EX-99.1 2 dex991.htm PRESS RELEASE DATED JANUARY 25, 2007 Press Release dated January 25, 2007

Exhibit 99.1

FOR IMMEDIATE RELEASE

January 25, 2007

 

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

FOURTH QUARTER AND FULL YEAR 2006 EARNINGS

HIGHLIGHTS

 

  •   Earnings for the year of $32.1 million, up 8% from $29.6 million in 2005.

 

  •   Diluted earnings per share for the year of $1.99, up 6% from 2005.

 

  •   Net interest margin expanded to 4.49%, up from 4.44% in 2005.

 

  •   Earnings for the quarter of $8.3 million, compared to $8.6 million for 4th quarter 2005.

 

  •   Diluted earnings per share for the quarter of $0.52, compared to $0.54 for the same period in 2005.

 

  •   Efficiency ratio improved to 57.41%

 

  •   Total assets at $2.55 billion, a 7% increase from 2005.

 

  •   Total loans increased $144 million, or 9%, from 2005.

 

  •   Stable core deposits at 73% of total deposits.

 

  •   Columbia Bank named Outstanding Philanthropic Corporation of 2006 by Association of Fundraising Professionals

TACOMA, Washington—Columbia Banking System, Inc. (Nasdaq: COLB) today announced net income of $8.3 million for the quarter ended December 31, 2006, compared to $8.6 million for the same quarter of 2005. On a diluted per share basis, net income for the quarter was $0.52, a decline from $0.54 in 2005. Return on average assets and return on average equity for the quarter were 1.31% and 13.28%, respectively, compared to 1.47% and 15.23%, respectively, for the same period in 2005. Revenue (net interest income plus noninterest income) was $31.1 million for the fourth quarter of 2006, up 2% from $30.4 million one year ago.

Melanie J. Dressel, President and Chief Executive Officer, said “Our momentum continued to build in the second half of 2006, as evidenced by good growth in loans. Despite industry-wide challenges in attracting and retaining low-cost deposits, we have continued to manage the pressure on our net

interest margin by maintaining a stable core deposit base, which comprises 73% of our total deposits. While credit quality remained good, we did increase our loan loss provision by $950,000 for the 4th quarter of 2006 as a result of loan growth and a $1.5 million loan charge-off on a “legacy credit” dating back to 1999. We remain focused on increasing our share of the market by building complete relationships with our customers and continuing to leverage the strong infrastructure we have built. Our significant investment in time and resources to enhance our core systems has resulted in lower data processing expenses, as well as increased flexibility in developing and implementing new products and services for current and potential customers.”

For the year ended December 31, 2006, net income increased $2.5 million to $32.1 million, up 8% from $29.6 million for 2005. On a diluted per share basis, earnings for the year were $1.99, an increase of 6% from $1.87 in the prior year. Return on average assets and return on average equity for the year were 1.30% and 13.50%, respectively, compared with 1.29% and 13.81% for 2005. Revenue for 2006 totaled $122.4 million, up 6% from $115.7 million for the year 2005. Total nonperforming assets decreased $1.4 million, or 29%, to $3.5 million at December 31, 2006.

Ms. Dressel continued, “We achieved loan growth of 9 percent, while maintaining exceptional portfolio diversity. Mark Nelson, Executive Vice President and Chief Banking Officer, added, “Columbia continues to attract talented bankers who will help us capitalize on our existing advantages of a balanced portfolio, core deposit mix and strong capital base. We recently hired two new lending teams based in King County, including a four-person commercial team in Bellevue and an experienced builder banking team. Our balanced portfolio structure affords us the ability to consider new lending relationships based on their merits without the constraints created by excessive concentrations in any single category.”

In November 2006, Columbia Bank was named 2006 Outstanding Philanthropic Corporation by the Association of Fundraising Professionals, Washington Chapter. In accepting the award on behalf of the bank, Melanie Dressel praised Columbia bankers for their ongoing commitment, and said, “We are only as strong as the communities we serve. Thank you for making a real difference.”

At December 31, 2006, Columbia’s total assets were $2.55 billion, an increase of 7% from $2.38 billion at December 31, 2005. Total loans were $1.71 billion at December 31, 2006, up 9% from December 31, 2005, and total securities increased $19.8 million to $605.1 million at December 31,

2006, an increase of 3% from the prior year. Total deposits increased 1% from December 31, 2005, ending at $2.02 billion at December 31, 2006. Core deposits totaled $1.47 billion at year-end 2006, comprising 73% of total deposits.

Core Financial Results

For the year ended December 31, 2006, core earnings were $32.9 million, an increase of 11% from $29.6 million for the year ended December 31, 2005; core earnings on a diluted per share basis for the year ended December 31, 2006 was $2.03 compared with $1.87 for the same period in 2005, an increase of 9%. Core earnings exclude the interest rate floor valuation adjustments which were taken in the second and third quarters of 2006. Return on average assets and return on average equity for the year ended December 31, 2006 were 1.33% and 13.79%, respectively, compared to 1.29% and 13.81%, respectively, for the period in 2005. For the quarter ended June 30, 2006 core earnings were $8.4 million with GAAP earnings of $7.2 million. For the quarter ended September 30, 2006 core earnings were $7.9 million with GAAP earnings of $8.3 million.

The following table reconciles GAAP net income to core earnings, including per-share figures:

(Dollars in thousands, except per share data)

 

     Twelve months ended December 31,
     2006    2005

Net income

    $ 32,103    $ 29,631

Add: Interest rate floor mark-to-market, net of tax

      757      —  
             

Core earnings

    $ 32,860    $ 29,631
             

Earnings per Diluted Share:

      

GAAP earnings

    $ 1.99    $ 1.87

Core earnings

    $ 2.03    $ 1.87

Operating Results

Quarter and Year-Ended December 31, 2006

Net Interest Income

Net interest income for the quarter increased 3% to $24.8 million, from $23.9 million for the same quarter in 2005, primarily due to moderately increased loan volumes. Columbia’s net interest margin decreased to 4.43% in the fourth quarter of 2006 from 4.61% for the same quarter last year; however, it was an increase from 4.41% for the third quarter of 2006. The compression on net interest margin resulted from increased competition for loans, slower core deposit growth and an increasing reliance on higher cost deposits and borrowings to fund loan growth. Total revenue was $31.1 million for the quarter, up 2% from $30.4 million in the same quarter of 2005.

Average interest-earning assets grew to $2.31 billion during the quarter, an increase of 9% compared with $2.12 billion during the same quarter of 2005. The yield on average interest-earning assets increased 75 basis points (a basis point equals 1/100 of 1%) to 7.05% during the quarter compared with 6.30% during the same quarter of 2005. During the same period, average interest-bearing liabilities were unchanged at $1.80 billion. The cost of average interest-bearing liabilities increased 116 basis points to 3.36% during the quarter, from 2.20% in the same quarter of 2005.

For the twelve months ended December 31, 2006, net interest income increased 8% to $97.8 million from $90.9 million in 2005. During 2006, the Company’s net interest margin increased to 4.49% from 4.44% for 2005. Total revenue for the year was $122.4 million, an increase of 6% from $115.7 million at year-end 2005. Average interest-earning assets grew to $2.27 billion during 2006, compared with $2.10 billion during 2005. The yield on average interest-earning assets increased 94 basis points to 6.87% during 2006, from 5.93% in 2005. In comparison, average interest-bearing liabilities grew to $1.77 billion compared with $1.64 billion for 2005. The cost of average interest-bearing liabilities increased 113 basis points to 3.04% during 2006 from 1.91% in 2005.

Noninterest Income

Noninterest income for the quarter was $6.3 million, a decrease of $144,000, or 2% from the same quarter in 2005. The decrease is primarily due to decreases in mortgage banking income and a decline in merchant services fees. The gross volume for merchant card services increased during 2006; however, the increased income attributable to volume was offset by net fees paid to the card associations and several correspondent banking relationships which were acquired and no longer using the service. For the year, noninterest income was $24.7 million, a slight decrease from $24.8 million for 2005.

Noninterest Expense

Total noninterest expense for the quarter was $18.6 million, an increase of 2% from $18.3 million for the same quarter in 2005. Noninterest expense for the year was $76.1 million, an increase of 5% from $72.9 million from the prior year. Ms. Dressel commented, “These moderate increases were primarily due to higher compensation, employee benefits, and advertising and promotion expenses, partially offset by lower data processing expenses.

Nonperforming Assets and Loan Loss Provision

During the fourth quarter of 2006, the Company allocated $950,000 to its provision for loan and lease losses, compared to $15,000 for the same period in 2005. The increased allocation for the three months ending December 31, 2006 is due to loan growth during the period, coupled with an increase in loan charge-offs when compared to the fourth quarter of 2005. Net charge-offs in the fourth quarter were $1.7 million, compared to net recoveries of $24,000 for the same period in 2005. The increase in net charge offs was primarily centered in one “legacy credit” originated at December of 1999, which was classified as non-performing in November of 2003. Based upon recently obtained information, management deemed it prudent to recognize a partial loss on this loan as some of the assets assigned to the bank as additional collateral became impaired and reduced the book value of the loan to $1.1 million from $2.6 million during the quarter ending December 31, 2006.

Management believes the balance to be collectible based upon the remaining collateral which secures the loan. Ms. Dressel commented, “This has been a protracted work-out situation spanning several years. Although some recovery is possible, we felt the prudent action was to take the charge-off based on the information we have today. The balance of the bank’s loan portfolio continues to perform extremely well with non-performing loans at their lowest level in seven years”. At December 31, 2006 non-performing loans were $3.5 million, or 0.20% of period end loans, compared to $4.8 million, or 0.31% at December 31, 2005.

As a result of the decline in nonperforming loans and an increase in the allowance for loan losses year-over-year, the ratio of the allowance for credit losses to nonperforming assets was 579.94% at December 31, 2006, compared with 427.26% at December 31, 2005. The reserve for loan losses stood at $20.2 million, or 1.18%, of period end loans as of December 31, 2006 compared to $20.8 million, or

1.33%, as of December 31, 2005. Management believes this level of reserve is appropriate based upon analysis of the loan portfolio and the economic conditions in markets in which the bank does business.

Expansion Activities

Ms. Dressel further noted, “Our stated goal is to expand our geographic footprint throughout the Pacific Northwest with de novo branching and strategic acquisitions that make economic sense for our shareholders. While we opened no new branches in 2006, due to challenges in acquiring locations that meet our criteria, we have several new branches in the pipeline. We will move ahead with these expansion efforts, while continuing our strategy of leveraging our strong base of branches in both Washington and Oregon. In addition, our new remote deposit product will launch in early April, providing current and potential business customers a convenient, cost-effective method of making deposits without needing to leave their place of business.”

Conference Call

Columbia will discuss the quarterly and year-end results on a conference call on Thursday, January 25, 2007 at 1:00 PST. Interested investors, analysts, media representatives and the public are invited to listen to this discussion by calling 1-866-404-2271; Conference ID code 5789817. A conference call replay will be available from approximately 3:00 p.m. PST on January 25 through midnight PST on Thursday, February 1, 2007. The conference call replay can be accessed by dialing 1-800-642-1687 and entering Conference ID code 5789817.

Annual Meeting of Shareholders

Columbia Banking System’s Annual Meeting of Shareholders will be held at 1:00 PST on April 25, 2006, at the Greater Tacoma Convention & Trade Center; 1500 Broadway, Tacoma, Washington.

Columbia Banking System, Inc. is a Tacoma-based bank holding company whose wholly owned banking subsidiaries are Columbia Bank and Bank of Astoria. Columbia Bank is a Washington state-chartered full-service commercial bank with 35 banking offices in Pierce, King, Cowlitz, Kitsap and Thurston counties. Bank of Astoria, a federally insured commercial bank headquartered in

Astoria, Oregon, operates four branches in Clatsop County: Astoria, Warrenton, Seaside and Cannon Beach; and one branch in Manzanita in Tillamook County. More information about Columbia can be found on its website at www.columbiabank.com.

# # #

Note Regarding Forward-Looking Statements

This news release includes forward looking statements, which management believes are a benefit to shareholders. These forward looking statements describe Columbia’s management’s expectations regarding future events and developments such as future operating results, growth in loans and deposits, continued success of Columbia’s style of banking and the strength of the local economy. The words “will,” “believe,” “expect,” “should,” and “anticipate” and words of similar construction are intended in part to help identify forward looking statements. Future events are difficult to predict, and the expectations described above are necessarily subject to risk and uncertainty that may cause actual results to differ materially and adversely. In addition to discussions about risks and uncertainties set forth from time to time in Columbia’s filings with the SEC, factors that may cause actual results to differ materially from those contemplated by such forward looking statements include, among others, the following possibilities: (1) local, national and international economic conditions are less favorable than expected or have a more direct and pronounced effect on Columbia than expected and adversely affect Columbia’s ability to continue its internal growth at historical rates and maintain the quality of its earning assets; (2) changes in interest rates reduce interest margins more than expected and negatively affect funding sources; (3) projected business increases following strategic expansion or opening or acquiring new branches are lower than expected; (4) costs or difficulties related to the integration of acquisitions are greater than expected; (5) competitive pressure among financial institutions increases significantly; (6) legislation or regulatory requirements or changes adversely affect the businesses in which Columbia is engaged.

FINANCIAL STATISTICS

Columbia Banking System, Inc.

Unaudited

 

     Three Months Ended
December 31,		     Twelve Months Ended
December 31,		  

(in thousands, except per share amounts)

    2006     2005     2006     2005  

Earnings

         

Net interest income

    $ 24,750     $ 23,934     $ 97,763     $ 90,912  

Provision for loan and lease losses

    $ 950     $ 15     $ 2,065     $ 1,520  

Noninterest income

    $ 6,324     $ 6,468     $ 24,672     $ 24,786  

Noninterest expense

    $ 18,560     $ 18,271     $ 76,134     $ 72,855  

Net income

    $ 8,341     $ 8,583     $ 32,103     $ 29,631  

Per Share

         

Net income (basic)

    $ 0.52     $ 0.55     $ 2.01     $ 1.89  

Net income (diluted)

    $ 0.52     $ 0.54     $ 1.99     $ 1.87  

Averages

         

Total assets

    $ 2,517,836     $ 2,316,654     $ 2,473,404     $ 2,290,746  

Interest-earning assets

    $ 2,310,502     $ 2,116,345     $ 2,265,393     $ 2,102,513  

Loans

    $ 1,688,600     $ 1,534,068     $ 1,629,616     $ 1,494,567  

Securities

    $ 602,075     $ 579,177     $ 623,631     $ 605,395  

Deposits

    $ 2,024,108     $ 2,006,448     $ 1,976,448     $ 1,923,778  

Core deposits

    $ 1,459,281     $ 1,467,077     $ 1,433,395     $ 1,423,862  

Shareholders’ Equity

    $ 249,202     $ 223,538     $ 237,843     $ 214,612  

Financial Ratios

         

Return on average assets

      1.31 %     1.47 %     1.30 %     1.29 %

Return on average equity

      13.28 %     15.23 %     13.50 %     13.81 %

Return on average tangible equity(1)

      15.49 %     18.17 %     15.88 %     16.63 %

Average equity to average assets

      9.90 %     9.65 %     9.62 %     9.37 %

Net interest margin

      4.43 %     4.61 %     4.49 %     4.44 %

Efficiency ratio (tax equivalent) (2)

      57.41 %     58.46 %     58.95 %     61.20 %
     December 31,              

Period end

    2006     2005              

Total assets

    $ 2,553,131     $ 2,377,322      

Loans

    $ 1,708,962     $ 1,564,704      

Allowance for loan and lease losses

    $ 20,182     $ 20,829      

Securities

    $ 605,133     $ 585,332      

Deposits

    $ 2,023,351     $ 2,005,489      

Core deposits

    $ 1,473,701     $ 1,478,090      

Shareholders’ equity

    $ 252,347     $ 226,242      

Book value per share

    $ 15.71     $ 14.29      

Tangible book value per share

    $ 13.68     $ 12.20      

Nonperforming assets

         

Nonaccrual loans

    $ 2,414     $ 4,733      

Restructured loans

      1,066       124      

Personal property owned

      —         —        

Other real estate owned

      —         18      
                    

Total nonperforming assets

    $ 3,480     $ 4,875      
                    

Nonperforming loans to period-end loans

      0.20 %     0.31 %    

Nonperforming assets to period-end assets

      0.14 %     0.21 %    

Allowance for loan and lease losses to period-end loans

      1.18 %     1.33 %    

Allowance for loan and lease losses to nonperforming loans

      579.94 %     428.84 %    

Allowance for loan and lease losses to nonperforming assets

      579.94 %     427.26 %    

Net loan charge-offs

    $ 2,712 (3)   $ 572 (4)    
(1) Annualized net income, excluding core deposit intangible asset amortization, divided by average daily shareholders’ equity, excluding average goodwill and average core deposit intangible asset.

(2) Noninterest expense divided by the sum of net interest income and noninterest income on a tax equivalent basis, excluding nonrecurring income and expense, such as gains/losses on investment securities, net cost (gain) of OREO and mark-to-market adjustments of interest rate floor instruments.
(3) For the twelve months ended December 31, 2006.
(4) For the twelve months ended December 31, 2005.

FINANCIAL STATISTICS

Columbia Banking System, Inc.

Unaudited

 

    

Period End

December 31,

  

(in thousands)

    2006     2005  
Loan Portfolio Composition     

Commercial business

    $ 608,636     $ 556,589  

Leases

      9,263       14,385  

Real Estate:

     

One-to-four family residential

      51,277       74,930  

Five or more family residential and commercial

      687,635       651,393  
                

Total Real Estate

      738,912       726,323  

Real Estate Construction:

     

One-to-four family residential

      92,124       41,033  

Five or more family residential and commercial

      115,185       89,134  
                

Total Real Estate Construction

      207,309       130,167  

Consumer

      147,782       140,110  
                

Subtotal loans

      1,711,902       1,567,574  

Less: Deferred loan fees

      (2,940 )     (2,870 )
                

Total loans

    $ 1,708,962     $ 1,564,704  
                

Loans held for sale

    $ 933     $ 1,850  
                
Deposit Composition     

Demand and other noninterest bearing

    $ 432,293     $ 455,838  

Interest bearing demand

      414,198       339,686  

Money market

      516,415       563,973  

Savings

      110,795       118,604  

Certificates of deposit

      549,650       527,388  
                

Total deposits

    $ 2,023,351     $ 2,005,489  
                

QUARTERLY FINANCIAL STATISTICS

Columbia Banking System, Inc.

Unaudited

 

     Three Months Ended  

(in thousands, except per share amounts)

   

Dec 31

2006

    

Sept 30

2006

    

Jun 30

2006

    

Mar 31

2006

    

Dec 31

2005

  

Earnings

           

Net interest income

    $ 24,750     $ 24,405     $ 24,302     $ 24,306     $ 23,934  

Provision for loan and lease losses

    $ 950     $ 650     $ 250     $ 215     $ 15  

Noninterest income

    $ 6,324     $ 6,108     $ 6,267     $ 5,973     $ 6,468  

Noninterest expense

    $ 18,560     $ 18,098     $ 21,136     $ 18,340     $ 18,271  

Net income

    $ 8,341     $ 8,335     $ 7,239     $ 8,188     $ 8,583  

Per Share

           

Net income [basic]

    $ 0.52     $ 0.52     $ 0.45     $ 0.52     $ 0.55  

Net income [diluted]

    $ 0.52     $ 0.52     $ 0.45     $ 0.51     $ 0.54  

Averages

           

Total assets

    $ 2,517,836     $ 2,504,371     $ 2,480,585     $ 2,388,680     $ 2,316,654  

Interest-earning assets

    $ 2,310,502     $ 2,290,351     $ 2,268,259     $ 2,190,872     $ 2,116,345  

Loans

    $ 1,688,600     $ 1,647,471     $ 1,613,253     $ 1,567,615     $ 1,534,068  

Securities

    $ 602,075     $ 627,821     $ 645,343     $ 619,428     $ 579,177  

Deposits

    $ 2,024,108     $ 1,975,103     $ 1,949,608     $ 1,955,851     $ 2,006,448  

Core deposits

    $ 1,459,281     $ 1,433,641     $ 1,414,455     $ 1,425,442     $ 1,467,077  

Shareholders’ Equity

    $ 249,202     $ 238,272     $ 232,614     $ 231,080     $ 223,538  

Financial Ratios

           

Return on average assets

      1.31 %     1.32 %     1.17 %     1.39 %     1.47 %

Return on average equity

      13.28 %     13.88 %     12.48 %     14.37 %     15.23 %

Return on average tangible equity

      15.49 %     16.32 %     14.77 %     17.00 %     18.17 %

Average equity to average assets

      9.90 %     9.51 %     9.38 %     9.67 %     9.65 %

Net interest margin

      4.43 %     4.41 %     4.47 %     4.65 %     4.61 %

Efficiency ratio (tax equivalent)

      57.41 %     58.81 %     60.97 %     58.64 %     58.46 %

Period end

           

Total assets

    $ 2,553,131     $ 2,507,450     $ 2,544,598     $ 2,460,453     $ 2,377,322  

Loans

    $ 1,708,962     $ 1,655,809     $ 1,625,255     $ 1,595,262     $ 1,564,704  

Allowance for loan losses

    $ 20,182     $ 20,926     $ 20,990     $ 20,691     $ 20,829  

Securities

    $ 605,133     $ 611,497     $ 650,955     $ 634,620     $ 585,332  

Deposits

    $ 2,023,351     $ 2,020,065     $ 1,962,748     $ 1,990,363     $ 2,005,489  

Core deposits

    $ 1,473,701     $ 1,460,634     $ 1,418,313     $ 1,455,390     $ 1,478,090  

Shareholders’ equity

    $ 252,347     $ 245,801     $ 232,241     $ 231,137     $ 226,242  

Book value per share

    $ 15.71     $ 15.32     $ 14.49     $ 14.47     $ 14.29  

Tangible book value per share

    $ 13.68     $ 13.27     $ 12.44     $ 12.41     $ 12.20  

Nonperforming assets

           

Nonaccrual loans

    $ 2,414     $ 4,101     $ 4,575     $ 5,115     $ 4,733  

Restructured loans

      1,066       804       1,197       1,146       124  

Personal property owned

      —         —         —         —         —    

Other real estate owned

      —         —         —         18       18  
                                        

Total nonperforming assets

    $ 3,480     $ 4,905     $ 5,772     $ 6,279     $ 4,875  
                                        

Nonperforming loans to period-end loans

      0.20 %     0.30 %     0.36 %     0.39 %     0.31 %

Nonperforming assets to period-end assets

      0.14 %     0.20 %     0.23 %     0.26 %     0.21 %

Allowance for loan and lease losses to period-end loans

      1.18 %     1.26 %     1.29 %     1.30 %     1.33 %

Allowance for loan and lease losses to nonperforming loans

      579.94 %     426.63 %     363.65 %     330.47 %     428.84 %

Allowance for loan and lease losses to nonperforming assets

      579.94 %     426.63 %     363.65 %     329.53 %     427.26 %

Net loan (recoveries) charge-offs

    $ 1,694     $ 714     $ (49 )   $ 353     $ (24 )

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

Columbia Banking System, Inc.

(Unaudited)

 

    

Three Months Ended

December 31,

   

Twelve Months Ended

December 31,

  

(in thousands except per share)

    2006    2005    2006     2005  

Interest Income

           

Loans

    $ 33,016    $ 27,320    $ 123,998     $ 99,535  

Taxable securities

      4,823      4,455      20,008       18,079  

Tax-exempt securities

      1,918      1,148      7,042       4,452  

Dividends on Federal Home Loan Bank stock

      10      —        10       56  

Federal funds sold and deposits with banks

      263      30      617       85  
                              

Total interest income

      40,030      32,953      151,675       122,207  

Interest Expense

           

Deposits

      12,071      8,110      40,838       25,983  

Federal Home Loan Bank advances

      2,600      364      10,944       3,515  

Long-term obligations

      522      443      1,992       1,583  

Other borrowings

      87      102      138       214  
                              

Total interest expense

      15,280      9,019      53,912       31,295  
                              

Net Interest Income

      24,750      23,934      97,763       90,912  

Provision for loan and lease losses

      950      15      2,065       1,520  
                              

Net interest income after provision for loan and lease losses

      23,800      23,919      95,698       89,392  

Noninterest Income

           

Service charges and other fees

      3,019      2,922      11,651       11,310  

Mortgage banking

      55      233      288       1,121  

Merchant services fees

      1,948      2,088      8,314       8,480  

Gain on sale of investment securities, net

      26      6      36       6  

Bank owned life insurance (“BOLI”)

      427      393      1,687       1,577  

Other

      849      826      2,696       2,292  
                              

Total noninterest income

      6,324      6,468      24,672       24,786  

Noninterest Expense

           

Compensation and employee benefits

      9,796      9,145      38,769       37,285  

Occupancy

      2,692      2,610      10,760       10,107  

Merchant processing

      809      804      3,361       3,258  

Advertising and promotion

      468      404      2,582       1,978  

Data processing

      519      735      2,314       2,904  

Legal & professional services

      552      914      2,099       3,503  

Taxes, licenses & fees

      626      538      2,499       2,018  

Net gain of other real estate owned

      —        —        (11 )     (8 )

Other

      3,098      3,121      13,761       11,810  
                              

Total noninterest expense

      18,560      18,271      76,134       72,855  
                              

Income before income taxes

      11,564      12,116      44,236       41,323  

Provision for income taxes

      3,223      3,533      12,133       11,692  
                              

Net Income

    $ 8,341    $ 8,583    $ 32,103     $ 29,631  
                              

Net income per common share:

           

Basic

    $ 0.52    $ 0.55    $ 2.01     $ 1.89  

Diluted

    $ 0.52    $ 0.54    $ 1.99     $ 1.87  

Dividend paid per common share

    $ 0.15    $ 0.12    $ 0.57     $ 0.39  

Average number of common shares outstanding

      15,988      15,813      15,946       15,708  

Average number of diluted common shares outstanding

      16,161      16,012      16,148       15,885  

CONSOLIDATED CONDENSED BALANCE SHEETS

Columbia Banking System, Inc.

(Unaudited)

 

(in thousands)

             

December 31,

2006

    

December 31,

2005

  

Assets

           

Cash and due from banks

          $ 76,365     $ 96,787  

Interest-earning deposits with banks

            13,979       3,619  

Federal funds sold

            14,000       —    
                      

Total cash and cash equivalents

            104,344       100,406  

Securities available for sale at fair value (amortized cost of $598,703 and $576,619 respectively)

            592,858       572,355  

Securities held to maturity (fair value of $1,871 and $2,587 respectively)

            1,822       2,524  

Federal Home Loan Bank stock

            10,453       10,453  

Loans held for sale

            933       1,850  

Loans, net of unearned income of ($2,940) and ($2,870) respectively

            1,708,962       1,564,704  

Less: allowance for loan and lease losses

            20,182       20,829  
                      

Loans, net

            1,688,780       1,543,875  

Interest receivable

            12,549       11,671  

Premises and equipment, net

            44,635       44,690  

Other real estate owned

            —         18  

Goodwill

            29,723       29,723  

Other assets

            67,034       59,757  
                      

Total Assets

          $ 2,553,131     $ 2,377,322  
                      

Liabilities and Shareholders’ Equity

           

Deposits:

           

Noninterest-bearing

          $ 432,293     $ 455,838  

Interest-bearing

            1,591,058       1,549,651  
                      

Total deposits

            2,023,351       2,005,489  

Short-term borrowing:

           

Federal Home Loan Bank advances

            205,800       94,400  

Securities sold under agreements to repurchase

            20,000       —    

Other borrowings

            198       2,572  
                      

Total short-term borrowing

            225,998       96,972  

Long-term subordinated debt

            22,378       22,312  

Other liabilities

            29,057       26,307  
                      

Total liabilities

            2,300,784       2,151,080  

Shareholders’ equity:

           

Preferred stock (no par value)

           

Authorized, 2 million shares; none outstanding

           
     December 31,
2006		    December 31,
2005		             

Common stock (no par value)

           

Authorized shares

    63,034    63,034     

Issued and outstanding

    16,060    15,831      166,763       162,973  

Retained earnings

            89,037       66,051  

Accumulated other comprehensive income

            (3,453 )     (2,782 )
                      

Total shareholders’ equity

            252,347       226,242  
                      

Total Liabilities and Shareholders’ Equity

          $ 2,553,131     $ 2,377,322