TACOMA, Wash., Jan. 29 /PRNewswire-FirstCall/ -- Columbia Banking System,
Inc. (Nasdaq: COLB) today announced net income of $1.8 million for the quarter
ended December 31, 2008, compared to $7.3 million for the same quarter of
2007. On a diluted per common share basis, net income for the quarter was
$0.07, a decline from $0.41 in 2007. These results reflect a provision for
loan losses of $13.3 million and an additional $1 million impairment charge
related to the continuing decline of an investment in preferred stock issued
by the Federal Home Loan Mortgage Corporation ("Freddie Mac") and the Federal
National Mortgage Association ("Fannie Mae").
For the year ended December 31, 2008, net income was $6.0 million compared
to $32.4 million for 2007. On a diluted per common share basis, earnings for
the year were $0.31 a decrease from $1.91 in the prior year. The lower
earnings for the year resulted from a provision for loan losses of $41.2
million, primarily due to our portfolio of real estate related construction
loans resulting from the rapid deterioration of the Pacific Northwest economic
environment and a $19.5 million impairment charge related to the decline in
the fair value of the investment in Freddie Mac and Fannie Mae preferred
stock. The remaining book value of this preferred stock is less than
$500,000.
"We achieved a profitable fourth quarter and full year 2008 during a year
of unprecedented economic challenges," said Melanie Dressel, President and
Chief Executive Officer. "Our focus on sound, fundamental banking, expense
control and our diversified loan portfolio has resulted in profitable core
operations. As shown in the table below, our core earnings for the fourth
quarter 2008 were $2.2 million, compared to $8.5 million for the fourth
quarter 2007, and were $14.8 million for the year 2008 compared to $33.5
million for the year 2007. Despite the pressure of dramatic interest rate
cuts during the quarter, our strong core deposit base has allowed us to
maintain our stable net interest margin. For the fourth quarter 2008, our net
interest margin increased to 4.39% from 4.29% a year ago, and 4.34% for the
third quarter 2008."
Ms. Dressel said, "We have mitigated risk by continuing our focus on a
diversified loan portfolio, avoiding concentration of risk in any one segment.
This diversification is a strength for us, with 36% of our total portfolio in
commercial business loans, 13% in real estate construction related loans, and
approximately 9% in the for-sale housing segment. We remain concerned about
the general decline in the economy with a resulting negative impact to our
credit quality. Nonperforming assets to total assets ended the year at 3.54%.
Until the economy stabilizes, we anticipate our annual provision for loan
losses and net charge-offs to be elevated, similar to the levels we recorded
in 2008."
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,
except per share data) Three months ended Twelve months ended
December 31, December 31,
2008 2007 2008 2007
Net Income $1,814 $7,298 $5,968 $32,381
Add: (amounts shown
net of tax)
Preferred stock
impairment write-down $660 $12,594
Accrual of Visa
litigation expense $1,155 $1,155
Deduct: (amounts shown
net of tax)
Gain on sale of
investment securities (545)
Redemption of Visa and
MasterCard shares (1,952)
Reversal of Visa
litigation expense $(259) $(832)
Insurance proceeds
received on death of
former officer (395)
Core Earnings $2,215 $8,453 $14,838 $33,536
Earnings per Diluted
Share:
GAAP earnings $0.07 $0.41 $0.31 $1.91
Core earnings $0.12 $0.47 $0.82 $1.98
The amounts contained in the above table have been tax affected to
illustrate their impact on net income.
Ms. Dressel continued, "On November 21, 2008, we issued approximately $77
million in preferred stock. Because of our financial strength, we were one of
the first regional banks selected to participate in the U.S. Treasury's
Capital Purchase Program. This additional equity bolstered our already strong
capital levels, and further affirms both our financial strength and our
successful business model. Our total risk-based capital ratio was 14.25% at
December at 31, 2008, enhancing our ability to lend and increasing our
flexibility to pursue strategic opportunities which may arise. Our liquidity
ratio remains strong as well at 34%, which translates into over $1 billion of
available funding for the general operation of our bank and to meet the loan
and deposit needs of our customers."
Revenue (net interest income plus noninterest income) was $35.7 million
for the fourth quarter of 2008, down 3% from $36.8 million one year ago.
Revenue for 2008 totaled $134.4 million, down 2% from $136.6 million for the
year 2006. Despite the deep cuts of 200 basis points in interest rates during
the quarter, the efficiency ratio improved to 57.62% and 59.88% for the fourth
quarter and year to date 2008 as compared to 62.83% and 61.33% for the same
periods in 2007.
Return on average assets and return on average equity for the quarter was
0.24% and 1.60%, respectively, compared to 0.92% and 8.63%, respectively, for
the same period in 2007. Return on average assets and return on average equity
for the year were 0.19% and 1.59%, respectively, compared with 1.14% and
11.19% for 2007.
Results for the full year 2008 reflect the financial consolidation of
Mountain Bank Holding Company and Town Center Bancorp, which were both
acquired on July 23, 2007; accordingly, full year 2008 financial information
includes a full year of the results of the two organizations. Additionally,
earnings per diluted common share for the year 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.
At December 31, 2008, Columbia's total assets were $3.10 billion compared
to $3.18 billion at December 31, 2007. Total loans were $2.23 billion at
December 31, 2008, down 2% from December 31, 2007, and total securities
decreased $32.4 million to $540.5 million at December 31, 2008, a decrease of
6% from the prior year. Total deposits decreased 5% from December 31, 2007,
ending at $2.38 billion at December 31, 2008. Core deposits, defined as
demand, savings, money market accounts and certificates of deposit under
$100,000, totaled $1.94 billion at year-end 2008, comprising 81.5% of total
deposits. Ms. Dressel commented, "We are actively managing our loan and
deposit portfolios, which have declined as we reposition the loan portfolio to
further manage risk and maintain diligence around our deposit pricing."
Operating Results
Quarter and Year-Ended December 31, 2008
Net Interest Income
Net interest income for the fourth quarter of 2008 was $29.3 million, a
decrease of 1%, relatively unchanged from $29.6 million for the same quarter
in 2007, primarily due to an increase in earning assets from the prior year.
Columbia's net interest margin increased to 4.39% in the fourth quarter of
2008 from 4.29% for the same quarter last year. On a linked 2008 quarterly
basis, the net interest margin was 4.38% for the first quarter, 4.39% for the
second quarter, and 4.34% for the third quarter.
Average interest-earning assets were $2.77 billion during the quarter, a
decrease of 2% compared with $2.84 billion during the same quarter of 2007.
The yield on average interest-earning assets decreased 129 basis points (a
basis point equals 1/100 of 1%) to 5.92% during the quarter compared with
7.21% during the same quarter of 2007. During the same period, average
interest-bearing liabilities decreased to $2.19 billion, or 4%, from $2.29
billion in 2007. The cost of average interest-bearing liabilities decreased
169 basis points to 1.93% during the quarter, from 3.62% in the same quarter
of 2007.
For the twelve months ended December 31, 2008, net interest income
increased to $119.5 million compared to $108.8 million in 2007. During 2008,
the Company's net interest margin increased to 4.38% from 4.35% for 2007.
Total revenue for the year was $134.4 million, a decrease of 2% from $136.6
million for 2007. Average interest-earning assets grew 10% to $2.85 billion
during 2008, compared with $2.60 billion during 2007. The yield on average
interest-earning assets decreased 92 basis points to 6.33% during 2008, from
7.25% in 2007. In comparison, average interest-bearing liabilities grew to
$2.28 billion compared with $2.08 billion for 2007. The cost of average
interest-bearing liabilities decreased 119 basis points to 2.44% during 2008
from 3.63% in 2007.
Noninterest Income
Noninterest income for the quarter was $6.3 million, a decrease of
$865,000, or 12% from the same quarter in 2007. The decrease is primarily due
to the $1 million impairment charge for the quarter on Fannie Mae and Freddie
Mac investment securities. Service charges and other fees were $3.7 million
for the quarter, unchanged from one year ago.
For the year, noninterest income was $14.9 million, a decrease of $13
million from $27.7 million for 2007, reflective of the $19.5 million
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 million. For the full year 2008, service
charges and other fees were $14.8 million, an increase of 10% from $13.5
million for 2007, reflecting a change in our deposit account fee structure in
conjunction with an increase in the number of deposit accounts. Other income
for the year increased $1.6 million, or 40%, due in part to insurance proceeds
received for the death of a former officer in the amount of $612,000.
Noninterest Expense
Total noninterest expense for the fourth quarter was $21.8 million, a
decrease of 15% from $25.7 million for the same quarter in 2007. This decrease
is primarily due to increased legal and professional fees in the fourth
quarter of 2007 related to the Visa litigation, and a recovery in the fourth
quarter of 2008 of the same expense, as well as traditional year-end
adjustments to accruals. In response to current economic and market
conditions, Columbia's executive management team has elected to forgo
increases in base salary for 2009.
Noninterest expense for the year was $92.1 million, an increase of 4% from
$88.8 million from the prior year. The increase was due to compensation,
employee benefits and occupancy costs related to the third quarter 2007
acquisitions. Regulatory premiums were $1.6 million higher for the year 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 December 31, 2008, non-performing assets were $109.6 million,
compared to $78.2 million at September 30, 2008, and $14.6 million at December
31, 2007. Residential construction loans continue to be the primary driver of
nonperforming assets, representing $69.7 million, or 64%, of nonperforming
assets. Commercial real estate loans account for another $30.3 million, or
28% of non-performing loans. These commercial real estate non-performing
assets are primarily centered in condominium development loans of
approximately $9.1 million and retail development of approximately $15.0
million. The increase in both of these categories reflects the continued
weakness in the for sale housing industry. In addition, the more recent
decline in retail sales and consumer spending has negatively affected retail
leasing activity in a few of our more recently completed retail development
projects.
For the quarter ended December 31, 2008, net loan charge-offs were
approximately $6.3 million compared to $16.4 million for the linked quarter
and $188,000 for the same period a year ago. Net charge offs continue to be
associated with loans principally in our for sale housing portfolio. Past due
loans were $10.4 million, or 0.46% of total loans, at December 31, 2008
compared to $13.1 million, or 0.59% of total loans, at September 30, 2008, and
$11.6 million, or 0.51% of total loans, at December 31, 2007.
Ms. Dressel said, "We remain aggressive in managing our construction loan
portfolio and continue to be successful at reducing our overall exposure in
both the 1-4 family residential construction segment as well as in the
commercial real estate construction segment. For the year, total construction
loans declined 33.1% due to payoffs and conversions to permanent loan status.
Our 1-4 family residential construction loans, where most of our challenges
are centered, now represent less than 10% of our entire loan portfolio. While
we believe both of these segments will remain challenged during 2009, we are
confident in our risk management strategies we have in place."
Organizational Update
Ms. Dressel noted, "In 2008, we continued our commitment to improving
efficiencies while maintaining our core value of customer service. During the
second quarter, two Mt. Rainier branch locations in Federal Way and Auburn,
Washington, were consolidated into two Columbia Bank branches due to their
proximity. In the third quarter, our 30th Avenue and Commerce branches in
Longview, Washington, also consolidated and moved to a more visible and
accessible new branch location. In December, 2008, we opened Bank of
Astoria's long-awaited, full service branch in downtown Tillamook, Oregon. We
have also begun construction of our long-planned Renton, Washington branch,
the only location scheduled to open in 2009. At the end of 2008, our strong
retail system included 53 branches in 10 counties in Washington and Oregon.
Ms. Dressel continued, "Our long standing strategy continues to focus on
improving efficiencies without jeopardizing the strength of our customer
relationships, which are the foundation of our bank. We are confident that
our healthy core deposits, the diversity of our loan and deposit portfolios
and our relationships with our customers, employees and communities will
result in long-term benefits for our shareholders."
Conference Call
Columbia Banking System management will discuss the company's fourth
quarter and full-year 2008 results on a conference call scheduled for
Thursday, January 29, 2009 at 1:00 p.m. PST. Interested parties may listen to
this discussion by calling 1-888-318-7969; Conference ID code #80748714. A
conference call replay will be available from approximately 4:00 p.m. PST on
January 29th through midnight PDT on Thursday, February 5, 2009. The
conference call replay can be accessed by dialing 1-800-642-1687 and entering
Conference ID code 80748714.
Annual Meeting of Shareholders
Columbia Banking System's Annual Meeting of Shareholders will be held at
1:00 PDT on April 22, 2008, at the Greater Tacoma Convention & Trade Center;
1500 Broadway, Tacoma, Washington.
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 53 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 and Tillamook 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.
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 Twelve Months Ended
(in thousands except December 31, December 31,
per share) 2008 2007 2008 2007
Earnings
Net interest income $29,319 $29,562 $119,513 $108,820
Provision for loan
and lease losses $13,250 $1,407 $41,176 $3,605
Noninterest income $6,334 $7,199 $14,850 $27,748
Noninterest expense $21,813 $25,736 $92,125 $88,829
Net income $1,814 $7,298 $5,968 $32,381
Per Common Share
Net income (basic) $0.07 $0.41 $0.31 $1.93
Net income (diluted) $0.07 $0.41 $0.31 $1.91
Averages
Total assets $3,061,867 $3,131,122 $3,134,054 $2,837,162
Interest-earning
assets $2,767,854 $2,836,045 $2,851,555 $2,599,379
Loans $2,214,918 $2,241,893 $2,264,486 $1,990,622
Securities $535,763 $572,412 $565,299 $581,122
Deposits $2,297,422 $2,487,356 $2,382,484 $2,242,134
Core deposits $1,865,402 $1,960,136 $1,911,897 $1,887,391
Interest-bearing
deposits $1,837,166 $2,023,255 $1,921,737 $1,803,660
Interest-bearing
liabilities $2,193,437 $2,289,566 $2,277,422 $2,075,564
Noninterest-bearing
deposits $460,257 $464,100 $460,747 $438,474
Shareholders'
equity $368,184 $335,510 $354,387 $289,297
Financial Ratios
Return on average
assets 0.24% 0.92% 0.19% 1.14%
Return on average
common equity 1.60% 8.63% 1.59% 11.19%
Return on average
tangible common
equity(1) 2.75% 13.08% 2.72% 14.53%
Average equity to
average assets 12.02% 10.72% 11.31% 10.20%
Net interest margin 4.39% 4.29% 4.38% 4.35%
Efficiency ratio
(tax equivalent)(2) 57.62% 62.83% 59.88% 61.33%
December 31,
Period end 2008 2007
Total assets $3,097,079 $3,178,713
Loans $2,232,332 $2,282,728
Allowance for loan
and lease losses $42,747 $26,599
Securities $540,525 $572,973
Deposits $2,382,151 $2,498,061
Core deposits $1,941,047 $1,996,393
Shareholders'
equity $415,385 $341,731
Book value per
common share $18.82 $19.03
Tangible book value
per common share $13.23 $13.29
Nonperforming assets
Nonaccrual loans $106,163 $14,005
Restructured loans 587 456
Other real estate
owned 2,874 181
Total
nonperforming
assets $109,624 $14,642
Nonperforming loans
to period-end loans 4.78% 0.63%
Nonperforming assets
to period-end
assets 3.54% 0.46%
Allowance for loan
and lease losses to
period-end loans 1.91% 1.17%
Allowance for loan
and lease losses to
nonperforming loans 40.04% 183.94%
Allowance for loan
and lease losses to
nonperforming
assets 38.99% 181.66%
Net loan charges-
offs $25,028 (3) $380 (4)
(1) Annualized net income, excluding core deposit intangible asset
amortization and preferred dividends 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 twelve months ended December 31, 2008.
(4) For the twelve months ended December 31, 2007.
FINANCIAL STATISTICS
Columbia Banking System, Inc.
Unaudited December 31,
(in thousands) 2008 2007
Loan Portfolio Composition
Commercial business $810,922 36.3% $762,365 33.4%
Real Estate:
One-to-four family residential 57,237 2.6% 60,991 2.7%
Five or more family residential
and commercial 862,595 38.7% 852,139 37.3%
Total Real Estate 919,832 41.3% 913,130 40.0%
Real Estate Construction:
One-to-four family residential 209,682 9.4% 269,115 11.8%
Five or more family residential
and commercial 81,176 3.6% 165,490 7.2%
Total Real Estate Construction 290,858 13.0% 434,605 19.0%
Consumer 214,753 9.6% 176,559 7.8%
Subtotal loans 2,236,365 100.2% 2,286,659 100.2%
Less: Deferred loan fees (4,033) -0.2% (3,931) -0.2%
Total loans $2,232,332 100.0% $2,282,728 100.0%
Loans held for sale $1,964 $4,482
December 31,
2008 2007
Deposit Composition
Core deposits:
Demand and other non-interest
bearing $466,078 19.6% $468,237 18.7%
Interest bearing demand 519,124 21.8% 478,596 19.2%
Money market 530,065 22.3% 609,502 24.4%
Savings 122,076 5.1% 115,324 4.6%
Certificates of deposit less than
$100,000 303,704 12.7% 324,734 13.0%
Total core deposits 1,941,047 81.5% 1,996,393 79.9%
Certificates of deposit greater
than $100,000 338,971 14.2% 428,885 17.2%
Wholesale certificates of deposit
(CDARS(R)) 39,903 1.7% 762 0.0%
Wholesale certificates of deposit 62,230 2.6% 72,021 2.9%
Total deposits $2,382,151 100.0% $2,498,061 100.0%
QUARTERLY FINANCIAL STATISTICS
Columbia Banking System, Inc.
Unaudited
(in thousands Three Months Ended
except per Dec 31 Sept 30 Jun 30 Mar 31 Dec 31
share) 2008 2008 2008 2008 2007
Earnings
Net
interest
income $29,319 $29,593 $30,274 $30,327 $29,562
Provision
for loan
and lease
losses $13,250 $10,500 $15,350 $2,076 $1,407
Noninterest
income $6,334 $(10,946) $9,305 $10,157 $7,199
Noninterest
expense $21,813 $23,391 $23,367 $23,554 $25,736
Net income
(loss) $1,814 $(8,759) $1,936 $10,977 $7,298
Per Common
Share
Net income
(loss)
(basic) $0.07 $(0.49) $0.11 $0.61 $0.41
Net income
(loss)
(diluted) $0.07 $(0.49) $0.11 $0.61 $0.41
Averages
Total
assets $3,061,867 $3,106,556 $3,182,877 $3,186,013 $3,131,122
Interest-
earning
assets $2,767,854 $2,830,894 $2,902,449 $2,906,172 $2,836,045
Loans $2,214,918 $2,241,574 $2,297,661 $2,304,588 $2,241,893
Securities $535,763 $558,990 $584,780 $582,056 $572,412
Deposits $2,297,422 $2,365,222 $2,413,225 $2,455,190 $2,487,356
Core
deposits $1,865,402 $1,925,780 $1,923,973 $1,932,813 $1,960,136
Interest-
bearing
deposits $1,837,166 $1,896,767 $1,950,123 $2,004,095 $2,023,255
Interest-
bearing
liabilities $2,193,437 $2,259,655 $2,319,556 $2,338,159 $2,289,566
Noninterest-
bearing
deposits $460,257 $468,455 $463,102 $451,095 $464,100
Shareholders'
equity $368,184 $344,158 $354,895 $350,271 $335,510
Financial
Ratios
Return on
average
assets 0.24% -1.12% 0.24% 1.39% 0.92%
Return on
average
common
equity 1.60% -10.10% 2.19% 12.60% 8.63%
Return on
average
tangible
common
equity 2.75% -13.89% 3.56% 18.33% 13.08%
Average
equity to
average
assets 12.02% 11.08% 11.15% 10.99% 10.72%
Net interest
margin 4.39% 4.34% 4.39% 4.38% 4.29%
Efficiency
ratio (tax
equivalent) 57.62% 60.34% 59.31% 62.36% 62.83%
Period end
Total
assets $3,097,079 $3,104,980 $3,169,607 $3,246,586 $3,178,713
Loans $2,232,332 $2,216,133 $2,275,719 $2,300,465 $2,282,728
Allowance
for loan
and lease
losses $42,747 $35,814 $41,724 $27,914 $26,599
Securities $540,525 $551,062 $549,755 $598,470 $572,973
Deposits $2,382,151 $2,355,821 $2,398,924 $2,526,514 $2,498,061
Core
deposits $1,941,047 $1,944,779 $1,933,256 $1,997,975 $1,996,393
Shareholders'
equity $415,385 $336,435 $344,270 $351,667 $341,731
Book value
per common
share $18.82 $18.54 $19.01 $19.45 $19.03
Tangible book
value per
common share $13.23 $12.94 $13.35 $13.77 $13.29
Nonperforming
assets
Nonaccrual
loans $106,163 $76,164 $71,730 $14,368 $14,005
Restructured
loans 587 746 540 468 456
Other personal
property owned - - - 187 -
Other real
estate
owned 2,874 1,288 - - 181
Total
nonperforming
assets $109,624 $78,198 $72,270 $15,023 $14,642
Nonperforming
loans to
period-end
loans 4.78% 3.47% 3.18% 0.64% 0.63%
Nonperforming
assets to
period-end
assets 3.54% 2.52% 2.28% 0.46% 0.46%
Allowance for
loan and lease
losses to
period-end
loans 1.91% 1.62% 1.83% 1.21% 1.17%
Allowance for
loan and
lease losses
to nonperforming
loans 40.04% 46.57% 57.73% 188.15% 183.94%
Allowance for
loan and
lease losses
to nonperforming
assets 38.99% 45.80% 57.73% 185.81% 181.66%
Net loan
charges-offs $6,317 $16,410 $1,540 $761 $188
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
Columbia Banking System, Inc. Three Months Ended Twelve Months Ended
(Unaudited) December 31, December 31,
(in thousands except per share) 2008 2007 2008 2007
Interest Income
Loans $33,603 $43,646 $147,830 $156,253
Taxable securities 4,362 4,547 18,852 18,614
Tax-exempt securities 1,979 1,998 7,976 7,923
Federal funds sold and deposits in
banks 23 247 402 1,427
Total interest income 39,967 50,438 175,060 184,217
Interest Expense
Deposits 8,863 17,313 45,307 59,930
Federal Home Loan Bank and Federal
Reserve Bank advances 1,109 2,948 7,573 11,065
Long-term obligations 461 573 1,800 2,177
Other borrowings 215 42 867 2,225
Total interest expense 10,648 20,876 55,547 75,397
Net Interest Income 29,319 29,562 119,513 108,820
Provision for loan and lease losses 13,250 1,407 41,176 3,605
Net interest income after provision
for loan and lease losses 16,069 28,155 78,337 105,215
Noninterest Income
Service charges and other fees 3,684 3,685 14,813 13,498
Merchant services fees 1,881 2,029 8,040 8,373
Redemption of Visa and Mastercard
shares - - 3,028 -
Gain (loss) on sale of investment
securities, net (36) - 846 -
Impairment charge on investment
securities (1,024) - (19,541) -
Bank owned life insurance ("BOLI") 488 507 2,075 1,886
Other 1,341 978 5,589 3,991
Total noninterest income 6,334 7,199 14,850 27,748
Noninterest Expense
Compensation and employee benefits 11,398 12,338 49,315 46,703
Occupancy 3,132 3,299 12,838 12,322
Merchant processing 827 883 3,558 3,470
Advertising and promotion 527 612 2,324 2,391
Data processing 979 701 3,486 2,564
Legal and professional fees 490 2,707 1,969 4,912
Taxes, licenses and fees 650 793 2,917 2,882
Regulatory premiums 616 334 2,141 507
Net (gain) loss on sale of other
real estate owned (30) 5 (49) 5
Other 3,224 4,064 13,626 13,073
Total noninterest expense 21,813 25,736 92,125 88,829
Income before income taxes 590 9,618 1,062 44,134
Provision (benefit) for income taxes (1,224) 2,320 (4,906) 11,753
Net Income $1,814 $7,298 $5,968 $32,381
Net Income Applicable to Common
Shareholders (1) $1,344 $7,298 $5,498 $32,381
Earnings per common share
Basic $0.07 $0.41 $0.31 $1.93
Diluted $0.07 $0.41 $0.31 $1.91
Dividends paid per common share $0.07 $0.17 $0.58 $0.66
Weighted average number of common
shares outstanding 17,959 17,783 17,914 16,802
Weighted average number of diluted
common shares outstanding 17,972 17,982 18,010 16,972
(1) For 2008, QTD and YTD net income less accumulated preferred dividends
($427) and amortization of preferred stock discount ($43)
CONSOLIDATED CONDENSED BALANCE SHEETS
Columbia Banking System, Inc.
(Unaudited) December 31,
(in thousands) 2008 2007
ASSETS
Cash and due from banks $84,787 $82,735
Interest-earning deposits with banks 3,943 11,240
Total cash and cash equivalents 88,730 93,975
Securities available for sale at fair value
(amortized cost of $525,110 and $558,685,
respectively) 528,918 561,366
Federal Home Loan Bank stock at cost 11,607 11,607
Loans held for sale 1,964 4,482
Loans, net of deferred loan fees of
($4,033) and ($3,931), respectively 2,232,332 2,282,728
Less: allowance for loan and lease losses 42,747 26,599
Loans, net 2,189,585 2,256,129
Interest receivable 11,646 14,622
Premises and equipment, net 61,139 56,122
Other real estate owned 2,874 181
Goodwill 95,519 96,011
Core deposit intangible, net 5,908 7,050
Other assets 99,189 77,168
Total Assets $3,097,079 $3,178,713
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing $466,078 $468,237
Interest-bearing 1,916,073 2,029,824
Total deposits 2,382,151 2,498,061
Federal Home Loan Bank and Federal
Reserve Bank advances 200,000 257,670
Securities sold under agreements to repurchase 25,000 -
Other borrowings 201 5,061
Long-term subordinated debt 25,603 25,519
Other liabilities 48,739 50,671
Total liabilities 2,681,694 2,836,982
Commitments and contingent liabilities
Shareholders' equity
December 31,
2008 2007
Preferred stock (no par value,
76,898 aggregate liquidation
preference)
Authorized shares 2,000 2,000
Issued and outstanding(1) 77 - 73,743 -
Common Stock (no par value)
Authorized shares 63,033 63,033
Issued and outstanding 18,151 17,953 233,192 226,550
Retained earnings 103,061 110,169
Accumulated other comprehensive
income 5,389 5,012
Total shareholders' equity 415,385 341,731
Total Liabilities and Shareholders'
Equity $3,097,079 $3,178,713
(1) Net EESA of 2008 Capital Purchase Program proceeds ($76,868) less net
preferred stock discount attributable to common stock warrant ($3,125)
