-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, D/vJ+SeXFVUmnNHThiA3N0j9IhTS1xBaeIPZjhSSzaHGjl+6YJJ9qCIpeApkQWOb BK3bEOytqKGjt47e2s7v4A== 0000887343-96-000007.txt : 19960625 0000887343-96-000007.hdr.sgml : 19960625 ACCESSION NUMBER: 0000887343-96-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960522 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLUMBIA BANKING SYSTEM INC CENTRAL INDEX KEY: 0000887343 STANDARD INDUSTRIAL CLASSIFICATION: 6035 IRS NUMBER: 911422237 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20288 FILM NUMBER: 96571000 BUSINESS ADDRESS: STREET 1: 1102 BROADWAY PLAZA CITY: TACOMA STATE: WA ZIP: 98402 BUSINESS PHONE: 2063051900 MAIL ADDRESS: STREET 1: 1102 BROADWAY PLAZA CITY: TACOMA STATE: WA ZIP: 98402 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1996. / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________. Commission File Number 0-20288 COLUMBIA BANKING SYSTEM, INC. (Exact name of small business issuer as specified in its charter) Washington 91-1422237 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 1102 Broadway Plaza Tacoma, Washington 98402 (Address of principal executive offices) (Zip Code) (206) 305-1900 (Issuer's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No The number of shares of the issuer's Common Stock outstanding at April 30, 1996 was 3,286,221. TABLE OF CONTENTS PART I -- FINANCIAL INFORMATION Page Item 1. Financial statements Consolidated Statements of Operations - three months ended March 31, 1996 and 1995 2 Consolidated Balance Sheets - March 31, 1996 and December 31, 1995 3 Consolidated Statements of Shareholders' Equity - twelve months ended December 31, 1995 and three months ended March 31, 1996 4 Consolidated Statements of Cash Flows - three months ended March 31, 1996 and 1995 5 Notes to consolidated financial statements 6 Item 2. Management discussion and analysis of financial condition and results of operations 8 PART II -- OTHER INFORMATION Item 6. Exhibits and reports on Form 8-K 13 Signatures 13 1 CONSOLIDATED STATEMENTS OF OPERATIONS Columbia Banking System, Inc.
Three Months Ended March 31, (in thousands except per share) 1996 1995 - - ----------------------------------------------------------------------------- Interest Income Loans $ 8,198 $ 6,583 Investment securities 270 Securities available for sale 410 50 Deposits with banks 178 39 - - ----------------------------------------------------------------------------- Total interest income 8,786 6,942 Interest Expense Deposits 3,795 2,765 Federal Home Loan Bank advances 437 256 Other borrowings 64 72 - - ----------------------------------------------------------------------------- Total interest expense 4,296 3,093 Net Interest Income 4,490 3,849 Provision for loan losses 330 300 - - ----------------------------------------------------------------------------- Net interest income after provision for loan losses 4,160 3,549 Noninterest Income Service charges and other fees 551 441 Mortgage banking 160 88 Credit card fees and other 454 354 - - ----------------------------------------------------------------------------- Total noninterest income 1,165 883 Noninterest Expense Compensation and employee benefits 1,819 1,872 Occupancy 816 681 Professional Services 124 116 Advertising and promotion 180 131 Printing and supplies 89 102 Regulatory premiums and assessments 64 160 Data processing 158 142 Gains on, and net cost of, real estate owned (110) Other 1,267 893 - - ----------------------------------------------------------------------------- Total noninterest expense 4,517 3,987 Income before income taxes 808 445 Provision for income taxes - - ----------------------------------------------------------------------------- Net Income $ 808 $ 445 ============================================================================= Per share (on average shares outstanding): Net Income $ 0.23 $ 0.13 Fully diluted net income 0.23 0.13 Average number of common and common equivalent shares outstanding 3,543 3,482 Fully diluted average common and common equivalent shares oustanding 3,796 3,741 See accompanying notes to consolidated financial statements.
2 CONSOLIDATED BALANCE SHEETS Columbia Banking System, Inc.
March 31, December 31, (in thousands) 1996 1995 - - ----------------------------------------------------------------------------- Assets Cash and due from banks $ 15,935 $ 18,244 Interest-earning deposits with banks 24,181 12,635 Securities available for sale: U.S. Treasury & Government Agencies 16,713 6,948 Mortgage-backed 11,955 12,446 FHLB stock 4,005 3,281 - - ----------------------------------------------------------------------------- Total securities available for sale 32,673 22,675 Loans held for sale 2,545 1,367 Loans 370,158 353,093 Less: allowance for loan losses 4,015 3,748 - - ----------------------------------------------------------------------------- Loans, net 366,143 349,345 Interest Receivable 2,517 2,469 Premises and equipment, net 13,373 13,736 Real estate owned 3,304 Other 1,560 1,431 - - ----------------------------------------------------------------------------- Total Assets $458,927 $425,206 ============================================================================= Liabilities and Shareholders' Equity Deposits: Noninterest-bearing $ 53,712 $ 52,991 Interest-bearing 332,017 308,884 - - ----------------------------------------------------------------------------- Total Deposits 385,729 361,875 Federal Home Loan Bank advances 35,000 25,000 Other liabilities 2,849 3,669 Convertible subordinated notes 2,680 2,695 - - ---------------------------------------------------------------------------- Total liabilities 426,258 393,239 Shareholders' equity: Preferred stock (no par value) Authorized, 2,000,000 shares; None outstanding March 31, December 31, Common stock (no par value) 1996 1995 --------- ---------- Authorized shares 10,000 10,000 Issued and outstanding 3,286 3,274 30,873 30,806 Retained Earnings 2,082 1,274 Unrealized losses on securities available for sale (286) (113) - - ----------------------------------------------------------------------------- Total shareholders' equity 32,669 31,967 - - ----------------------------------------------------------------------------- Total Liabilities and Shareholders' Equity $458,927 $425,206 =============================================================================
See accompanying notes to consolidated financial statements. 3 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY Columbia Banking System, Inc.
Common stock Unrealized Total Number of Retained Gains and Shareholders' (in thousands) Shares Amount Earnings (Losses) Equity - - ----------------------------------------------------------------------------- Balance at December 31, 1994 3,258 $30,703 ($1,481) ($361) $28,861 Net income 2,755 2,755 Issuance of shares of common stock, net 16 103 103 Change in unrealized gains and (losses) 248 248 - - ----------------------------------------------------------------------------- Balance at December 31, 1995 3,274 30,806 1,274 (113) 31,967 Net income 808 808 Issuance of shares of common stock, net 12 67 67 Change in unrealized gains and (losses) (173) (173) - - ----------------------------------------------------------------------------- Balance at March 31, 1996 3,286 $30,873 $2,082 ($286) $32,669 =============================================================================
See accompanying notes to consolidated financial statements. 4 CONSOLIDATED STATEMENTS OF CASH FLOWS Columbia Banking System, Inc.
Three Months Ended March 31, (in thousands) 1996 1995 - - ----------------------------------------------------------------------------- Operating Activities Net income $ 808 $ 445 Adjustments to reconcile net income (loss) to net cash provided (used) by operating activities: Provision for loan losses 330 300 Losses (gains) on real estate owned 41 (12) Provision for depreciation and amortization 464 295 Net losses (gains) on sale of investing assets 40 (22) (Increase) decrease in loans held for sale (1,178) 846 Increase in interest receivable (48) (196) Increase in interest payable 49 304 Net changes in other assets and liabilities (1,017) (211) - - ----------------------------------------------------------------------------- Net cash provided (used) by operating activities (511) 1,749 Investing Activities Proceeds from maturities of securities available for sale 207 Proceeds from maturities of mortgage-backed securities available for sale 333 Proceeds from maturities of mortgage-backed securities 645 Purchases of securities available for sale (10,626) Purchases of investment securities (527) Loans originated and acquired, net of principal collected (17,201) (24,072) Purchases of premises and equipment (275) (2,190) Proceeds from disposal of premises and equipment 140 Proceeds from sale of real estate owned 3,263 Other, net (43) - - ----------------------------------------------------------------------------- Net cash used by investing activities (24,159) (26,187) Financing Activities Net increase in deposits 23,854 27,922 Proceeds from FHLB advances and other long-term debt 10,000 Proceeds from issuance of common stock 53 5 - - ----------------------------------------------------------------------------- Net cash provided by financing activities 33,907 27,927 - - ----------------------------------------------------------------------------- Increase in cash and cash equivalents 9,237 3,489 Cash and cash equivalents at beginning of period 30,879 13,658 - - ----------------------------------------------------------------------------- Cash and cash equivalents at end of period $40,116 $17,147 ============================================================================= Supplemental information: Cash paid for interest $ 4,246 $ 2,789 Loans foreclosed and transferred to real estate owned Issuance of common stock from conversion of convertible subordinated notes 14 See accompanying notes to consolidated financial statements.
5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Columbia Banking System, Inc. 1. Basis of Presentation The interim unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments including normal recurring accruals necessary for a fair presentation of results of operations for the interim periods included herein have been made. The results of operations for the three months ended March 31, 1996 are not necessarily indicative of results to be anticipated for the year ending December 31, 1996. Certain amounts in the 1995 financial statements have been reclassified to conform with the 1996 presentation. For additional information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1995. 2. Summary of Significant Accounting Policies In December 1995, the FASB issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"). The statement requires the Company to elect to account for stock-based compensation on a fair value basis or an intrinsic value basis. The intrinsic value basis is currently used by the Company and is the accounting principle prescribed by Accounting Principles Board No. 25 "Accounting for Stock Issued to Employees" (APB 25). SFAS 123 requires among other things, disclosure in the footnotes of the pro forma impact on net income and earnings per share of the difference between compensation expense using the intrinsic value method and the fair value method if the fair value method of accounting is not used. The adoption of SFAS 123 is required for the fiscal year ended December 31, 1996. As of March 31, 1996, the Company had not decided which method will be used for fiscal year ending December 31, 1996. 3. Susequent Event On April 24, 1996, the Company announced a 5% stock dividend payable on May 22, 1996, to shareholders of record on May 8, 1996. Average shares outstanding and net income per share have been adjsuted to give retroactive effect to the quarters ending March 31, 1996 and 1995. 6 CONSOLIDATED AVERAGE BALANCES--NET CHANGES Columbia Banking System, Inc.
Three Months Ended Increase March 31, (Decrease) (in thousands) 1996 1995 Amount - - ---------------------------------------------------------------------------- ASSETS Loans receivable $364,528 $283,287 $81,241 Securities 28,748 22,359 6,389 Interest-earning deposits with banks 13,236 2,641 10,595 - - ---------------------------------------------------------------------------- Total interest-earning assets 406,512 308,287 98,225 Noninterest-earning assets 29,073 24,216 4,857 - - ---------------------------------------------------------------------------- Total assets $435,585 $332,503 $103,082 ============================================================================ LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing deposits $316,817 $245,068 $ 71,749 Federal Home Loan Bank advances 31,295 17,449 13,846 Convertible subordinated notes 2,684 2,735 (51) - - ---------------------------------------------------------------------------- Total interest-bearing liabilities $350,796 265,252 85,544 Noninterest-bearing deposits 49,837 36,566 13,271 Other noninterest-bearing liabilities 2,951 2,106 845 Shareholders' Equity 32,001 28,579 3,422 - - ---------------------------------------------------------------------------- Total liabilities and shareholders'equity $435,585 $332,503 $103,082 ============================================================================
7 MANAGEMENT DISCUSSION AND FINANCIAL REVIEW Columbia Banking System, Inc. Earnings Summary For the first quarter of 1996 the Company recorded net income of $808,000, compared with net income of $445,000 in the first quarter of 1995. First quarter 1996 net income per share was $0.23 increasing from a net income per share of $0.13 in the first quarter of 1995. Net income for the first quarter of 1996 was positively affected by an increase in net interest income, service charges on deposit accounts and bank card fees. The Company continues to benefit from utilization of its net operating loss carryforwards for federal income tax purposes. Therefore, the Company has no federal income tax provision for the three months ending March 31, 1996. Had the earnings been fully taxable, net income would have been $520,000. Management has determined that in order to successfully pursue the perceived potential for Columbia Bank, it is necessary to establish strategic branch coverage in the Tacoma/Pierce County area. Columbia Bank opened four new branches during 1995, three in Pierce County and one in south King County. Construction began in the first quarter of 1996 on a permanent facility for the Gig Harbor branch. Plans are also underway for a new Spanaway branch at 176th and Pacific Avenue which will open in the summer of 1996 in a temporary facility. Additional upcoming expansion opportunities in Pierce County include two new branches in Puyallup and a branch in Dupont, all areas of high growth or recently announced business expansion. Establishment of new branches and relocation of existing temporary branches can be expected to utilize considerable resources in 1996 and beyond. New branches normally do not contribute to net income for many months after opening. Net Interest Income Net interest income for the first quarter increased to $4.5 million, or 18.4%, from $3.8 million in the first quarter of 1995. The increase in net interest income in the first quarter of 1996 is largely due to the overall growth of Company. Net interest income was favorable affected by average interest- earning assets increasing more rapidly than average interest-bearing liabilities, with the difference funded by noninterest-bearing deposits and shaholders' equity. Specifically, average interest-earning assets increased $98.2 million, while average interest-bearing liabilities increased only $85.5 million, compared with the same period in 1995. The 1996 increase in average interest earning assets and average interest-bearing liabilities is primarily due to the ongoing expansion of Columbia Bank. Net interest margin (net interest income divided by average interest-earning assets) decreased to 4.43% in the first quarter of 1996 from 4.99% in the first quarter of 1995. The decrease in net interest margin is primarily the result of growth in earning assets at reduced spreads. While interest- earning-assets grew, the average yield decreased 0.46% to 8.67% for the first quarter of 1996 from 9.13% in the same period of 1995. The average cost of interest-bearing liabilities increased 0.18% to 4.91% for the first quarter of 1996 from 4.73% in the same period of 1995. The decrease in net interest margin and spread is the result of increased competition in the Company's market area accompanied by interest-earning assets repricing faster than interest-bearing liabilities. 8 Noninterest Income and Expense Total noninterest income increased $282,000, or 31.9%, in the first quarter of 1996, compared to the same period a year ago. Increases in noninterest income in the first quarter of 1996 were centered in account service charges, bank card revenue, and mortgage banking income. Total noninterest expense increased $530,000, or 13.3%, in the first quarter of 1996, compared with the same period in 1995. The increase is primarily due to expenses associated with the expansion of Columbia Bank. Total noninterest expense was 79.9% and 84.3% of total revenues (the sum of net interest income plus noninterest income less nonrecurring gains) for the first quarter of 1996 and 1995, respectively. Increases in noninterest expense are centered in occupancy, advertising, business & occupation taxes, data processing and other expense. In general, increases in noninterest expense are due to the growth of the Company and the associated "volume driven" expenses. Total noninterest expense for the Company is expected to decline in relation to revenues as the Company pursues its commitment to more efficient operations and as projected asset growth materializes. In February 1996, the Company recorded a loss of $41,000 on the sale of its' "real estate owned" (which consisted of one property in the state of Washington). Also, in March 1996, the Company recorded a loss of $38,000 on a branch real estate transaction. Loan Portfolio Following is a summary of loans by type:
March 31, December 31 (in thousands) 1996 1995 - - ----------------------------------------------------------------------------- Real estate: One-to four-family residential $ 66,564 $ 67,991 Five or more family residential and commercial properties 109,664 97,103 - - ----------------------------------------------------------------------------- Total real estate 176,228 165,094 Real estate construction: One-to four-family residential 22,206 22,741 Five or more family residential and commercial properties 10,030 8,884 - - ----------------------------------------------------------------------------- Total real estate construction 32,236 31,625 Commercial business 117,053 113,775 Consumer 45,221 43,343 - - ----------------------------------------------------------------------------- Sub-total loans 370,738 353,837 Less: Deferred loan fees (580) (744) - - ----------------------------------------------------------------------------- Total loans $370,158 $353,093 ============================================================================= Loans held for sale $ 2,545 $ 1,367 =============================================================================
9 Total loans increased $17.1 million, or 4.8%, from year-end 1995. All loan categories contributed to the increase except for one-to-four family residential and construction loans which declined slightly. The category of five or more family residential and commercial properties loans increased $12.6 million, or 12.9%, from year-end, while five or more family residential and commercial property construction loans increased $1.1 million, or 12.9%, from year-end. Commercial business loans increased $3.3 million, or 2.9%, to $117.1 million at March 31, 1996 from $113.8 million at December 31, 1995. Consumer loans increased $1.9 million, or 4.3%, from year-end. Loans held for sale increased $1.2 million, or 86.2%. The increases are primarily the result of Columbia Bank's continued expansion in the Tacoma/Pierce County market, as well as a rise in loan demand. Commercial business loans and consumer loans will likely continue to represent an increasing proportion of the total loan portfolio as a result of the expansion of Columbia Bank in Pierce County. At March 31, 1996, the Company had no foreign loans or loans related to highly leveraged transactions. Nonperforming Assets Below is an analysis of the composition of the Company's nonperforming assets which consist of nonaccrual loans, restructured loans and real estate owned ("REO").
March 31, December 31, (in thousands) 1996 1995 - - ----------------------------------------------------------------------------- Nonaccrual: One-to four-family residential $ 853 $ 329 Commercial business 42 86 Consumer 119 20 - - ----------------------------------------------------------------------------- Total $1,014 $ 435 ============================================================================= Restructured: One-to four-family residential $ 28 $ 29 - - ----------------------------------------------------------------------------- Total $ 28 $ 29 ============================================================================= Real estate owned: Five or more family residential and commercial properties $3,304 - - ----------------------------------------------------------------------------- Total $3,304 ============================================================================= Total nonperforming assets $1,042 $3,768 =============================================================================
The current policy of the Company generally is to discontinue the accrual of interest on all loans past due 90 days or more and place them on nonaccrual status. Total nonperforming loans increased $578,000 to $1.0 million, or 0.28% of total loans (excluding loans held for sale), at March 31, 1996, compared with $464,000, or 0.13% of total loans, at December 31, 1995. In February 1996, the Company sold all of its' "real estate owned" (which consisted of one property in the state of Washington), thus reducing total nonperforming assets to $1.0 million from $3.8 million at year-end 1995. 10 Provision and Allowance for Loan Losses Net loan charge-offs amounted to $63,000 for the first quarter of 1996, compared with net loan charge-offs of $1,000 for the same period in 1995. The Company's provision for loan losses was $330,000 for the first quarter of 1996, compared with $300,000 for the first quarter of 1995. During the first quarter of 1996, the allowance for loan losses increased by $267,000, increasing to 1.08% of loans at March 31, 1996 from 1.06% of loans (excluding loans held for sale) at December 31, 1995. Management considers the allowance for loan losses at March 31, 1996 to be adequate to cover anticipated loan losses based on management's assessment of various factors affecting the loan portfolio, including the level of problem loans, business conditions, estimated collateral values, loss experience and credit concentrations. The following table summarizes the changes in the allowance for loan losses for the three months ended March 31, 1996 and 1995:
Three Months Ended March 31, (in thousands) 1996 1995 - - ---------------------------------------------------------------------------- Beginning balance $3,748 $2,711 Charge offs: Commercial business (26) Consumer (39) (13) - - ---------------------------------------------------------------------------- Total charge-offs (65) (13) Recoveries: Commercial business 2 12 - - ---------------------------------------------------------------------------- Total recoveries 2 12 - - ---------------------------------------------------------------------------- Net (charge-offs) recoveries (63) (1) Provision charged to expense 330 300 - - ---------------------------------------------------------------------------- Ending balance $4,015 $3,010 ============================================================================
Liquidity and Sources of Funds The Company's primary sources of funds are customer deposits and advances from the Federal Home Loan Bank (the "FHLB"). These funds, together with loan repayments, loan sales, retained earnings, equity and other borrowed funds, are used to make loans, to acquire securities and other assets, and to fund continuing operations. Total deposits increased 6.6% to $385.7 million at March 31, 1996 from $361.9 million at December 31, 1995. FHLB advances increased $10.0 million during the first three months of 1996 to $35.0 million. Management anticipates that the Company will continue to rely on the same sources of funds in the future and will use those funds primarily to make loans and purchase securities. Management determined that in order to successfully pursue the perceived potential for Columbia Bank, it is necessary to establish broad branch coverage in the Tacoma/Pierce County area and hire experienced bank personnel. To fund the growth of the Company, management's strategy has been to make use of brokered and other wholesale deposits while working to build "core" deposits as rapidly as practical. Brokered and wholesale deposits can be more expensive and more volatile in comparison with core deposits obtained in the Company's market area. The deposit increase of $23.8 million during the first quarter of 1996 occurred entirely in "core deposits". Brokered and other wholesale deposits (excluding public deposits) decreased $4.9 million to $43.4 million, or 11.3% of total deposits at March 31, 1996, from $48.3 million, or 13.3% of total deposits at December 31, 1995. 11 Capital Shareholders' equity at March 31, 1996 was $32.7 million compared with $32.0 million at December 31, 1995. The increase is primarily due to improved net income during the first three months of 1996. Shareholders' equity was 7.1% and 7.5% of total period-end assets at March 31, 1996 and December 31, 1995, respectively. Banking regulations require bank holding companies to maintain a minimum "leverage" ratio of core capital to adjusted quarterly average total assets of at least 3%. At March 31, 1996, the Company's leverage ratio was 7.47%, compared with 7.72% at December 31, 1995. In addition, banking regulators have adopted risk-based capital guidelines, under which risk percentages are assigned to various categories of assets and off-balance sheet items to calculate a risk-adjusted capital ratio. Tier I capital generally consists of common shareholders' equity, less goodwill and certain identifiable assets, while Tier II capital includes the allowance for loan losses and subordianted debt, both subject to certain limitations. Regulatory minimum risk-based capital guidelines require Tier I capital of 4% of risk-adjusted assets and total capital (combined Tier I and Tier II) of 8%. The Company's Tier I and total capital ratios were 8.90% and 10.73%, respectively, at March 31, 1996, compared with 9.10% and 10.95%, respectively, at December 31, 1995. During 1992, the Federal Deposit Insurance Corporation (the "FDIC") published the qualifications necessary to be classified as a "well capitalized" bank, primarily for assignment of FDIC insurance premium rates beginning in 1993. To qualify as "well capitalized," banks must have a Tier I risk-adjusted capital ratio of at least 6%, a total risk-adjusted capital ratio of at least 10%, and a leverage ratio of at least 5%. Columbia Bank qualified as "well capitalized" at March 31, 1996. In addition, in accordance with the 1993 order by the FDIC granting insurance for the deposits of Columbia Bank, the Bank is required to obtain a leverage ratio of 8% by August 1996. Under Washington State banking regulations, Columbia Bank's ability to declare or pay dividends to the Company is limited to the amount of the Bank's profits then on hand, less any required transfers to additional paid-in capital. The Company's ability to pay dividends is substantially dependent upon receipt of dividends from the Bank. The Company presently intends to retain earnings to support anticipated growth. Accordingly, the Company does not intend to pay cash dividends on its common stock in the foreseeable future. On April 24, 1996, the Company announced a 5% stock dividend payable on May 22, 1996, to shareholders of record on May 8, 1996. 12 PART II - OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 11 - Computation of Fully Diluted Earnings per Common Share Exhibit 27 - Financial Data Schedule (b) On April 30, 1996, the Company filed a Form 8-K reporting that W.W. Philip, the Company's President and Chief Operating Officer had agreed to remain in his present position with the Company and its subsidiary bank for two additional years, through the end of calendar year 1998. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. COLUMBIA BANKING SYSTEM, INC. (Registrant) Date May 10, 1996 By /s/ A. G. Espe ----------------------------- ----------------------------- A. G. Espe Chairman and Chief Executive Officer Date May 10, 1996 By /s/ Gary R. Schminkey ----------------------------- ----------------------------- Gary R. Schminkey Senior Vice President and Chief Financial Officer (Principal Financial Officer) 13 Exhibit 11 Statement re computation of per share earnings Columbia Banking System, Inc.
Three Months Ended March 31, (in thousands, except per share data) 1996 1995 - - ---------------------------------------------------------------------------- Earnings Net income applicable to common stock $808 $445 Interest on convertible subordinated notes, net of income tax effects--Note 1 60 62 - - ---------------------------------------------------------------------------- Pro forma net income available to common stock $868 $507 ============================================================================ Shares Weighted average number of common and common equivalent shares outstanding 3,543 3,482 Additional shares assuming conversion of convertible subordinated notes--Note 1 253 259 - - ---------------------------------------------------------------------------- Pro forma shares 3,796 3,741 ============================================================================ Fully diluted earnings per share - as reported $ 0.23 $0.13 ============================================================================ Fully diluted earnings per share - as calculated $ 0.23 $0.14 ============================================================================
Note 1. Earnings per share and fully diluted earnings per share as reported are the same for the three months ended March 31, 1996, and 1995. The inclusion of convertible subordinated notes would produce an antidilutive effect. Additional average shares, assuming the conversion of convertible subordinated notes, represent 253,742 shares and 258,948 shares for the three months ended March 31, 1996, and 1995, respectively. The related interest expense on these notes (net of income tax effects) was $60,265 and $61,502 for the three months ended March 31, 1996, and 1995, respectively. EX-27 2
9 FINANCIAL DATA SCHEDULE Columbia Banking System, Inc. (in thousands except per share) 0000887343 COLUMBIA BANKING SYSTEM, INC. 1000 $ 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 1 15935 24181 0 0 32673 0 0 370158 4015 458927 385729 0 2849 37680 0 0 30873 1796 458927 8198 410 178 8786 3795 4296 4490 330 0 4517 808 808 0 0 808 .23 .23 4.43 1014 389 28 0 3748 65 2 4015 4015 0 661
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