EXHIBIT 99.1
FOR IMMEDIATE RELEASE
January 28, 2010
Contacts: Melanie J. Dressel, President and
Chief Executive Officer
(253) 305-1911
Gary R. Schminkey, Executive Vice President
and Chief Financial Officer
(253) 305-1966
COLUMBIA BANKING SYSTEM ANNOUNCES
FOURTH QUARTER AND FULL YEAR 2009 RESULTS; DECLARES CASH DIVIDEND
Fourth Quarter Profitable, Business Fundamentals Remain Strong; Company is Very Well Capitalized, With Strong Liquidity and Excellent Core Deposit Base
Highlights for the Quarter
| · | Net Income of $447,000, or $0.02 per common share |
| · | Remains very well capitalized at 19.60% total risk-based capital ratio |
| · | Residential construction loans decline to 5.4% of total loans at December 31, 2009. |
| · | Liquidity ratio of 51%, or over $1.6 billion of available funding from multiple sources |
| · | Very strong core deposits at 83% of total deposits |
| · | Stable net interest margin of 4.30% |
| · | Vancouver, WA branch added; 52-branch network at year-end 2009. |
| · | Columbia River Bank, The Dalles, Oregon, acquired on January 22, 2010 in FDIC-assisted transaction; brings network to 73 branches in Washington and Oregon. |
TACOMA, Washington, January 28, 2010 -- Columbia Banking System, Inc. (NASDAQ: COLB) (“Columbia”) today announced net income applicable to common shareholders of $447,000 for the quarter ended December 31, 2009, compared to $1.3 million for the same quarter of 2008. On a diluted earnings per common share basis, net income was $0.02, compared with net income of $0.07 per share a year earlier. These results were achieved while the Company added $15.0 million to the provision for loan losses due to the continued decline in real estate values, principally relating to residential land, lots and lot development loans.
The year 2009 resulted in a net loss applicable to common shareholders of $8.4 million, compared with earnings of $5.5 million for 2008, primarily reflecting a $63.5 million provision for loan losses in 2009. On a diluted per common share basis, the net loss for 2009 was $0.38 compared with income of $0.30 a year earlier.
“We are pleased to have achieved a profitable fourth quarter in this continuing and difficult economic environment,” said Melanie Dressel, President and Chief Executive Officer. “Despite our proactive concentration on managing credit issues, our 2009 earnings were obviously impacted by declining real estate values. However, our results for the quarter and the year serve to confirm our long-standing business model. We remain very well capitalized, with multiple sources of liquidity and a diversified loan portfolio. We have significantly reduced our exposure to residential construction loans. Our core value of building relationships with our customers continues to generate an exceptional level of core deposits, which are an important factor in the relatively stable net interest margin we have maintained. We believe we are very well positioned to become even stronger as we navigate through this economic cycle.”
Ms. Dressel continued, “Our strength and capital level also give us the ability to take advantage of opportunities to move further toward our goal of growing into a true Pacific Northwest regional community bank. On January 22, 2010, we acquired Columbia River Bank through an FDIC-assisted transaction, significantly expanding our footprint in both Oregon and Washington.”
Revenue
Revenue (net interest income plus noninterest income) was $ 38.3 million for the fourth quarter of 2009, up 7% from $35.7 million one year ago. The significant increase was primarily due to an additional $1.0 million impairment charge in the fourth quarter 2008 related to the decline in the fair value of an investment in preferred stock issued by the Federal Home Loan Mortgage Corporation (“Freddie Mac”) and the Federal National Mortgage Association (“Fannie Mae”). Excluding the impairment charge in 2008, revenue for the fourth quarter 2009 was up 4% from fourth quarter 2008.,
Revenue for the year ended December 31, 2009 was $145.0 million, an increase of 8% from $134.4 million for the same period in 2008. Excluding the 2008 impairment charge, redemption of Visa
and MasterCard shares and gain on the sale of investment securities, revenue for the year 2009 was down 3% from 2008.
At December 31, 2009, Columbia’s total assets were $3.2 billion, an increase of 3% from $3.10 billion at December 31, 2008. Total loans were $2.01 billion at December 31, 2009, down 10% from $2.23 billion at year-end 2008. Total securities increased $91.7 million to $631.6 million at December 31, 2009 as a result of management’s asset/liability strategies. Total deposits were $2.48 billion at December 31, 2009, an increase of 4% from $2.38 billion at December 31, 2008, and an increase of 2% from $2.44 billion at September 30, 2009. Core deposits, defined as demand, savings, money market accounts and certificates of deposit under $100,000, totaled $2.07 billion at December 31, 2009, comprising 83% of total deposits.
Ms. Dressel noted, “We have continued to focus on developing our customer relationships, resulting in core deposits that have helped us achieve a lower cost deposit mix. The decrease in our total loans reflects the soft market and the resulting lower demand, as well as payoffs in the construction loan portfolio. The decrease in our commercial business loans is primarily a result of loan pay-downs and a decrease in line of credit usage.”
Acquisition of Columbia River Bank
On January 22, 2010, Columbia State Bank acquired all of the deposits and certain assets of Columbia River Bank from the Federal Deposit Insurance Corporation, which had been appointed receiver of the institution. We acquired approximately $1 billion in assets and $980 million in deposits through 21 branches located in Oregon and Washington. Columbia River Bank’s approximately $700 million in loans are subject to a loss-sharing agreement with the FDIC. We participated in a competitive bid process, whereby we agreed to assume all of the deposits and nearly all of the assets of Columbia River Bank. The accepted bid included a 1% deposit premium on non-brokered deposits and a negative bid of $43.9 million.
Fourth Quarter 2009 Operating Results
Net Interest Income
Net interest income for the fourth quarter of 2009 increased $481,000, or 2%, from $29.3 million for the fourth quarter 2008, reflecting a $176,000 recovery related to a nonperforming loan and a decrease
in interest expense on deposits. For the year ended December 31, 2009, net interest income decreased 4% to $115.4 million from $119.5 million a year earlier, primarily due to a decrease in earning assets from the prior year.
Columbia’s net interest margin was 4.30% for the fourth quarter 2009, down from 4.39% for the fourth quarter of 2008. On a quarterly basis, the net interest margin was 4.26% for the first quarter of 2009, 4.38% for the second quarter of 2009, and 4.34% in the third quarter of 2009. Interest reversals impacting the net interest margin for the fourth quarter 2009 were $194,569, representing approximately 2 basis points.
Average interest-earning assets increased 4% to $2.87 billion in the fourth quarter of 2009, from $2.77 billion in the fourth quarter of 2008. The yield on average interest-earning assets decreased 80 basis points to 5.12% in the fourth quarter of 2009, from 5.92% in the fourth quarter of 2008. During the same period, average interest-bearing liabilities decreased to $2.04 billion from $2.19 billion last year. The cost of average interest-bearing liabilities decreased 77 basis points to 1.16% in the fourth quarter of 2009, compared with 1.93% in the fourth quarter of 2008. Ms. Dressel noted, “These results reflect the rapid decline in interest rates during 2008. The prime rate was 7.25% at the beginning of January 2008, and ended the year at 3.25%, the current rate.”
For the year ending December 31, 2009, Columbia’s net interest margin decreased to 4.33% from 4.38% a year earlier. Average interest-earning assets decreased to $2.78 billion for the year 2009 from $2.85 billion for 2008. The yield on average interest-earning assets decreased 101 basis points to 5.32% in 2009, from 6.33% in 2008. Average interest-bearing liabilities were $2.07 billion compared to $2.28 billion for 2008. The cost of average interest-bearing liabilities decreased 110 basis points to 1.34% in 2009, compared with 2.44% for 2008. Interest reversals impacting the net interest margin for 2009 were $2.1 million, representing approximately 7 basis points.
Noninterest income
Total noninterest income for the fourth quarter 2009 was $8.5 million, an increase of 35% from $6.3 million a year earlier. The increase was primarily due to a $1 million impairment charge in the fourth quarter 2008 related to the decline in the fair value of an investment in preferred stock issued by the Federal Home Loan Mortgage Corporation (“Freddie Mac”) and the Federal National Mortgage
Association (“Fannie Mae”). Excluding the impact of the impairment charge and gains and losses on sales of securities, noninterest income was relatively unchanged from the prior-year quarter. Other income was down approximately 22% from fourth quarter, 2008 primarily due to reduced fees from residential mortgage origination activity, as well as reduced income from the loan customer interest rate swap program.
For the year ended December 31, 2009, noninterest income was $29.7 million, an increase of $14.8 million, or 100%, from 2008. The increase was primarily due to the $18.5 million impairment charge in the third quarter 2008 related to Freddie Mac and Fannie Mae investments as noted above. Excluding the impact of the impairment charge, gains on sales of securities and proceeds from the redemption of Visa and MasterCard shares, noninterest income declined 6% from 2008. Proceeds from the redemption of Visa and MasterCard shares for 2009 declined $3 million from 2008, and other income for 2009 declined $1.6 million, or 27% from 2008 partially due to the receipt of life insurance proceeds of $612,000 received in the prior year, as well as reduced fees from residential mortgage origination activity and less activity in the loan customer interest rate swap program.
Noninterest expense
Noninterest expense for the fourth quarter of 2009 was $22.8 million, an increase of 5% from $21.8 million a year earlier. Decreases in compensation and benefits, advertising and promotion and other expenses resulting from the continued focus on expense control were offset by higher regulatory premiums and additional costs of operating other real estate owned. Regulatory premiums increased $442,000, or 72%, from the fourth quarter of 2008, resulting from increased FDIC assessment rates. Other real estate owned balances increased to $19.0 million at December 31, 2009, compared to $2.9 million at December 31, 2008, contributing to a $1.0 million increase in the cost of operating from December 31, 2008.
Total noninterest expense for 2009 was $94.5 million, an increase of $2.4 million, or 3%, from $92.1 million a year earlier. Decreases of 4% in compensation and employee benefits, and 6% in occupancy expenses were again significantly offset by legal and professional fees and FDIC regulatory premium expenses. Legal and professional fees were $3.9 million for 2009, compared to $2.0 million for
2008. FDIC regulatory premium expenses were $5.8 million for 2009, compared to $2.1 million one year ago.
Nonperforming Assets and Loan Loss Provision
As of December 31, 2009, non-performing assets were $129.5 million, compared to $109.6 million at December 31, 2008 and down from $148.9 million at September 30, 2009. 1-4 Family Residential Construction assets continue to be the largest component of nonperforming assets; however, it was also the area where we saw the largest reduction in nonperforming assets. The balance of the portfolio remained relatively stable. Detail is provided in the table below.
| | 1-4 Family Residential Real Estate | | | 1-4 Family Residential Real Estate Construction | | | Multi-family Residential and Commercial Real Estate | | | Multi-family Residential and Commercial Real Estate Construction | | | Commercial Business | | | Consumer | | | Total | |
| Non Accrual & Restructured Loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2009 | | $ | 1,860 | | | $ | 47,713 | | | $ | 24,354 | | | $ | 16,230 | | | $ | 18,979 | | | $ | 1,355 | | | $ | 110,491 | |
| September 30, 2009 | | $ | 2,665 | | | $ | 65,527 | | | $ | 26,650 | | | $ | 19,138 | | | $ | 14,969 | | | $ | 1,769 | | | $ | 130,718 | |
| June 30, 2009 | | $ | 1,879 | | | $ | 65,168 | | | $ | 24,256 | | | $ | 22,099 | | | $ | 12,198 | | | $ | 2,167 | | | $ | 127,767 | |
| December 31, 2008 | | $ | 905 | | | $ | 69,667 | | | $ | 5,710 | | | $ | 25,752 | | | $ | 3,563 | | | $ | 1,152 | | | $ | 106,750 | |
| OREO | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2009 | | $ | 0 | | | $ | 15,045 | | | $ | 3,195 | | | $ | 797 | | | $ | 0 | | | $ | 0 | | | $ | 19,037 | |
| September 30, 2009 | | $ | 0 | | | $ | 15,830 | | | $ | 1,510 | | | $ | 797 | | | $ | 0 | | | $ | 0 | | | $ | 18,137 | |
| June 30, 2009 | | $ | 0 | | | $ | 6,859 | | | $ | 1,510 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 8,369 | |
| December 31, 2008 | | $ | 0 | | | $ | 2,874 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 2,874 | |
| Nonperforming Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2009 | | $ | 1,860 | | | $ | 62,757 | | | $ | 27,550 | | | $ | 17,027 | | | $ | 18,979 | | | $ | 1,355 | | | $ | 129,528 | |
| September 30, 2009 | | $ | 2,665 | | | $ | 81,358 | | | $ | 28,160 | | | $ | 19,935 | | | $ | 14,968 | | | $ | 1,769 | | | $ | 148,855 | |
| June 30, 2008 | | $ | 1,879 | | | $ | 72,028 | | | $ | 25,766 | | | $ | 22,099 | | | $ | 12,198 | | | $ | 2,167 | | | $ | 136,136 | |
| December 31, 2008 | | $ | 905 | | | $ | 72,541 | | | $ | 5,710 | | | $ | 25,752 | | | $ | 3,563 | | | $ | 1,152 | | | $ | 109,624 | |
For the quarter ended December 31, 2009, net loan charge-offs were approximately $13.2 million, compared to $6.3 million for the same period a year ago, and $13.7 million during the third quarter of 2009. Net charge-offs in the 1-4 family residential construction portfolio of $5.2 million for the quarter were centered in residential land and lot development loans. Commercial real estate construction net charge-offs of $1.7 million were related to write-downs on condominium loans. The commercial business
pool had charge- offs of approximately $4.5 million, and continue to be centered in loans related to the construction and real estate development industries. The consumer portfolio had $1.2 million in net charge-offs primarily centered in home equity lines of credit. For the year ending December 31, 2009, net charges-offs were $52.7 million. Most of the net charges were in the 1-4 family residential construction portfolio, followed by commercial business loans and commercial construction loan net charge-offs. The breakout by portfolio is in the table below.
| | | 1-4 Family Residential Real Estate | | | 1-4 Family Residential Real Estate Construction | | | Multi-family Residential and Commercial Real Estate | | | Multi-family Residential and Commercial Real Estate Construction | | | Commercial Business | | | Consumer | | | Total | |
| 2009 Net Loan Charge-Offs | | $ | 327 | | | $ | 26,878 | | | $ | 1,284 | | | $ | 9,297 | | | $ | 12,180 | | | $ | 2,803 | | | $ | 52,769 | |
| 2008 Net Loan Charge-Offs | | $ | 46 | | | $ | 18,324 | | | $ | 662 | | | $ | 2,169 | | | $ | 2,547 | | | | 1,280 | | | $ | 25,028 | |
For the fourth quarter 2009, the provision for loan losses was $15.0 million compared to $13.3 million for the same quarter last year and $16.5 million for the third quarter of 2009. The elevated levels of provisioning are related to continued weakness in the Pacific Northwest economy. The allowance for loan losses as a percentage of outstanding loans at December 31, 2009 was 2.66% compared to 1.91% and 2.50% at December 31, 2008 and September 30, 2009, respectively.
Past due loans were $9.1 million, or 0.45% of total loans, as of December 31, 2009, compared to $10.4 million or 0.46%, of total loans, at December 31, 2008 and $12.0 million or 0.58% as of September 30, 2009.
“Overall it was an improving quarter for credit quality” said Ms. Dressel, “Most importantly, we were able to reduce our level of nonperforming assets, In addition, we continue to be pleased with our ability to reduce exposure in the areas of residential and commercial construction which declined by 18% or $33 million during the quarter.”
Organizational Update
Ms. Dressel said, “During 2009, we moved forward with strategies designed to increase our resources and presence in markets where we were able to capitalize on opportunities to fill in our geographic footprint and increase market share. We brought on board experienced teams of bankers,
particularly in our Vancouver, Washington and Portland, Oregon markets, who have been able to take advantage of our capacity and willingness to lend.”
Ms. Dressel noted, “We are very pleased with the progress of our new locations, including our Renton, Washington branch which opened in July, followed by an office in Vancouver in mid-December. Our Portland office, which will house business bankers and a full-service branch in the Fox Tower, is scheduled to open in late first quarter of this year. These growth initiatives, along with our acquisition of Columbia River Bank, help to offset the lower loan demand in the current economy, and position us well for the future.”
Cash Dividend Announcement
The Board of Directors has announced a quarterly cash dividend of $0.01 per common share, which will be paid on February 24, 2010 to shareholders of record as of the close of business on February 10, 2010
Conference Call
Columbia’s management will discuss the fourth quarter results on a conference call scheduled for January 28, 2010 at 1:00 p.m. PST (4:00 p.m. EST). Interested parties may listen to this discussion by calling 1-888-318-7969; Conference ID code #49843829.
A conference call replay will be available from approximately 4:00 p.m. PST on
January 28, 2010 through midnight PST on February 3, 2010. The conference call replay can be accessed by dialing 1-800-642-1687 and entering Conference ID code #49843829.
Annual Meeting of Shareholders (New Location from previous Annual Meetings)
Columbia Banking System’s Annual Meeting of Shareholders will be held at 1:00 PDT on April 28, 2010, at the William W. Philip Hall at the University of Washington Tacoma., 1900 Commerce Street, Tacoma, Washington 98402. The Hall is named in honor of William W. “Bill” Philip, who had a seminal role in establishing UW Tacoma, and was a co-founder of Columbia Bank.
Directions and parking information are available at www.tacoma.washington.edu/conference.
About Columbia
Headquartered in Tacoma, Washington, Columbia Banking System, Inc. is the holding company of Columbia Bank, a Washington state-chartered full-service commercial bank which was awarded second place in the large employer category by Seattle Business Magazine’s 100 Best Companies to Work For 2009 and was designated one of Puget Sound Business Journal’s “Washington’s Best Workplaces 2009”.
With the January 22, 2010 FDIC-assisted acquisition of Columbia River Bank, Columbia Banking System has 73 banking offices in ten counties in Washington State, and eleven counties in Oregon. Columbia Bank does business under the Bank of Astoria name at the Bank of Astoria’s former branches located in Astoria, Warrenton, Seaside and Cannon Beach in Clatsop County and in Manzanita and Tillamook in Tillamook County. More information about Columbia can be found on its website at www.columbiabank.com.
###
Note Regarding Forward Looking Statements
This news release includes forward looking statements, which management believes are a benefit to shareholders. These forward looking statements describe management’s expectations regarding future events and developments such as future operating results, growth in loans and deposits, continued success of our style of banking and the strength of the local economy. The words “will,” “believe,” “expect,” “should,” and “anticipate” and words of similar construction are intended in part to help identify forward looking statements. Future events are difficult to predict, and the expectations described above are necessarily subject to risk and uncertainty that may cause actual results to differ materially and adversely. In addition to discussions about risks and uncertainties set forth from time to time in our filings with the SEC, factors that may cause actual results to differ materially from those contemplated by such forward looking statements include, among others, the following possibilities: (1) local and national economic conditions are less favorable than expected or have a more direct and pronounced effect on us than expected and adversely affect our ability to continue internal growth at historical rates and maintain the quality of our earning assets; (2) a continued decline in the housing/real estate market; (3) changes in interest rates significantly reduce interest margins and negatively affect funding sources; (4) deterioration of credit quality that could, among other things, increase defaults and delinquency risks in the Banks’ loan portfolios (5) projected business increases following strategic expansion activities are lower than expected; (6) competitive pressure among financial institutions increases significantly; (7) legislation or regulatory requirements or changes adversely affect the businesses in which we are engaged; and (8) our ability to realize the efficiencies we expect to receive from our investments in personnel, acquisitions and infrastructure
| FINANCIAL STATISTICS | | | | | | | | | | | | | | |
| Columbia Banking System, Inc. | | Three Months Ended | | | | Twelve Months Ended | |
| Unaudited | | December 31, | | | | December 31, | |
| (dollars in thousands except per share) | | 2009 | | | | 2008 | | | | 2009 | | | 2008 | |
| Earnings | | | | | | | | | | | | | | |
| Net interest income | | $ | 29,800 | | | | $ | 29,319 | | | | $ | 115,352 | | | $ | 119,513 | |
| Provision for loan and lease losses | | $ | 15,000 | | | | $ | 13,250 | | | | $ | 63,500 | | | $ | 41,176 | |
| Noninterest income | | $ | 8,526 | | | | $ | 6,334 | | | | $ | 29,690 | | | $ | 14,850 | |
| Noninterest expense | | $ | 22,847 | | | | $ | 21,813 | | | | $ | 94,488 | | | $ | 92,125 | |
| Net income (loss) | | $ | 1,552 | | | | $ | 1,814 | | | | $ | (3,968 | ) | | $ | 5,968 | |
| Net income (loss) applicable to common shareholders | | $ | 447 | | | | $ | 1,344 | | | | $ | (8,371 | ) | | $ | 5,498 | |
| Per Common Share | | | | | | | | | | | | | | | | | | |
| Earnings (loss) (basic) | | $ | 0.02 | | | | $ | 0.07 | | | | $ | (0.38 | ) | | $ | 0.30 | |
| Earnings (loss) (diluted) | | $ | 0.02 | | | | $ | 0.07 | | | | $ | (0.38 | ) | | $ | 0.30 | |
| Averages | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 3,177,098 | | | | $ | 3,061,867 | | | | $ | 3,084,421 | | | $ | 3,134,054 | |
| Interest-earning assets | | $ | 2,872,842 | | | | $ | 2,767,854 | | | | $ | 2,783,862 | | | $ | 2,851,555 | |
| Loans | | $ | 2,034,903 | | | | $ | 2,214,918 | | | | $ | 2,124,574 | | | $ | 2,264,486 | |
| Securities | | $ | 643,716 | | | | $ | 535,763 | | | | $ | 584,028 | | | $ | 565,299 | |
| Deposits | | $ | 2,453,553 | | | | $ | 2,297,422 | | | | $ | 2,378,176 | | | $ | 2,382,484 | |
| Core deposits | | $ | 2,039,533 | | | | $ | 1,865,402 | | | | $ | 1,945,039 | | | $ | 1,911,897 | |
| Interest-bearing deposits | | $ | 1,890,479 | | | | $ | 1,837,166 | | | | $ | 1,866,917 | | | $ | 1,921,737 | |
| Interest-bearing liabilities | | $ | 2,041,761 | | | | $ | 2,193,437 | | | | $ | 2,067,014 | | | $ | 2,277,422 | |
| Noninterest-bearing deposits | | $ | 563,074 | | | | $ | 460,257 | | | | $ | 511,259 | | | $ | 460,747 | |
| Shareholders' equity | | $ | 530,804 | | | | $ | 368,184 | | | | $ | 462,167 | | | $ | 354,387 | |
| Financial Ratios | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.19 | % | | | | 0.24 | % | | | | (0.13 | %) | | | 0.19 | % |
| Return on average common equity | | | 0.39 | % | | | | 1.60 | % | | | | (2.16 | %) | | | 1.59 | % |
| Average equity to average assets | | | 16.71 | % | | | | 12.02 | % | | | | 14.98 | % | | | 11.31 | % |
| Net interest margin | | | 4.30 | % | | | | 4.39 | % | | | | 4.33 | % | | | 4.38 | % |
Efficiency ratio (tax equivalent)(1) | | | 58.12 | % | | | | 57.62 | % | | | | 61.53 | % | | | 59.88 | % |
| | | December 31, | | | | | | | | | | |
| Period end | | | 2009 | | | | | 2008 | | | | | | | | | | |
| Total assets | | $ | 3,200,930 | | | | $ | 3,097,079 | | | | | | | | | | |
| Loans | | $ | 2,008,884 | | | | $ | 2,232,332 | | | | | | | | | | |
| Allowance for loan and lease losses | | $ | 53,478 | | | | $ | 42,747 | | | | | | | | | | |
| Securities | | $ | 631,645 | | | | $ | 540,525 | | | | | | | | | | |
| Deposits | | $ | 2,482,705 | | | | $ | 2,382,151 | | | | | | | | | | |
| Core deposits | | $ | 2,072,821 | | | | $ | 1,941,047 | | | | | | | | | | |
| Shareholders' equity | | $ | 528,139 | | | | $ | 415,385 | | | | | | | | | | |
| Book value per common share | | $ | 16.13 | | | | $ | 18.82 | | | | | | | | | | |
| Nonperforming assets | | | | | | | | | | | | | | | | | | |
| Nonaccrual loans | | $ | 110,431 | | | | $ | 106,163 | | | | | | | | | | |
| Restructured loans accruing interest | | | 60 | | | | | 587 | | | | | | | | | | |
| Other real estate owned | | | 19,037 | | | | | 2,874 | | | | �� | | | | | | |
| Total nonperforming assets | | $ | 129,528 | | | | $ | 109,624 | | | | | | | | | | |
| Nonperforming loans to period-end loans | | | 5.50 | % | | | | 4.78 | % | | | | | | | | | |
| Nonperforming assets to period-end assets | | | 4.05 | % | | | | 3.54 | % | | | | | | | | | |
| Allowance for loan and lease losses to period-end loans | | | 2.66 | % | | | | 1.91 | % | | | | | | | | | |
| Allowance for loan and lease losses to nonperforming loans | | | 48.40 | % | | | | 40.04 | % | | | | | | | | | |
| Allowance for loan and lease losses to nonperforming assets | | | 41.29 | % | | | | 38.99 | % | | | | | | | | | |
| Net loan charges-offs | | $ | 52,769 | | (2) | | $ | 25,028 | | (3) | | | | | | | | |
| (1) Noninterest expense divided by the sum of net interest income and noninterest income on a tax equivalent basis, excluding gain/loss |
| on sale of investment securities, net cost (gain) of OREO, proceeds from redemption of Visa and Mastercard shares, reversal of |
| previously accrued Visa litigation expense, net income from BOLI policy swap transactions, death benefit insurance proceeds and |
| other than temporary security impairment charge. | | | | | | | | |
| (2) For the twelve months ended December 31, 2009. | | | | | | | | |
| (3) For the twelve months ended December 31, 2008. | | | | | | | | |
| FINANCIAL STATISTICS | | | | | | | | | | | | |
| Columbia Banking System, Inc. | | | |
| Unaudited | | December 31, | |
| (dollars in thousands) | | 2009 | | | 2008 | |
| Loan Portfolio Composition | | | | | | | | | | | | |
| Commercial business | | $ | 744,440 | | | | 37.0 | % | | $ | 810,922 | | | | 36.3 | % |
| Real Estate: | | | | | | | | | | | | | | | | |
| One-to-four family residential | | | 63,364 | | | | 3.1 | % | | | 57,237 | | | | 2.6 | % |
| Multi-family residential and commercial | | | 856,260 | | | | 42.6 | % | | | 862,595 | | | | 38.7 | % |
| Total Real Estate | | | 919,624 | | | | 45.7 | % | | | 919,832 | | | | 41.3 | % |
| Real Estate Construction: | | | | | | | | | | | | | | | | |
| One-to-four family residential | | | 107,620 | | | | 5.4 | % | | | 209,682 | | | | 9.4 | % |
| Multi-family residential and commercial | | | 41,829 | | | | 2.1 | % | | | 81,176 | | | | 3.6 | % |
| Total Real Estate Construction | | | 149,449 | | | | 7.5 | % | | | 290,858 | | | | 13.0 | % |
| Consumer | | | 199,987 | | | | 10.0 | % | | | 214,753 | | | | 9.6 | % |
| Subtotal loans | | | 2,013,500 | | | | 100.2 | % | | | 2,236,365 | | | | 100.2 | % |
| Less: Deferred loan fees | | | (4,616 | ) | | | -0.2 | % | | | (4,033 | ) | | | -0.2 | % |
| Total loans | | $ | 2,008,884 | | | | 100.0 | % | | $ | 2,232,332 | | | | 100.0 | % |
| Loans held for sale | | $ | - - | | | | | | | $ | 1,964 | | | | | |
| | | | |
| | | December 31, | |
| | | 2009 | | | 2008 | |
| Deposit Composition | | | | | | | | | | | | | | | | |
| Core deposits: | | | | | | | | | | | | | | | | |
| Demand and other noninterest-bearing | | $ | 574,687 | | | | 23.1 | % | | $ | 466,078 | | | | 19.6 | % |
| Interest-bearing demand | | | 499,922 | | | | 20.1 | % | | | 519,124 | | | | 21.8 | % |
| Money market | | | 604,229 | | | | 24.3 | % | | | 530,065 | | | | 22.3 | % |
| Savings | | | 139,406 | | | | 5.6 | % | | | 122,076 | | | | 5.1 | % |
| Certificates of deposit less than $100,000 | | | 254,577 | | | | 10.3 | % | | | 303,704 | | | | 12.7 | % |
| Total core deposits | | | 2,072,821 | | | | 83.4 | % | | | 1,941,047 | | | | 81.5 | % |
| Certificates of deposit greater than $100,000 | | | 259,794 | | | | 10.5 | % | | | 338,971 | | | | 14.2 | % |
Wholesale certificates of deposit (CDARS®) | | | 96,314 | | | | 3.9 | % | | | 39,903 | | | | 1.7 | % |
| Wholesale certificates of deposit | | | 53,776 | | | | 2.2 | % | | | 62,230 | | | | 2.6 | % |
| Total deposits | | $ | 2,482,705 | | | | 100.0 | % | | $ | 2,382,151 | | | | 100.0 | % |
| QUARTERLY FINANCIAL STATISTICS | | | | | | | | | | | | | | | |
| Columbia Banking System, Inc. | | Three Months Ended | |
| Unaudited | | Dec 31 | | | Sep 30 | | | Jun 30 | | | Mar 31 | | | Dec 31 | |
| (dollars in thousands except per share) | | 2009 | | | 2009 | | | 2009 | | | 2009 | | | 2008 | |
| Earnings | | | | | | | | | | | | | | | |
| Net interest income | | $ | 29,800 | | | $ | 29,118 | | | $ | 28,531 | | | $ | 27,903 | | | $ | 29,319 | |
| Provision for loan and lease losses | | $ | 15,000 | | | $ | 16,500 | | | $ | 21,000 | | | $ | 11,000 | | | $ | 13,250 | |
| Noninterest income | | $ | 8,526 | | | $ | 7,190 | | | $ | 7,000 | | | $ | 6,974 | | | $ | 6,334 | |
| Noninterest expense | | $ | 22,847 | | | $ | 23,146 | | | $ | 25,314 | | | $ | 23,181 | | | $ | 21,813 | |
| Net income (loss) | | $ | 1,552 | | | $ | (1,502 | ) | | $ | (5,530 | ) | | $ | 1,512 | | | $ | 1,814 | |
| Net income (loss) applicable to common shareholders | | $ | 447 | | | $ | (2,605 | ) | | $ | (6,631 | ) | | $ | 419 | | | $ | 1,344 | |
| Per Common Share | | | | | | | | | | | | | | | | | | | | |
| Earnings (loss) (basic) | | $ | 0.02 | | | $ | (0.11 | ) | | $ | (0.37 | ) | | $ | 0.02 | | | $ | 0.07 | |
| Earnings (loss) (diluted) | | $ | 0.02 | | | $ | (0.11 | ) | | $ | (0.37 | ) | | $ | 0.02 | | | $ | 0.07 | |
| Book value | | $ | 16.13 | | | $ | 16.15 | | | $ | 18.50 | | | $ | 18.73 | | | $ | 18.82 | |
| Averages | | | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 3,177,098 | | | $ | 3,077,005 | | | $ | 3,024,491 | | | $ | 3,057,861 | | | $ | 3,061,867 | |
| Interest-earning assets | | $ | 2,872,842 | | | $ | 2,783,121 | | | $ | 2,728,086 | | | $ | 2,774,259 | | | $ | 2,767,854 | |
| Loans | | $ | 2,034,903 | | | $ | 2,088,478 | | | $ | 2,159,415 | | | $ | 2,217,908 | | | $ | 2,214,918 | |
| Securities | | $ | 643,716 | | | $ | 593,516 | | | $ | 554,270 | | | $ | 543,403 | | | $ | 535,763 | |
| Deposits | | $ | 2,453,553 | | | $ | 2,395,311 | | | $ | 2,337,385 | | | $ | 2,324,853 | | | $ | 2,297,422 | |
| Core deposits | | $ | 2,039,533 | | | $ | 1,977,977 | | | $ | 1,893,419 | | | $ | 1,867,001 | | | $ | 1,865,402 | |
| Interest-bearing deposits | | $ | 1,890,479 | | | $ | 1,857,708 | | | $ | 1,850,193 | | | $ | 1,869,155 | | | $ | 1,837,166 | |
| Interest-bearing liabilities | | $ | 2,041,761 | | | $ | 2,019,051 | | | $ | 2,073,750 | | | $ | 2,135,045 | | | $ | 2,193,437 | |
| Noninterest-bearing deposits | | $ | 563,074 | | | $ | 537,603 | | | $ | 487,192 | | | $ | 455,698 | | | $ | 460,257 | |
| Shareholders' equity | | $ | 530,804 | | | $ | 478,589 | | | $ | 417,961 | | | $ | 419,752 | | | $ | 368,184 | |
| Financial Ratios | | | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | 0.19 | % | | | (0.19 | )% | | | (0.73 | %) | | | 0.20 | % | | | 0.24 | % |
| Return on average common equity | | | 0.39 | % | | | (2.56 | )% | | | (7.73 | %) | | | 0.49 | % | | | 1.60 | % |
| Average equity to average assets | | | 16.71 | % | | | 15.55 | % | | | 13.82 | % | | | 13.73 | % | | | 12.02 | % |
| Net interest margin | | | 4.30 | % | | | 4.34 | % | | | 4.38 | % | | | 4.26 | % | | | 4.39 | % |
| Efficiency ratio (tax equivalent) | | | 58.12 | % | | | 60.85 | % | | | 63.79 | % | | | 63.59 | % | | | 57.62 | % |
| Period end | | | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 3,200,930 | | | $ | 3,167,028 | | | $ | 3,021,857 | | | $ | 3,045,757 | | | $ | 3,097,079 | |
| Loans | | $ | 2,008,884 | | | $ | 2,063,398 | | | $ | 2,119,443 | | | $ | 2,185,755 | | | $ | 2,232,332 | |
| Allowance for loan and lease losses | | $ | 53,478 | | | $ | 51,688 | | | $ | 48,880 | | | $ | 44,249 | | | $ | 42,747 | |
| Securities | | $ | 631,645 | | | $ | 658,227 | | | $ | 558,011 | | | $ | 555,974 | | | $ | 540,525 | |
| Deposits | | $ | 2,482,705 | | | $ | 2,443,567 | | | $ | 2,353,326 | | | $ | 2,344,406 | | | $ | 2,382,151 | |
| Core deposits | | $ | 2,072,821 | | | $ | 2,027,482 | | | $ | 1,932,771 | | | $ | 1,873,626 | | | $ | 1,941,047 | |
| Shareholders' equity | | $ | 528,139 | | | $ | 527,920 | | | $ | 411,871 | | | $ | 415,717 | | | $ | 415,385 | |
| Nonperforming assets | | | | | | | | | | | | | | | | | | | | |
| Nonaccrual loans | | $ | 110,431 | | | $ | 130,718 | | | $ | 127,767 | | | $ | 117,340 | | | $ | 106,163 | |
| Restructured loans accruing interest | | | 60 | | | | - - | | | | - - | | | | - - | | | | 587 | |
| Other real estate owned | | | 19,037 | | | | 18,137 | | | | 8,369 | | | | 4,312 | | | | 2,874 | |
| Total nonperforming assets | | $ | 129,528 | | | $ | 148,855 | | | $ | 136,136 | | | $ | 121,652 | | | $ | 109,624 | |
| Nonperforming loans to period-end loans | | | 5.50 | % | | | 6.34 | % | | | 6.03 | % | | | 5.37 | % | | | 4.78 | % |
| Nonperforming assets to period-end assets | | | 4.05 | % | | | 4.70 | % | | | 4.51 | % | | | 3.99 | % | | | 3.54 | % |
| Allowance for loan and lease losses to period-end loans | | | 2.66 | % | | | 2.50 | % | | | 2.31 | % | | | 2.02 | % | | | 1.91 | % |
| Allowance for loan and lease losses to nonperforming loans | | | 48.40 | % | | | 39.54 | % | | | 38.26 | % | | | 37.71 | % | | | 40.04 | % |
| Allowance for loan and lease losses to nonperforming assets | | | 41.29 | % | | | 34.72 | % | | | 35.91 | % | | | 36.37 | % | | | 38.99 | % |
| Net loan charge-offs | | $ | 13,210 | | | $ | 13,692 | | | $ | 16,369 | | | $ | 9,498 | | | $ | 6,317 | |
| CONSOLIDATED CONDENSED STATEMENTS OF INCOME | | | | | | | | | | |
| Columbia Banking System, Inc. | | Three Months Ended | | | Twelve Months Ended | |
| (Unaudited) | | December 31, | | | December 31, | |
| (in thousands except per share) | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| Interest Income | | | | | | | | | | | | |
| Loans | | $ | 28,860 | | | $ | 33,603 | | | $ | 117,062 | | | $ | 147,830 | |
| Taxable securities | | | 4,570 | | | | 4,362 | | | | 17,300 | | | | 18,852 | |
| Tax-exempt securities | | | 2,200 | | | | 1,979 | | | | 8,458 | | | | 7,976 | |
| Federal funds sold and deposits in banks | | | 146 | | | | 23 | | | | 215 | | | | 402 | |
| Total interest income | | | 35,776 | | | | 39,967 | | | | 143,035 | | | | 175,060 | |
| Interest Expense | | | | | | | | | | | | | | | | |
| Deposits | | | 4,953 | | | | 8,863 | | | | 23,250 | | | | 45,307 | |
| Federal Home Loan Bank and Federal Reserve Bank borrowings | | | 643 | | | | 1,109 | | | | 2,759 | | | | 7,573 | |
| Long-term obligations | | | 260 | | | | 461 | | | | 1,197 | | | | 1,800 | |
| Other borrowings | | | 120 | | | | 215 | | | | 477 | | | | 867 | |
| Total interest expense | | | 5,976 | | | | 10,648 | | | | 27,683 | | | | 55,547 | |
| Net Interest Income | | | 29,800 | | | | 29,319 | | | | 115,352 | | | | 119,513 | |
| Provision for loan and lease losses | | | 15,000 | | | | 13,250 | | | | 63,500 | | | | 41,176 | |
| Net interest income after provision for loan and lease losses | | | 14,800 | | | | 16,069 | | | | 51,852 | | | | 78,337 | |
| Noninterest Income | | | | | | | | | | | | | | | | |
| Service charges and other fees | | | 4,199 | | | | 3,684 | | | | 15,181 | | | | 14,813 | |
| Merchant services fees | | | 1,714 | | | | 1,881 | | | | 7,321 | | | | 8,040 | |
| Redemption of Visa and Mastercard shares | | | - - | | | | - - | | | | 49 | | | | 3,028 | |
| Gain (loss) on sale of investment securities, net | | | 1,077 | | | | (36 | ) | | | 1,077 | | | | 846 | |
| Impairment charge on investment securities | | | - - | | | | (1,024 | ) | | | - - | | | | (19,541 | ) |
| Bank owned life insurance ("BOLI") | | | 491 | | | | 488 | | | | 2,023 | | | | 2,075 | |
| Other | | | 1,045 | | | | 1,341 | | | | 4,039 | | | | 5,589 | |
| Total noninterest income | | | 8,526 | | | | 6,334 | | | | 29,690 | | | | 14,850 | |
| Noninterest Expense | | | | | | | | | | | | | | | | |
| Compensation and employee benefits | | | 11,258 | | | | 11,398 | | | | 47,275 | | | | 49,315 | |
| Occupancy | | | 3,123 | | | | 3,132 | | | | 12,128 | | | | 12,838 | |
| Merchant processing | | | 860 | | | | 827 | | | | 3,449 | | | | 3,558 | |
| Advertising and promotion | | | 268 | | | | 527 | | | | 1,943 | | | | 2,324 | |
| Data processing | | | 1,073 | | | | 979 | | | | 4,047 | | | | 3,486 | |
| Legal and professional fees | | | 1,092 | | | | 490 | | | | 3,871 | | | | 1,969 | |
| Taxes, licenses and fees | | | 503 | | | | 650 | | | | 2,478 | | | | 2,917 | |
| Regulatory premiums | | | 1,058 | | | | 616 | | | | 5,777 | | | | 2,141 | |
| Net cost of operation of other real estate | | | 271 | | | | (30 | ) | | | 861 | | | | (49 | ) |
| Other | | | 3,341 | | | | 3,224 | | | | 12,659 | | | | 13,626 | |
| Total noninterest expense | | | 22,847 | | | | 21,813 | | | | 94,488 | | | | 92,125 | |
| Income (loss) before income taxes | | | 479 | | | | 590 | | | | (12,946 | ) | | | 1,062 | |
| Income tax benefit | | | (1,073 | ) | | | (1,224 | ) | | | (8,978 | ) | | | (4,906 | ) |
| Net Income (Loss) | | $ | 1,552 | | | $ | 1,814 | | | $ | (3,968 | ) | | $ | 5,968 | |
| Net Income (Loss) Applicable to Common Shareholders | | $ | 447 | | | $ | 1,344 | | | $ | (8,371 | ) | | $ | 5,498 | |
| Earnings (loss) per common share (1) | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.02 | | | $ | 0.07 | | | $ | (0.38 | ) | | $ | 0.30 | |
| Diluted | | $ | 0.02 | | | $ | 0.07 | | | $ | (0.38 | ) | | $ | 0.30 | |
| Dividends paid per common share | | $ | 0.01 | | | $ | 0.07 | | | $ | 0.07 | | | $ | 0.58 | |
| Weighted average common shares outstanding | | | 27,841 | | | | 17,959 | | | | 21,854 | | | | 17,914 | |
| Weighted average diluted common shares outstanding | | | 27,924 | | | | 17,972 | | | | 21,854 | | | | 18,010 | |
| | | | | | | | | | | | | | | | | |
| (1) The Company adopted authoritative guidance in the Earnings per Share topic of the FASB Accounting Standards Codification on January 1, 2009. All prior periods have been restated to the current period's presentation. The adoption of the authoritative guidance resulted in a $0.01 per share reduction in basic and diluted EPS for the year ended December 31, 2008 | |
| CONSOLIDATED CONDENSED BALANCE SHEETS | | | | | | | | | | | | |
| Columbia Banking System, Inc. | | | | | | | | | | | | |
| (Unaudited) | | | | | | | | December 31, | |
| (in thousands) | | | | | | | | 2009 | | | 2008 | |
| ASSETS | | | | |
| Cash and due from banks | | | | | | | | $ | 55,802 | | | $ | 84,787 | |
| Interest-earning deposits with banks | | | | | | | | | 249,272 | | | | 3,943 | |
| Total cash and cash equivalents | | | | | | | | | 305,074 | | | | 88,730 | |
| Securities available for sale at fair value (amortized cost of $602,675 and $525,110, respectively) | | | | | | | | | 620,038 | | | | 528,918 | |
| Federal Home Loan Bank stock at cost | | | | | | | | | 11,607 | | | | 11,607 | |
| Loans held for sale | | | | | | | | | - - | | | | 1,964 | |
| Loans, net of deferred loan fees of ($4,616) and ($4,033), respectively | | | | | | | | | 2,008,884 | | | | 2,232,332 | |
| Less: allowance for loan and lease losses | | | | | | | | | 53,478 | | | | 42,747 | |
| Loans, net | | | | | | | | | 1,955,406 | | | | 2,189,585 | |
| Interest receivable | | | | | | | | | 10,335 | | | | 11,646 | |
| Premises and equipment, net | | | | | | | | | 62,670 | | | | 61,139 | |
| Other real estate owned | | | | | | | | | 19,037 | | | | 2,874 | |
| Goodwill | | | | | | | | | 95,519 | | | | 95,519 | |
| Core deposit intangible, net | | | | | | | | | 4,863 | | | | 5,908 | |
| Other assets | | | | | | | | | 116,381 | | | | 99,189 | |
| Total Assets | | | | | | | | $ | 3,200,930 | | | $ | 3,097,079 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | |
| Noninterest-bearing | | | | | | | | $ | 574,687 | | | $ | 466,078 | |
| Interest-bearing | | | | | | | | | 1,908,018 | | | | 1,916,073 | |
| Total deposits | | | | | | | | | 2,482,705 | | | | 2,382,151 | |
| Federal Home Loan Bank and Federal Reserve Bank borrowings | | | | | | | | | 100,000 | | | | 200,000 | |
| Securities sold under agreements to repurchase | | | | | | | | | 25,000 | | | | 25,000 | |
| Other borrowings | | | | | | | | | 86 | | | | 201 | |
| Long-term subordinated debt | | | | | | | | | 25,669 | | | | 25,603 | |
| Other liabilities | | | | | | | | | 39,331 | | | | 48,739 | |
| Total liabilities | | | | | | | | | 2,672,791 | | | | 2,681,694 | |
| Commitments and contingent liabilities | | | | | | | | | | | | | | |
| | | December 31, | | | | | | | | | |
| | | 2009 | | | 2008 | | | | | | | | | |
| Preferred stock (no par value, 76,898 aggregate liquidation preference) | | | | | | | | | | | | | | |
| Authorized shares | | | 2,000 | | | | 2,000 | | | | | | | | | |
| Issued and outstanding | | | 77 | | | | 77 | | | | 74,301 | | | | 73,743 | |
| Common Stock (no par value) | | | | | | | | | | | | | | | | |
| Authorized shares | | | 63,033 | | | | 63,033 | | | | | | | | | |
| Issued and outstanding | | | 28,129 | | | | 18,151 | | | | 348,706 | | | | 233,192 | |
| Retained earnings | | | | | | | | | | | 93,316 | | | | 103,061 | |
| Accumulated other comprehensive income | | | | | | | | | | | 11,816 | | | | 5,389 | |
| Total shareholders' equity | | | | | | | | | | | 528,139 | | | | 415,385 | |
| Total Liabilities and Shareholders' Equity | | | | | | | | | | $ | 3,200,930 | | | $ | 3,097,079 | |
