365 33.4%
Real Estate:
One-to-four
family
residential 57,280 2.6% 55,233 2.5% 60,991 2.7%
Five or more
family
residential
and commercial 841,885 38.0% 872,342 39.4% 852,139 37.3%
Total Real
Estate 899,165 40.6% 927,575 41.9% 913,130 40.0%
Real Estate
Construction:
One-to-four
family
residential 236,512 10.7% 231,017 10.4% 269,115 11.8%
Five or more
family
residential
and commercial 97,297 4.4% 154,455 7.0% 165,490 7.2%
Total Real
Estate
Construction 333,809 15.1% 385,472 17.4% 434,605 19.0%
Consumer 206,561 9.3% 171,786 7.8% 176,559 7.8%
Subtotal loans 2,219,985 100.2% 2,217,028 100.2% 2,286,659 100.2%
Less: Deferred
loan fees (3,852) -0.2% (4,277) -0.2% (3,931) -0.2%
Total loans $2,216,133 100.0% $2,212,751 100.0% $2,282,728 100.0%
Loans held
for sale $2,890 $2,273 $4,482
September 30, 2008 December 31, 2007 September 30, 2007
(in thousands) % of % of % of
Balance Total Balance Total Balance Total
Deposit Composition
Core deposits:
Demand and other
non-interest
bearing $498,815 21.2% $468,237 18.7% $474,600 19.2%
Interest bearing
demand 437,769 18.6% 478,596 19.2% 451,282 18.2%
Money market 582,040 24.7% 609,502 24.4% 593,301 23.9%
Savings 121,845 5.2% 115,324 4.6% 118,347 4.8%
Certificates of
deposit less
than $100,000 304,310 12.9% 324,734 13.0% 325,739 13.1%
Total core
deposits 1,944,779 82.6% 1,996,393 79.9% 1,963,269 79.2%
Certificates of
deposit greater
than $100,000 333,579 14.2% 428,885 17.2% 453,284 18.3%
Wholesale
certificates
of deposit
(CDARS(R)) 15,233 0.6% 762 0.0% 760 0.0%
Wholesale
certificates of
deposit 62,230 2.6% 72,021 2.9% 60,481 2.4%
Total
deposits $2,355,821 100.0% $2,498,061 100.0% $2,477,794 100.0%
QUARTERLY FINANCIAL STATISTICS
Columbia Banking System, Inc. Three Months Ended
Unaudited Sept 30 Jun 30 Mar 31
(in thousands except per share) 2008 2008 2008
Earnings
Net interest income $29,593 $30,274 $30,327
Provision for loan and lease losses $10,500 $15,350 $2,076
Noninterest income $(10,946) $9,305 $10,157
Noninterest expense $23,391 $23,367 $23,554
Net income (loss) $(8,759) $1,936 $10,977
Per Share
Net income (loss) (basic) $(0.49) $0.11 $0.61
Net income (loss) (diluted) $(0.49) $0.11 $0.61
Averages
Total assets $3,106,556 $3,182,877 $3,186,013
Interest-earning assets $2,830,894 $2,902,449 $2,906,172
Loans $2,241,574 $2,297,661 $2,304,588
Securities $558,990 $584,780 $582,056
Deposits $2,365,222 $2,413,225 $2,455,190
Core deposits $1,925,780 $1,923,973 $1,932,813
Shareholders' equity $344,158 $354,895 $350,271
Financial Ratios
Return on average assets -1.12% 0.24% 1.39%
Return on average equity -10.10% 2.19% 12.60%
Return on average tangible equity -13.89% 3.56% 18.33%
Average equity to average assets 11.08% 11.15% 10.99%
Net interest margin 4.34% 4.39% 4.38%
Efficiency ratio (tax equivalent) 60.34% 59.31% 62.36%
Period end
Total assets $3,104,980 $3,169,607 $3,246,586
Loans $2,216,133 $2,275,719 $2,300,465
Allowance for loan and lease losses $35,814 $41,724 $27,914
Securities $551,062 $549,755 $598,470
Deposits $2,355,821 $2,398,924 $2,526,514
Core deposits $1,944,779 $1,933,256 $1,997,975
Shareholders' equity $336,435 $344,270 $351,667
Book value per share $18.54 $19.01 $19.45
Tangible book value per share $12.94 $13.35 $13.77
Nonperforming assets
Nonaccrual loans $76,164 $71,730 $14,368
Restructured loans 746 540 468
Other personal property owned - - 187
Other real estate owned 1,288 - -
Total nonperforming assets $78,198 $72,270 $15,023
Nonperforming loans to period-end loans 3.47% 3.18% 0.64%
Nonperforming assets to period-end assets 2.52% 2.28% 0.46%
Allowance for loan and lease losses to
period-end loans 1.62% 1.83% 1.21%
Allowance for loan and lease losses to
nonperforming loans 46.57% 57.73% 188.15%
Allowance for loan and lease losses to
nonperforming assets 45.80% 57.73% 185.81%
Net loan charges-offs $16,410 $1,540 $761
QUARTERLY FINANCIAL STATISTICS
Columbia Banking System, Inc. Three Months Ended
Unaudited Dec 31 Sept 30
(in thousands except per share) 2007 2007
Earnings
Net interest income $29,562 $28,860
Provision for loan and lease losses $1,407 $1,231
Noninterest income $7,199 $7,631
Noninterest expense $25,736 $22,425
Net income (loss) $7,298 $9,256
Per Share
Net income (loss) (basic) $0.41 $0.53
Net income (loss) (diluted) $0.41 $0.53
Averages
Total assets $3,131,122 $2,969,197
Interest-earning assets $2,836,045 $2,702,487
Loans $2,241,893 $2,102,281
Securities $572,412 $572,124
Deposits $2,487,356 $2,382,881
Core deposits $1,960,136 $1,919,330
Shareholders' equity $335,510 $301,499
Financial Ratios
Return on average assets 0.92% 1.24%
Return on average equity 8.63% 12.18%
Return on average tangible equity 13.08% 15.81%
Average equity to average assets 10.72% 10.15%
Net interest margin 4.29% 4.40%
Efficiency ratio (tax equivalent) 62.83% 59.23%
Period end
Total assets $3,178,713 $3,122,744
Loans $2,282,728 $2,212,751
Allowance for loan and lease losses $26,599 $25,380
Securities $572,973 $577,712
Deposits $2,498,061 $2,477,794
Core deposits $1,996,393 $1,963,269
Shareholders' equity $341,731 $329,969
Book value per share $19.03 $18.45
Tangible book value per share $13.29 $12.79
Nonperforming assets
Nonaccrual loans $14,005 $9,983
Restructured loans 456 257
Other personal property owned - -
Other real estate owned 181 181
Total nonperforming assets $14,642 $10,421
Nonperforming loans to period-end loans 0.63% 0.46%
Nonperforming assets to period-end assets 0.46% 0.33%
Allowance for loan and lease losses to
period-end loans 1.17% 1.15%
Allowance for loan and lease losses to
nonperforming loans 183.94% 247.85%
Allowance for loan and lease losses to
nonperforming assets 181.66% 243.55%
Net loan charges-offs $188 $382
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
Columbia Banking System, Inc.
(Unaudited) Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands except per share) 2008 2007 2008 2007
Interest Income
Loans $35,590 $42,353 $114,227 $112,607
Taxable securities 4,615 4,625 14,490 14,067
Tax-exempt securities 1,997 2,005 5,997 5,925
Federal funds sold and deposits in
banks 135 395 379 1,180
Total interest income 42,337 49,378 135,093 133,779
Interest Expense
Deposits 10,148 16,841 36,444 42,617
Federal Home Loan Bank advances 1,887 2,454 6,464 8,117
Long-term obligations 423 584 1,339 1,604
Other borrowings 286 639 652 2,183
Total interest expense 12,744 20,518 44,899 54,521
Net Interest Income 29,593 28,860 90,194 79,258
Provision for loan and lease losses 10,500 1,231 27,926 2,198
Net interest income after provision
for loan and lease losses 19,093 27,629 62,268 77,060
Noninterest Income
Service charges and other fees 3,823 3,561 11,129 9,813
Merchant services fees 2,081 2,251 6,159 6,344
Redemption of Visa and MasterCard
shares - - 3,028 -
Gain on sale of investment
securities, net - - 882 -
Loss on impairment of equity
securities (18,517) - (18,517) -
Bank owned life insurance ("BOLI") 533 502 1,587 1,379
Other 1,134 1,317 4,248 3,013
Total noninterest income (10,946) 7,631 8,516 20,549
Noninterest Expense
Compensation and employee benefits 12,173 12,159 37,917 34,365
Occupancy 3,248 3,241 9,706 9,023
Merchant processing 961 880 2,731 2,587
Advertising and promotion 579 575 1,797 1,779
Data processing 909 743 2,507 1,863
Legal and professional fees 765 695 1,479 2,205
Taxes, licenses and fees 720 773 2,267 2,089
Net loss (gain) on sale of other
real estate owned 4 - (19) -
Other 4,032 3,359 11,927 9,182
Total noninterest expense 23,391 22,425 70,312 63,093
Income (loss) before income taxes (15,244) 12,835 472 34,516
Provision (benefit) for income taxes (6,485) 3,579 (3,682) 9,433
Net Income (Loss) $(8,759) $9,256 $4,154 $25,083
Net income (loss) per common share
Basic $(0.49) $0.53 $0.23 $1.52
Diluted $(0.49) $0.53 $0.23 $1.51
Dividends paid per common share $0.17 $0.17 $0.51 $0.49
Weighted average number of common
shares outstanding 17,948 17,339 17,898 16,472
Weighted average number of diluted
common shares outstanding 17,985 17,533 17,994 16,636
CONSOLIDATED CONDENSED BALANCE SHEETS
Columbia Banking System, Inc.
(Unaudited) September 30, December 31,
(in thousands) 2008 2007
ASSETS
Cash and due from banks $81,555 $82,735
Interest-earning deposits with banks 21,849 11,240
Total cash and cash equivalents 103,404 93,975
Securities available for sale at fair value
(amortized cost of $535,620 and $558,685,
respectively) 536,277 561,366
Federal Home Loan Bank stock at cost 14,785 11,607
Loans held for sale 2,890 4,482
Loans, net of deferred loan fees of
($3,852) and ($3,931), respectively 2,216,133 2,282,728
Less: allowance for loan and lease losses 35,814 26,599
Loans, net 2,180,319 2,256,129
Interest receivable 12,980 14,622
Premises and equipment, net 61,153 56,122
Other real estate owned 1,288 181
Goodwill 95,519 96,011
Core deposit intangible, net 6,179 7,050
Other assets 90,186 77,168
Total Assets $3,104,980 $3,178,713
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing $498,815 $468,237
Interest-bearing 1,857,006 2,029,824
Total deposits 2,355,821 2,498,061
Short-term borrowings:
Federal Home Loan Bank advances 301,000 257,670
Securities sold under agreements to
repurchase 25,000 -
Other borrowings 20,097 5,061
Total short-term borrowings 346,097 262,731
Long-term subordinated debt 25,582 25,519
Other liabilities 41,045 50,671
Total liabilities 2,768,545 2,836,982
Commitments and contingent liabilities
Shareholders' equity
Preferred stock (no par value) - -
Authorized, 2 million shares; none
outstanding
September 30, December 31,
2008 2007
Common Stock (no par value)
Authorized shares 63,034 63,034
Issued and outstanding 18,147 17,953 229,680 226,550
Retained earnings 102,965 110,169
Accumulated other comprehensive
income 3,790 5,012
Total shareholders' equity 336,435 341,731
Total Liabilities and Shareholders'
Equity $3,104,980 $3,178,713
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, both of Columbia Banking System, Inc.
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