Columbia Bancorp (CBBO) 10-Q 2005 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2005

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from     to

Commission file number: 0-27938

COLUMBIA BANCORP

(Exact name of registrant as specified in its charter)

	93-1193156
Oregon	(I.R.S. Employer
(State of incorporation)	Identification No.)

401 East Third Street, Suite 200
The Dalles, Oregon 97058
(Address of principal executive offices)

(541) 298-6649
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YESþ           NOo

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).

YESþ           NOo

At July 28, 2005, there were 8,928,912 shares of common stock of Columbia Bancorp outstanding.

1

COLUMBIA BANCORP

FORM 10-Q

June 30, 2005

Table of Contents

PART I. — FINANCIAL INFORMATION	3
ITEM 1.Financial Statements	3
Consolidated Financial Statements of Columbia Bancorp and Subsidiary	3
CONSOLIDATED BALANCE SHEETS	3
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME	4
CONSOLIDATED STATEMENTS OF CASH FLOWS	5
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY	6
Notes to Consolidated Financial Statements	7
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS	11
OVERVIEW	11
MATERIAL CHANGES IN FINANCIAL CONDITION	13
RESULTS OF OPERATIONS	21
LIQUIDITY AND CAPITAL RESOURCES	24
CRITICAL ACCOUNTING POLICIES	26
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk	27
ITEM 4. Controls and Procedures	27
PART II. — OTHER INFORMATION	27
ITEM 1.Legal Proceedings	27
ITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds	28
ITEM 3.Defaults Upon Senior Securities	28
ITEM 4. Submission of Matters to a Vote of Security Holders	28
ITEM 5.Other Information	28
ITEM 6.Exhibits	28
SIGNATURES	29
EXHIBIT 10.1
EXHIBIT 10.2
EXHIBIT 10.2
EXHIBIT 10.4
EXHIBIT 10.5
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

2

PART I. — FINANCIAL INFORMATION

These consolidated financial statements should be read in conjunction with the financial statements, accompanying notes and other relevant information included in the Company’s report on Form 10-K for the year ended December 31, 2004, and the notes and other textual information included herewith.

ITEM 1. Financial Statements

Consolidated Financial Statements of Columbia Bancorp and Subsidiary

COLUMBIA BANCORP AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	June 30,			December 31,
	2005			2004
ASSETS
Cash and due from banks	$	26,562,308		$	25,527,270
Interest bearing deposits with other banks		12,560,447			12,165,712
Federal funds sold		48,532,714			20,285,817
Total cash and cash equivalents		87,655,469			57,978,799
Investment securities available-for-sale		18,359,469			24,573,394
Investment securities held-to-maturity		17,996,994			17,789,481
Equity securities		609,951			605,594
Restricted equity securities		2,439,100			2,429,200
Total investment securities		39,405,514			45,397,669
Loans held-for-sale		7,479,322			2,517,182
Loans, net of allowance for loan losses and unearned loan fees		608,747,097			571,607,850
Property and equipment, net of accumulated depreciation		15,145,996			15,222,622
Accrued interest receivable		5,416,369			4,107,806
Goodwill		7,389,094			7,389,094
Mortgage servicing asset, net of accumulated amortization and valuation allowance		—			2,162,654
Other assets		7,698,770			8,988,842
Total assets	$	778,937,631		$	715,372,518
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest bearing demand deposits	$	205,377,898		$	172,421,947
Interest bearing demand deposits		245,370,746			211,239,408
Savings accounts		39,448,404			35,926,117
Time certificates		178,692,902			187,356,091
Total deposits		668,889,950			606,943,563
Notes payable		27,915,882			34,889,564
Accrued interest payable and other liabilities		6,170,306			3,538,413
Junior subordinated debentures		4,124,000			4,124,000
Total liabilities		707,100,138			649,495,540
Shareholders’ equity:
Common stock, no par value; 20,000,000 shares authorized, 8,922,360 issued and outstanding (8,839,151 at December 31, 2004)		33,014,096			32,140,776
Retained earnings		38,966,199			33,816,489
Accumulated other comprehensive loss, net of taxes		(142,802	)		(80,287	)
Total shareholders’ equity		71,837,493			65,876,978
Total liabilities and shareholders’ equity	$	778,937,631		$	715,372,518

See accompanying notes.

3

COLUMBIA BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2005		2004			2005			2004
INTEREST INCOME
Interest and fees on loans	$	12,068,683	$	10,045,518		$	23,546,405		$	19,323,932
Interest on investments:
Taxable investment securities		174,428		92,483			351,325			183,799
Nontaxable investment securities		147,344		152,981			300,210			307,641
Other interest income		324,608		61,059			689,609			143,580
Total interest income		12,715,063		10,352,041			24,887,549			19,958,952
INTEREST EXPENSE
Interest on interest bearing deposit and savings accounts		850,810		270,284			1,591,768			560,867
Interest on time deposit accounts		1,438,330		968,605			2,846,017			1,884,256
Other borrowed funds		353,906		315,812			716,628			576,369
Total interest expense		2,643,046		1,554,701			5,154,413			3,021,492
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES		10,072,017		8,797,340			19,733,136			16,937,460
PROVISION FOR LOAN LOSSES		650,000		1,390,000			850,000			2,090,000
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		9,422,017		7,407,340			18,883,136			14,847,460
NON-INTEREST INCOME
Service charges and fees		1,190,673		1,191,731			2,363,489			2,247,305
Mortgage Team revenues, net of expenses		723,347		105,961			1,344,200			156,462
Credit card discounts and fees		116,973		113,499			229,959			218,512
CRB Financial Services Team revenues		156,230		166,037			299,985			301,862
Other non-interest income		796,620		339,470			1,049,669			573,683
Total non-interest income		2,983,843		1,916,698			5,287,302			3,497,824
NON-INTEREST EXPENSE
Salaries and employee benefits		4,044,109		3,107,765			7,731,207			6,308,439
Occupancy expense		762,838		601,984			1,560,162			1,198,293
Credit card processing fees		32,631		31,177			60,947			56,934
Data processing expense		122,613		140,560			222,533			254,719
Other non-interest expenses		2,014,594		1,792,113			3,973,166			3,726,500
Total non-interest expense		6,976,785		5,673,599			13,548,015			11,544,885
INCOME BEFORE PROVISION FOR INCOME TAXES		5,429,075		3,650,439			10,622,423			6,800,399
PROVISION FOR INCOME TAXES		1,987,042		1,335,554			3,867,767			2,468,906
NET INCOME		3,442,033		2,314,885			6,754,656			4,331,493
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES
Unrealized holding gains (losses) arising during the period		116,177		(92,573	)		(63,416	)		(126,264	)
Reclassification adjustment for losses included in net income		901		57,588			901			50,624
Total other comprehensive income (loss), net of taxes		117,078		(34,985	)		(62,515	)		(75,640	)
COMPREHENSIVE INCOME	$	3,559,111	$	2,279,900		$	6,692,141		$	4,255,853
Earnings per share of common stock
Basic	$	0.39	$	0.26		$	0.76		$	0.49
Diluted	$	0.38	$	0.26		$	0.74		$	0.48
Weighted average common shares outstanding		8,905,324		8,787,417			8,886,871			8,778,062
Basic		8,905,324		8,787,417			8,886,871			8,778,062
Diluted		9,134,193		9,005,326			9,111,222			9,028,581

See accompanying notes.

4

COLUMBIA BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended
	June 30,
	2005			2004
CASH FLOWS RELATED TO OPERATING ACTIVITIES
Net income	$	6,754,656		$	4,331,493
Adjustments to reconcile net income to net cash from operating activities:
Loss on sale or write-down of property and equipment		33,551			98,064
Net loss on sale or call of investments		1,421			79,849
Depreciation on property and equipment		819,021			702,625
Amortization of mortgage servicing asset		116,972			1,059,974
Federal Home Loan Bank stock dividend		(9,900	)		(48,700	)
Provision for loan losses		850,000			2,090,000
Increase (decrease) in cash due to changes in assets/liabilities:
Accrued interest receivable		(1,308,563	)		(1,030,259	)
Other assets		(3,515,808	)		(1,239,418	)
Accrued interest payable and other liabilities		2,931,763			6,403,485
NET CASH FROM OPERATING ACTIVITIES		6,673,113			12,447,113
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of available-for-sale securities		100,000			3,000,000
Proceeds from the maturity of available-for-sale securities		8,000,000			5,000,000
Proceeds from the maturity of held-to-maturity securities		1,703,897			938,954
Purchases of held-to-maturity securities		(1,966,167	)		—
Purchases of available-for-sale securities		(1,964,534	)		(8,506,158	)
Net change in loans made to customers		(38,073,700	)		(99,237,790	)
Proceeds from the sale of mortgage servicing asset		1,837,503			—
Proceeds from the sale of restricted equity securities		—			483,100
Proceeds from the sale of other real estate owned		188,896			41,500
Payments made for purchase of property and equipment		(780,389	)		(1,183,254	)
NET CASH FROM INVESTING ACTIVITIES		(30,954,494	)		(99,463,648	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in demand deposit and savings accounts		70,609,577			23,110,353
Net change in from time deposits		(8,663,189	)		28,834,772
Net (decrease) increase in notes payable		(6,973,682	)		21,388,526
Cash paid for dividends and fractional shares		(1,597,458	)		(1,578,740	)
Proceeds from stock options exercised and sales of common stock		582,803			371,834
Repurchase of common stock		—			(226,229	)
NET CASH FROM FINANCING ACTIVITIES		53,958,051			71,900,516
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		29,676,670			(15,199,019	)
CASH AND CASH EQUIVALENTS, beginning of period		57,978,799			53,866,193
CASH AND CASH EQUIVALENTS, end of period	$	87,655,469		$	38,667,174
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid in cash	$	6,531,666		$	2,760,594
Taxes paid in cash	$	4,176,000		$	2,365,000
SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Change in unrealized loss on available-for-sale securities, net of taxes	$	(62,515	)	$	(75,640	)
Cash dividend declared and payable after quarter-end	$	803,012		$	791,225
Transfer of loans to other real estate owned	$	84,453		$	1,394,770

See accompanying notes.

5

COLUMBIA BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

										Accumulated
										Other			Total
				Common			Retained			Comprehensive			Shareholders’
	Shares			Stock			Earnings			Income (Loss)			Equity
BALANCE, December 31, 2003		8,750,582		$	31,520,099		$	26,252,366		$	31,999		$	57,804,464
Stock options exercised		101,069			725,193			—			—		$	725,193
Income tax benefit from stock options exercised		—			121,713			—			—			121,713
Stock repurchase		(12,500	)		(226,229	)		—			—			(226,229	)
Cash dividends paid		—			—			(2,375,043	)		—			(2,375,043	)
Cash dividends declared		—			—			(795,524	)		—			(795,524	)
Net income and comprehensive income		—			—			10,734,690			(112,286	)		10,622,404
	��
BALANCE, December 31, 2004		8,839,151		$	32,140,776		$	33,816,489		$	(80,287	)	$	65,876,978
Stock options exercised		83,209		$	582,803		$	—		$	—		$	582,803
Income tax benefit from stock options exercised		—			290,517			—			—			290,517
Cash dividends paid		—			—			(801,934	)		—			(801,934	)
Cash dividends declared		—			—			(803,012	)		—			(803,012	)
Net income and comprehensive income		—			—			6,754,656			(62,515	)		6,692,141
BALANCE, June 30, 2005		8,922,360		$	33,014,096		$	38,966,199		$	(142,802	)	$	71,837,493

See accompanying notes.

6

COLUMBIA BANCORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	Principles of Consolidation
	The interim consolidated financial statements include the accounts of Columbia Bancorp (“Columbia” or the “Company”), an Oregon corporation and a registered financial holding company, and its wholly-owned subsidiary Columbia River Bank (“CRB”), after elimination of intercompany transactions and balances. CRB is an Oregon state-chartered bank, headquartered in The Dalles. Substantially all activity of Columbia is conducted through its subsidiary bank, CRB.
	The interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The financial information included in this interim report has been prepared by Management. Columbia’s annual report contains audited financial statements. All adjustments, including normal recurring accruals necessary for the fair presentation of results of operations for the interim periods included herein, have been made. The results of operations for the three and six months ended June 30, 2005, are not necessarily indicative of results to be anticipated for the year ending December 31, 2005.
2.	Management’s Estimates and Assumptions
	Various elements of Columbia’s accounting policies are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. In particular, Management has identified certain policies that due to the judgments, estimates and assumptions inherent in those policies are critical to an understanding of the consolidated financial statements. These policies and judgments, estimates and assumptions are described in greater detail in the Notes to the consolidated financial statements included in Columbia’s annual report on Form 10-K, filed March 15, 2005.
	Management believes the judgments, estimates and assumptions used in the preparation of the consolidated financial statements are appropriate given the factual circumstances at the time. However, given the sensitivity of the consolidated financial statements to these critical accounting policies, the use of other judgments, estimates and assumptions could result in material differences in the results of operations or financial conditions.

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3.

Stock Options

Columbia applies Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations in accounting for its stock option plan using the intrinsic value-based method. Accordingly, compensation costs are recognized as the difference between the exercise price of each option and the market price of Columbia’s stock at the date of each grant. Had compensation costs for Columbia’s grants under its stock-based compensation plan been determined consistent with the fair value-based method defined in SFAS No. 123, “Accounting for Stock-Based Compensation,” its net income and earnings per common share would approximate the pro forma amounts for the periods shown below:

FAS 123 Pro Forma Net Income:
(dollars in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004
Net income, as reported	$	3,442		$	2,315		$	6,755		$	4,331
Deduct: Total stock-based employee compensation expense determined under fair value based methods for all awards, net of related tax effects		(5	)		(17	)		(197	)		(48	)
Pro forma net income	$	3,437		$	2,298		$	6,558		$	4,283
Earnings per share:
Basic — as reported	$	0.39		$	0.26		$	0.76		$	0.49
Basic — pro forma	$	0.39		$	0.26		$	0.74		$	0.49
Diluted — as reported	$	0.38		$	0.26		$	0.74		$	0.48
Diluted — pro forma	$	0.38		$	0.26		$	0.72		$	0.47

	The effects of applying SFAS No. 123 in the pro forma disclosure are not indicative of future amounts. Recently, the Financial Accounting Standards Board (FASB) announced the release of SFAS No. 123 (R), “Share-Based Payment.” The effect of this revision will require Columbia to begin recognizing the fair values of stock options granted as compensation cost on the date of grant or over the vesting period. SFAS 123 (R) will take effect beginning January 1, 2006. As permitted by SFAS 123, Columbia currently accounts for share-based payments to employees using the intrinsic value method and, as such, generally recognizes no compensation cost for employee stock options. Accordingly, the adoption of SFAS 123 (R)’s fair value method may have a significant impact on our future results of operations, although it is expected to have no impact on our overall financial position. The actual impact of adoption of SFAS 123 (R) cannot be predicted at this time because it will depend on levels of share-based payments granted in the future. Statement 123 (R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required under current literature. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after adoption.
4.	Loans and Allowance for Loan Losses
	Columbia does not accrue interest on loans for which full payment of principal and interest is not expected, or for which payment of principal or interest has been in default for 90 days or more, unless the loan is well-secured and in the process of collection. Further, Columbia may place on non-accrual status loans that are not contractually past due or that are deemed fully collateralized to promote better oversight and review of loan arrangements. Loans on non-accrual status at June 30, 2005 and December 31, 2004, were $347,145 and $4.20 million, respectively. A single real estate secured loan in the amount of $3.10 million comprised the majority of loans on non-accrual status as of December 31, 2004. Columbia obtained resolution from the guarantors of this loan during the first quarter of 2005, which accounts for the majority of the decrease in non-accrual loans as of June 30, 2005.

8

	At June 30, 2005, Columbia held no assets acquired through loan foreclosure or recovery activities, known as other real estate owned (“OREO”), a decrease from the $100,000 in this asset category as of December 31, 2004. Proceeds for the sale of OREO were $186,896 and $41,500 for the six months ended June 30, 2005 and 2004, respectively. Additionally, at June 30, 2005, Columbia had one loan in the amount of $46,890 that was considered a restructured loan upon which the interest rate or payment schedule had been modified from original terms or restructured to accommodate borrowers’ weakened financial positions. Columbia had not identified any restructured loans as of December 31, 2004.
5.	Mortgage Servicing Asset
	The following table presents an overview of key mortgage servicing asset balances and ratios as of the dates indicated:

Mortgage Servicing:
(dollars in thousands)

	Three Months Ended
	June 30, 2005			December 31, 2004			June 30, 2004
Mortgage servicing asset, net	$	—		$	2,163		$	2,724
Mortgage loans serviced	$	—		$	333,742		$	375,685
Number of mortgage loans serviced		—			2,989			3,245
Mortgage servicing asset multiple		0.00	%		0.65	%		0.73	%

	Management made the strategic decision to discontinue selling mortgage loans with servicing retained, beginning in 2004. Subsequently, during the second quarter of 2005, Columbia sold the mortgage servicing asset (“MSA”). The MSA was an asset representing the estimated net present value of Columbia’s mortgage servicing rights income for mortgage loans originated by Columbia River Bank Mortgage Team (“Mortgage Team”) and subsequently sold to third party investors. The book value of the mortgage servicing asset (“MSA”) on the effective sales date of April 29, 2005, was $2.05 million, which represented approximately $307.14 million of aggregate unpaid principal balance of mortgage loans serviced by Columbia. After adjustments for delinquencies, current month pay-offs and fees, the adjusted sales price was $3.02 million.
	The transfer date of the mortgage servicing asset was May 31, 2005. The sale of the mortgage servicing asset, after consideration for all anticipated expenses, adjustments for mortgage pre-payments and the brokerage fee, resulted in an initial gain $560,588 during the second quarter of 2005. The total amount of gain will not be determined until the mortgage prepayment exposure period has closed on August 30, 2005. The mortgage prepayment exposure represents the speeds in which mortgages prepay, often due to fluctuations with interest rates. Exposure is greatest at the beginning of the time period which began on the sale date and will close on August 30, 2005. At the time of the filing of this report, Management estimates the additional amount of gain will be in a range of $20,000 to $50,000 for the third quarter of 2005.
6.	Segment Information
	Columbia operates two primary segments — the community banking segment and the mortgage banking segment. The community banking segment consists of Columbia’s subsidiary, CRB, which operates 17 bank branches in Oregon and three bank branches in Washington. CRB offers loan, investment, and deposit products to its customers who range from individuals to companies of varying sizes representing agricultural, real estate development and other commercial industries. The mortgage banking segment consists of the Mortgage Team, headquartered in Bend, Oregon, with dedicated loan officers located in 13 of CRB’s Oregon and Washington branches. The Mortgage Team offers a full range of mortgage lending services and products to its clients.

9

Financial information that Columbia’s Management uses to evaluate its reportable segments and the reconciliation to Columbia’s consolidated financial statements are summarized as follows:

Segment Information:
(dollars in thousands)

	Community		Mortgage
	Banking		Banking			Consolidated
Six Months Ended June 30, 2005:
Net interest income before provision for loan losses	$	19,692	$	41		$	19,733
Non-interest income		3,290		1,997			5,287
Depreciation on property and equipment		789		30			819
Mortgage servicing asset amortization		—		117			117
Income (loss) before provision for income taxes		9,824		799			10,623
Total assets		769,272		9,666			778,938
Six Months Ended June 30, 2004:
Net interest income before provision for loan losses	$	16,831	$	106		$	16,937
Non-interest income		2,056		1,442			3,498
Depreciation on property and equipment		665		38			703
Mortgage servicing asset amortization		—		1,060			1,060
Income (loss) before provision for income taxes		7,410		(610	)		6,800
Total assets		659,807		6,982			666,789

7.	Earnings Per Share
	Basic earnings per share excludes dilution and is calculated by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if common shares were issued pursuant to the exercise of options under stock option plans. Weighted average shares outstanding include common shares outstanding and common stock equivalents attributable to outstanding stock options.
	The weighted average number of shares and common share equivalent figures have been retroactively adjusted for all stock dividends or splits.
8.	Recently Issued Accounting Standards
	In December 2004, the FASB issued Statement No. 123(R) “Share-Based Payment.” This statement replaces existing requirements under SFAS No. 123 “Accounting for Stock-Based Compensation,” and eliminates the ability to account for share-based compensation transactions under APB Opinion No. 25 “Accounting for Stock Issued to Employees.” SFAS No. 123(R) requires stock-based transactions to be recognized as compensation expense in the income statement based on their fair values at the date of grant. The fair value should be estimated using option-pricing models such as the Black-Scholes model or a binomial model. This statement is effective beginning January 1, 2006. At this time, Columbia does not believe the future impact on earnings to be materially different than what has historically been reported as the pro forma effect to income in Note 3 included herein and in Note 1 to Columbia’s December 31, 2004, consolidated financial statements contained in Form 10-K. The impact to operating and financing cash flows is not considered to be material to the consolidated financial statements.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains various forward-looking statements about plans and anticipated results of operations and financial condition relating to Columbia Bancorp. These statements include statements about Management’s present plans and intentions about our strategy, growth, and deployment of resources, and about Management’s expectations for future financial performance. Readers can sometimes identify forward-looking statements by the use of prospective language and context, including words like “may”, “will”, “should”, “expect”, “anticipate”, “estimate”, “continue”, “plans”, “intends”, or other similar terminology. Because forward-looking statements are, in part, an attempt to project future events and explain Management’s current plans, they are subject to various risks and uncertainties that could cause our actions and our financial and operational results to differ materially from those set forth in such statements. These risks and uncertainties include, without limitation, our ability to estimate accurately the value of certain of our intangible assets, economic and other factors that affect the collectibility of our loans, the impact of competition and fluctuations in market interest rates on Columbia’s revenues and margins, Management’s ability to open and generate growth from new branches, and other risks and uncertainties that we have in the past, or that we may from time to time in the future, detail in our filings with the Securities and Exchange Commission (“SEC”). Information presented in this report is accurate as of the date the report was filed with the SEC, and we cannot undertake to update our forward-looking statements or the factors that may cause us to deviate from them, except as required by law.

OVERVIEW

Columbia Bancorp is an Oregon corporation and a registered financial holding company. Our common stock is traded on the NASDAQ Stock Market^TM under the symbol “CBBO”. The majority of our income is derived from, and the majority of our assets are held in, our wholly-owned subsidiary, Columbia River Bank, which is an Oregon state-chartered bank, headquartered in The Dalles, Oregon. When we speak of our financial condition and results of operations, we sometimes use the term “Columbia” to refer to the bank and the holding company on a consolidated basis. Columbia River Bank operates 20 branches in Oregon and Washington. In addition to these community-oriented branches, mortgage lending services are provided through the Columbia River Bank Mortgage Team and brokerage services through the CRB Financial Services Team.

At June 30, 2005, our assets totaled $778.94 million and shareholders’ equity was $71.84 million. For the first six months of 2005, our net income was $6.75 million, or $0.74 per diluted common share, which represents an increase of $2.42 million, or 55.94%, compared to the first six months of 2004. Net income for the three months ended June 30, 2005, was $3.44 million, or $0.38 per diluted common share, an increase over the same period in 2004, of $1.13 million or 48.69%. The increase in net income for the six months ended June 30, 2005, was the result of several factors. The most significant factors were:

• the reduction of provision for loan losses by $1.24 million over the same period in 2004, due to improved loan quality, a reduction in charged-off loans and controlled loan growth;

• an increase in interest and fees on loans due to a steady upward movement of interest rates on variable interest loans, which was partially offset by a similar increase in deposit interest expense;

• the collection during the first quarter of 2005, of approximately $442,000 of interest and fees associated with one loan that had been on non-accrual status since the third quarter of 2004, of which approximately $336,000 of the interest collected was due from 2004;

• the recognized gain on the sale of the mortgage servicing asset of $560,588 during the second quarter and;

• a year-to-date increase in Mortgage Team revenue of $1.19 million.

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These increases in income or reductions of expenses were offset by an increase in non-interest expense primarily attributable to increased salary and employee benefits expense related to higher incentive compensation accruals over the same period in 2004, as wells as to occupancy expenses related to branch expansion. We believe these expenses will continue to trend upward for the remainder of 2005. For purposes of illustration, for the six months of 2005 excluding the one-time benefits from the sale of the MSA and collection of interest from 2004, as described above, the net income would have been $6.19 million, or $0.68 per diluted share an increase of 42.84%, compared to net income in the first six months of 2004. Net income for the three months ended June 30, 2005, would have been $3.09 million, or $0.34 per diluted common share, representing an increase of $772,584, or 33.37% over the comparable period last year.

The following table presents an overview of our key financial performance indicators:

Key Financial Performance Indicators:
(dollars in thousands except per share data)

	As of and for the						As of and for the
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2005			2004			2005			2004
Return on average assets		1.86	%		1.48	%		1.85	%		1.43	%
Return on average equity		19.51	%		15.50	%		19.69	%		14.66	%
Net interest margin, tax equivalent basis		5.90	%		6.19	%		5.86	%		6.20	%
Efficiency ratio		54.92	%		52.96	%		54.15	%		56.49	%
Net income	$	3,442		$	2,314		$	6,755		$	4,331
Total loans, gross(1)								626,449			568,980
Total assets								778,938			666,789
Deposits								668,890			548,303
Book value per common share							$	8.05		$	6.90
Tangible book value per common share								7.22			5.75

⁽¹⁾ Loans include portfolio and loans held for sale and exclude allowance for loan losses and unearned loan fees.

We sometimes refer, in this report, to our Executive Management Team collectively as “Management”. Their goal is to grow our earning assets while maintaining a high return on equity and high asset quality. The key to this, in Management’s view, is to emphasize personalized, quality banking products and services for our customers, to hire and retain high performing, experienced branch and administrative personnel and to respond quickly to customer demand and growth opportunities. Management also intends to increase penetration in our existing markets, and to expand into new markets through suitable acquisitions and new branch openings for our primary operating subsidiary, Columbia River Bank. Additionally, we are exploring the possibility of land development opportunities as a possible means to leverage excess capital. Management is also considering an agreement with a broker for the generation of commercial real estate loans with the ability to either, hold, sell and/or to participate loans under a special arrangement.

In late 2004, we made a strategic shift in our branch reporting structure, appointing four regional managers to oversee three to five branches within each identified region. These Regional Managers are focused on the delivery of retail products to their markets. Management believes each of these regions have unique characteristics, strengths and competitive opportunities. By making this change, Management anticipates gaining greater synergies by focusing on each region and building on those strengths and opportunities specific to that area. Additionally, we have begun to staff each region with a senior level credit officer to oversee loan quality and loan production in those specific markets.

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In April 2005, we announced an application had been filed with the FDIC, to open an additional branch in The Dalles, Oregon, to be known as the Cherry Heights Branch. It is located in a shopping complex immediately west of the downtown area and is scheduled to open during the fourth quarter of 2005. We will continue the operation of our Westside Branch located in the Safeway store adjacent to this site. Management believes this new branch will be a strong addition to Columbia River Bank’s presence in our hometown, making it the third office in the community and the sixth branch in the Columbia River Gorge area. The focus of this branch will be to expand our dominant presence in The Dalles by providing a more convenient banking alternative to the consumer. The branch will feature a coffee shop and a five-lane drive through with two drive-up ATMs. This will be the only financial institution in The Dalles with more than two drive-up lanes, and is expected to relieve pressure from our downtown office.

We will be moving our Kennewick branch to a new location in the Tri-Cities area. This region consists of the Washington cities of Richland, Kennewick and Pasco. The name will be changed to the Meadow Springs Branch and it will be our flagship branch serving all of the Tri-Cities Market. The 10,000 square foot facility will house a full service bank branch on the first floor and our Tri-Cities Business Banking Team on the second floor. In order to serve the retail customers more conveniently, the branch will have a five lane drive-up with two ATM’s.

Recently, Columbia began construction on our Pasco Branch which will be located on Route 68 next to the TRAC Convention Center in Pasco. The branch will primarily serve the northwestern portion of the Tri-Cities area and will focus on small business relationships and expanding our consumer product base. This branch will be opened in the first quarter of 2006. The 2,900 square foot full service branch will further expand our ability to serve the Tri-Cities Market. This branch will also have a four lane drive up with two drive-up ATMs, features aimed at further expanding our core deposits.

MATERIAL CHANGES IN FINANCIAL CONDITION

ASSETS

Columbia’s assets are comprised primarily of loans made to customers with the expectation of receipt of interest and principal through repayment from the customer, as well as operating cash and various investment securities.

Investment Securities

Investment securities totaled $39.41 million as of June 30, 2005, a decrease of $5.99 million, or 13.20%, compared to December 31, 2004. The decrease in investment securities resulted from the maturity of short term agency securities in the amount of $7.0 million, which was partially offset by the purchase of securities for use as collateral. The investment securities portfolio contains bank-qualified municipal securities, debt issued by government agencies, mortgage-backed securities, equity securities and restricted equity securities. Qualifying available-for-sale securities as well as held-to-maturity securities may be pledged as collateral for public agency deposits. At June 30, 2005, $21.12 million, or 53.61%, of the portfolio was pledged, compared to $17.06 million, or 37.58%, at December 31, 2004, and $15.0 million, or 48.95%, at June 30, 2004.

Unrealized losses on available-for-sale and equity securities at June 30, 2005, were $157,075 or $99,586 net of tax, compared to a loss of $82,602, or $52,370 net of tax, and $139,727, or $86,685 net of tax, at December 31, 2004, and June 30, 2004, respectively. The unrealized loss as of June 30, 2005, is attributed to an overall increase in interest rates since the beginning of the year and Management, at this time, has no plans to liquidate the available-for-sale securities.

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Loans

Columbia’s loan portfolio reflects Management’s efforts to diversify risk across a range of loan types and industries, and thereby complement the markets in which Columbia does business. Loan products include construction, land development and real estate loans, commercial loans, consumer loans, agriculture loans and credit cards loans.

Over the last few years, construction, land development and commercial real estate concentrations have grown to represent 66.38% of our loan portfolio. Management believes high growth rates in the real estate loan portfolio during 2004, resulting from continued low interest rates, strong regional real estate markets, relatively weak stock market performance and the fear of rising interest rates, will likely not be replicated in the near term. As a result, investors should not expect annual growth rates in this portion of the portfolio greater than what was experienced during the past few years. Columbia is protected against potential downturns in the real estate lending markets by its ability to buy commercial real estate loans on the secondary market during periods when loan levels do not meet Management’s internal expectations and by the volume of loans that can be produced through our loan production office.

Columbia also participates in non-real estate agricultural lending. This segment makes up approximately 14% of the total loan portfolio and employs lenders that have developed a high level of expertise in underwriting and monitoring these types of loans. This focus has provided opportunities into markets that traditionally have been neglected due to the perception that these types of loans carry higher risk than more traditional lending. Columbia has mitigated these risks by hiring experienced agricultural lenders and consultants, by diversifying the loan portfolio across 15 different commodity types, and by maintaining Preferred Lender Status with the Farm Service Agency. This status allows participation in Farm Loan Government Guarantee Programs, which provide guarantees of up to 90% of qualified loans. Approximately 10% of Columbia’s agricultural loans are guaranteed through this program; however, these guaranties are limited and readers should not infer that these loans are without credit risk.

Columbia’s net loan portfolio (excluding loans held for sale), at June 30, 2005, was $608.75 million, an increase of $37.14 million, or 6.50% over December 31, 2004, and an increase of $51.44 million, or 9.23%, over June 30, 2004. These numbers reflect flat loan growth during the first quarter and moderate loan growth during the second quarter representing a typical pattern based on historical performance for Columbia. Management believes CRB will experience moderate loan growth through the remainder of 2005 as agriculture, construction and commercial borrowing have historically increased in the third quarter. Construction and agricultural segments of the portfolio historically tend to show downward to flat trends during the late fall and winter months due to normal seasonal impacts of weather and operating cycles.

The Mortgage Team, a division of CRB, originates and funds single-family mortgage loans. These loans are normally committed for sale to mortgage investors, and are generally held by CRB for less than 30 days in an account titled “Loans held for sale” on the balance sheet. At June 30, 2005, loans held for sale totaled $7.48 million compared to $2.52 million and $1.87 million at December 31, 2004 and June 30, 2004, respectively. At June 30, 2005, $863,661 of loans held for sale exceeded 30 days on the balance sheet, consisting of four loans that are expected to be cleared by the end of July. The increase in loans held for sale resulted from an increase in mortgage production during the first six months of 2005, in which 230 loans were originated compared to 157 loans during the same period in 2004, a 46.50 % increase.

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The following table presents CRB’s loan portfolio composition by loan type:

Loans:
(dollars in thousands)

	June 30, 2005						December 31, 2004						June 30, 2004
				Percent of						Percent of						Percent of
	Dollar Amount			Total			Dollar Amount			Total			Dollar Amount			Total
Commercial loans	$	97,956			16	%	$	93,618			16	%	$	95,287			17	%
Agricultural loans		88,506			14	%		79,224			14	%		82,362			15	%
Real estate loans		280,880			46	%		247,045			44	%		244,569			44	%
Real estate loans — construction		130,007			21	%		139,415			24	%		121,836			22	%
Consumer loans		13,576			2	%		14,386			3	%		16,256			3	%
Other loans		8,045			1	%		7,660			1	%		6,797			1	%
		618,970						581,348						567,107
Allowance for loan losses		(8,681	)		-1	%		(8,184	)		-2	%		(7,940	)		-2	%
Unearned loan fees		(1,542	)		0	%		(1,556	)		0	%		(1,856	)		0	%
Loans, net of allowance for loan losses, unearned loan fees and loans held for sale		608,747						571,608						557,311
Loans held for sale		7,479			1	%		2,517			0	%		1,873			0	%
Total loans	$	616,226			100	%	$	574,125			100	%	$	559,184			100	%

Non-performing Assets

Non-performing assets consist of loans on non-accrual status, delinquent loans past due greater than 90 days, restructured loans and other real estate owned (“OREO”). Columbia does not accrue interest on loans for which full payment of principal and interest is not expected, or for which payment of principal or interest has been in default 90 days or more, unless the loan is well-secured and in the process of collection. Restructured loans are those for which the interest rate or payment schedules were modified from original terms to accommodate the borrower’s weakened financial condition. OREO represents assets held through loan foreclosure or recovery activities.

At June 30, 2005, Columbia’s total non-performing assets were $394,035, as compared to $4.32 million and $3.10 million at December 31, 2004, and June 30, 2004, respectively. The decrease in non-performing assets at June 30, 2005, is attributed to resolution in the first quarter by guarantors of a $3.12 million loan secured by commercial real estate. The loan was resolved with the guarantors subsequent to a ruling of summary judgment in Columbia’s favor in February 2005. After the guarantors paid down approximately $290,000 in principal and paid all interest, fees and charges due in full, totaling $442,000 of which $336,000 of the interest was from 2004, this loan was refinanced into the names of two of its guarantors. Columbia expects to be paid off in full by year-end 2005 through the earnings and the liquidation of the borrower’s assets. At this time, Management anticipates no further problems with this loan.

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The following table presents information with respect to non-performing assets:

Non-performing Assets:
(dollars in thousands)

	June 30, 2005			December 31, 2004			June 30, 2004
Loans on non-accrual status	$	347		$	4,217		$	1,615
Delinquent loans on accural status		—			—			—
Restructured loans		47			—			9
Total non-performing loans		394			4,217			1,624
Other real estate owned		—			100			1,436
Total non-performing assets	$	394		$	4,317		$	3,060
Allowance for loan losses	$	8,681		$	8,184		$	7,940
Ratio of total non-performing assets to total assets		0.05	%		0.60	%		0.46	%
Ratio of total non-performing loans to total loans		0.07	%		0.74	%		0.29	%
Ratio of allowance for loan losses to total non-performing assets		2203.07	%		189.57	%		259.48	%

Allowance for Loan Losses

The allowance for loan losses allows Columbia to establish a reserve on the balance sheet that represents an estimate of potential losses associated with the loan portfolio and deposit account overdrafts as of the reporting date. The allowance for loan losses is evaluated based on a systematic approach each quarter. Increases to the allowance occur either through recoveries of previously charged off loans or through an expense that is charged to the provision for loan losses in the income statement. Decreases occur when loan or overdraft losses are recognized. Management determines the appropriateness and amount of these charges by assessing the risk potential in the portfolio on an ongoing basis. Beginning in 2005, in accordance with Financial Institution Letter (“FIL”) 11-2005 issued by FDIC, Columbia also includes an analysis of demand deposit overdrafts in the calculation for allowance for loan losses.

This risk potential is primarily calculated as a percentage of the outstanding balance of loans that are adversely classified or are in a troubled state as identified by Columbia’s internal risk rating system. Columbia also establishes a portion of the allowance for loan losses based on the balance of the remaining loans in the portfolio that are not classified. Different percentages, based on standards established by regulatory agencies and tested against the historic loss experience of Columbia, are assigned according to industry and collateral type. The historic losses from deposit overdrafts have been minimal and the risk potential of outstanding overdrafts is calculated based on factors developed from that history. In addition, Management reviews current regional and national economic conditions and trends, specific economic circumstances that may affect borrowers’ individually and collectively, and various other factors that Management considers appropriate for allocation to specific loans or loan categories.

When a loan, or a portion of a loan, is determined to be uncollectible, it is “charged-off” which means it is removed, in whole or in part, from the balance sheet, and the reduction is charged against the allowance for loan losses. Recoveries of amounts previously charged-off are increases to the allowance for loan losses. Overdraft charge-offs are handled in the same manner.

As a percentage of average loans outstanding at year-end, Columbia’s allowance for loan losses has ranged between 0.84% and 1.64% over the 10-year period 1995 through 2004, and has averaged 1.35%, on an annual basis. As of June 30, 2005, Columbia’s allowance for loan losses was 1.39% of outstanding loans, including loans held for sale. Management believes the allowance for loan losses is adequate based on its assessment of the factors, conditions and calculations described above. Columbia’s net charge-offs (charge-offs less recoveries) for the first six months of 2005, were lower by approximately $409,000 over the same period in 2004, due to

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improved loan quality and an improved economy. Management believes total net charge-offs for the year will compare favorably with the historic 10 year average range of between 0.20% and 0.25% of average gross loans. At this point in time, 2005 net charge offs are approximately .058 as a percentage of average gross loans or an annualized pace of .12 as a percentage of average gross loans.

The following table presents activity in allowance for loan losses:

Allowance for Loan Loss:
(dollars in thousands)

	Three Months ended				Six Months ended
	June 30,				June 30,
	2005		2004		2005		2004
Balance at beginning of period	$	8,249	$	6,876	$	8,184	$	6,612
Charge-offs:
Commercial		55		202		77		459
Real estate		—		95		8		116
Agriculture		133		—		156		—
Consumer loans		55		33		100		122
Credit card and related accounts		19		23		43		101
Demand deposit overdrafts		47		—		77
Total charge-offs		309		353		461		798
Recoveries:
Commercial		36		23		39		26
Real estate		9		—		9		—
Agriculture		—		—		4		—
Consumer loans		8		1		14		4
Credit card and related accounts		—		3		3		6
Demand deposit overdrafts		38		—		39
Total recoveries		91		27		108		36
Provision for loan losses		650		1,390		850		2,090
Balance at end of period	$	8,681	$	7,940	$	8,681	$	7,940

Mortgage Servicing Asset

On April 29, 2005, Columbia completed an agreement with a buyer for the sale of its mortgage servicing asset. The book value of the mortgage servicing asset at the time of sale was $2.05 million. After adjustments for delinquencies, current month pay-offs and fees, the adjusted sales price was $3.02 million, which resulted in an initial gain of $560,588, during the second quarter of 2005. The transfer date of the mortgage servicing asset was May 31, 2005. The total amount of gain will not be determined until the mortgage prepayment exposure period has closed on August 30, 2005. The mortgage prepayment exposure represents the speeds in which mortgages prepay due to fluctuations with interest rates. Exposure is greatest at the beginning of the time period which began on the sale date and will close on August 30, 2005. At the time of the filing of this report, Management believes the additional amount of gain will be in a range of $20,000 to $50,000 for the third quarter of 2005.

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The following table presents a reconciliation for CRB’s mortgage servicing asset for the six and twelve month periods presented:

Mortgage Servicing Asset Reconciliation:
(dollars in thousands)

	June 30, 2005			December 31, 2004			June 30, 2004
Mortgage servicing asset (“MSA”), beginning	$	2,163		$	3,691		$	3,691
Add servicing retained premiums		—			93			92
Deduct MSA amortization		(117	)		(1,621	)		(1,059	)
Deduct MSA valuation adjustments		—			—			—
Deduct sale of MSA		(2,046	)		—			—
Mortgage servicing asset, ending	$	—		$	2,163		$	2,724

LIABILITIES

Columbia’s liabilities are comprised primarily of its obligation to repay customers’ deposits on demand (for “demand deposits”) or at a stated time in the future (for “time deposits”), debt and interest accrued thereon and obligations to pay interest and, at maturity, principal on the “trust preferred securities” issued by Columbia Bancorp Trust I.

Deposits

Columbia offers various deposit accounts, including interest bearing checking, savings, money market, certificates of deposit and non-interest bearing checking accounts. The accounts vary as to terms, with principal differences being minimum balances required, length of time the funds must remain on deposit, interest rate and deposit or withdrawal options. Deposits are Columbia’s primary source for funding loan growth. Columbia strives to fund operations with non-interest bearing demand deposits, a strategy which will improve the net interest margin, defined as the difference between interest income and interest expense as a percentage of average earning assets.

At June 30, 2005, Columbia had $668.89 million in total deposits, which represented an increase of $61.95 million or 10.21% over December 31, 2004 and an increase of $120.59 million or 21.99% over June 30, 2004. Deposit account growth in the first six months of 2005 has occurred primarily in non-interest and interest bearing demand accounts. This increase in demand deposits was partially offset by a decrease of $8.66 million, or 4.62%, in time certificates of deposit during the same period. Since the beginning of the year, non-interest bearing demand accounts have increased $32.96 million, or 19.11% and interest bearing accounts have increased $34.13 million, or 16.16%. The growth in these accounts can be attributed to Columbia’s focus on increased personalized attention paid to commercial customers to attract new deposits. The decline in time certificates of deposit is attributed primarily to the maturity of $11.35 million in brokered or wholesale certificates of deposit and public certificates of deposit. Overall, deposits grew through to a combination of pricing strategies, increased marketing and an emphasis on strengthening customer relationships.

The following table presents deposit composition by deposit type:

Deposits:
(dollars in thousands)

	June 30, 2005					December 31, 2004					June 30, 2004
			Percent of										Percent of
	Dollar Amount		Total			Dollar Amount		Percent of Total			Dollar Amount		Total
Non-interest bearing deposits	$	205,378		30	%		172,422		28	%	$	174,515		32	%
Interest bearing deposits		245,371		37	%		211,240		35	%		186,178		34	%
Savings deposits		39,448		6	%		35,926		6	%		36,027		7	%
Time certificates		178,693		27	%		187,356		31	%		151,583		27	%
Total deposits	$	668,890		100	%	$	606,944		100	%	$	548,303		100	%

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Columbia defines wholesale funds as liabilities obtained outside the retail branch network. These liabilities include brokered certificate of deposits, wholesale deposits (deposits obtained through a process whereby Columbia posts rates on a proprietary network that solicits certificates of deposits from other financial institutions and public entities), direct institutional deposits, and FHLB borrowings.

Columbia utilizes wholesale funds as additional sources of funding for loan growth. At June 30, 2005, brokered certificates of deposit total $43.76 million, compared to $46.65 million at December 31, 2004, and $37.17 million at June 30, 2004. In most cases, brokered deposit accounts are purchased with intermediate to long-term maturities ranging from two to seven years. Wholesale deposits totaled $10.47 million as of June 30, 2005, with maturities ranging from 30 days to two years; Columbia had wholesale deposits of $18.94 million as of December 31, 2004 and $4.55 million as of June 30, 2004. These are classified as either brokered certificates of deposit or public certificates of deposit depending on their source. During the first half of 2005, Columbia actively increased deposit gathering efforts at the branch level. Therefore, Management believes reliance on brokered certificate of deposits and wholesale deposits will likely decline for the remainder of 2005.

Borrowings

The majority of Columbia’s borrowings are through advances from the Federal Home Loan Bank (“FHLB”). At June 30, 2005, borrowings from FHLB totaled $27.07 million, a decrease of $6.97 million from $34.04 million previously reported at December 31, 2004, and a decrease of $16.31 million as compared to $43.37 million at June 30, 2004. Columbia also uses lines of credit at correspondent banks to purchase Fed Funds as a source for short-term funding. There were no fed funds purchased as of June 30, 2005 and December 31, 2004. As of June 30, 2004, there were $6.10 million in fed fund funds purchased. The remainder of borrowings consists of a Treasury Tax and Loan note payable for $850,000 as of June 30, 2005 and June 30, 2004, and $849,970 as of December 31, 2004. Columbia will continue to allow borrowings to mature without renewing them so long as deposit growth meets or exceeds future loan growth.

The following table presents certain information with respect to Columbia’s FHLB borrowings:

FHLB Borrowings:
(dollars in thousands)

	June 30,			December 31,			June 30,
	2005			2004			2004
Amount outstanding at end of period	$	27,066		$	34,040		$	43,372
Weighted average interest rate at end of period		3.71	%		3.41	%		2.38	%
Maximum amount outstanding at any month-end and during the year	$	33,836		$	46,941		$	46,941
Average amount outstanding during the period	$	33,326		$	30,023		$	15,383
Average weighted interest rate during the period		3.54	%		3.36	%		2.80	%

Off-Balance Sheet Items — Commitments/Letters of Credit

In the normal course of business to meet the financing needs of its customers, Columbia is party to financial instruments with off-balance-sheet risk. These financial instruments include commitments to extend credit, the issuance of letters of credit and interest rate swaps. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amounts recognized on Columbia’s balance sheets.

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Columbia’s potential exposure to credit loss for commitments to expend credit and for letters of credit written is represented by the contractual amount of those instruments, and would be triggered in the event of nonperformance by the other party. Columbia uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Columbia may or may not require collateral or other security to support financial instruments with credit risk, depending on its loan underwriting guidelines. The following table presents a comparison of contract commitment amounts:

Commitments:
(dollars in thousands)

	June 30, 2005		December 31, 2004		June 30, 2004
Financial instruments whose contract amounts contain credit risk:
Commitments to extend credit	$	161,785	$	168,812	$	157,896
Commitments to extend credit for overdrafts		10,549		10,249		9,701
Undisbursed credit card lines of credit		19,325		18,437		18,129
Commercial and standby letters of credit		2,384		2,227		2,680
	$	194,043	$	199,725	$	188,406

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to expire without being drawn, total commitment amounts do not necessarily represent future cash requirements.

The amount of collateral obtained to secure a loan or commitment, if deemed necessary by Columbia, is based on Management’s credit evaluation of the borrower. A majority of commitments are secured by real estate or other types of qualifying collateral. The type of collateral held varies but may include accounts receivable, inventory, property and equipment, and income-producing properties. Less than 10% of the Bank’s commitments are unsecured. Lending commitments are distributed across all loan categories at levels roughly proportionate to concentrations in the loan portfolio.

Columbia has an overdraft protection product that allows certain types of deposit products to become overdrawn up to a set dollar limit before checks will be returned. The commitment to extend credit for overdrafts represents the estimated total exposure to the Bank if virtually every customer utilized the full amount of this protection at one time. However, the annual average usage outstanding is much lower than this commitment, totaling approximately 3.00% or $304,000 in 2004 and approximately 2.53% or $245,000 as of June 30, 2005.

Letters of credit written are conditional commitments issued by Columbia to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions. The credit risk involved in issuing letters of credit parallels the risk involved in extending loans to customers. Columbia holds deposits, marketable securities or real estate as collateral supporting those commitments for which collateral is deemed necessary.

Derivative Instruments-Interest Rate Swap

During January 2003, in connection with the issuance of $4.0 million of floating-rate Trust Preferred Securities, Columbia entered into an interest rate swap agreement with an unrelated third party. Under the terms of the agreement, which expires in January 2008, Columbia will pay 3.27% on a notional amount of $4.0 million and receive 90-day LIBOR on the same amount. The effect of this transaction was the conversion of the $4.0 million trust preferred issuance from a floating rate instrument paying 90-day LIBOR plus 330 basis points to a fixed rate instrument paying 6.57% for five years, the point at which Columbia has the option to call the Trust Preferred

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Securities. Columbia has classified the swap agreement as a cash flow hedge in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” The effect of this transaction was to mitigate variability in cash flows by establishing a fixed cost for the initial five years of the trust preferred securities.

RESULTS OF OPERATIONS

Net Income

Net income for the first six months of 2005, was $6.75 million, or $0.74 per diluted common share. This represents an increase of $2.42 million, or 55.94%, over net income earned during the first six months of 2004. Net income for the three months ended June 30, 2005, was $3.44 million, or $0.38 per diluted common share. This represents an increase over the same period in 2004, of $1.13 million or 48.69%. The increase in net income for the six months ended June 30, 2005, was the result of several factors. The most significant factors were:

• the reduction of provision for loan losses by $1.24 million over the same period in 2004, due to improved loan quality, a reduction in charged-off loans and controlled loan growth;

• an increase in interest and fees on loans due to a steady upward movement of interest rates on variable interest loans, which was partially offset by a similar increase in deposit interest expense;

• the collection during the first quarter of 2005, of approximately $442,000 of interest and fees associated with one loan that had been on non-accrual status since the third quarter of 2004, of which approximately $336,000 of the interest collected was due from 2004;

• the recognized gain on the sale of the mortgage servicing asset of $560,588 during the second quarter and;

• a year-to-date increase in Mortgage Team revenue of $1.19 million.

These increases in income or reductions of expenses were offset by an increase in non-interest expense primarily attributable to increased salary and employee benefits expenses related to higher incentive compensation accruals over the same period in 2004, as well as to occupancy expense related to branch expansion. We believe these expenses will continue to trend upward for the remainder of 2005. For purposes of illustration, for the six months of 2005 excluding the one-time benefits from the sale of the MSA and collection of interest from 2004, as described above, the net income would have been $6.19 million, or $0.68 per diluted share an increase of 42.84%, compared to net income in the first six months of 2004. Net income for the three months ended June 30, 2005, would have been $3.09 million, or $0.34 per diluted common share, representing an increase of $772,584, or 33.37% over the comparable period last year.

Net Interest Income

The primary component of income for most financial institutions is net interest income. This represents the institution’s interest income earned from loans and investment securities, minus interest expense paid on deposits and other interest bearing liabilities. Columbia’s total net interest income increased $2.80 million, or 16.51%, for the six months ended June 30, 2005, as compared to the same period in 2004 and increased $1.27 million, or 14.49%, for the three months ended June 30, 2005, compared to the same period in 2004. The increases in net interest income are due to the increase in interest rates on variable rate loans. Approximately 80-90% of the loans in Columbia’s portfolio are tied to a variable interest rate. As interest rates continue to rise, the interest due on a majority of these loans will increase. Additionally, Columbia received approximately $442,000 in interest income in the first quarter of 2005, related to one large loan that had been on non-accrual status since the last part of 2004. Of this amount, approximately $336,000 of the interest was due from 2004. These gains were offset by an increase in interest expense on deposits. The tax equivalent net interest margin for the first half 2005 was 5.86% as compared to 6.20% for the same period in 2004 and 5.90% for the second quarter of 2005, compared to 6.19% for the second quarter of 2004. Approximately 10 basis points of the net interest margin for the first half of 2005 is attributable to the one time recovery of interest during

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the first quarter on the loan previously classified as a non-accrual loan during the first quarter, mentioned above. Had Columbia not recovered this interest, the net interest margin for June 30, 2005, would have been 5.76%. Net interest income, on average, represents approximately 80.00% of Columbia’s total revenue. It is expected that the net interest margin will begin to stabilize for the remainder of the year due to Columbia’s high percentage of loans indexed to the Prime rate and an interest rate environment favorable towards the asset-sensitive position of the balance sheet.

The following table presents a comparison of average balances and rates:

Net Interest Income Average Balances and Rates:
(dollars in thousands)

	Three Months Ended June 30, 2005							Three Months Ended June 30, 2004
	Average Balances							Average Yields/Costs Tax Equivalent
	2005		2004		Change			2005			2004			Change
Taxable securities	$	22,234	$	15,188	$	7,046			3.18	%		2.45	%		0.73	%
Nontaxable securities		12,864		13,241		(377	)		6.96	%		7.33	%		-0.37	%
Interest bearing deposits		17,542		9,278		8,264			2.58	%		2.22	%		0.36	%
Federal funds sold		29,767		2,462		27,305			2.86	%		1.39	%		1.47	%
Loans		607,280		536,813		70,467			7.97	%		7.53	%		0.44	%
Interest-earning assets		689,687		576,982		112,705			7.44	%		7.28	%		0.16	%
Nonearning assets		52,479		54,097		(1,618	)
Total assets	$	742,166	$	631,079	$	111,087
Savings & interest bearing deposits	$	269,715	$	222,701	$	47,014			1.27	%		0.49	%		0.78	%
Time certificates		174,562		136,959		37,603			3.30	%		2.84	%		0.46	%
Borrowed funds		35,033		46,155		(11,122	)		4.05	%		2.74	%		1.31	%
Interest bearing liabilities		479,310		405,815		73,495			2.21	%		1.54	%		0.67	%
Non-interest bearing demand deposits		189,935		162,223		27,712
Other liabilities		2,141		2,984		(843	)
Shareholders’ equity		70,781		60,057		10,724
Total liabilities and shareholders’ equity	$	742,166	$	631,079	$	111,087

	Six Months Ended June 30, 2005							Six Months Ended June 30, 2005
	Average Balances							Average Yields/Costs Tax Equivalent
	2005		2004		Change			2005			2004			Change
Taxable securities	$	24,313	$	15,133	$	9,180			2.91	%		2.51	%		0.40	%
Nontaxable securities		13,017		13,333		(316	)		7.05	%		7.32	%		-0.27	%
Interest bearing deposits		19,091		9,917		9,174			2.47	%		2.00	%		0.47	%
Federal funds sold		35,352		7,233		28,119			2.60	%		1.20	%		1.40	%
Loans		592,925		509,325		83,600			8.01	%		7.63	%		0.38	%
Interest-earning assets		684,698		554,941		129,757			7.38	%		7.30	%		0.08	%
Nonearning assets		51,927		52,413		(486	)
Total assets	$	736,625	$	607,354	$	129,271
Savings & interest bearing deposits	$	269,037	$	223,489	$	45,548			1.19	%		0.50	%		0.69	%
Time certificates		177,200		130,541		46,659			3.24	%		2.90	%		0.34	%
Borrowed funds		36,588		37,057		(469	)		3.95	%		3.14	%		0.81	%
Interest bearing liabilities		482,824		391,087		91,737			2.15	%		1.55	%		0.60	%
Non-interest bearing demand deposits		182,131		153,539		28,592
Other liabilities		2,505		3,306		(801	)
Shareholders’ equity		69,164		59,422		9,742
Total liabilities and shareholders’ equity	$	736,625	$	607,354	$	129,271

Non-Interest Income

Non-interest income represents earnings on fees, service charges, Mortgage Team revenues, CRB Financial Services Team revenues, Bankcard Team revenues and gains from the sale of loans, securities and other assets. Total non-interest income for the quarter ended June 30, 2005, increased $1.07 million, or 55.68%, as compared to the same period in 2004 and increased $1.79

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million, or 51.16% on a year-to-date basis compared to the same time period in 2004. Included in the overall increase in non-interest income, under the caption “other non-interest income”, for the second quarter of 2005, is the gain on the sale of the mortgage servicing asset of $560,588. Additionally, production of mortgage loans increased, which have resulted in an increase in Mortgage Team revenues of $1.19 million for the first six months of 2005, over the same period in 2004, and an increase of $617,386 for the quarter ended June 30, 2005, over the same quarter in 2004. During the second quarter of 2005, Columbia produced 230 mortgage loans, compared to 157 loans in the second quarter of 2004, resulting in an increase of 73 loans or 46.50%. Management believes Mortgage team revenues will continue to rise through the remainder of 2005, because of a strong real estate market, continued hiring of additional mortgage loan officers and a low mortgage rate environment.

The following table presents the balances and percentage changes in non-interest income:

Non-Interest Income:
(dollars in thousands)

	Three Months Ended									Six Months Ended
	June 30,									June 30,
	2005			2004			% change			2005			2004			% change
Service charges on deposits	$	1,190		$	1,192			0	%	$	2,363		$	2,247			5	%
Credit card discounts & fees		117			114			3	%		230			219			5	%
CRB Financial Services Team revenues		156			166			-6	%		300			302			-1	%
Mortgage servicing, net		83			(195	)		143	%		172			(434	)		-140	%
Gain on sale of mortgage loans		30			8			275	%		75			79			-5	%
Mortgage loan origination income		391			293			33	%		717			511			40	%
Gain from sale of securities		(1	)		—			—			(1	)		—			—
Gain/(loss) on sale of assets		(39	)		—			—			(38	)		—			—
Gain on sale of MSA		561			—			—			561			—			—
Other non-interest Income		496			339			46	%		908			574			58	%
Total non-interest Income	$	2,984		$	1,917			56	%	$	5,287		$	3,498			51	%

Provision for Loan Losses

Charges to provision for loan losses for the three and six months ended June 30, 2005, were $650,000 and $850,000, respectively, compared to $1.39 million and $2.09 million for the same periods in 2004. The decrease in the provision for loan losses was primarily the result of moderate loan growth in the first half of 2005 and improved loan quality compared to the same period in 2004. The provision amount is determined by Management’s assessment, taking into account credit risk, loan concentrations and historical loan loss trends. The amount of provision for loan losses is added to the allowance for loan losses and is used to measure the risk associated with potential losses within the loan portfolio. Management believes the provision for loan losses is adequate.

Non-Interest Expense

Total non-interest expense for the three and six months ended June 30, 2005, increased $1.30 million, or 22.97% and $2.00 million, or 17.35%, respectively, as compared to the same periods in 2004. The overall increase in non-interest expense was attributed to higher salary and employee benefits expense due to an increased accrual amount in incentive compensation and occupancy expense associated with branch expansion. Management believes these expenses will continue to trend upward for the remainder of 2005. Other non-interest expense increased $246,666 or 6.62% for the first half of 2005, primarily due to an increase over the first quarter in advertising and general operating expenses and in the areas of software licensing due to the purchase of new software and consulting fees to comply with the Community Reinvestment Act (“CRA”), updating and maintaining the disaster recovery and business continuity plan and compliance with Section 404 of the Sarbanes-Oxley Act of 2002 during the first quarter of 2005.

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The following table presents a schedule of the components of and changes in non-interest expense:

Non-Interest Expense:
(dollars in thousands)

	Three Months Ended							Six Months Ended
	June 30,							June 30,
	2005		2004		% change			2005		2004		% change
Salaries & employee benefits	$	4,044	$	3,108		30	%	$	7,731	$	6,308		23	%
Occupancy expense		763		602		27	%		1,560		1,198		30	%
Data processing		123		141		-13	%		223		255		-13	%
Other non-interest expense		2,047		1,823		12	%		4,034		3,784		7	%
Total non-interest expense	$	6,977	$	5,674		23	%	$	13,548	$	11,545		17	%

LIQUIDITY AND CAPITAL RESOURCES

Shareholders’ Equity

At June 30, 2005, shareholders’ equity totaled $71.84 million, compared to $65.88 million at December 31, 2004, an increase of 9.05%. The change is primarily the result of net income, totaling $6.75 million for the period, partially offset by dividends declared or paid of $1.60 million. During the second quarter of 2005, Columbia declared a dividend of $0.09 per share payable July 29, 2005, to shareholders of record as of July 15, 2005. With cash dividends paid and declared in 2005, approximately 23.76% of Columbia’s year-to-date earnings will have been returned to shareholders, with the remainder being retained in the form of shareholders’ equity for the purpose of leveraging future balance sheet growth. On May 24, 2005, Columbia’s Board of Directors approved a stock repurchase plan with an expiration date of June 30, 2006, and a stock repurchase limit of $1.0 million, to replace the repurchase plan, that expired June 30, 2005. Any repurchase plan will be conducted in the open market pursuant to the Securities Exchange Act Rule 10b-18 at the sole discretion of Management. There were no stock repurchases as of June 30, 2005.

Liquidity

Columbia has adopted policies in order to address its liquidity requirements, particularly with respect to customers’ needs for borrowing and deposit withdrawals. Generally, Columbia’s main sources of liquidity are customer deposits; sales and maturities of investment securities; the use of federal funds; brokered certificates of deposit; and net cash provided by operating activities. Scheduled loan repayments are a relatively stable source of funds, whereas deposit inflows and unscheduled loan prepayments are variable and often influenced by general interest rate levels, competing interest rates available on alternative investments, market competition; economic conditions and other factors.

The first six months of 2005 saw an increase in Columbia’s liquidity position as a result of deposit gathering efforts. Liquidity is determined by the aggregate of cash and due from banks; interest bearing deposits with other banks; held-to-maturity securities maturing within three months that are not pledged; and available-for-sale securities not pledged minus vault cash. Total measurable liquid assets were $85.11 million on June 30, 2005, as compared to $33.56 million on June 30, 2004. Historically, Columbia experiences strong loan growth in the second quarter of each year creating the need for Columbia to borrow funds. As a result, Columbia experienced a decrease in the overall liquidity position. Loan growth for the first six months of 2005 increased by $37.14 million and was complemented by an even larger increase in deposit growth of $61.95 million for the same time period. Management will continue to rely on retail branch deposit growth and, to a limited extent, on brokered and wholesale certificates of deposit and other funding sources, as necessitated by liquidity needs.

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The analysis of liquidity also includes a review of the changes that appear in the consolidated statement of cash flows for the first six months of 2005. The statement of cash flows includes operating, investing and financing categories. Net cash from operating activities decreased by $5.77 million during the first half of 2005, as compared to the same period in 2004. This figure is adjusted for non-cash items as well as for increases or decreases in cash due to changes in certain assets and liabilities. Cash flows from investing activities, consisted primarily of proceeds and sales of securities along with the impact of net growth in loans, decreased by $68.51 million over the same period in 2004. The large majority of the change is attributable to the moderate loan growth that occurred during the first half of 2005 as opposed to the unusually large loan demand experienced during the same period in 2004. Cash flows from financing activities decreased $17.94 million over the same period in 2004. This decrease is due mostly to the decrease in deposits over the first half of 2005 as compared to the same period in 2004, and is offset by a reduction in brokered and wholesale time certificates of deposits and in notes payable, over the same period in 2004.

Capital Requirements and Ratios

The Federal Reserve Board (“FRB”) and the Federal Deposit Insurance Corporation (“FDIC”) have established minimum requirements for capital adequacy for bank holding companies and member banks. The requirements address both risk-based capital and leveraged capital. The regulatory agencies may establish higher minimum requirements if, for example, a corporation has previously received special attention or has a high susceptibility to interest rate risk.

The following table presents Columbia’s various capital ratios as compared to regulatory minimums:

Capital Ratios:

							June 30, 2005			December 31, 2004
	Minimum			Well-Capitalized			Actual Ratio			Actual Ratio
Tier 1 risk-based capital		4.00	%		6.00	%		10.15	%		9.80	%
Total risk-based capital		8.00	%		10.00	%		11.40	%		11.05	%
Leverage ratio		4.00	%		5.00	%		9.40	%		8.74	%

Columbia intends to remain “well-capitalized” by regulatory definition. Regulatory capital levels historically are expected to trend down during the second and third quarters as loan demand increases. However, Management believes the decrease will not significantly affect Managements ability to pay cash dividends as well as open one to two additional branches over the next twelve to eighteen months. In addition, Management is exploring options to enter into the land development business using some of the excess capital.

Stock Repurchase Plan

On May 24, 2005, Columbia’s Board of Directors renewed a plan to repurchase shares of Columbia common stock. Columbia authorized the repurchase program consistent with the Board of Directors view that such repurchases constitute a sound investment and use of Columbia’s shareholders’ equity to reduce excess capital. Any stock repurchases would be made on the open market pursuant to Securities Exchange Act Rule 10b-18 at the sole discretion of Management. The new repurchase plan authorizes Columbia to repurchase common stock in an amount up to $1.0 million until the expiration date, June 30, 2006, or sooner if the maximum authorized amount of shares is repurchased prior to that date. It is at the sole discretion of Management is to determine the number, timing and price of the shares of common stock repurchased. As of June 30, 2005, Columbia has not repurchased any stock under the stock repurchase plan.

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Trust Preferred Securities

During December 2002, Columbia formed Columbia Bancorp Trust I (“Trust”), a Delaware statutory business trust, for the purpose of issuing guaranteed undivided beneficial interests in junior subordinated debentures (“trust preferred securities”). During 2002, the Trust issued $4.0 million in trust preferred securities. The $4.0 million in debentures issued through the Trust continue to qualify as Tier 1 capital under guidance issued by the Board of Governors of the Federal Reserve System.

CRITICAL ACCOUNTING POLICIES

The “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as disclosures included elsewhere in this Form 10-Q, are based upon consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires Management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis, Management evaluates the estimates used, including the adequacy of the allowance for loan losses, impairment of intangible assets, and contingencies and litigation. Estimates are based upon historical experience, current economic conditions and other factors that Management considers reasonable under the circumstances. These estimates result in judgments regarding the carrying values of assets and liabilities when these values are not readily available from other sources as well as assessing and identifying the accounting treatments of commitments and contingencies. Actual results may differ from these estimates under different assumptions or conditions. The following critical accounting policies involve the more significant judgments and assumptions used in the preparation of the consolidated financial statements.

The allowance for loan losses is established to absorb known and inherent losses attributable to loans outstanding, overdraft charge-offs and related off-balance-sheet commitments. The adequacy of the allowance is monitored on an ongoing basis and is based on Management’s evaluation of numerous factors. These factors include the quality of the current loan portfolio, the trend in the loan portfolio’s risk ratings, current economic conditions, loan concentrations, loan growth rates, past-due and non-performing trends, evaluation of specific loss estimates for all significant problem loans, historical charge-off and recovery experience and other pertinent information. Approximately 66.38% of Columbia’s loan portfolio is secured by real estate and a significant decrease in real estate values in Oregon and Washington may cause Management to increase the allowance for loan losses.

At June 30, 2005, Columbia had approximately $7.39 million in goodwill as a result of business combinations. Columbia adopted the Statement of Financial Accounting Standards (“SFAS”) No. 142 on January 1, 2002. SFAS No. 142 requires Columbia to evaluate goodwill for impairment not less than annually and to write down the goodwill if the business unit associated with the goodwill cannot sustain the value attributed to it. Ongoing analysis of the fair value of recorded goodwill for impairment will involve a substantial amount of judgment, as will establishing and monitoring estimated lives of other amortizable intangible assets.

Columbia applies Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations in accounting for its stock option plans. Accordingly, compensation costs are recognized as the difference between the exercise price of each option and the market price of the Columbia’s stock at the date of each grant.

Columbia may become party to various legal proceedings. These matters have a high degree of uncertainty associated with them. There can be no assurance that the ultimate outcome will not differ materially from the assessment of them. There can also be no assurance that all matters that may be brought against us are known to us at any point in time.

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ITEM 3.Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes regarding Columbia’s market risk position from the information provided under the caption “Quantitative and Qualitative Disclosures about Market Risk” on page 41 in Columbia’s Form 10-K filing with the SEC on March 15, 2005, covering the fiscal year ended December 31, 2004.

ITEM 4.Controls and Procedures

Columbia’s Management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this quarterly report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, to the best of their knowledge, as of the end of the period covered by this quarterly report, the disclosure controls and procedures are effective in ensuring all material information required to be filed in this quarterly report has been made known to them in a timely fashion.

There were no changes in Columbia’s internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are likely to materially affect, Columbia’s internal control over financial reporting.

PART II. — OTHER INFORMATION

ITEM 1.Legal Proceedings

During the normal course of its business, Columbia is a party to various debtor-creditor legal actions, which individually or in the aggregate, could be material to Columbia’s business, operations or financial condition. These include cases filed as a plaintiff in collection and foreclosure cases, and the enforcement of creditors’ rights in bankruptcy proceedings. Management is presently aware of one legal proceeding, detailed below:

Columbia River Bank v. Cascadia Revolving Fund, Wasco County, Oregon, Circuit Court Case No. CC04-217

This litigation arose from a dispute between Columbia and another lender, Cascadia Revolving Fund, over the validity of a subordination agreement relating to loans made to a borrower that ceased doing business in 2004. The issue is whether Cascadia Revolving Fund is entitled to recover from Columbia $150,000 in collateral liquidation proceeds. Columbia denies that it is liable to Cascadia and is contesting the claim but has entered into negotiations in order to limit potential cost. As of June 30, 2005, Management considered the settlement of this case to be likely and had reserved $75,000 in the current period to cover this contingency. Subsequent to quarter end Columbia and Cascadia agreed to settlement of this case in principle for $78,415.04, and expects to have a definitive agreement by the end of July 2005.

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ITEM 2.Unregistered Sales of Equity Securities and Use of Proceeds

None.

ITEM 3.Defaults Upon Senior Securities

None.

ITEM 4.Submission of Matters to a Vote of Security Holders

None.

ITEM 5.Other Information

None.

ITEM 6.Exhibits

(a) Exhibits

3.1.1	Articles of Incorporation of Columbia Bancorp (Incorporated herein by reference to Exhibit 3(i) to Columbia’s form 10-Q for the period ended June 30, 1999).
3.1.2	Bylaws of Columbia Bancorp (Incorporated herein by reference to Exhibit 15.5 to Columbia’s Form 10-KSB for the year ended December 31, 1998).
4.1	Indenture dated as of December 19, 2002 between Columbia Bancorp, as Issuer, and Wells Fargo Bank, N.A., as Trustee, relating to Floating Rate Junior Subordinated Debt Securities due 2033.*
4.2	Form of Floating Rate Junior subordinated Debt Security due 2033.*
10.1	Employment agreement of April 15, 2005 between Roger L. Christensen and Columbia Bancorp.
10.2	Employment agreement of April 15, 2005 between Greg B. Spear and Columbia Bancorp.
10.3	Employment agreement of April 15, 2005 between Craig J. Ortega and Columbia River Bank.
10.4	Employment agreement of April 15, 2005 between Britt W. Thomas and Columbia River Bank.
10.5	Employment agreement of May 15, 2005 between R. Shane Correa and Columbia River Bank.
31.1	Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).
31.2	Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).
32.1	Certification of Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
32.2	Certification of Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

* Incorporated by reference to Columbia Bancorp’s Form 10-K for the year ended December 31, 2004, filed with the Securities and Exchange Commission.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	COLUMBIA BANCORP
Dated: August 3, 2005	/s/ Roger L. Christensen
	Roger L. Christensen
	President & Chief Executive Officer
Dated: August 3, 2005	/s/ Greg B. Spear
	Greg B. Spear
	Executive Vice President & Chief
	Financial Officer

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