EXHIBIT 99.1
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FOR IMMEDIATE RELEASE
---------------------
January 23, 2003
Contacts: Melanie Dressel, President & Chief Operating Officer
(253) 305-1911
Gary R. Schminkey, Executive Vice President
and Chief Financial Officer
(253) 305-1966
COLUMBIA BANKING SYSTEM REPORTS
FULL YEAR 2002 EARNINGS AND
41% INCREASE IN 4TH QUARTER 2002 EARNINGS
HIGHLIGHTS:
o Fourth quarter earnings $4.5 million, up 41% from the 4th quarter 2001
and 21% from 3rd quarter 2002.
o Earnings for the year $10.9 million, down 13% compared with the prior
year.
o Diluted 4th quarter earnings per share of $0.33, up 38% from the 4th
quarter 2001 and 18% from 3rd quarter 2002.
o Diluted earnings per share for the year $0.82, down 10% from last year.
o Allowance for loan losses increased to 1.63% of total loans, up from
1.26% at year-end 2001.
o Total noninterest income up 15%; total noninterest expense up 5%
compared with 2001.
o ROE and ROA improve to 13.74% and 1.06%, respectively, in 4th quarter
2002.
o Efficiency ratio improves to 61.66% in 4th quarter 2002; 66.17% for
full year 2002.
TACOMA, WASHINGTON---Columbia Banking System, Inc. (Nasdaq: COLB) today
announced earnings for the fourth quarter and full year ended December 31, 2002.
Net income for the fourth quarter was $4.5 million, an increase of 41% from $3.2
million in the fourth quarter of 2001. On a diluted per share basis, net income
for the fourth quarter was $0.33, up 38% from $0.24 in 2001. Return on average
assets and return on average equity for the 4th quarter 2002 were 1.06% and
13.74%, respectively, compared to 0.87% and 10.38%, respectively, for last year.
Net income for the year 2002 decreased 13% to $10.9 million compared
with net income of $12.5 million in 2001, primarily resulting from a $10 million
increase in the provision for loan losses for the year 2002. On a diluted per
share basis, net income for 2002 was $0.82 per share compared with $0.91 per
share in 2001, a decrease of 10%. Return on average assets and return on average
equity were 0.68% and 8.77%, respectively, compared to 0.86% and 10.39%,
respectively, for last year.
William T. Weyerhaeuser, Chairman of the Board, stated, "We are pleased
that the efforts we began in the second quarter of 2002 led to the increase in
profitability we saw in Columbia's fourth quarter results. During a challenging
economic environment and after a disappointing first quarter, we focused on our
core business processes, asset quality and maintaining our commitment to
exceptional customer service."
At December 31, 2002, Columbia's total assets were $1.7 billion, an
increase of 13% from $1.5 billion at year-end 2001. Total loans were $1.2
billion at year-end 2002, unchanged from year-end 2001. Total deposits increased
14% from December 31, 2001, ending the year at $1.5 billion. Core deposits
increased $134 million, or 16%, for the year 2002 compared with 2001. Average
core deposits increased to 65% of average total deposits in 2002, compared to
56% of average total deposits in 2001.
Melanie Dressel, President and Chief Executive Officer of Columbia Bank
commented, "Our focus has been to improve profitability and credit quality. The
ongoing refinements of our credit and operational processes have contributed to
our enhanced profitability the latter part of the year."
"Our customers are at the center of everything we do," Ms. Dressel
continued. "We are striving to provide the best possible customer service while
still being compensated for the higher quality of service we deliver. While this
process is not yet complete, our goal has been to make the most of our branch
infrastructure by improving operational efficiency while generating increased
revenue."
YEAR 2002 OPERATING RESULTS
NET INTEREST INCOME
Net interest income increased $6.1 million, or 10%, in 2002 compared
with a decrease of $63,000 in 2001. The increase in 2002 net interest income was
the result of stable interest rates and increased core deposits. Decreases in
net interest income in 2001 were largely due to a rapidly declining interest
rate environment.
The Company's net interest margin increased to 4.50% in 2002, compared
with 4.36% in 2001. The net interest margin remained relatively consistent
throughout 2002, at 4.54% in the first and second quarters, and 4.52% in the
third quarter. Net interest margin decreased to 4.42% in the fourth quarter,
primarily as a result of a 50 basis point decrease in the federal funds target
rate.
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Average interest-earning assets increased to $1.45 billion, or 8%,
during 2002, compared with $1.34 billion for the year 2001. The average yield on
interest-earning assets decreased to 6.42% in 2002 from 7.81% in 2001, or 139
basis points. Average interest-bearing liabilities increased 10% to $1.21
billion, and the cost of average interest-bearing liabilities decreased 190
basis points to 2.31% from 4.21% in the year 2001.
NONPERFORMING ASSETS AND LOAN LOSS PROVISION
The Company's provision for loan losses was $15.8 million for 2002,
compared with $5.8 million for 2001. For the years ended December 31, 2002 and
2001, net loan charge-offs amounted to $11.3 and $9.9 million, respectively. The
2002 charge-offs included $5.3 million in connection with the now concluded
problem credit relationship with a single borrower, initially reported in early
2001. This charge-off represents a write-down related to a commercial property
that was subsequently transferred to Real Estate Owned and later sold in fourth
quarter 2002. During 2002, the allowance for loan losses balance had a net
increase of $4.4 million to $19.2 million as compared to year-end 2001. The
allowance for loan losses as a percentage of loans (excluding loans held for
sale at each date) improved to 1.63% at December 31, 2002 as compared to 1.26%
of loans at December 31, 2001.
At year-end 2002, the allowance for loan losses to nonperforming loans
was 112% compared to 80% at December 31, 2001. Ms. Dressel said, "In light of
the uncertain economic times, we are committed to prudent coverage in our
allowance for loan losses."
NONINTEREST INCOME
Total noninterest income increased $2.6 million, or 15%, in 2002. Total
noninterest income, excluding the gain on sale of securities, increased $3.7
million, or 24%, in 2002. The increases in noninterest income during the fourth
quarter and full year 2002 were in residential mortgage loan originations
resulting from the effect of lower long-term interest rates, service charges and
other fees resulting from the growth in core deposits, and merchant services
income.
In accordance with the Company's ongoing investment strategy,
management monitors market conditions and seeks to realize gains on its
securities portfolio as market conditions allow. Treasury activity in 2002
contributed $610,000 toward noninterest income from gain on sales of securities,
compared to $1.7 million in 2001.
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NONINTEREST EXPENSE
Total noninterest expense increased $2.7 million, or 5%, for the year
ending December 31, 2002, compared with the same period last year. Total
noninterest expense, excluding gains on Real Estate Owned, increased $4.0
million, or 8%, for the year ending December 31, 2002, compared with the same
period last year. The Company's emphasis on expense control is reflected in the
small increase of $182,000, or 1%, for the fourth quarter of 2002, compared with
the fourth quarter of 2001. The increases for the year 2002 were primarily due
to personnel and occupancy costs associated with the Company's expansion in the
major metropolitan areas of King and Pierce counties, which occurred principally
in the first quarter of 2002.
The Company's efficiency ratio improved to 66.2% for 2002 compared with
68.9% percent for 2001. Ms. Dressel noted, " We are pleased with the improving
trend to our efficiency ratio, which was 69.8% in the first quarter of 2002,
69.7% for the 2nd quarter, 63.5% for the 3rd quarter and 61.7% for the last
quarter of the year."
BRANCH NETWORK
Ms. Dressel said, "During the first quarter of 2002, we opened our
long-awaited Redmond branch and our 2nd & Columbia office in downtown Seattle;
both of these new branches have exceeded our expectations in terms of loan and
deposits. In the second quarter, we opened 104th & Canyon as a satellite branch
to our Summit office, and relocated our Fife branch to a more visible and
accessible location. Our second Gig Harbor location opened in August 2002, with
a storefront facility within the busy downtown core, bringing us to 36 branches
in 5 counties."
Ms. Dressel noted, "While we have no new branches planned for 2003, we
have not abandoned our growth aspirations. We are focusing Columbia's efforts on
increasing market share in all of our communities. During the fourth quarter we
implemented an information system that will allow us to more effectively market
to our existing customer base as well. Our mission has not changed. We want to
be the community bank in every community we serve."
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Columbia Banking System, Inc. is a Tacoma-based bank holding company
whose wholly owned bank subsidiary is Columbia Bank, a Washington
state-chartered full-service commercial bank with 36 banking offices in Pierce,
King, Cowlitz, Kitsap and Thurston counties. Columbia's stock trades on the
Nasdaq Stock MarketSM under the symbol COLB. Columbia Banking System's Annual
Meeting of Shareholders will be held at 1:00 PST on April 23, 2003 at the
Sheraton Tacoma Hotel, 1320 Broadway Plaza, Tacoma, Washington.
###
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 and national general and economic conditions,
including the impact of the events of September 11, 2001, 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.
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Columbia Banking System, Inc.
Financial Statistics
Unaudited
(in thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
2002 2001 2002 2001
---- ---- ---- ----
EARNINGS
- --------
Net interest income $ 16,587 $ 14,595 $ 64,289 $ 58,205
Provision for loan loss 2,700 2,750 15,780 5,800
Noninterest income 5,858 6,113 20,050 17,451
Noninterest expense 13,335 13,153 53,653 50,954
Net income 4,472 3,169 10,885 12,513
PER SHARE*
- ----------
Net income (basic)* $ 0.34 $ 0.24 $ 0.83 $ 0.92
Net income (diluted)* 0.33 0.24 0.82 0.91
AVERAGES
- --------
Total assets $1,668,848 $1,450,488 $1,601,061 $1,460,263
Interest-earning assets 1,518,118 1,321,857 1,454,714 1,343,410
Loans 1,186,886 1,195,795 1,183,922 1,218,906
Securities 280,358 102,581 246,995 100,343
Deposits 1,454,955 1,286,222 1,360,968 1,281,748
Core deposits 951,165 785,505 885,008 718,262
Shareholders' Equity 129,137 121,133 124,096 120,403
FINANCIAL RATIOS
- ----------------
Return on average assets 1.06% 0.87% 0.68% 0.86%
Return on average equity 13.74 10.38 8.77 10.39
Net interest margin 4.42 4.42 4.50 4.36
Efficiency ratio 61.66 68.88 66.17 68.92
Average equity to average assets 7.74 8.35 7.75 8.25
December 31 December 31
PERIOD END 2002 2001
- ---------- ---- ----
Total assets $1,699,613 $1,498,294
Loans 1,175,853 1,170,633
Allowance for loan losses 19,171 14,734
Deposits 1,487,153 1,306,750
Core deposits 980,709 846,546
Shareholders' equity 132,384 118,966
Book value per share* 9.95 9.01
NONPERFORMING ASSETS
- --------------------
Nonaccrual loans $ 16,918 $ 17,635
Restructured loans 187 716
Personal property owned 916
Real estate owned 130 197
---------- ----------
Total nonperforming assets $ 18,151 $ 18,548
Nonperforming loans to period-end loans 1.45% 1.57%
Nonperforming assets to period-end assets 1.07 1.24
Allowance for loan losses to period-end loans 1.63 1.26
Allowance for loan losses to nonperforming
loans 112.08 80.29
Net loan charge-offs $ 11,343(1) $ 9,857(2)
* Per share amounts have been retroactively adjusted for the 5% stock dividend
announced April 2, 2002.
(1) For the twelve months ended December 31, 2002.
(2) For the year ended December 31, 2001.
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Columbia Banking System, Inc.
Quarterly Financial Statistics
Unaudited
(in thousands, except per share amounts)
Three Months Ended
----------------------------------------------------------------------------
Dec 31 Sept 30 June 30 Mar 31 Dec 31
2002 2002 2002 2002 2001
---- ---- ---- ---- ----
EARNINGS
- --------
Net interest income $ 16,587 $ 16,219 $ 15,927 $ 15,556 $ 14,595
Provision for loan loss 2,700 4,035 1,980 7,065 2,750
Noninterest income 5,858 5,508 4,617 4,067 6,113
Noninterest expense 13,335 12,473 14,152 13,693 13,153
Net income (loss) 4,472 3,687 3,154 (428) 3,169
PER SHARE*
- ----------
Net income (loss) [basic]* 0.34 0.28 0.24 (0.03) 0.24
Net income (loss) [diluted]* 0.33 0.28 0.24 (0.03) 0.24
AVERAGES
- --------
Total assets 1,668,848 1,607,831 1,578,889 1,547,266 1,450,488
Interest-earning assets 1,518,118 1,451,499 1,430,752 1,416,947 1,321,857
Loans 1,186,886 1,178,493 1,176,788 1,193,656 1,195,795
Securities 280,358 242,844 251,125 212,956 102,581
Deposits 1,454,955 1,378,396 1,317,080 1,291,455 1,286,222
Core deposits 951,165 893,548 858,297 835,658 785,505
Shareholders' Equity 129,137 125,421 120,324 121,402 121,133
FINANCIAL RATIOS
- ----------------
Return on average assets 1.06% 0.91% 0.80% (0.11)% 0.87%
Return on average equity 13.74% 11.66% 10.51% (1.43)% 10.38%
Net interest margin 4.42% 4.52% 4.54% 4.54% 4.42%
Efficiency ratio 61.66% 63.52% 69.68% 69.78% 68.88%
Average equity to average assets 7.74% 7.80% 7.62% 7.85% 8.35%
PERIOD END
- ----------
Total assets 1,699,613 1,661,370 1,590,862 1,593,698 1,498,294
Loans 1,175,853 1,167,633 1,160,847 1,171,192 1,170,633
Allowance for loan losses 19,171 18,426 15,767 15,226 14,734
Deposits 1,487,153 1,437,728 1,346,199 1,309,765 1,306,750
Core deposits 980,709 945,502 881,013 857,870 846,546
Shareholders' equity 132,384 127,699 122,990 117,980 118,966
Book value per share* 9.95 9.63 9.27 8.90 9.01
NONPERFORMING ASSETS
- --------------------
Nonaccrual loans 16,918 15,027 15,956 23,849 17,635
Restructured loans 187 425 425 425 716
Personal property owned 916 1,148 1,275
Real estate owned 130 4,681 6,668 276 197
----------- ----------- ----------- ----------- -----------
Total nonperforming assets 18,151 21,281 24,324 24,550 18,548
Nonperforming loans to period-end loans 1.45% 1.32% 1.41% 2.07% 1.57%
Nonperforming assets to period-end assets 1.07% 1.28% 1.53% 1.54% 1.24%
Allowance for loan losses to period-end loans 1.63% 1.58% 1.36% 1.30% 1.26%
Allowance for loan losses to nonperforming loans 112.08% 119.25% 96.25% 62.73% 80.29%
Net loan charge-offs 1,955 1,376 1,439 6,573 1,413
* Per share amounts have been retroactively adjusted for the 5% stock dividend
announced April 2, 2002.
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CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
Columbia Banking System, Inc.
Unaudited
Three Months Ended Twelve Months Ended
December 31, December 31,
(in thousands except per share) 2002 2001 2002 2001
- -------------------------------------------------------------------------------------------------------------------------
INTEREST INCOME
Loans $ 19,619 $ 21,623 $ 80,003 $ 97,650
Securities available for sale 3,250 1,370 11,606 5,596
Securities held to maturity 50 63 214 265
Deposits with banks 188 118 372 1,061
- -------------------------------------------------------------------------------------------------------------------------
Total interest income 23,107 23,174 92,195 104,572
INTEREST EXPENSE
Deposits 5,906 8,165 24,740 43,763
Federal Home Loan Bank advances 313 51 1,945 1,690
Trust preferred obligations 301 363 1,221 635
Other borrowings 279
- -------------------------------------------------------------------------------------------------------------------------
Total interest expense 6,520 8,579 27,906 46,367
- -------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 16,587 14,595 64,289 58,205
Provision for loan losses 2,700 2,750 15,780 5,800
- -------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 13,887 11,845 48,509 52,405
NONINTEREST INCOME
Service charges and other fees 2,518 1,968 8,783 7,182
Mortgage banking 1,352 880 3,411 2,652
Merchant services fees 1,161 1,195 4,852 4,453
Gain on sale of investment securities, net 193 1,613 610 1,720
Bank owned life insurance (BOLI) 358 233 1,294 429
Other 276 224 1,100 1,015
- -------------------------------------------------------------------------------------------------------------------------
Total noninterest income 5,858 6,113 20,050 17,451
NONINTEREST EXPENSE
Compensation and employee benefits 6,980 6,903 28,964 26,826
Occupancy 2,142 1,990 8,249 7,563
Merchant processing 508 465 2,015 1,852
Advertising and promotion 231 410 1,867 1,763
Data processing 414 500 1,792 1,921
Legal and professional services 1,043 439 2,382 1,592
Taxes, licenses & fees 490 502 1,777 2,060
Gains on, and net cost of, real estate owned (372) 7 (1,565) (307)
Other 1,899 1,937 8,172 7,684
- -------------------------------------------------------------------------------------------------------------------------
Total noninterest expense 13,335 13,153 53,653 50,954
Income before income taxes 6,410 4,805 14,906 18,902
Provision for income taxes 1,938 1,636 4,021 6,389
- -------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 4,472 $ 3,169 $ 10,885 $ 12,513
=========================================================================================================================
NET INCOME PER COMMON SHARE:
Basic $ 0.34 $ 0.24 $ 0.83 $ 0.92
Diluted 0.33 0.24 0.82 0.91
Average number of common shares outstanding 13,187 13,168 13,165 13,538
Average number of diluted common shares outstanding 13,353 13,368 13,318 13,721
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CONSOLIDATED CONDENSED BALANCE SHEETS
Columbia Banking System, Inc.
Unaudited
(in thousands)
December 31, December 31,
2002 2001
- ---------------------------------------------------------------------------------------------------------
ASSETS
Cash and due from banks $ 67,058 $ 57,628
Interest-earning deposits with banks 18,425 9,361
- ---------------------------------------------------------------------------------------------------------
Total cash and cash equivalents 85,483 66,989
Securities available for sale at fair value (amortized cost of $320,499 and
$145,550 respectively) 321,513 144,465
Securities held to maturity (fair value of $6,412 and $8,024 respectively) 6,192 7,856
Federal Home Loan Bank stock 9,707 9,141
Loans held for sale 22,102 29,364
Loans, net of unearned income of ($2,625) and ($2,894) respectively 1,175,853 1,170,633
Less: allowance for loan losses 19,171 14,734
- ---------------------------------------------------------------------------------------------------------
Loans, net 1,156,682 1,155,899
Interest receivable 6,710 6,405
Premises and equipment, net 52,921 52,297
Real estate owned 130 197
Other 38,173 25,681
- ---------------------------------------------------------------------------------------------------------
Total Assets $1,699,613 $1,498,294
=========================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 299,862 $ 242,971
Interest-bearing 1,187,291 1,063,779
- ---------------------------------------------------------------------------------------------------------
Total deposits 1,487,153 1,306,750
Federal Home Loan Bank advances 46,470 40,000
Trust preferred obligations 21,433 21,367
Other liabilities 12,173 11,211
- ---------------------------------------------------------------------------------------------------------
Total liabilities 1,567,229 1,379,328
Shareholders' equity:
Preferred stock (no par value)
Authorized, 2 million shares; none outstanding
December 31, December 31,
Common stock (no par value) 2002 2001
---- ----
Authorized shares 60,032 60,032
Issued and outstanding 13,310 13,207 111,028 101,892
Retained earnings 20,696 17,779
Accumulated other comprehensive income (loss) -
Unrealized gains (losses) on securities available for sale, net of tax 660 (705)
- ---------------------------------------------------------------------------------------------------------
Total shareholders' equity 132,384 118,966
- ---------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $1,699,613 $1,498,294
=========================================================================================================
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