 | Contact: Roger L. Christensen, President and CEO 541/298-6633 or rchristensen@columbiabancorp.com Greg B. Spear, Executive Vice President, CFO and CAO 541/298-6612 or gspear@columbiabancorp.com |
COLUMBIA BANCORP REPORTS STABILIZATION OF NET INTEREST MARGIN IN SECOND QUARTER;
TOTAL ASSETS CONTINUE TO GROW
The Dalles, Oregon - July 25, 2007 - Columbia Bancorp (NASDAQ: CBBO), the financial holding company for Columbia River Bank, reported second quarter total assets of $1.1 billion, a 12% or $114.8 million increase over the second quarter 2006. Management noted Columbia’s net interest margin was 5.54% for the second quarter of 2007, down 28 basis points from the first quarter of 2007. “The net interest margin appears to be stabilizing when compared with the decrease we experienced during the first quarter of 2007,” stated Greg Spear, Executive Vice President and Chief Financial Officer. “We will continue to experience slight compression, due to increasing competition for deposits,” he added.
KEY SECOND QUARTER ANALYTICS
| · | 2Q07 Return on Equity (ROE) was 12.66% |
| · | 2Q07 Return on Assets (ROA) was 1.16% |
| · | 2Q07 Net Interest Margin (tax equivalent) (NIM) was 5.54% |
| · | 2Q07 Efficiency Ratio was 55.81% |
KEY YEAR-TO-DATE ANALYTICS
| · | Total Assets were $1.1 billion, a YTD growth rate of 3% |
| · | Gross Loans were $864.4 million, a YTD growth rate of 6% |
| · | Deposits were $911.2 million, a YTD growth rate of 6% |
| · | Return on Equity (ROE) was 13.84% |
| · | Return on Assets (ROA) was 1.30% |
| · | Net Interest Margin (tax equivalent) (NIM) was 5.67% |
| · | Efficiency Ratio was 56.85% |
COMPANY BUSINESS TRENDS
Columbia continued to emphasize its focus on the five core areas it established in late 2005:
| · | Balanced loan and deposit growth |
| · | Strategic branch expansion |
| · | Attractive products, services and customer conveniences |
Executive Vice President and Chief Banking Officer, Shane Correa, reported the Company will continue to direct its efforts toward offering the best customer service possible. “We do have our sales team focused on activity geared to the small business segment. Enhancements to our product lines projected for the fourth quarter will also improve our success rate in obtaining new small business clients,” he said. Christine Herb, Executive Vice President and Chief Information Officer, said “In response to the challenging environment we’re putting more emphasis on streamlining processes, improving distribution and beefing up sales. We had enormous and unexpected growth in 2006. Now, looking forward in this tightening market, we need to leverage our efficiencies and redirect our resources.”
COLUMBIA BANCORP RELEASES SECOND QUARTER EARNINGS
July 24, 2007
Page of 2 of 6
INCOME STATEMENT PERFORMANCE
Interest income for the three months ending June 30, 2007, rose 23% to $20.5 million, an increase of $3.9 million over the same quarter 2006. Revenue (net-interest income plus non-interest income) for the second quarter increased 7% to $16.2 million, as compared to $15.2 million in the second quarter a year ago. This contributed to year-to-date revenues of $31.7 million in the first six months of 2007, up 8% or $2.3 million from the comparable period of the prior year. Net interest income before provision for loan losses increased 5% in quarter two of 2007 to $13.4 million, compared to $12.8 million in the second quarter of 2006. Interest income increases continued to be offset by larger increases to Columbia’s cost of funds as maturing certificates of deposit re-priced and deposit pressures and competition continued.
The loan loss provision, at $2.3 million in the second quarter of this year, increased 83% or $1.1 million over the second quarter of 2006, and 84% or $1.5 million to $3.4 million year-to date, compared to the first six months of 2006. The majority of the provision was related to a charge-off of a loan to a single borrower in the potato industry as disclosed earlier in the quarter. Management anticipates additional charge-offs during the remainder of the year will fall back to historic trend levels which could equate directly to an additional $700,000 in charge-offs by the end of the year. Should these charge-offs actually develop it would likely be due in part to the weakening real estate market. “Currently I don’t see our losses growing tremendously higher than what they are right now; but we are factoring historic trends into our planning for the rest of the year,” explained Britt Thomas, Executive Vice President and Chief Credit Officer. “Classified assets rose during the second quarter and they are tied directly to softening real estate markets. What we are seeing right now is the higher-leveraged borrowers showing some stress in a falling market,” he added.
Total non-interest income rose 16% to $2.8 million for the second quarter of 2007, compared to $2.4 million in the same prior year period. Significantly, mortgage loan origination income grew to $1.0 million, a 44% increase in the second quarter of 2007; in quarter two of 2006, that figure stood at $696,000. Comparative results for year-to-date saw an increase of 51% for the period as mortgage loan origination income jumped to $2.0 million from $1.3 million in the first half of 2006. Columbia River Bank President Craig Ortega, believes the underlying factor in this increase is the hiring of high quality lenders. While much of the industry is experiencing flat growth in the loan arena due to a weakened market, Columbia’s Mortgage Team had strong loan production in the second quarter.
Operating expenses rose 11% or $897,000 from $8.1 million in the second quarter 2006 to $9.0 million in the same quarter of 2007. This increase was substantially lower compared to the increases of 2006. “In each of the four quarters of 2006, we saw anywhere between a 16% and 30% increase in our total non-interest expense compared to the same quarters of the prior year,” explained Greg Spear, Chief Financial Officer. “Much of that increase was due to our expansion efforts into the Columbia Basin region, as well as the Vancouver, Washington market. With the net interest margin continuing to compress during 2007, management formalized a company-wide goal to minimize expenses.
Columbia’s efficiency ratio increased in the three months ending June 30, 2007 to 55.81%, from 53.60% in the same period of the prior year. Year-to-date efficiency ratio for the first half of 2007 was 56.85% compared to 54.02% a year ago.
BALANCE SHEET PERFORMANCE
Year-over-year growth for the quarter ending June 30, 2007 saw a gross loan balance of $864.4 million, up $97.8 million, or 13% from the second quarter 2006 balance of $766.6 million, compared to December 31, 2006. Columbia realized a 6%, or $50.9 million gain over the year-end balance of $813.4 million. “Although growth rates for the first half of 2007 are less than what we have experienced over the last two years, we remain on target to meet our double digit growth goal,” explained Shane Correa. “While most of our year-to-date growth was centered in our Columbia Basin and Willamette Valley Regions, we are seeing a slow-down in the volume of construction lending from our Central Oregon teams,” he continued.
Total deposits at June 30, 2007 rose to $911.2 million from $777.3 in the same quarter of the prior year. That $133.9 million, or 17% increase occurred primarily in the area of time certificate deposits, which saw a 61% or $132.3 million jump from mid-year 2006 to June 30, 2007. Compared to year end 2006, total deposits increased $52.1 million, or 6%, at June 30, 2007. “Growth in non-interest bearing deposits continues to be a challenge as it is industry-wide,” maintained Correa. Year-to-date deposit growth was primarily related to promotional certificates of deposit and additional wholesale deposits.
COLUMBIA BANCORP RELEASES SECOND QUARTER EARNINGS
July 24, 2007
Page of 3 of 6
Shareholder’s equity at June 30, 2007 rose 15% to $96.0 million, or $9.57 per outstanding share, as compared to $83.4 million, or $8.43 per share at June 30, 2006. Tangible book value stands at $8.83 per share as of June 30, 2007, a 15% increase over the comparative prior-year quarter value of $7.68.
LOOKING TO THE FUTURE
“As always, our focus remains on our shareholders, customers and the employees. We’ve been experiencing some industry-wide challenges, but we will continue to enhance our product lines and customer service levels, provide quality loans and aggressively pursue deposits,” stated Roger Christensen, President and Chief Executive Officer. “At the same time, we will continue to focus on generating non interest bearing deposits. Our expansion into the Vancouver, Washington market continues, and we expect to have a fully-operational branch there by the end of 2007,” he added.
EARNINGS TELECONFERENCE AND WEBCAST
Columbia will conduct a Teleconference and Webcast on Wednesday, July 25, 2007, at 12:00 noon Pacific Time (3:00 p.m. Eastern Time) when management, led by Roger Christensen, will discuss results for the second quarter 2007. To participate in the call, dial 1-888-404-1740; the conference ID is 5385366. The live Webcast can be heard by going to Columbia Bancorp’s web site, www.columbiabancorp.com, and clicking on Presentations/Webcast under the Investor Relations section.
The call replay will be available starting two hours after the completion of the live call until July 31, 2007. To listen to the replay dial 1-800-642-1687 and use access code 5385366. The Webcast will be archived on Columbia Bancorp’s website.
ABOUT COLUMBIA BANCORP
Columbia Bancorp (www.columbiabancorp.com) is the financial holding company for Columbia River Bank, which operates 21 branches located in The Dalles (2), Hood River, Bend (3), Madras, Redmond (2), Pendleton, Hermiston, McMinnville, Lake Oswego, Canby, and Newberg, Oregon, and in Goldendale, White Salmon, Sunnyside, Yakima, Pasco and Richland, Washington. In addition, Columbia River Bank has three limited service branches located in retirement homes, one in Bend, Oregon and two in McMinnville, Oregon. To supplement its community banking services, Columbia River Bank also provides mortgage-lending services through Columbia River Bank Mortgage Team and brokerage services through CRB Financial Services Team.
FORWARD LOOKING STATEMENTS
This press release 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 which 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 collectibility of our loans, economic and other factors which 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 release 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.
COLUMBIA BANCORP RELEASES SECOND QUARTER EARNINGS
July 24, 2007
Page of 4 of 6
INCOME STATEMENT | | | | | | | | | | | | | | | | | | | |
| (Unaudited) | | | | | | | | | | | | | | | | | | | |
| (In thousands, except per share data and ratios) | | | | | | | | | | | | | | | | | | | |
| | | | | | | % | | | | | | % | |
| | | | | | | Change | | | | | | | |
| | | | 2007 | | | 2006 | | | | | | 2007 | | | 2006 | | | | |
| Interest income | | $ | 20,495 | | $ | 16,634 | | | 23 | % | $ | 39,418 | | $ | 32,192 | | | 22 | % |
| Interest expense | | | 7,101 | | | 3,861 | | | 84 | % | | 13,111 | | | 7,461 | | | 76 | % |
| Net interest income before | | | | | | | | | | | | | | | | | | | |
| provision for loan losses | | | 13,394 | | | 12,773 | | | 5 | % | | 26,307 | | | 24,731 | | | 6 | % |
| Provision for loan losses | | | 2,325 | | | 1,270 | | | 83 | % | | 3,350 | | | 1,820 | | | 84 | % |
| Net interest income | | | | | | | | | | | | | | | | | | | |
| after provision for loan losses | | | 11,069 | | | 11,503 | | | -4 | % | | 22,957 | | | 22,911 | | | - | |
| | | | | | | | | | | | | | | | | | | | |
| Non-interest income: | | | | | | | | | | | | | | | | | | | |
| Service charges and fees | | | 1,110 | | | 1,192 | | | -7 | % | | 2,112 | | | 2,322 | | | -9 | % |
| Mortgage loan origination income | | | 1,005 | | | 696 | | | 44 | % | | 2,018 | | | 1,334 | | | 51 | % |
| Financial services revenue | | | 304 | | | 243 | | | 25 | % | | 524 | | | 442 | | | 19 | % |
| Credit card discounts and fees | | | 135 | | | 121 | | | 12 | % | | 250 | | | 227 | | | 10 | % |
| Other non-interest income | | | 224 | | | 138 | | | 62 | % | | 520 | | | 384 | | | 35 | % |
| Total non-interest income | | | 2,778 | | | 2,390 | | | 16 | % | | 5,424 | | | 4,709 | | | 15 | % |
| | | | | | | | | | | | | | | | | | | | |
| Non-interest expense: | | | | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 5,259 | | | 4,815 | | | 9 | % | | 10,301 | | | 9,392 | | | 10 | % |
| Occupancy expense | | | 1,145 | | | 918 | | | 25 | % | | 2,268 | | | 1,784 | | | 27 | % |
| Other non-interest expense | | | 2,620 | | | 2,394 | | | 9 | % | | 5,469 | | | 4,727 | | | 16 | % |
| Total non-interest expense | | | 9,024 | | | 8,127 | | | 11 | % | | 18,038 | | | 15,903 | | | 13 | % |
| | | | | | | | | | | | | | | | | | | | |
| Income before provision for income taxes | | | 4,823 | | | 5,766 | | | -16 | % | | 10,343 | | | 11,717 | | | -12 | % |
| Provision for income taxes | | | 1,817 | | | 2,159 | | | -16 | % | | 3,884 | | | 4,388 | | | -11 | % |
| Net income | | $ | 3,006 | | $ | 3,607 | | | -17 | % | $ | 6,459 | | $ | 7,329 | | | -12 | % |
| | | | | | | | | | | | | | | | | | | | |
| Earnings per common share | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.30 | | $ | 0.36 | | | -16 | % | $ | 0.65 | | $ | 0.74 | | | -12 | % |
| Diluted | | | 0.30 | | | 0.36 | | | -18 | % | | 0.63 | | | 0.72 | | | -12 | % |
| Cumulative dividend per common share | | | 0.10 | | | 0.10 | | | - | | | 0.20 | | | 0.19 | | | 5 | % |
| | | | | | | | | | | | | | | | | | | | |
| Book value per common share | | | | | | | | | | | $ | 9.57 | | $ | 8.43 | | | 14 | % |
Tangible book value per common share (1) | | | | | | | | | | | | 8.83 | | | 7.68 | | | 15 | % |
| | | | | | | | | | | | | | | | | | | | |
| Weighted average shares outstanding | | | | | | | | | | | | | | | | | | | |
| Basic | | | 9,976 | | | 9,888 | | | | | | 9,970 | | | 9,871 | | | | |
| Diluted | | | 10,171 | | | 10,156 | | | | | | 10,187 | | | 10,132 | | | | |
| Actual shares outstanding | | | 10,029 | | | 9,901 | | | | | | 10,029 | | | 9,901 | | | | |
| | | Quarter Ended | | Year to Date | |
| | | June 30, | | June 30, | | June 30, | | June 30, | |
RATIOS | | 2007 | | 2006 | | 2007 | | 2006 | |
| Interest rate yield on interest-earning assets, | | | | | | | | | | | | | |
| tax equivalent | | | 8.46 | % | | 8.59 | % | | 8.48 | % | | 8.43 | % |
| Interest rate expense on interest-bearing | | | | | | | | | | | | | |
| liabilities | | | 3.95 | % | | 2.89 | % | | 3.85 | % | | 2.82 | % |
| Interest rate spread, tax equivalent | | | 4.51 | % | | 5.69 | % | | 4.64 | % | | 5.61 | % |
| Net interest margin, tax equivalent | | | 5.54 | % | | 6.60 | % | | 5.67 | % | | 6.49 | % |
Efficiency ratio (2) | | | 55.81 | % | | 53.60 | % | | 56.85 | % | | 54.02 | % |
| Return on average assets | | | 1.16 | % | | 1.72 | % | | 1.30 | % | | 1.78 | % |
| Return on average equity | | | 12.66 | % | | 17.57 | % | | 13.84 | % | | 18.28 | % |
| Average equity / average assets | | | 9.17 | % | | 9.81 | % | | 9.39 | % | | 9.75 | % |
(1) Total common equity, less goodwill and other intangible assets, divided by actual shares outstanding. |
(2) Non-interest expense divided by net interest income and non-interest income. |
COLUMBIA BANCORP RELEASES SECOND QUARTER EARNINGS
July 24, 2007
Page of 5 of 6
BALANCE SHEET | | | | | | | | | | | |
| (Unaudited) | | | | | | | | | | | |
| (In thousands) | | | | | | | | | | | |
ASSETS | | June 30, 2007 | | June 30, 2006 | | Year over Year % Change | | December 31, 2006 | | Year to Date % Change | |
| Cash and cash equivalents | | $ | 129,633 | | $ | 117,051 | | | 11 | % | $ | 148,514 | | | -13 | % |
| Investment securities | | | 35,467 | | | 36,825 | | | -4 | % | | 37,704 | | | -6 | % |
| Loans: | | | | | | | | | | | | | | | | |
| Commercial loans | | | 130,143 | | | 117,563 | | | 11 | % | | 136,582 | | | -5 | % |
| Agricultural loans | | | 82,027 | | | 93,222 | | | -12 | % | | 86,218 | | | -5 | % |
| Real estate loans | | | 335,583 | | | 327,942 | | | 2 | % | | 347,526 | | | -3 | % |
| Real estate loans - construction | | | 286,052 | | | 199,707 | | | 43 | % | | 212,826 | | | 34 | % |
| Consumer loans | | | 12,907 | | | 13,466 | | | -4 | % | | 12,540 | | | 3 | % |
| Loans held for sale | | | 6,078 | | | 6,159 | | | -1 | % | | 7,538 | | | -19 | % |
| Other loans | | | 11,576 | | | 8,540 | | | 36 | % | | 10,212 | | | 13 | % |
| Total gross loans | | | 864,366 | | | 766,599 | | | 13 | % | | 813,442 | | | 6 | % |
| | | | | | | | | | | | | | | | | |
| Unearned loan fees | | | (1,286 | ) | | (1,806 | ) | | 29 | % | | (1,428 | ) | | 10 | % |
| Allowance for loan losses | | | (10,168 | ) | | (9,671 | ) | �� | -5 | % | | (10,143 | ) | | - | |
| Net loans | | | 852,912 | | | 755,122 | | | 13 | % | | 801,871 | | | 6 | % |
| | | | | | | | | | | | | | | | | |
| Property and equipment, net | | | 20,299 | | | 17,934 | | | 13 | % | | 18,089 | | | 12 | % |
Goodwill | | | 7,389 | | | 7,389 | | | - | | | 7,389 | | | - | |
| Other assets | | | 21,849 | | | 18,432 | | | 19 | % | | 19,621 | | | 11 | % |
| Total assets | | $ | 1,067,549 | | $ | 952,753 | | | 12 | % | $ | 1,033,188 | | | 3 | % |
| | | | | | | | | | | | | | | | | |
LIABILITIES | | | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | | | |
| Non-interest bearing demand deposits | | $ | 222,950 | | $ | 236,075 | | | -6 | % | $ | 235,037 | | | -5 | % |
| Interest bearing demand deposits | | | 301,729 | | | 282,918 | | | 7 | % | | 313,433 | | | -4 | % |
| Savings accounts | | | 36,506 | | | 40,651 | | | -10 | % | | 35,456 | | | 3 | % |
| Time certificates | | | 350,010 | | | 217,679 | | | 61 | % | | 275,140 | | | 27 | % |
| Total deposits | | | 911,195 | | | 777,323 | | | 17 | % | | 859,066 | | | 6 | % |
| | | | | | | | | | | | | | | | | |
| Borrowings | | | 53,361 | | | 81,589 | | | -35 | % | | 74,138 | | | -28 | % |
| Other liabilities | | | 7,032 | | | 10,403 | | | -32 | % | | 8,966 | | | -22 | % |
| Total liabilities | | | 971,588 | | | 869,315 | | | 12 | % | | 942,170 | | | 3 | % |
| | | | | | | | | | | | | | | | | |
| Shareholders' equity | | | 95,961 | | | 83,438 | | | 15 | % | | 91,018 | | | 5 | % |
| Total liabilities and shareholders' equity | | $ | 1,067,549 | | $ | 952,753 | | | 12 | % | $ | 1,033,188 | | | 3 | % |
COLUMBIA BANCORP RELEASES SECOND QUARTER EARNINGS
July 24, 2007
Page of 6 of 6
ADDITIONAL FINANCIAL INFORMATION | | | | | |
| (Unaudited) | | | | | |
| (In thousands, except ratios) | | | | | |
| �� | | | |
NON-PERFORMING ASSETS | | June 30, 2007 | | June 30, 2006 | |
| Delinquent loans on non-accrual status | | $ | 4,557 | | $ | 3,032 | |
| Delinquent loans on accrual status | | | - | | | - | |
| Restructured loans | | | 104 | | | 32 | |
| Total non-performing loans | | | 4,661 | | | 3,064 | |
| Other real estate owned | | | - | | | - | |
| Repossed other assets | | | 32 | | | - | |
| Total non-performing assets | | $ | 4,693 | | $ | 3,064 | |
| | | | | | | | |
| Total non-performing assets / total assets | | | 0.44 | % | | 0.32 | % |
| | | Quarter Ended | | Year to Date | |
ALLOWANCE FOR CREDIT LOSSES | | June 30, 2007 | | June 30, 2006 | | June 30, 2007 | | June 30, 2006 | |
| Allowance for loan losses, beginning of period | | $ | 10,055 | | $ | 8,866 | | $ | 10,143 | | $ | 9,526 | |
| Provision for loan losses | | | 2,325 | | | 1,270 | | | 3,350 | | | 1,820 | |
| Recoveries | | | 98 | | | 45 | | | 178 | | | 95 | |
| Charge offs | | | (2,310 | ) | | (510 | ) | | (3,503 | ) | | (1,080 | ) |
| Reclassify liability for unfunded loan commitments | | | - | | | - | | | - | | | (690 | ) |
| Allowance for loan losses, end of period | | | 10,168 | | | 9,671 | | | 10,168 | | | 9,671 | |
| Liability for unfunded loan commitments | | | 838 | | | 690 | | | 838 | | | 690 | |
| Allowance for credit losses | | $ | 11,006 | | $ | 10,361 | | $ | 11,006 | | $ | 10,361 | |
| | | | | | | | | | | | | | |
| Allowance for loan losses / gross loans | | | | | | | | | 1.18 | % | | 1.26 | % |
| Allowance for credit losses / gross loans | | | | | | | | | 1.27 | % | | 1.35 | % |
| Non-performing loans / allowance for loan losses | | | | | | | | | 45.84 | % | | 31.68 | % |
| | | Quarter Ended | | Year to Date | |
FINANCIAL PERFORMANCE | | June 30, 2007 | | June 30, 2006 | | June 30, 2007 | | June 30, 2006 | |
| Average interest-earning assets | | $ | 974,908 | | $ | 780,516 | | $ | 940,108 | | $ | 773,368 | |
| Average gross loans | | | 857,155 | | | 708,005 | | | 842,612 | | | 697,231 | |
| Average assets | | | 1,038,735 | | | 839,072 | | | 1,006,711 | | | 829,177 | |
| Average interest-bearing liabilities | | | 720,233 | | | 535,302 | | | 687,603 | | | 533,255 | |
| Average interest-bearing deposits | | | 701,715 | | | 497,356 | | | 659,704 | | | 499,292 | |
| Average deposits | | | 922,556 | | | 713,967 | | | 877,676 | | | 710,676 | |
| Average liabilities | | | 943,505 | | | 756,720 | | | 908,598 | | | 748,306 | |
| Average equity | | | 95,230 | | | 82,352 | | | 94,112 | | | 80,871 | |
| | | | | | | | | | | | | | |
| # # # | | | | | | | | | | | | | |
