Headquartered in Columbia, Maryland,The Columbia Bank is the largest community bank in Howard County, one of the wealthiest coun-ties in the United States.
In less than ten years, the Bank has risen to third in market share in its home market, Howard County, and is working hard to close the gap with the two market leaders, Allied Irish (First National Bank of Maryland) and NationsBank.
The Bank's continued commitment is to expand by introducing its unique
and successful style of banking to other communities of the Baltimore-Washington
Corridor.
| HOWARD COUNTY
Columbia Town Center Columbia Town Center Residential MortgageEllicott City Harmony Hall Harper's Choice Long Gate Oakland Mills River Hill Vantage House Wilde Lake BALTIMORE CITY
BALTIMORE COUNTY
Mortgage Lending OfficeMONTGOMERY COUNTY Olney Residential Mortgage Lending Office |
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During 1997, we successfully completed several major growth initiatives without compro-mising our ability to deliver consistent increases in profitability. These initiatives included opening three new full-service branches and two residen-tial mortgage lending offices, while at the same time continuing to invest heavily in our back-office infrastructure. Our underlying business strategy has remained constant since our found-ing: to provide comprehensive and competitive banking services in a convenient community banking format, with emphasis on a high level of customer service.
At December 31, 1997 total assets were $373.5 million, representing
a 17.7 percent annual increase. This growth was driven by a 13.5 per- cent
annual increase in loans outstanding, inclu-sive of loans held for sale,
and a 23.1 percent increase in deposits.
Record Profitability
Core operating earnings continued to be strong. Net income of $4.2 million was up 11.1 percent over 1996, reaching a record level for the sixth consecutive year.
Return on assets and return on equity were 1.2 percent and 12.8 percent, respectively, com-paring favorably with peer group ratios.
Our net yield on earning assets has remained strong at 5.9 percent,
well above the 4.8 percent recorded by our peer institutions. n Our efficiency
ratio (noninterest expense as a percentage of operating income) for 1997
of 66.5 percent was only slightly higher than our peer group ratio in spite
of the fact that we continued to invest heavily in infrastructure and expansion.
Strong Asset Quality
Net loan losses to average loans equaled .13 percent, consistent with the strong overall quality of our loan portfolio.
Nonperforming assets and past-due loans to total assets increased slightly to 1.41 percent, but this increase continued to reflect primarily isolat-ed problems encountered with two loan relation-ships, each secured by residential real estate. Such increases in nonperforming assets occur from time-to-time in the normal course of our resi-dential development and construction lending business.
Diluted earnings per share were $1.82, as com-pared to $1.66 for 1996.
Market capitalization increased significantly to $74.8 million at December 31, 1997.
In December, 1997 we increased our quarterly common stock dividend from
$.12 to $.14 per share, which represents a compound annual growth rate
of 47 percent since we began paying dividends in 1994, while maintaining
a prudent dividend pay-out ratio of 24.8%.
*All publicly traded banks in Maryland, Pennsylvania,Virginia and the District of Columbia with total assets less than $1 billion.
Source:The Wadley-Donovan Group Ltd., Claritas Inc., US Bureau of Census.
We understand this banking environment and have created our organizational structure with the flexibility to make informed, rapid deci-sionsÉ and to deliver responsive, courteous ser-vice to our customers. Unlike many of our larger competitors, we are not hampered by rigid organizational structures frequently dependent upon out-of-state decision makers. As banking industry consolidation continues in Maryland, it is evident that our community banking franchise has increasing long-term viability and value based upon this local competitive advantage.
We are aided by the strong growth of our home market which continues
to provide us new expansion opportunities. Our success can be measured
by our increasing market share which places us well ahead of such major
regional banks as First Union and Crestar.
New Office Expansion
Our Long Gate Center Branch in Ellicott City, Wilde Lake Village Center Branch in Columbia, and River Hill Village Center Branch in Clarksville opened in 1997.We now have a total of nine full-service branches, plus four limited-service retirement community branches.
In July we opened a new Towson-area full-ser-vice Residential Mortgage
Lending center to ser-vice consumers in Baltimore City and Baltimore and
Harford Counties. In August we added another such center in Olney, focused
on Montgomery and Prince George's Counties.
Technological Enhancements
Completing a major data processing and sys-tems upgrade begun in 1996, we have installed fully automated work stations with state-of-the-art terminals for all branch personnel.
PC based banking was introduced in 1997. This innovation has received a strong endorse-ment from customers who recognize that our product offerings compare very favorably with those of our much larger competitors.
The same management team that helped form Columbia Bancorp a decade ago is still with the Company. Members of our management team are leaders in our community, serving on a wide variety of boards and in other positions. During the past year, our Chairman was named Howard County "Business Person of the Year," our President received honors as "Entrepreneur of the Year" for Financial Services in a major regional competition, and our Bank was cited as "Business of the Year" by the Maryland Private Industry Council.These awards are indicative of our approach to doing business.
We continue to see substantial opportunities within our marketplace. As the largest communi-ty bank headquartered in Howard County, at the heart of the Baltimore-Washington Corridor, we are well positioned to continue gaining market share as the banking industry consolida-tion in Maryland disrupts still more customer relationships.
Investors viewed our progress favorably during 1997, as Columbia Bancorp enjoyed a healthy increase in market capitalization.Yet, as we view our prospects for the future and valuation levels applicable to our peers, we believe that there is still considerable growth potential.We will con-tinue to build shareholder value by striving for an optimal balance between rapid growth and enhanced profitability.
| Herschel L. Langenthal
Vice Chairman |
James R. Moxley, Jr.
Chairman |
John M. Bond, Jr.
President and Chief Executive Officer |
