EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

 

FOR IMMEDIATE RELEASE

July 28, 2005

 

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 2005 EARNINGS

 

SECOND QUARTER HIGHLIGHTS

 

  •   Net income of $6.8 million, up 26% from 2nd quarter 2004.

 

  •   Diluted earnings per share of $0.43, up 16% from the prior year.

 

  •   Return on average tangible equity improved to 15.80% from 13.76% for 2nd quarter 2004.

 

  •   Total nonperforming assets decreased 29% from December 31, 2004; allowance for loan losses to nonperforming assets improved to 318%.

 

  •   Total loans were $1.51 billion, an increase of $150.3 million, or 11%, from December 31, 2004

 

  •   University Place branch opened in May, 2005, bringing total offices to 40.

 

TACOMA, Washington—Columbia Banking System, Inc. (Nasdaq: COLB) today announced earnings for the second quarter 2005 of $6.8 million, up 26% from $5.4 million for the second quarter of 2004. Diluted earnings per share were $0.43, an increase of 16% from $0.37 per share one year ago. Return on average assets and return on average equity for the second quarter 2005 were 1.19% and 12.99%, respectively, compared to 1.17% and 13.75%, respectively, for the same period in 2004.

 

Melanie Dressel, President and Chief Executive Officer stated, “Our earnings continue to improve as a result of significantly increased loan volume and interest income. The efforts of our lending teams, as well as the economic improvement in our market areas, are reflected in our total loans, which have increased over $150.3 million since the end of 2004 and over $379.5 million from a year ago. Approximately $82 million, or well over 50%, of our growth was in commercial business loans, excluding commercial real estate loans. In addition, we have been able to manage our cost of funds through continued growth in core deposits, which now comprise over 75% of our total deposits.”

“Our focus, as always, is on increasing our share of the market by building full relationships with our customers, providing competitive products, a wide variety of delivery channels and striving to deliver the best possible service,” Ms. Dressel continued. “As a result of these efforts throughout our organization, total revenue for the second quarter 2005 has climbed to $28.5 million, up 25% from $22.8 million for the same period in 2004. For the first six months of 2005, total revenue was $55.4 million, up 24% from $44.8 million for the first six months of 2004.” (Total revenue is defined as net interest income plus noninterest income.)

 

Net income for the six months ended June 30, 2005 was $13.1 million, an increase of 24% from $10.6 million for the first six months of 2004. On a diluted per share basis, net income was $0.83, compared with $0.73 for the same period last year, an increase of 14%. Return on average assets and return on average equity for the first six months of 2005 were 1.17% and 12.68%, respectively, compared to 1.17% and 13.56%, respectively, for the period in 2004.

 

Return on average tangible equity for the second quarter 2005 improved to 15.80%, compared to 13.76% for the same period last year. For the first six months of 2005, return on average tangible equity was 15.47%, up from 13.57% for the first six months of 2004. Return on average tangible equity, a non-GAAP performance measure, is used by Columbia’s management in recognition of the goodwill created by the fourth quarter 2004 acquisition of Bank of Astoria, providing a more consistent comparison with pre-acquisition performance.

 

At June 30, 2005, Columbia’s total assets were $2.33 billion, an increase of 7% from $2.18 billion at December 31, 2004. Total loans were $1.51 billion at June 30, 2005, up 11% from $1.36 billion at year-end 2004. Total deposits increased to $1.90 billion during the first six months of 2005, a 2% increase from December 31, 2004. Core deposits totaled $1.42 billion at June 30, 2005, up 3% from $1.38 billion at the end of 2004.

Second Quarter 2005 Operating Results

 

Net Interest Income

 

Net interest income for the 2nd quarter of 2005 was $22.3 million, an increase of $5.4 million, or 32%, compared to $17.0 million for the second quarter 2004. The increase is primarily due to significantly increased loan volumes, rising short-term interest rates, and increased core deposits. Columbia’s net interest margin increased to 4.36% in the second quarter of 2005, from 4.10% for the same period in 2004.

 

Average interest-earning assets increased to $2.11 billion, or 23%, during the second quarter of 2005, compared with $1.72 billion during the second quarter of 2004. The yield on average interest-earning assets increased 71 basis points to 5.80% during the second quarter of 2005, from 5.09% for the same period in 2004. Average interest-bearing liabilities increased to $1.66 billion from $1.36 billion last year. The cost of average interest-bearing liabilities increased 57 basis points to 1.83% in the second quarter of 2005, compared to 1.26% in the second quarter of 2004.

 

For the six months ended June 30, 2005, net interest income increased 29% to $43.6 million from $33.8 million for the same period in 2004. During the first six months of 2005, Columbia’s net interest margin increased to 4.36% from 4.17% for the same period of 2004. Average interest-earning assets grew to $2.08 billion during the first six months of 2005, compared with $1.68 billion for the same period of 2004. The yield on average interest-earning assets increased 51 basis points to 5.70% during the first six months of 2005, from 5.19% in 2004. In comparison, average interest-bearing liabilities grew to $1.63 billion compared with $1.32 billion for the first six months of 2004. The cost of average interest-bearing liabilities increased 42 basis points to 1.71% during the first six months of 2005, compared to 1.29% for the same period in 2004.

 

Noninterest income

 

Total noninterest income for the 2nd quarter 2005 was $6.1 million, an increase of 4% from $5.9 million a year ago. The increase in noninterest income during the second quarter of 2005 as compared to second quarter 2004 was primarily due to merchant services fees, offset by a decline in mortgage banking fees. Service charges on deposit accounts showed a modest improvement for the 2nd quarter

2005. Total noninterest income for the first six months of 2005 was $11.8 million, an increase of 7% from $11.0 million for the same period of 2004.

 

Noninterest expense

 

Noninterest expense for the second quarter of 2005 was $18.5 million, an increase of 22% from $15.2 million for the same period in 2004. This increase was primarily due to the addition of Bank of Astoria during the fourth quarter 2004. The results of operations for Bank of Astoria are not included in the second quarter 2004. Also impacting noninterest expense was the expansion of Columbia’s lending groups, volume-related merchant services processing expenses, as well as data processing and legal and professional services.

 

Nonperforming Assets and Loan Loss Provision

 

Provision for loan losses for the second quarter of 2005 was $370,000; the company made no provision for credit losses during the second quarter of 2004. The provision for the 2nd quarter 2005 was a decrease of $520,000 from the first quarter 2005. This decrease in the provision for credit losses over the first quarter reflected a decrease in total net charge offs. Net charge offs in the first quarter of 2005 were $592,000, compared with second quarter net recoveries of $38,000. The decline in losses was primarily the result of declining levels of nonperforming loans, continuing collection efforts and stable economic conditions. Total nonperforming assets declined to $6.5 million at June 30, 2005 from $9.1 million at December 31, 2004 and $6.9 million at June 30, 2004. The ratio of the allowance for credit losses to nonperforming loans was 318% at June 30, 2005, compared with 235% at December 31, 2004 and 359% at June 20, 2004. Management believes the reserve is at an appropriate level under current circumstances and prevailing economic conditions.

 

Expansion Activities

 

“Our footprint continues to expand as planned,” Ms. Dressel noted. “During the second quarter, we opened a branch in University Place, just south of Tacoma, which has been well received by the community. The response to our newly redesigned website, www.columbiabank.com, has been excellent; the site calls to mind the friendly, full-service feeling of one of our brick-and-mortar branches. We are also pleased with the very positive response from the successful integration of Bank of Astoria, which continues to serve as a base for potential expansion in Oregon.”

Columbia Banking System, Inc. is a Tacoma-based bank holding company whose wholly owned banking subsidiaries are Columbia Bank and Bank of Astoria, which was acquired October 1, 2004. 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,
  
   2005
     2004
     2005
     2004
  

Earnings

                                 

Net interest income

    $ 22,346     $ 16,976     $ 43,647     $ 33,848  

Provision for loan losses

      370               1,260       300  

Noninterest income

      6,128       5,871       11,802       10,985  

Noninterest expense

      18,514       15,179       35,791       29,528  

Net income

      6,798       5,414       13,096       10,565  

Per Share

                                 

Net income (basic)

    $ 0.44     $ 0.38     $ 0.84     $ 0.74  

Net income (diluted)

      0.43       0.37       0.83       0.73  

Averages

                                 

Total assets

    $ 2,297,297     $ 1,858,082     $ 2,260,033     $ 1,817,069  

Interest-earning assets

      2,113,384       1,716,825       2,078,345       1,679,730  

Loans

      1,498,990       1,150,611       1,454,303       1,138,487  

Securities

      612,455       498,553       622,377       504,655  

Deposits

      1,874,208       1,664,497       1,869,435       1,611,819  

Core deposits

      1,397,353       1,218,528       1,388,075       1,163,661  

Shareholders’ Equity

      209,864       158,331       208,197       156,656  

Financial Ratios

                                 

Return on average assets

      1.19 %     1.17 %     1.17 %     1.17 %

Return on average equity

      12.99       13.75       12.68       13.56  

Net interest margin

      4.36       4.10       4.36       4.17  

Efficiency ratio (tax equivalent)(1)

      63.22       64.18       62.73       63.78  

Average equity to average assets

      9.14       8.52       9.21       8.62  

Return on average tangible equity(2)

      15.80       13.76       15.47       13.57  

 

     June 30,
    

December 31,

2004

  
     2005
     2004
    

Period end

                         

Total assets

    $ 2,326,564     $ 1,861,623     $ 2,177,550  

Loans

      1,510,043       1,130,508       1,359,743  

Allowance for loan losses

      20,587       19,769       19,881  

Securities

      609,574       487,407       642,759  

Deposits

      1,899,033       1,671,545       1,864,028  

Core deposits

      1,417,600       1,227,948       1,382,235  

Shareholders’ equity

      214,788       155,674       203,154  

Book value per share

      13.68       10.92       13.03  

Nonperforming assets

                         

Nonaccrual loans

    $ 6,304     $ 5,255     $ 8,222  

Restructured loans

      178       251       227  

Personal property owned

              639          

Real estate owned

              781       680  
    
 
 

Total nonperforming assets

    $ 6,482     $ 6,926     $ 9,129  
    
 
 

Nonperforming loans to period-end loans

      0.43 %     0.49 %     0.62 %

Nonperforming assets to period-end assets

      0.28       0.37       0.42  

Allowance for loan losses to period-end loans

      1.36       1.75       1.46  

Allowance for loan losses to nonperforming loans

      317.60       359.04       235.31  

Allowance for loan losses to nonperforming assets

      317.60       285.43       217.78  

Net loan charge-offs

    $ 554 (3)   $ 792 (4)   $ 2,742 (5)

 

(1) 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 and net cost (gain) of OREO.

 

(2) Annualized net income, excluding core deposit intangible asset amortization, divided by average daily shareholders’ equity, excluding average goodwill and average core deposit intangible asset.

 

(3) For the six months ended June 30, 2005.

 

(4) For the six months ended June 30, 2004.

 

(5) For the twelve months ended December 31, 2004.

QUARTERLY FINANCIAL STATISTICS

Columbia Banking System, Inc.

 

Unaudited

(in thousands, except per share amounts)

    Three Months Ended
  
   Jun 30
2005
     Mar 31
2005
     Dec 31
2004
     Sept 30
2004
     Jun 30
2004
  

Earnings

                                         

Net interest income

    $ 22,346     $ 21,301     $ 20,528     $ 17,567     $ 16,976  

Provision for loan losses

      370       890       445       250          

Noninterest income

      6,128       5,674       5,923       5,336       5,871  

Noninterest expense

      18,514       17,277       16,737       15,061       15,179  

Net income

      6,798       6,298       6,465       5,483       5,414  

Per Share

                                         

Net income [basic]

      0.44       0.40       0.42       0.38       0.38  

Net income [diluted]

      0.43       0.40       0.41       0.38       0.37  

Averages

                                         

Total assets

    $ 2,297,297     $ 2,222,355     $ 2,154,285     $ 1,885,892     $ 1,858,082  

Interest-earning assets

      2,113,384       2,042,917       1,973,690       1,742,778       1,716,825  

Loans

      1,498,990       1,409,119       1,320,260       1,147,746       1,150,611  

Securities

      612,455       632,410       650,411       550,203       498,553  

Deposits

      1,874,208       1,864,610       1,854,809       1,681,896       1,664,497  

Core deposits

      1,397,353       1,378,695       1,381,334       1,243,860       1,218,528  

Shareholders’ Equity

      209,864       206,511       201,934       162,133       158,331  

Financial Ratios

                                         

Return on average assets

      1.19 %     1.15 %     1.19 %     1.16 %     1.17 %

Return on average equity

      12.99       12.37       12.74       13.45       13.75  

Net interest margin

      4.36       4.35       4.26       4.13       4.10  

Efficiency ratio (tax equivalent)

      63.22       62.18       61.40       64.14       64.18  

Average equity to average assets

      9.14       9.29       9.37       8.60       8.52  

Return on average tangible equity

      15.80       15.13       15.63       13.46       13.76  

Period end

                                         

Total assets

    $ 2,326,564     $ 2,243,739     $ 2,177,550     $ 1,936,048     $ 1,861,623  

Loans

      1,510,043       1,436,820       1,359,743       1,165,340       1,130,508  

Allowance for loan losses

      20,587       20,179       19,881       19,927       19,769  

Securities

      609,574       619,140       642,759       608,939       487,407  

Deposits,

      1,899,033       1,870,096       1,864,028       1,688,437       1,671,545  

Core deposits

      1,417,600       1,393,695       1,382,235       1,246,958       1,227,948  

Shareholders’ equity

      214,788       204,754       203,154       169,939       155,674  

Book value per share

      13.68       13.11       13.03       11.90       10.92  

Nonperforming assets

                                         

Nonaccrual loans

    $ 6,304     $ 7,183     $ 8,222     $ 5,743     $ 5,255  

Restructured loans

      178       205       227       239       251  

Personal property owned

                              615       639  

Real estate owned

                      680       680       781  
    
 
 
 
 

Total nonperforming assets

    $ 6,482     $ 7,388     $ 9,129     $ 7,277     $ 6,926  
    
 
 
 
 

Nonperforming loans to period-end loans

      0.43 %     0.51 %     0.62 %     0.51 %     0.49 %

Nonperforming assets to period-end assets

      0.28       0.33       0.42       0.38       0.37  

Allowance for loan losses to period-end loans

      1.36       1.40       1.46       1.71       1.75  

Allowance for loan losses to nonperforming loans

      317.60       273.13       235.31       333.12       359.04  

Allowance for loan losses to nonperforming assets

      317.60       273.13       217.78       273.84       285.43  

Net loan (recoveries) charge-offs

    $ (38 )   $ 592     $ 1,858     $ 92     $ 189  

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

Columbia Banking System, Inc.

 

(Unaudited)

(in thousands except per share)

   

Three Months Ended

June 30,

   

Six Months Ended

June 30,

  
   2005
     2004
    2005
     2004
  

Interest Income

                                

Loans

    $ 24,313     $ 16,415    $ 46,135     $ 32,464  

Securities available for sale

      5,585       4,612      11,308       9,651  

Securities held to maturity

      16       26      32       54  

Deposits with banks

      15       165      24       178  
    
 
  
 

Total interest income

      29,929       21,218      57,499       42,347  

Interest Expense

                                

Deposits

      5,820       3,962      11,002       7,877  

Federal Home Loan Bank advances

      1,345              2,051       80  

Long-term obligations

      381       280      728       542  

Other borrowings

      37              71          
    
 
  
 

Total interest expense

      7,583       4,242      13,852       8,499  
    
 
  
 

Net Interest Income

      22,346       16,976      43,647       33,848  

Provision for loan losses

      370              1,260       300  
    
 
  
 

Net interest income after provision for loan losses

      21,976       16,976      42,387       33,548  

Noninterest Income

                                

Service charges and other fees

      2,797       2,745      5,433       5,272  

Mortgage banking

      336       661      758       1,164  

Merchant services fees

      2,248       1,841      4,037       3,403  

Loss on sale of investment securities, net

                             (6 )

Bank owned life insurance (BOLI)

      354       346      727       596  

Other

      393       278      847       556  
    
 
  
 

Total noninterest income

      6,128       5,871      11,802       10,985  

Noninterest Expense

                                

Compensation and employee benefits

      9,438       7,875      18,706       15,661  

Occupancy

      2,577       2,000      4,909       4,086  

Merchant processing

      841       750      1,548       1,402  

Advertising and promotion

      535       894      1,039       1,165  

Data processing

      729       563      1,436       1,078  

Legal & professional services

      934       668      1,698       1,296  

Taxes, licenses & fees

      486       405      951       789  

Net (gain) cost of other real estate owned

      (7 )     62      (9 )     74  

Other

      2,981       1,962      5,513       3,977  
    
 
  
 

Total noninterest expense

      18,514       15,179      35,791       29,528  
    
 
  
 

Income before income taxes

      9,590       7,668      18,398       15,005  

Provision for income taxes

      2,792       2,254      5,302       4,440  
    
 
  
 

Net Income

    $ 6,798     $ 5,414    $ 13,096     $ 10,565  
    
 
  
 

Net income per common share:

                                

Basic

    $ 0.44     $ 0.38    $ 0.84     $ 0.74  

Diluted

      0.43       0.37      0.83       0.73  

Dividends paid per common share

      0.09       0.07      0.16       0.12  

Average number of common shares outstanding

      15,664       14,241      15,635       14,194  

Average number of diluted common shares outstanding

      15,898       14,463      15,862       14,425  

CONSOLIDATED CONDENSED BALANCE SHEETS

Columbia Banking System, Inc.

 

(Unaudited)

(in thousands)

             

June 30,

2005

   

December 31,

2004

Assets

                        

Cash and due from banks

              $ 77,672    $ 54,287

Interest-earning deposits with banks

                403      369
              
  

Total cash and cash equivalents

                78,075      54,656

Securities available for sale at fair value (amortized cost of $595,319 and $627,519 respectively)

                596,019      628,897

Securities held to maturity (fair value of $3,180 and $3,199 respectively)

                3,102      3,101

Federal Home Loan Bank stock

                10,453      10,761

Loans held for sale

                14,400      6,019

Loans, net of unearned income of ($3,068) and ($2,839) respectively

                1,510,043      1,359,743

Less: allowance for loan losses

                20,587      19,881
              
  

Loans, net

                1,489,456      1,339,862

Interest receivable

                10,407      9,582

Premises and equipment, net

                44,431      44,774

Real estate owned

                       680

Goodwill

                29,723      29,723

Other assets

                50,498      49,495
              
  

Total Assets

              $ 2,326,564    $ 2,177,550
              
  

Liabilities and Shareholders’ Equity

                        

Deposits:

                        

Noninterest-bearing

              $ 422,410    $ 392,173

Interest-bearing

                1,476,623      1,471,855
              
  

Total deposits

                1,899,033      1,864,028

Federal Home Loan Bank advances

                171,000      68,700

Other borrowings

                2,849      2,500

Long-term subordinated debt

                22,279      22,246

Other liabilities

                16,615      16,922
              
  

Total liabilities

                2,111,776      1,974,396

Shareholders’ equity:

                        

Preferred stock (no par value)

                        

Authorized, 2 million shares; none outstanding

                        
     June 30,
2005
    December 31,
2004
          

Common stock (no par value)

                        

Authorized shares

    63,034    63,034              

Issued and outstanding

    15,696    15,594      161,186      159,693

Retained earnings

                53,146      42,552

Accumulated other comprehensive income -

                        

Unrealized gains on securities available for sale, net of tax

                456      909
              
  

Total shareholders’ equity

                214,788      203,154
              
  

Total Liabilities and Shareholders’ Equity

              $ 2,326,564    $ 2,177,550