EX-99.1 3 exh99-1_11882.txt PRESS RELEASE EXHIBIT 99.1 ------------ FOR IMMEDIATE RELEASE --------------------- APRIL 23, 2003 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 REPORTS SOLID FIRST QUARTER 2003 EARNINGS HIGHLIGHTS: o FIRST QUARTER EARNINGS $4.4 MILLION, UP FROM A LOSS OF $428,000 IN 1ST QUARTER 2002. o HIGHEST FIRST QUARTER EARNINGS IN COLUMBIA'S HISTORY. o DILUTED 1ST QUARTER EARNINGS PER SHARE OF $0.33, UP FROM A LOSS OF $0.03 IN 1ST QUARTER 2002. o ALLOWANCE FOR LOAN LOSSES INCREASED TO 1.68% OF TOTAL LOANS, UP FROM 1.63% AT YEAR-END 2002 AND 1.30% AT MARCH 31, 2002. o TOTAL NONINTEREST INCOME UP 37%; TOTAL NONINTEREST EXPENSE UNCHANGED COMPARED WITH 1ST QUARTER 2002. o ROE AND ROA IMPROVE TO 13.30% AND 1.07%, RESPECTIVELY, IN 1ST QUARTER 2003. o FIRST QUARTER 2003 EFFICIENCY RATIO OF 63.48%, IMPROVED FROM 69.78% FOR 1ST QUARTER 2002. TACOMA, WASHINGTON---Columbia Banking System, Inc. (Nasdaq: COLB) today announced earnings for the first quarter 2003 of $4.4 million, up from a loss of $428,000 in the first quarter of 2002. For the same periods, earnings per share increased to $0.33 per diluted share, from a loss of $(0.03) per diluted share. Return on average assets and return on average equity for the first quarter 2003 were 1.07% and 13.30%, respectively, compared to (0.11)% and (1.43)%, respectively, for the prior year. The provision for loan losses was $1.6 million for the first quarter of 2003, compared to $7.1 million for the first quarter of 2002 and $2.7 million for the fourth quarter of 2002. The provision for loan losses in the first quarter of 2002 included an additional $5.3 million for a now concluded single substantial credit relationship. Melanie Dressel, President and Chief Executive Officer stated, "We are pleased to see improved profitability for the first quarter of 2003, in a challenging economic environment. We are also pleased that while Columbia has historically experienced our highest expenses in the first quarter of each year, our first quarter earnings per share matched those of the prior quarter for the first time as we took measures to slow expense growth and improve noninterest income." Ms. Dressel continued, "Our trend of improving earnings is the result of better efficiencies, lower contributions to our loan loss allowance, and continued commitment to exceptional customer service. Columbia bankers continue to work as a team to improve profitability and loan quality, and we've seen the results of our efforts this quarter as well as the latter part of last year. We continue to see relatively soft loan demand, as businesses appear to be hesitant to make capital investments in this unpredictable economic environment. However, we continue to be focused on increasing market share in all of our communities by providing the best possible customer service and competitive products through various delivery channels." At March 31, 2003, Columbia's total assets were $1.8 billion, an increase of 10% from $1.6 billion at March 31, 2002. Total loans were $1.1 billion at March 31, 2003, down 2% from March 31, 2002, and total securities rose to $426.1 million for the first quarter of 2003, an increase of 66% from the prior year. Total deposits increased 14% from March 31, 2002, ending at $1.5 billion at March 31, 2003. Core deposits increased $148 million, or 17%, for the first quarter 2003 compared with 2002. FIRST QUARTER 2003 OPERATING RESULTS NET INTEREST INCOME Net interest income increased $463,000, or 3%, in the first quarter 2003 compared to the first quarter 2002 due to a lower cost of funds and increased core deposits. The Company's net interest margin decreased to 4.37% in the first quarter 2003, compared with 4.54% in the first quarter 2002. The net interest margin was impacted by a 50 basis point decrease in the prime rate in the fourth quarter 2002. Average interest-earning assets increased to $1.52 billion, or 7%, during the first quarter of 2003, compared with $1.42 billion at the end of the first quarter 2002. The yield on average interest-earning assets decreased 80 basis points to 5.91% at March 31, 2003, from 6.71% at March 31, 2002. Average interest-bearing liabilities increased 6% to $1.24 billion. The cost of average interest-bearing liabilities decreased 74 basis points to 1.88% in the first quarter of 2003, compared to 2.62% in the first quarter of 2002. NONPERFORMING ASSETS AND LOAN LOSS PROVISION The Company's provision for loan losses was $1.6 million for first quarter 2003, compared with $7.1 million for first quarter 2002. For the quarters ended March 31, 2003 and 2002, net loan charge-offs amounted to $1.5 and $6.6 million, respectively. The first quarter 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. The allowance for loan losses had a net increase of $4.0 million, to $19.3 million as compared to quarter-end a year ago. The allowance for loan losses as a percentage of loans (excluding loans held for sale at each date) improved to 1.68% at March 31, 2003 as compared to 1.30% of loans at March 31, 2002, and 1.63% at year-end 2002. At quarter-end, the allowance for loan losses to nonperforming loans was 181% compared to 63% at March 31, 2002. Ms. Dressel said, "In light of the current economy, we are taking a conservative approach. We will continue to add to our loan loss allowance as we feel is prudent to ensure we maintain adequate reserves." NONINTEREST INCOME Total noninterest income increased $1.5 million, or 37%, from a year ago. The increases in noninterest income during the first quarter of 2003 as compared to first quarter 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. NONINTEREST EXPENSE The Company's emphasis on expense control is reflected in the total for noninterest expense, which was unchanged at $13.7 million at both March 31, 2003 and March 31, 2002. Noninterest expense increased by $359,000, or 2.7%, from the fourth quarter of 2002. This increase was due to a gain on Real Estate Owned, which decreased total noninterest expense by $372,000 for the fourth quarter of 2002. Excluding this fourth quarter gain, noninterest expense for first quarter 2003 was unchanged. The Company's efficiency ratio improved to 63.48% for the first quarter 2003 compared with 69.78% percent for the same period in 2002. The first quarter 2003 efficiency ratio was up from 61.66% in the fourth quarter of 2002. This increase in the efficiency ratio from fourth quarter 2002 was due to a decline in revenue from the full effect of the 50 basis point drop in the prime rate during the fourth quarter of last year. In addition, decreases in revenue from service charges on deposit accounts and mortgage banking in the first quarter of 2003 also contributed to the increase in this efficiency ratio. Ms. Dressel noted, "We continue to challenge ourselves to operate more efficiently and effectively, while still keeping in mind our core value of customer service." 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 PDT 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, 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. COLUMBIA BANKING SYSTEM, INC. FINANCIAL STATISTICS UNAUDITED (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED MARCH 31, ------------------------------ 2003 2002 ------------ ------------ EARNINGS -------- Net interest income $ 16,019 $ 15,556 Provision for loan loss 1,600 7,065 Noninterest income 5,553 4,067 Noninterest expense 13,694 13,693 Net income (loss) 4,431 (428) PER SHARE* ---------- Net income (loss) [basic]* $ 0.33 $ (0.03) Net income (loss) [diluted]* 0.33 (0.03) AVERAGES -------- Total assets $ 1,673,047 $ 1,547,266 Interest-earning assets 1,520,782 1,416,947 Loans 1,175,935 1,193,656 Securities 335,432 212,956 Deposits 1,448,203 1,291,455 Core deposits 956,909 835,658 Shareholders' Equity 135,160 121,402 FINANCIAL RATIOS ---------------- Return on average assets 1.07% (0.11)% Return on average equity 13.30 (1.43) Net interest margin 4.37 4.54 Efficiency ratio 63.48 69.78 Average equity to average assets 8.08 7.85 MARCH 31 MARCH 31 DECEMBER 31 PERIOD END 2003 2002 2002 ---------- ------------ ------------ ------------ Total assets $ 1,758,587 $ 1,593,698 $ 1,699,613 Loans 1,146,527 1,171,192 1,175,853 Allowance for loan losses 19,272 15,226 19,171 Securities 426,088 255,914 337,412 Deposits 1,489,039 1,309,765 1,487,153 Core deposits 1,006,121 857,870 980,709 Shareholders' equity 137,594 117,980 132,384 Book value per share* 10.32 8.90 9.95 NONPERFORMING ASSETS -------------------- Nonaccrual loans $ 10,532 $ 23,849 $ 16,918 Restructured loans 130 425 187 Personal property owned 836 916 Real estate owned 2,500 276 130 ------------ ------------ ------------ Total nonperforming assets $ 13,998 $ 24,550 $ 18,151 Nonperforming loans to period-end loans 0.93% 2.07% 1.45% Nonperforming assets to period-end assets 0.80 1.54 1.07 Allowance for loan losses to period-end loans 1.68 1.30 1.63 Allowance for loan losses to nonperforming loans 180.75 62.73 112.08 Net loan charge-offs $ 1,499(1) $ 6,573(2) $ 11,343(3)
(1) For the three months ended March 31, 2003. (2) For the three months ended March 31, 2002. (3) For the twelve months ended December 31, 2002. COLUMBIA BANKING SYSTEM, INC. QUARTERLY FINANCIAL STATISTICS UNAUDITED (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED -------------------------------------------------------------------------------- MAR 31 DEC 31 SEPT 30 JUNE 30 MAR 31 2003 2002 2002 2002 2002 ------------ ------------ ------------ ------------ ------------ EARNINGS -------- Net interest income $ 16,019 $ 16,587 $ 16,219 $ 15,927 $ 15,556 Provision for loan loss 1,600 2,700 4,035 1,980 7,065 Noninterest income 5,553 5,858 5,508 4,617 4,067 Noninterest expense 13,694 13,335 12,473 14,152 13,693 Net income (loss) 4,431 4,472 3,687 3,154 (428) PER SHARE* ---------- Net income (loss) [basic]* 0.33 0.34 0.28 0.24 (0.03) Net income (loss) [diluted]* 0.33 0.33 0.28 0.24 (0.03) AVERAGES -------- Total assets 1,673,047 1,668,848 1,607,831 1,578,889 1,547,266 Interest-earning assets 1,520,782 1,518,118 1,451,499 1,430,752 1,416,947 Loans 1,175,935 1,186,886 1,178,493 1,176,788 1,193,656 Securities 335,432 280,358 242,844 251,125 212,956 Deposits 1,448,203 1,454,955 1,378,396 1,317,080 1,291,455 Core deposits 956,909 951,165 893,548 858,297 835,658 Shareholders' Equity 135,160 129,137 125,421 120,324 121,402 FINANCIAL RATIOS ---------------- Return on average assets 1.07% 1.06% 0.91% 0.80% (0.11)% Return on average equity 13.30% 13.74% 11.66% 10.51% (1.43)% Net interest margin 4.37% 4.42% 4.52% 4.54% 4.54 % Efficiency ratio 63.48% 61.66% 63.52% 69.68% 69.78 % Average equity to average assets 8.08% 7.74% 7.80% 7.62% 7.85 % PERIOD END ---------- Total assets 1,758,587 1,699,613 1,661,370 1,590,862 1,593,698 Loans 1,146,527 1,175,853 1,167,633 1,160,847 1,171,192 Allowance for loan losses 19,272 19,171 18,426 15,767 15,226 Securities 426,088 337,412 253,114 242,077 255,914 Deposits 1,489,039 1,487,153 1,437,728 1,346,199 1,309,765 Core deposits 1,006,121 980,709 945,502 881,013 857,870 Shareholders' equity 137,594 132,384 127,699 122,990 117,980 Book value per share* 10.32 9.95 9.63 9.27 8.90 NONPERFORMING ASSETS -------------------- Nonaccrual loans 10,532 16,918 15,027 15,956 23,849 Restructured loans 130 187 425 425 425 Personal property owned 836 916 1,148 1,275 Real estate owned 2,500 130 4,681 6,668 276 ------------ ------------ ------------ ------------ ------------ Total nonperforming assets 13,998 18,151 21,281 24,324 24,550 Nonperforming loans to period-end loans 0.93% 1.45% 1.32% 1.41% 2.07% Nonperforming assets to period-end assets 0.80% 1.07% 1.28% 1.53% 1.54% Allowance for loan losses to period-end loans 1.68% 1.63% 1.58% 1.36% 1.30% Allowance for loan losses to nonperforming loans 180.75% 112.08% 119.25% 96.25% 62.73% Net loan charge-offs 1,499 1,955 1,376 1,439 6,573
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS COLUMBIA BANKING SYSTEM, INC. UNAUDITED
THREE MONTHS ENDED MARCH 31, --------------------------- (IN THOUSANDS EXCEPT PER SHARE) 2003 2002 ------------------------------------------------------------------------------------- INTEREST INCOME Loans $ 18,612 $ 20,479 Securities available for sale 3,097 2,572 Securities held to maturity 44 59 Deposits with banks 27 43 ----------------------------------------------------- ---------- ---------- Total interest income 21,780 23,153 INTEREST EXPENSE Deposits 5,206 6,715 Federal Home Loan Bank advances 277 572 Trust preferred obligations 278 310 ----------------------------------------------------- ---------- ---------- Total interest expense 5,761 7,597 ----------------------------------------------------- ---------- ---------- NET INTEREST INCOME 16,019 15,556 Provision for loan losses 1,600 7,065 ----------------------------------------------------- ---------- ---------- Net interest income after provision for loan losses 14,419 8,491 NONINTEREST INCOME Service charges and other fees 2,395 1,942 Mortgage banking 1,081 596 Merchant services fees 1,291 1,046 Bank owned life insurance (BOLI) 398 230 Other 388 253 ----------------------------------------------------- ---------- ---------- Total noninterest income 5,553 4,067 NONINTEREST EXPENSE Compensation and employee benefits 7,172 7,289 Occupancy 2,187 1,967 Merchant processing 496 417 Advertising and promotion 507 676 Data processing 449 461 Legal and professional services 514 410 Taxes, licenses & fees 450 428 Gains on, and net cost of, real estate owned (5) (27) Other 1,924 2,072 ----------------------------------------------------- ---------- ---------- Total noninterest expense 13,694 13,693 Income before income taxes 6,278 (1,135) Provision for income taxes 1,847 (707) ----------------------------------------------------- ---------- ---------- NET INCOME $ 4,431 $ (428) ===================================================== ========== ========== NET INCOME PER COMMON SHARE: Basic $ 0.33 $ (0.03) Diluted 0.33 (0.03) Average number of common shares outstanding 13,304 13,145 Average number of diluted common shares outstanding 13,415 13,297
CONSOLIDATED CONDENSED BALANCE SHEETS COLUMBIA BANKING SYSTEM, INC. UNAUDITED
MARCH 31, DECEMBER 31, (IN THOUSANDS) 2003 2002 --------------------------------------------------------------------------------------------- ASSETS Cash and due from banks $ 69,788 $ 67,058 Interest-earning deposits with banks 14,810 18,425 --------------------------------------------------------------- ---------- ---------- Total cash and cash equivalents 84,598 85,483 Securities available for sale at fair value (amortized cost of $408,450 and $320,499 respectively) 410,230 321,513 Securities held to maturity (fair value of $6,240 and $6,412 respectively) 6,023 6,192 Federal Home Loan Bank stock 9,835 9,707 Loans held for sale 20,442 22,102 Loans, net of unearned income of $2,752 and $2,625, respectively 1,146,527 1,175,853 Less: allowance for loan losses 19,272 19,171 --------------------------------------------------------------- ---------- ---------- Loans, net 1,127,255 1,156,682 Interest receivable 7,341 6,710 Premises and equipment, net 52,202 52,921 Real estate owned 2,500 130 Other 38,161 38,173 --------------------------------------------------------------- ---------- ---------- Total Assets $1,758,587 $1,699,613 =============================================================== ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Noninterest-bearing $ 300,540 $ 299,862 Interest-bearing 1,188,499 1,187,291 --------------------------------------------------------------- ---------- ---------- Total deposits 1,489,039 1,487,153 Federal Home Loan Bank advances 99,804 46,470 Trust preferred obligations 21,449 21,433 Other liabilities 10,701 12,173 --------------------------------------------------------------- ---------- ---------- Total liabilities 1,620,993 1,567,229 Shareholders' equity: Preferred stock (no par value) Authorized, 2 million shares; none outstanding MARCH 31, DECEMBER 31, 2003 2002 ---------- ---------- Common stock (no par value) Authorized shares 60,032 60,032 Issued and outstanding 13,331 13,310 111,310 111,028 Retained earnings 25,127 20,696 Accumulated other comprehensive income (loss) - Unrealized gains on securities available for sale, net of tax 1,157 660 --------------------------------------------------------------------------------------------- Total shareholders' equity 137,594 132,384 --------------------------------------------------------------------------------------------- Total Liabilities and Shareholders' Equity $1,758,587 $1,699,613 =============================================================================================