Exhibit 99.1
FOR IMMEDIATE RELEASE
July 27, 2006
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
INCREASED SECOND QUARTER 2006 EARNINGS
SECOND QUARTER HIGHLIGHTS
| • | | Net income of $7.2 million, up 6% from 2nd quarter 2005. |
| • | | Diluted earnings per share of $0.45, up 5% from the prior year. |
| • | | Total loans were $1.63 billion, an increase of $60.5 million, or 4%, from December 31, 2005 |
| • | | Net interest margin improved to 4.47%, up from 4.36% in 2005. |
TACOMA, Washington—Columbia Banking System, Inc. (NASDAQ: COLB) today announced earnings for the second quarter 2006 of $7.2 million, up 6% from $6.8 million for the second quarter of 2005. Diluted earnings per share were $0.45, an increase of 5% from $0.43 per share one year ago. Return on average assets and return on average equity for the second quarter 2006 were 1.17% and 12.48%, respectively, compared to 1.19% and 12.99%, respectively, for the same period in 2005. The efficiency ratio for the second quarter 2006 was 60.97 %, compared to 63.22% for the same period in 2005. Revenue (net interest income plus noninterest income) was $30.6 million for the second quarter of 2006, up 7.4% from $28.5 million one year ago.
Melanie Dressel, President & Chief Executive Officer said, “Our earnings continued to improve due to rising short-term interest rates, continued loan growth and increased interest income. We are particularly pleased with the earnings growth in light of a $1.1 million net of tax expense associated with the market value adjustment of our prime rate floor contracts. These prime rate floors serve as an important tool to mitigate possible earnings exposure if interest rates decline over the next five years. We are also pleased that revenue continued to increase as well, up over 7% from second quarter 2005, and almost 10% from the first six months of 2005.”
The valuation adjustment for Columbia’s interest rate floors resulted in a pre-tax, non-cash expense for the second quarter 2006 of $1.8 million. The valuation adjustment is a result of utilizing mark to market accounting. In future periods, management expects to achieve hedge accounting treatment for these floors, where changes in market value will be an adjustment to equity rather than an offset to earnings. Once achieved, valuation adjustments for these floors would be reflected on the balance sheet throughOther Comprehensive Income. This is much like the mark to market adjustments forAvailable for Sale Securities. Over the life of the floors, Columbia will continue to recognize through expense no more than the original $3.1 million cost of the floors.
Ms. Dressel continued, “As always, our focus is on building full relationships with our customers, providing competitive products, a wide variety of delivery channels and striving to provide the best possible service. While we maintain a strong core deposit base as a result of these principles, deposit growth has slowed and we have seen downward pressure on our net interest margin. This trend is likely to continue during the coming year due to the increasingly competitive lending environment, rising costs of deposits and borrowings, and some deposits moving to the equity markets.”
Net income for the six months ended June 30, 2006 was $15.4 million, an increase of 18% from $13.1 million for the first six months of 2005. On a diluted per share basis, net income was $0.96, compared with $0.83 for the same period last year, an increase of 16%. Return on average assets and return on average equity for the first six months of 2006 were 1.28% and 13.42% respectively, compared to 1.17% and 12.68%, respectively, for the same period in 2005. The efficiency ratio for the first six months of 2006 was 59.81%, compared with 62.73% for the first six months of 2005.
Return on average tangible equity for the second quarter 2006 was 14.77%, compared to 15.76% for the same period last year. For the first six months of 2006, return on average tangible equity was 15.87%, up from 15.47% for the first six months of 2005. Return on average tangible equity, a non-GAAP performance measure, is used by Columbia’s management in recognition of the goodwill created by acquisitions.
At June 30, 2006, Columbia’s total assets were $2.54 billion, an increase of 7% from $2.38 billion at December 31, 2005. Total loans were $1.63 billion at June 30, 2006, up 4% from $1.56 billion at year-end 2005. Columbia continues to be prudent in originating loans, as rising interest rates and other economic factors may slow portfolio growth for the remainder of the year. Total deposits decreased slightly to $1.96 billion during the first six months of 2006, down 2% from $2.0 billion at
December 31, 2005. Core deposits which consist of demand, savings, and money market accounts represented 72% of total deposits.
Core Financial Results
Excluding the valuation adjustment for Columbia’s interest rate floors, net income for the second quarter 2006 was $8.4 million,up 23% from $6.8 million for the second quarter of 2005. Earnings per share were $0.52 per diluted share, an increase of 21% from $0.43 per diluted share one year ago. For the six months ended June 30, 2006, net income was $16.6 million, an increase of 27% from $13.1 million for the six months ended June 30, 2005; net income on a diluted per share basis for the six months ended June 30, 2006 was $1.03 compared with $0.83 for the same period in 2005, an increase of 24%. Return on average assets and return on average equity for first six months of 2006 were 1.37% and 14.39%, respectively, compared to 1.17% and 12.68%, respectively, for the period in 2005.
The following table reconciles GAAP net income to core operating earnings, including per-share figures:
| | | | | | | | | | | | |
(Dollars in thousands, except per Share data) | | Three months
ended June 30, | | Six months ended
June 30, |
| | | 2006 | | 2005 | | 2006 | | 2005 |
Net income | | $ | 7,239 | | $ | 6,798 | | $ | 15,427 | | $ | 13,096 |
Add back: Interest rate floor mark- to-market, net of tax | | | 1,153 | | | — | | | 1,153 | | | — |
| | | | | | | | | | | | |
Core operating earnings | | $ | 8,392 | | $ | 6,798 | | $ | 16,580 | | $ | 13,096 |
| | | | | | | | | | | | |
Earnings per Diluted Share: | | | | | | | | | | | | |
GAAP earnings | | $ | 0.45 | | $ | 0.43 | | $ | 0.96 | | $ | 0.83 |
Core operating earnings | | $ | 0.52 | | $ | 0.43 | | $ | 1.03 | | $ | 0.83 |
Second Quarter 2006 Operating Results
Net Interest Income
Net interest income for the second quarter of 2006 was $24.3 million, an increase of $2.0 million, or 9%, compared to $22.3 million for the second quarter 2005. The increase is primarily due to increased loan volumes, rising short-term interest rates, and increased core deposits. Columbia’s net interest margin increased to 4.47% in the second quarter of 2006, from 4.36% for the same period in 2005. However, the margin decreased from 4.65% in the first quarter of 2006, and 4.61% in the fourth quarter of 2005. Ms. Dressel noted, “We are seeing an industry-wide challenge for banks in maintaining and growing core deposits. The decrease in our net interest margin is a result of a greater reliance on higher cost borrowings.”
Average interest-earning assets increased to $2.27 billion, or 7%, during the second quarter of 2006, compared with $2.11 billion during the second quarter of 2005. The yield on average interest-earning assets increased99basis points to 6.79% during the second quarter of 2006, from 5.80% for the same period in 2005. Average interest-bearing liabilities increased to $1.79 billion from $1.66 billion last year. The cost of average interest-bearing liabilities increased 110 basis points to 2.93% in the second quarter of 2006, compared to 1.83% in the second quarter of 2005.
For the six months ended June 30, 2006, net interest income increased 11% to $48.6 million from $43.6 million for the same period in 2005. During the first six months of 2006, Columbia’s net interest margin increased to 4.56% from 4.36% for the same period of 2005. Average interest-earning assets grew to $2.23 billion during the first six months of 2006 compared with $2.08 billion for the same period of 2005. The yield on average interest-earning assets increased 101 basis points to 6.71% during the first six months of 2006, from 5.70% in 2005. In comparison, average interest-bearing liabilities grew to $1.74 billion compared with $1.63 billion for the first six months of 2005. The cost of average interest-bearing liabilities increased 105 basis points to 2.76% during the first six months of 2006, compared to 1.71% for the same period in 2005.
Noninterest income
Total noninterest income for the second quarter 2006 was $6.3 million, an increase of 2% from $6.1 million a year ago. The increase in noninterest income during the second quarter of 2006 as compared to second quarter 2005 was primarily due to service charges and other fees, offset by a decline in mortgage banking fees. Service charges on deposit accounts showed a modest improvement for the second quarter 2006. Total noninterest income for the first six months of 2006 was $12.2 million, an increase of 4% from $11.8 million for the same period of 2005.
Noninterest expense
Noninterest expense for the second quarter of 2006 was $21.1 million, an increase of 14% from $18.5 million for the same period in 2005. This increase was primarily due to the pre-tax prime rate floor market value adjustment of $1.8 million, increased occupancy expenses, as well as advertising production and media costs. At the end of the first quarter of 2006, Columbia entered into an agreement to purchase $200 million in five-year prime rate floors with a threshold price range of 7.75% to 7.25%. The floors assist the Company in minimizing the impact of declining interest rates on earnings. The market value of these floors can vary greatly on a quarterly basis; therefore, Columbia expects to achieve hedge accounting treatment during the third quarter of 2006. During the second quarter of 2006, the Company recognized in pre-tax expense $1.8 million of the $3.1 million total fee associated with the purchase of these prime rate floors.
Nonperforming Assets and Loan Loss Provision
Provision for loan losses for the second quarter of 2006 was $250,000 down $120,000 from a provision of $370,000 during the second quarter of 2005. The provision was essentially even with that taken during the first quarter of 2006 of $215,000. Total nonperforming assets were $5.8 million at June 30, 2006 compared to $4.9 million at December 31, 2005 and $6.5 million at June 30, 2005. The ratio of the allowance for credit losses to nonperforming loans was 364% at June 30, 2006, compared with 429% at December 31, 2005 and 318% at June 30, 2005. Ms. Dressel said, “We are maintaining a conservative approach to credit quality and we continue to prudently add to our loan loss allowance as necessary to ensure we maintain adequate reserves.”
Expansion Activities
Ms. Dressel commented, “While we will maintain our efforts to increase market share in our current branch locations, we have also selected strategic new markets, with particular emphasis on opportunities in King County. It is important for us to begin with an experienced, local banker around whom we can build a branch in a market area that would be a good fit for our style of banking.
We are currently developing a new branch location in Lacey, just east of Olympia, which, due to permitting issues, we now expect to open in the second quarter of next year. As always, we strive to bethe community bank in every community we serve.”
Conference Call
Columbia will discuss the quarterly and year-end results on a conference call on Thursday, July 27, 2006 at 1:00 PDT. Interested investors, analysts, media representatives and the public are invited to listen to this discussion by calling 1-866-404-2271. A conference call replay will be available from approximately 4:30 p.m. PST on July 27 through midnight PDT on Thursday, August 3, 2006. The conference call replay can be accessed by dialing 1-800-642-1687 and entering access code 3312131.
Columbia Banking System, Inc. is a Tacoma-based bank holding company whose wholly owned banking subsidiaries are Columbia Bank and Bank of Astoria. Columbia Bank is a Washington state-chartered full-service commercial bank with 35 banking offices in Pierce, King, Cowlitz, Kitsap and Thurston counties. Bank of Astoria, a federally insured commercial bank headquartered in Astoria, Oregon, operates four branches in Clatsop County: Astoria, Warrenton, Seaside and Cannon Beach; and one branch in Manzanita 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 Columbia’s management’s expectations regarding future events and developments such as future operating results, growth in loans and deposits, continued success of Columbia’s style of banking and the strength of the local economy. The words “will,” “believe,” “expect,” “should,” and “anticipate” and words of similar construction are intended in part to help identify forward looking statements. Future events are difficult to predict, and the expectations described above are necessarily subject to risk and uncertainty that may cause actual results to differ materially and adversely. In addition to discussions about risks and uncertainties set forth from time to time in Columbia’s filings with the SEC, factors that may cause actual results to differ materially from those contemplated by such forward looking statements include, among others, the following possibilities: (1) local, national and international economic conditions are less favorable than expected or have a more direct and pronounced effect on Columbia than expected and adversely affect Columbia’s ability to continue its internal growth at historical rates and maintain the quality of its earning assets; (2) changes in interest rates reduce interest margins more than expected and negatively affect funding sources; (3) projected business increases following strategic expansion or opening or acquiring new branches are lower than expected; (4) costs or difficulties related to the integration of acquisitions are greater than expected; (5) competitive pressure among financial institutions increases significantly; (6) legislation or regulatory requirements or changes adversely affect the businesses in which Columbia is engaged.
FINANCIAL STATISTICS
Columbia Banking System, Inc.
| | | | | | | | | | | | | | | | |
Unaudited (in thousands, except per share amounts) | | Three Months Ended
June 30, | | | Six Months Ended
June 30, | |
| | 2006 | | | 2005 | | | 2006 | | | 2005 | |
Earnings | | | | | | | | | | | | | | | | |
Net interest income | | $ | 24,302 | | | $ | 22,346 | | | $ | 48,608 | | | $ | 43,647 | |
Provision for loan and lease losses | | $ | 250 | | | $ | 370 | | | $ | 465 | | | $ | 1,260 | |
Noninterest income | | $ | 6,267 | | | $ | 6,128 | | | $ | 12,240 | | | $ | 11,802 | |
Noninterest expense | | $ | 21,136 | | | $ | 18,514 | | | $ | 39,476 | | | $ | 35,791 | |
Net income | | $ | 7,239 | | | $ | 6,798 | | | $ | 15,427 | | | $ | 13,096 | |
Per Share | | | | | | | | | | | | | | | | |
Net income (basic) | | $ | 0.45 | | | $ | 0.44 | | | $ | 0.97 | | | $ | 0.84 | |
Net income (diluted) | | $ | 0.45 | | | $ | 0.43 | | | $ | 0.96 | | | $ | 0.83 | |
Averages | | | | | | | | | | | | | | | | |
Total assets | | $ | 2,480,585 | | | $ | 2,297,297 | | | $ | 2,434,887 | | | $ | 2,260,033 | |
Interest-earning assets | | $ | 2,268,259 | | | $ | 2,113,384 | | | $ | 2,229,779 | | | $ | 2,078,345 | |
Loans | | $ | 1,613,253 | | | $ | 1,498,990 | | | $ | 1,590,560 | | | $ | 1,454,303 | |
Securities | | $ | 645,343 | | | $ | 612,455 | | | $ | 632,457 | | | $ | 622,377 | |
Deposits | | $ | 1,949,608 | | | $ | 1,874,208 | | | $ | 1,952,713 | | | $ | 1,869,435 | |
Core deposits | | $ | 1,414,455 | | | $ | 1,397,353 | | | $ | 1,419,918 | | | $ | 1,388,075 | |
Shareholders’ Equity | | $ | 232,614 | | | $ | 209,864 | | | $ | 231,851 | | | $ | 208,197 | |
Financial Ratios | | | | | | | | | | | | | | | | |
Return on average assets | | | 1.17 | % | | | 1.19 | % | | | 1.28 | % | | | 1.17 | % |
Return on average equity | | | 12.48 | % | | | 12.99 | % | | | 13.42 | % | | | 12.68 | % |
Return on average tangible equity(1) | | | 14.77 | % | | | 15.76 | % | | | 15.87 | % | | | 15.47 | % |
Average equity to average assets | | | 9.38 | % | | | 9.14 | % | | | 9.52 | % | | | 9.21 | % |
Net interest margin | | | 4.47 | % | | | 4.36 | % | | | 4.56 | % | | | 4.36 | % |
Efficiency ratio (tax equivalent) (2) | | | 60.97 | % | | | 63.22 | % | | | 59.81 | % | | | 62.73 | % |
| | | | | | | | | | | | |
| | | June 30, | | | December 31, | |
| | | 2006 | | | 2005 | | | 2005 | |
Period end | | | | | | | | | | | | |
Total assets | | $ | 2,544,598 | | | $ | 2,326,252 | | | $ | 2,377,322 | |
Loans | | $ | 1,625,255 | | | $ | 1,510,043 | | | $ | 1,564,704 | |
Allowance for loan and lease losses | | $ | 20,990 | | | $ | 20,587 | | | $ | 20,829 | |
Securities | | $ | 650,955 | | | $ | 609,574 | | | $ | 585,332 | |
Deposits | | $ | 1,962,748 | | | $ | 1,897,854 | | | $ | 2,005,489 | |
Core deposits | | $ | 1,418,313 | | | $ | 1,416,421 | | | $ | 1,478,090 | |
Shareholders’ equity | | $ | 232,241 | | | $ | 214,788 | | | $ | 226,242 | |
Book value per share | | $ | 14.49 | | | $ | 13.68 | | | $ | 14.29 | |
Tangible book value per share | | $ | 12.44 | | | $ | 11.56 | | | $ | 12.20 | |
Nonperforming assets | | | | | | | | | | | | |
Nonaccrual loans | | $ | 4,575 | | | $ | 6,304 | | | $ | 4,733 | |
Restructured loans | | | 1,197 | | | | 178 | | | | 124 | |
Personal property owned | | | — | | | | — | | | | — | |
Real estate owned | | | — | | | | — | | | | 18 | |
| | | | | | | | | | | | |
Total nonperforming assets | | $ | 5,772 | | | $ | 6,482 | | | $ | 4,875 | |
| | | | | | | | | | | | |
Nonperforming loans to period-end loans | | | 0.36 | % | | | 0.43 | % | | | 0.31 | % |
Nonperforming assets to period-end assets | | | 0.23 | % | | | 0.28 | % | | | 0.21 | % |
Allowance for loan and lease losses to period-end loans | | | 1.29 | % | | | 1.36 | % | | | 1.33 | % |
Allowance for loan and lease losses to nonperforming loans | | | 363.65 | % | | | 317.60 | % | | | 428.84 | % |
Allowance for loan and lease losses to nonperforming assets | | | 363.65 | % | | | 317.60 | % | | | 427.26 | % |
Net loan charge-offs | | $ | 304 | (3) | | $ | 554 | (4) | | $ | 572 | (5) |
| (1) | Annualized net income, excluding core deposit intangible asset amortization, divided by average daily shareholders’ equity, excluding average goodwill and average core deposit intangible asset. |
| (2) | Noninterest expense divided by the sum of net interest income and noninterest income on a tax equivalent basis, excluding nonrecurring income and expense, such as gains/losses on investment securities, net cost (gain) of OREO and mark-to-market adjustments of interest rate floor instruments. |
| (3) | For the six months ended June 30, 2006. |
| (4) | For the six months ended June 30, 2005. |
| (5) | For the twelve months ended December 31, 2005. |
FINANCIAL STATISTICS
Columbia Banking System, Inc.
| | | | | | | | | | | | |
| | | Period End | |
Unaudited (in thousands) | | June 30, | | | December 31, | |
| | 2006 | | | 2005 | | | 2005 | |
Loan Portfolio Composition | | | | | | | | | | | | |
Commercial business | | $ | 595,363 | | | $ | 570,303 | | | $ | 556,589 | |
Leases | | | 12,278 | | | | — | | | | 14,385 | |
Real Estate: | | | | | | | | | | | | |
One-to-four family residential | | | 83,290 | | | | 45,724 | | | | 74,930 | |
Five or more family residential and commercial | | | 690,790 | | | | 627,391 | | | | 651,393 | |
| | | | | | | | | | | | |
Total Real Estate | | | 774,080 | | | | 673,115 | | | | 726,323 | |
Real Estate Construction: | | | | | | | | | | | | |
One-to-four family residential | | | 31,260 | | | | 31,340 | | | | 41,033 | |
Five or more family residential and commercial | | | 71,587 | | | | 97,117 | | | | 89,134 | |
| | | | | | | | | | | | |
Total Real Estate Construction | | | 102,847 | | | | 128,457 | | | | 130,167 | |
Consumer | | | 142,969 | | | | 141,236 | | | | 140,110 | |
| | | | | | | | | | | | |
Subtotal loans | | | 1,627,537 | | | | 1,513,111 | | | | 1,567,574 | |
Less: Deferred loan fees | | | (2,282 | ) | | | (3,068 | ) | | | (2,870 | ) |
| | | | | | | | | | | | |
Total loans | | $ | 1,625,255 | | | $ | 1,510,043 | | | $ | 1,564,704 | |
Loans held for sale | | $ | 1,288 | | | $ | 14,400 | | | $ | 1,850 | |
Deposit Composition | | | | | | | | | | | | |
Demand and other noninterest bearing | | $ | 446,568 | | | $ | 422,410 | | | $ | 455,838 | |
Interest bearing demand | | | 367,891 | | | | 321,618 | | | | 339,686 | |
Money market | | | 488,615 | | | | 560,450 | | | | 563,973 | |
Savings | | | 115,239 | | | | 113,121 | | | | 118,604 | |
Certificates of deposit | | | 544,435 | | | | 481,434 | | | | 527,388 | |
| | | | | | | | | | | | |
Total deposits | | $ | 1,962,748 | | | $ | 1,899,033 | | | $ | 2,005,489 | |
QUARTERLY FINANCIAL STATISTICS
Columbia Banking System, Inc.
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended | |
Unaudited
(in thousands, except per share amounts) | | Jun 30
2006 | | | Mar 31
2006 | | | Dec 31
2005 | | | Sept 30
2005 | | | Jun 30
2005 | |
Earnings | | | | | | | | | | | | | | | | | | | | |
Net interest income | | $ | 24,302 | | | $ | 24,306 | | | $ | 23,934 | | | $ | 23,331 | | | $ | 22,346 | |
Provision for loan and lease losses | | $ | 250 | | | $ | 215 | | | $ | 15 | | | $ | 245 | | | $ | 370 | |
Noninterest income | | $ | 6,267 | | | $ | 5,973 | | | $ | 6,468 | | | $ | 6,516 | | | $ | 6,128 | |
Noninterest expense | | $ | 21,136 | | | $ | 18,340 | | | $ | 18,271 | | | $ | 18,793 | | | $ | 18,514 | |
Net income | | $ | 7,239 | | | $ | 8,188 | | | $ | 8,583 | | | $ | 7,952 | | | $ | 6,798 | |
Per Share | | | | | | | | | | | | | | | | | | | | |
Net income [basic] | | $ | 0.45 | | | $ | 0.52 | | | $ | 0.55 | | | $ | 0.50 | | | $ | 0.44 | |
Net income [diluted] | | $ | 0.45 | | | $ | 0.51 | | | $ | 0.54 | | | $ | 0.50 | | | $ | 0.43 | |
Averages | | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 2,480,585 | | | $ | 2,388,680 | | | $ | 2,316,654 | | | $ | 2,325,262 | | | $ | 2,297,297 | |
Interest-earning assets | | $ | 2,268,259 | | | $ | 2,190,872 | | | $ | 2,116,345 | | | $ | 2,136,229 | | | $ | 2,113,384 | |
Loans | | $ | 1,613,253 | | | $ | 1,567,615 | | | $ | 1,534,068 | | | $ | 1,534,281 | | | $ | 1,498,990 | |
Securities | | $ | 645,343 | | | $ | 619,428 | | | $ | 579,177 | | | $ | 598,204 | | | $ | 612,455 | |
Deposits | | $ | 1,949,608 | | | $ | 1,955,851 | | | $ | 2,006,448 | | | $ | 1,948,022 | | | $ | 1,874,208 | |
Core deposits | | $ | 1,414,455 | | | $ | 1,425,442 | | | $ | 1,467,077 | | | $ | 1,451,054 | | | $ | 1,397,353 | |
Shareholders’ Equity | | $ | 232,614 | | | $ | 231,080 | | | $ | 223,538 | | | $ | 218,308 | | | $ | 209,864 | |
Financial Ratios | | | | | | | | | | | | | | | | | | | | |
Return on average assets | | | 1.17 | % | | | 1.39 | % | | | 1.47 | % | | | 1.36 | % | | | 1.19 | % |
Return on average equity | | | 12.48 | % | | | 14.37 | % | | | 15.23 | % | | | 14.45 | % | | | 12.99 | % |
Return on average tangible equity | | | 14.77 | % | | | 17.00 | % | | | 18.17 | % | | | 17.35 | % | | | 15.76 | % |
Average equity to average assets | | | 9.38 | % | | | 9.67 | % | | | 9.65 | % | | | 9.39 | % | | | 9.14 | % |
Net interest margin | | | 4.47 | % | | | 4.65 | % | | | 4.61 | % | | | 4.45 | % | | | 4.36 | % |
Efficiency ratio (tax equivalent) | | | 60.97 | % | | | 58.64 | % | | | 58.46 | % | | | 61.26 | % | | | 63.22 | % |
Period end | | | | | | | | | | | | | | | | | | | | |
Total assets | | $ | 2,544,598 | | | $ | 2,460,053 | | | $ | 2,377,322 | | | $ | 2,322,896 | | | $ | 2,326,252 | |
Loans | | $ | 1,625,255 | | | $ | 1,595,262 | | | $ | 1,564,704 | | | $ | 1,511,386 | | | $ | 1,510,043 | |
Allowance for loan and lease losses | | $ | 20,990 | | | $ | 20,691 | | | $ | 20,829 | | | $ | 20,790 | | | $ | 20,587 | |
Securities | | $ | 650,955 | | | $ | 634,620 | | | $ | 585,332 | | | $ | 592,467 | | | $ | 609,574 | |
Deposits | | $ | 1,962,748 | | | $ | 1,990,363 | | | $ | 2,005,489 | | | $ | 1,992,238 | | | $ | 1,897,854 | |
Core deposits | | $ | 1,418,313 | | | $ | 1,455,390 | | | $ | 1,478,090 | | | $ | 1,493,925 | | | $ | 1,416,421 | |
Shareholders’ equity | | $ | 232,241 | | | $ | 231,137 | | | $ | 226,242 | | | $ | 221,873 | | | $ | 214,788 | |
Book value per share | | $ | 14.49 | | | $ | 14.47 | | | $ | 14.29 | | | $ | 14.04 | | | $ | 13.68 | |
Tangible book value per share | | $ | 12.44 | | | $ | 12.41 | | | $ | 12.20 | | | $ | 11.93 | | | $ | 11.56 | |
Nonperforming assets | | | | | | | | | | | | | | | | | | | | |
Nonaccrual loans | | $ | 4,575 | | | $ | 5,115 | | | $ | 4,733 | | | $ | 6,165 | | | $ | 6,304 | |
Restructured loans | | | 1,197 | | | | 1,146 | | | | 124 | | | | 151 | | | | 178 | |
Personal property owned | | | — | | | | — | | | | — | | | | — | | | | — | |
Real estate owned | | | — | | | | 18 | | | | 18 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Total nonperforming assets | | $ | 5,772 | | | $ | 6,279 | | | $ | 4,875 | | | $ | 6,316 | | | $ | 6,482 | |
| | | | | | | | | | | | | | | | | | | | |
Nonperforming loans to period-end loans | | | 0.36 | % | | | 0.39 | % | | | 0.31 | % | | | 0.42 | % | | | 0.43 | % |
Nonperforming assets to period-end assets | | | 0.23 | % | | | 0.26 | % | | | 0.21 | % | | | 0.27 | % | | | 0.28 | % |
Allowance for loan and lease losses to period-end loans | | | 1.29 | % | | | 1.30 | % | | | 1.33 | % | | | 1.38 | % | | | 1.36 | % |
Allowance for loan and lease losses to nonperforming loans | | | 363.65 | % | | | 330.47 | % | | | 428.84 | % | | | 329.16 | % | | | 317.60 | % |
Allowance for loan and lease losses to nonperforming assets | | | 363.65 | % | | | 329.53 | % | | | 427.26 | % | | | 329.16 | % | | | 317.60 | % |
Net loan charge-offs (recoveries) | | $ | (49 | ) | | $ | 353 | | | $ | (24 | ) | | $ | 42 | | | $ | (38 | ) |
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Columbia Banking System, Inc.
| | | | | | | | | | | | | | | | |
| (Unaudited) | | Three Months Ended
June 30, | | | Six Months Ended
June 30, | |
| (in thousands except per share) | | 2006 | | | 2005 | | | 2006 | | | 2005 | |
Interest Income | | | | | | | | | | | | | | | | |
Loans | | $ | 30,328 | | | $ | 24,313 | | | $ | 58,972 | | | $ | 46,135 | |
Taxable securities | | | 5,208 | | | | 4,492 | | | | 10,166 | | | | 9,148 | |
Tax-exempt securities | | | 1,753 | | | | 1,109 | | | | 3,180 | | | | 2,192 | |
Deposits with banks | | | 103 | | | | 15 | | | | 132 | | | | 24 | |
Federal funds sold | | | 18 | | | | — | | | | 29 | | | | — | |
| | | | | | | | | | | | | | | | |
Total interest income | | | 37,410 | | | | 29,929 | | | | 72,479 | | | | 57,499 | |
Interest Expense | | | | | | | | | | | | | | | | |
Deposits | | | 9,408 | | | | 5,820 | | | | 17,899 | | | | 11,002 | |
Federal Home Loan Bank advances | | | 3,206 | | | | 1,345 | | | | 4,974 | | | | 2,051 | |
Long-term obligations | | | 492 | | | | 381 | | | | 951 | | | | 728 | |
Other borrowings | | | 2 | | | | 37 | | | | 47 | | | | 71 | |
| | | | | | | | | | | | | | | | |
Total interest expense | | | 13,108 | | | | 7,583 | | | | 23,871 | | | | 13,852 | |
| | | | | | | | | | | | | | | | |
Net Interest Income | | | 24,302 | | | | 22,346 | | | | 48,608 | | | | 43,647 | |
Provision for loan and lease losses | | | 250 | | | | 370 | | | | 465 | | | | 1,260 | |
| | | | | | | | | | | | | | | | |
Net interest income after provision for loan and lease losses | | | 24,052 | | | | 21,976 | | | | 48,143 | | | | 42,387 | |
Noninterest Income | | | | | | | | | | | | | | | | |
Service charges and other fees | | | 2,907 | | | | 2,797 | | | | 5,741 | | | | 5,433 | |
Mortgage banking | | | 109 | | | | 336 | | | | 256 | | | | 758 | |
Merchant services fees | | | 2,174 | | | | 2,248 | | | | 4,212 | | | | 4,037 | |
Gain on sale of investment securities, net | | | — | | | | | | | | 10 | | | | — | |
Bank owned life insurance (“BOLI”) | | | 434 | | | | 354 | | | | 833 | | | | 727 | |
Other | | | 643 | | | | 393 | | | | 1,188 | | | | 847 | |
| | | | | | | | | | | | | | | | |
Total noninterest income | | | 6,267 | | | | 6,128 | | | | 12,240 | | | | 11,802 | |
Noninterest Expense | | | | | | | | | | | | | | | | |
Compensation and employee benefits | | | 9,426 | | | | 9,438 | | | | 19,095 | | | | 18,706 | |
Occupancy | | | 2,685 | | | | 2,577 | | | | 5,333 | | | | 4,909 | |
Merchant processing | | | 887 | | | | 841 | | | | 1,671 | | | | 1,548 | |
Advertising and promotion | | | 854 | | | | 535 | | | | 1,506 | | | | 1,039 | |
Data processing | | | 520 | | | | 729 | | | | 1,320 | | | | 1,436 | |
Legal & professional services | | | 737 | | | | 934 | | | | 967 | | | | 1,698 | |
Taxes, licenses & fees | | | 640 | | | | 486 | | | | 1,236 | | | | 951 | |
Net gain of other real estate owned | | | (11 | ) | | | (7 | ) | | | (11 | ) | | | (9 | ) |
Interest rate floor valuation adjustment | | | 1,775 | | | | — | | | | 1,775 | | | | — | |
Other | | | 3,623 | | | | 2,981 | | | | 6,584 | | | | 5,513 | |
| | | | | | | | | | | | | | | | |
Total noninterest expense | | | 21,136 | | | | 18,514 | | | | 39,476 | | | | 35,791 | |
| | | | | | | | | | | | | | | | |
Income before income taxes | | | 9,183 | | | | 9,590 | | | | 20,907 | | | | 18,398 | |
Provision for income taxes | | | 1,944 | | | | 2,792 | | | | 5,480 | | | | 5,302 | |
| | | | | | | | | | | | | | | | |
Net Income | | | 7,239 | | | $ | 6,798 | | | $ | 15,427 | | | $ | 13,096 | |
| | | | | | | | | | | | | | | | |
Net income per common share: | | | | | | | | | | | | | | | | |
Basic | | $ | .45 | | | $ | .44 | | | $ | 0.97 | | | $ | 0.84 | |
Diluted | | $ | .45 | | | $ | .43 | | | $ | 0.96 | | | $ | 0.83 | |
Dividend paid per common share | | $ | 0.14 | | | $ | .09 | | | $ | 0.27 | | | $ | 0.16 | |
Average number of common shares outstanding | | | 15,937 | | | | 15,664 | | | | 15,907 | | | | 15,635 | |
Average number of diluted common shares outstanding | | | 16,115 | | | | 15,898 | | | | 16,095 | | | | 15,862 | |
CONSOLIDATED CONDENSED BALANCE SHEETS
Columbia Banking System, Inc.
| | | | | | | | | | | | |
(Unaudited) (in thousands) | | | | | | June 30, 2006 | | | December 31, 2005 | |
Assets | | | | | | | | | | | | |
Cash and due from banks | | | | | | $ | 107,010 | | | $ | 96,787 | |
Interest-earning deposits with banks | | | | | | | 28,328 | | | | 3,619 | |
| | | | | | | | | | | | |
Total cash and cash equivalents | | | | | | | 135,338 | | | | 100,406 | |
Securities available for sale at fair value (amortized cost of $654,047 and $576,619 respectively) | | | | | | | 637,977 | | | | 572,355 | |
Securities held to maturity (fair value of $2,577 and $2,587 respectively) | | | | | | | 2,525 | | | | 2,524 | |
Federal Home Loan Bank stock | | | | | | | 10,453 | | | | 10,453 | |
Loans held for sale | | | | | | | 1,288 | | | | 1,850 | |
Loans, net of unearned income of ($2,282) and ($2,870) respectively | | | | | | | 1,625,255 | | | | 1,564,704 | |
Less: allowance for loan and lease losses | | | | | | | 20,990 | | | | 20,829 | |
| | | | | | | | | | | | |
Loans, net | | | | | | | 1,604,265 | | | | 1,543,875 | |
Interest receivable | | | | | | | 11,541 | | | | 11,671 | |
Premises and equipment, net | | | | | | | 44,837 | | | | 44,690 | |
Real estate owned | | | | | | | — | | | | 18 | |
Goodwill | | | | | | | 29,723 | | | | 29,723 | |
Other assets | | | | | | | 66,651 | | | | 59,757 | |
| | | | | | | | | | | | |
Total Assets | | | | | | $ | 2,544,598 | | | $ | 2,377,322 | |
| | | | | | | | | | | | |
Liabilities and Shareholders’ Equity | | | | | | | | | | | | |
Deposits: | | | | | | | | | | | | |
Noninterest-bearing | | | | | | $ | 446,568 | | | $ | 455,838 | |
Interest-bearing | | | | | | | 1,516,180 | | | | 1,549,651 | |
| | | | | | | | | | | | |
Total deposits | | | | | | | 1,962,748 | | | | 2,005,489 | |
Federal Home Loan Bank advances | | | | | | | 303,000 | | | | 94,400 | |
Other borrowings | | | | | | | 227 | | | | 2,572 | |
Long-term subordinated debt | | | | | | | 22,345 | | | | 22,312 | |
Other liabilities | | | | | | | 24,037 | | | | 26,307 | |
| | | | | | | | | | | | |
Total liabilities | | | | | | | 2,312,357 | | | | 2,151,080 | |
Shareholders’ equity: | | | | | | | | | | | | |
Preferred stock (no par value) | | | | | | | | | | | | |
Authorized, 2 million shares; none outstanding | | | | | | | | | | | | |
| | | | |
| | | June 30,
2006 | | December 31,
2005 | | | | | | |
Common stock (no par value) | | | | | | | | | | | | |
Authorized shares | | 63,034 | | 63,034 | | | | | | | | |
Issued and outstanding | | 16,024 | | 15,831 | | | 165,464 | | | | 162,973 | |
Retained earnings | | | | | | | 77,175 | | | | 66,051 | |
Accumulated other comprehensive income - | | | | | | | | | | | | |
Unrealized gains (losses) on securities available for sale, net of tax | | | | | | | (10,398 | ) | | | (2,782 | ) |
| | | | | | | | | | | | |
Total shareholders’ equity | | | | | | | 232,241 | | | | 226,242 | |
| | | | | | | | | | | | |
Total Liabilities and Shareholders’ Equity | | | | | | $ | 2,544,598 | | | $ | 2,377,322 | |
| | | | | | | | | | | | |
