COLUMBIA BANKING SYSTEM, INC. 
By TACOMA, Wash., Jan. 24, 2013 /PRNewswire/ -- Melanie Dressel, President and Chief Executive Officer of Columbia Banking System and Columbia Bank (NASDAQ: COLB) ("Columbia") said today upon the release of Columbia's fourth quarter 2012 earnings, "Our core performance measures continue their positive trend, the result of our ongoing strategic initiatives. These initiatives have resulted in solid loan growth, improved credit quality metrics, as well as increased levels of noninterest income, coupled with reduced expenses."
Ms. Dressel continued, "In general, our core performance measures for the fourth quarter 2012 and the full year 2012 are improved when compared to the results of the same periods in the prior year. Prior period comparisons are distorted by the favorable impact resulting from one of our FDIC-assisted acquisitions, which bolstered earnings during the fourth quarter of 2011 by $0.15 per share, or $6 million. With loan growth of 8%, our high level of core deposits and the pending merger with West Coast Bancorp, we feel we are well-positioned heading into 2013."
Columbia's net income was $13.5 million for the quarter ended December 31, 2012 compared to net income of $14.8 million for the same quarter of 2011. Earnings per diluted common share were $0.34 for the fourth quarter, compared with earnings of $0.37 per diluted common share a year earlier. The decline in earnings was due to the enhanced benefits realized in the fourth quarter of 2011 from Columbia's FDIC-assisted transactions.
Significant Influences on the Quarter Ended December 31, 2012
Net Interest Margin
Columbia's net interest margin decreased to 5.15% for the fourth quarter of 2012, down from 7.14% for the same period last year and down from 5.52% for the third quarter of 2012. Columbia's net interest margin is impacted significantly by the accounting for acquired loans. The net interest margin for the current quarter reflects a moderating trend in the incremental accretion income related to the acquired loans, which peaked during the last six months of 2011.
Columbia's net interest margin, excluding incremental accretion income, interest reversals on nonaccrual loans and prepayment charge on Federal Home Loan Bank advances, decreased to 4.14% for the fourth quarter of 2012, down from 4.68% for the same period last year and down from 4.40% for the third quarter of 2012. The net interest margin, excluding incremental accretion income, was negatively impacted during the fourth quarter of 2012 by the overall decreasing trend in rates, impacting both the loan and investment portfolios. The average yield on investments declined as portfolio cash flows were reinvested at lower prevailing rates. Also contributing to the lower net interest margin was the additional cash held in overnight funds in anticipation of payment of the cash portion of the West Coast Bancorp merger consideration.
Ms. Dressel commented, "Our operating net interest margin compressed during the current quarter at a similar rate as much of the industry experienced in the previous quarter. During the fourth quarter, we executed on several initiatives to supplement the net interest margin in 2013, the results of which were beginning to be realized in December."
The following table shows the impact to interest income and the related impact to the net interest margin resulting from accretion of income on acquired loan portfolios for the periods presented.
Three Months Ended Year Ended
------------------ ----------
December 31, December 31, December 31,
2012 2011 2012 December 31, 2011
------------- ------------- ------------- -----------------
(dollars in thousands)
Interest income as
recorded $19,719 $38,722 $98,583 $109,581
Less: Interest income
at stated note rate 7,848 12,316 37,406 42,221
Incremental accretion
income $11,871 $26,406 $61,177 $67,360
======= ======= ======= =======
Incremental accretion
income due to:
Acquired impaired
loans $10,850 $17,222 $55,305 $53,079
Other acquired loans 1,021 9,184 5,872 14,281
----- ----- ----- ------
Incremental accretion
income $11,871 $26,406 $61,177 $67,360
======= ======= ======= =======
Reported net interest
margin 5.15% 7.14% 5.77% 6.29%
Net interest margin
excluding incremental
accretion income,
interest reversals on
nonaccrual loans and
prepayment charge on
FHLB advances 4.14% 4.68% 4.36% 4.53%
Impact of Acquired Loan Accounting
The following table illustrates the significant impact to earnings associated with Columbia's acquired loan portfolios:
Acquired Loan Portfolio Activity
Three Months Ended Year Ended
------------------ ----------
December 31, December 31, December 31, December 31,
2012 2011 2012 2011
------------- ------------- ------------- -------------
(in thousands)
Incremental
accretion
income on
acquired
impaired
loans $10,850 $17,222 $55,305 $53,079
Incremental
accretion
income on
other
acquired
loans 1,021 9,184 5,872 14,281
(Provision)
recapture for
losses on
covered loans (2,511) 3,960 (25,892) 1,648
Change in FDIC
loss-sharing
asset (9,680) (17,448) (24,467) (49,496)
Claw back
liability
benefit
(expense) 154 (362) 54 (3,656)
--- ---- --- ------
Pre-tax
earnings
impact $(166) $12,556 $10,872 $15,856
===== ======= ======= =======
The incremental accretion income in the table above represents the amount of income recorded on acquired loans above the contractual rate stated in the individual loan notes and stems from the discount established at the time these loan portfolios were acquired. At December 31, 2012, the accretable yield on acquired impaired loans was $166.9 million and the net discount on other acquired loans was $2.4 million. The accretable yield and net discount represent income to be recorded by Columbia over the remaining life of the acquired loans. Accretable yield is subject to change based upon expected future loan cash flows, which are re-measured by Columbia on a quarterly basis.
The $2.5 million net provision for losses on covered loans in the current period is partially offset by an 80%, or $2.0 million, benefit to the change in the FDIC loss-sharing asset, resulting in a negative net pre-tax earnings impact of $502 thousand. The provision for losses on covered loans was primarily due to decreased expected future cash flows as re-measured during the current quarter when compared to the prior quarter's re-measurement.
The $9.7 million change in the FDIC loss-sharing asset in the current quarter negatively affected noninterest income and consists of $9.5 million of scheduled amortization expense and approximately $2.2 million of expense related to covered other real estate owned partially offset by the $2.0 million favorable adjustment described above.
Balance Sheet
Ms. Dressel commented, "Our focus on developing and enhancing customer relationships resulted in 8% growth in noncovered loans and a 12% increase in our business loans from the end of last year." Noncovered loans were $2.53 billion at December 31, 2012, up 2% from $2.48 billion at the prior quarter and up 8% from $2.35 billion at prior year end. Net noncovered loan growth was approximately $49 million from prior quarter and $177 million from prior year end. The growth in noncovered loans for the quarter was centered in commercial and multifamily residential real estate loans and commercial and multifamily residential real estate construction loans. At December 31, 2012, Columbia's total assets were $4.91 billion, a 3% increase from $4.79 billion in total assets at prior year end and virtually unchanged from the prior quarter. Securities, including FHLB stock, were $1.02 billion at December 31, 2012, up 6% from $965.6 million at the prior quarter and down 3% from $1.05 billion at prior year end.
Total deposits at December 31, 2012 were $4.04 billion, a 3% increase from $3.94 billion at September 30, 2012, and a 6% increase from $3.82 billion at December 31, 2011. Core deposits comprised 94% of total deposits, and were $3.80 billion at December 31, 2012, an increase of 3% from $3.69 billion at September 30, 2012, and an increase of 8% from $3.51 billion at December 31, 2011.
During the fourth quarter of 2012, the Company repaid $106.4 million of FHLB advances. Associated with this repayment, the Company incurred $603 thousand in prepayment expense.
Total shareholders' equity was $764.0 million at December 31, 2012, compared to $762.0 million and $759.3 million at September 30, 2012 and December 31, 2011, respectively. In accordance with the Columbia's recent capital and dividend strategies, total shareholders' equity has remained relatively unchanged over the past four quarters.
Asset Quality
At December 31, 2012, nonperforming noncovered assets were $48.5 million, a decrease of 9% from $53.3 million at September 30, 2012, and 43% from $85.4 million at December 31, 2011. Nonaccrual loans declined $4.2 million during the fourth quarter. The decrease in nonaccrual loans for the quarter was driven by payments of $4.4 million, charge-offs of $2.7 million, the return of $2.5 million of nonaccrual loans to accrual status, and $935 thousand of loans transferred to OREO, partially offset by $6.3 million of new nonaccrual loans. Noncovered other real estate owned (OREO) and other personal property owned (OPPO) were reduced by $641 thousand during the fourth quarter, as a result of $991 thousand in sales and $585 thousand in write-downs, partially offset by loan foreclosures of $935 thousand. Columbia's allowance for loan losses to nonperforming, noncovered loans ratio was 140% for the quarter, up from 124% for the third quarter 2012 and 99% for the same period last year.
The following table sets forth, at the dates indicated, information with respect to noncovered nonaccrual loans and total noncovered nonperforming assets.
December 31, September 30, December 31,
2012 2012 2011
------------- -------------- -------------
(dollars in thousands)
Nonaccrual noncovered loans:
Commercial business $9,299 $12,564 $10,243
Real estate:
One-to-four family residential 2,349 2,220 2,696
Commercial and multifamily
residential 19,204 19,459 19,485
------ ------ ------
Total real estate 21,553 21,679 22,181
Real estate construction:
One-to-four family residential 4,900 5,359 10,785
Commercial and multifamily
residential - - 7,067
--- --- -----
Total real estate construction 4,900 5,359 17,852
Consumer 1,643 1,987 3,207
----- ----- -----
Total nonaccrual loans 37,395 41,589 53,483
Noncovered other real estate
owned and other personal
property owned 11,108 11,749 31,905
Total nonperforming noncovered
assets $48,503 $53,338 $85,388
======= ======= =======
For the quarter ended December 31, 2012, net loan charge-offs were $1.6 million, compared to $2.1 million for the same period a year ago, and $3.5 million last quarter. Net charge-offs during the current quarter were primarily centered in commercial business loans.
The following table provides an analysis of the Company's allowance loan and lease losses at the dates and the periods indicated.
Three Months Ended December 31, Year Ended December 31,
------------------------------- -----------------------
2012 2011 2012 2011
---- ---- ---- ----
(in thousands)
Beginning balance $51,527 $50,422 $53,041 $60,993
Charge-offs:
Commercial business (1,903) (1,758) (10,173) (7,909)
One-to-four family
residential real estate (50) - (549) (717)
Commercial and multifamily
residential real estate (365) (1,325) (5,474) (3,687)
One-to-four family
residential real estate
construction (181) (72) (1,606) (2,487)
Commercial and multifamily
residential real estate
construction - (503) (93) (2,213)
Consumer (658) (620) (2,534) (3,918)
---- ---- ------ ------
Total charge-offs (3,157) (4,278) (20,429) (20,931)
Recoveries:
Commercial business 234 1,441 1,548 2,598
One-to-four family
residential real estate 83 2 285 80
Commercial and multifamily
residential real estate 261 363 1,599 459
One-to-four family
residential real estate
construction 582 168 1,488 2,091
Commercial and multifamily
residential real estate
construction 2 - 66 -
Consumer 362 173 1,171 351
--- --- ----- ---
Total recoveries 1,524 2,147 6,157 5,579
----- ----- ----- -----
Net charge-offs (1,633) (2,131) (14,272) (15,352)
Provision charged to expense 2,350 4,750 13,475 7,400
----- ----- ------ -----
Ending balance $52,244 $53,041 $52,244 $53,041
======= ======= ======= =======
For the fourth quarter of 2012, Columbia made a provision of $2.4 million for noncovered loan losses. For the comparable quarter last year the company made a provision of $4.8 million. The provision for noncovered loan losses during the current quarter was primarily driven by net charge-offs realized in the quarter and to a lesser extent by the $49 million in noncovered loan growth experienced during the quarter.
The allowance for noncovered loan losses to period end loans was 2.07% at December 31, 2012 compared to 2.08% at September 30, 2012 and 2.26% at December 31, 2011.
Fourth Quarter 2012 Operating Results
Quarter ended December 31, 2012
Net Interest Income
Net interest income for the fourth quarter of 2012 was $54.9 million, a decrease of 24% from $72.1 million for the same quarter in 2011, primarily due to the accretion income recorded during the fourth quarter of 2011 related to our acquired loan portfolios. During the fourth quarter of 2012, the Company recorded $11.9 million in incremental accretion income on acquired loans compared to $26.4 million for the fourth quarter of 2011.
Compared to the third quarter of 2012, net interest income decreased 4% from $57.3 million primarily due to lower yields on the loan and securities portfolios.
Noninterest Income (Loss)
Total noninterest income was $6.6 million for the fourth quarter of 2012, compared to a loss of $9.6 million for the fourth quarter of 2011. The increase from the prior-year period was due to a combination of the change in the FDIC loss-sharing asset, which accounted for $7.8 million of the increase, and an increase of $6.5 million in investment securities gains. The increase in securities gains was primarily due to the $3.0 million gain recorded in the current quarter on a municipal bond that was determined to be other than temporarily impaired in the fourth quarter of 2011. The Company received full payment on this security in the current quarter.
The following table reflects the components of the change in the FDIC loss-sharing asset for the three month periods indicated.
Three Months Ended Year Ended
------------------ ----------
December 31, December 31,
------------ ------------
2012 2011 2012 2011
---- ---- ---- ----
(in thousands)
Adjustments reflected in
income
Amortization, net (9,522) (13,493) (42,940) (46,049)
Loan impairment (recapture) 2,009 (3,742) 20,714 (1,318)
Sale of other real estate (2,908) (859) (7,789) (4,346)
Write-downs of other real
estate 687 563 5,190 1,474
Other 54 83 358 743
--- ---
Change in FDIC loss-sharing
asset $(9,680) $(17,448) $(24,467) $(49,496)
======= ======== ======== ========
Noninterest Expense
Total noninterest expense for the fourth quarter of 2012 was $37.8 million, a decrease of 9% from $41.3 million for the same quarter in 2011. The decrease from the prior-year period was due to a decrease of $830 thousand in compensation and benefits, $642 thousand in occupancy and $992 thousand in other noninterest expense as well as an increase of $834 thousand in net benefit of operation of other real estate. These decreases were partially offset by a $1.1 million increase in legal and professional fees, which includes $649 thousand of costs recorded during the fourth quarter of 2012 related to the announced merger with West Coast Bancorp.
Compared to the third quarter of 2012, noninterest expense decreased $3.1 million, or 8%. The decrease was primarily attributable to a decrease of $1.0 million in advertising and promotion, $573 thousand in compensation and benefit expense, and a $489 thousand change in the FDIC clawback liability.
Organizational Update
Melanie Dressel commented, "As an important component of our ongoing effort to improve efficiencies without compromising customer service, we continually evaluate the profitability of our customer delivery channels. A total of three branches were closed during 2012; during the fourth quarter, we consolidated our Port Townsend and Belfair branches, both located in grocery stores in Washington, into nearby, full-service locations."
Ms. Dressel continued, "As we announced last quarter, we signed a definitive merger agreement with West Coast Bancorp ("West Coast") headquartered in Lake Oswego, Oregon. After the merger, Columbia will rank as the number one community bank in deposit market share in both Oregon and Washington, and we will have extensive coverage throughout both states with about 150 branches and over $7 billion in assets. We expect this transaction to be completed within the next three months, subject to the approval of the shareholders of each company and the necessary regulatory approvals."
Cash Dividend Announcement
The Board of Directors announced that a quarterly cash dividend of $0.10 per common share will be paid on February 20, 2013 to shareholders of record on February 6, 2013. This is an increase of 11% from $0.09 paid the prior quarter.
Conference Call
Columbia's management will discuss the fourth quarter and full year 2012 results on a conference call scheduled for Thursday, January 24, 2013 at 1:00 p.m. PDT (4:00 pm EDT). Interested parties may listen to this discussion by calling 1-866-378-3802; Conference ID code #86908552.
A conference call replay will be available from approximately 4:00 p.m. PDT on January 24, 2013 through midnight PDT on January 31, 2013. The conference call replay can be accessed by dialing 1-855-859-2056 and entering Conference ID code #86908552.
About Columbia
Headquartered in Tacoma, Washington, Columbia Banking System, Inc. is the holding Company of Columbia State Bank, a Washington state-chartered full-service commercial bank. For the sixth consecutive year, the bank was named in 2012 as one of Puget Sound Business Journal's "Washington's Best Workplaces."
Columbia Banking System has 99 banking offices, including 74 branches in Washington State and 25 branches in Oregon. Columbia Bank does business under the Bank of Astoria name in Astoria, Warrenton, Seaside, Cannon Beach, Manzanita and Tillamook in Oregon. 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 within the meaning of the Private Securities Litigation Reform Act of 1995, 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," "intend," "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 Securities and Exchange Commission, available at the SEC's website at www.sec.gov and the Company's website at www.columbiabank.com, including the "Risk Factors," "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of our annual reports on Form 10-K and quarterly reports on Form 10-Q, factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following: (1) local, national and international economic conditions may be 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 may reduce interest margins more than expected and negatively affect funding sources; (3) projected business increases following strategic expansion or opening or acquiring new branches may be lower than expected; (4) the proposed merger with West Coast Bancorp may not close when expected or at all because required regulatory, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all, which may have an effect on the trading prices of Columbia's stock; (5) costs or difficulties related to the integration of acquisitions may be greater than expected; (6) competitive pressure among financial institutions may increase significantly; and (7) legislation or regulatory requirements or changes may adversely affect the businesses in which Columbia is engaged. We believe the expectations reflected in our forward-looking statements are reasonable, based on information available to us on the date hereof. However, given the described uncertainties and risks, we cannot guarantee our future performance or results of operations and you should not place undue reliance on these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The factors noted above and the risks and uncertainties described in our SEC filings should be considered when reading any forward-looking statements in this release.
FINANCIAL STATISTICS
Columbia Banking System, Inc.
Unaudited
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2012 2011 2012 2011
---- ---- ---- ----
Earnings (dollars in thousands except per share amounts)
--------
Net interest income $54,898 $72,124 $238,927 $236,736
Provision for loan and
lease losses $2,350 $4,750 $13,475 $7,400
Provision (recapture) for
losses on covered loans,
net (1) $2,511 $(3,960) $25,892 $(1,648)
Noninterest income (loss) $6,567 $(9,602) $27,058 $(9,283)
Noninterest expense $37,800 $41,314 $162,913 $155,759
Net income $13,462 $14,754 $46,143 $48,037
Per Common Share
----------------
Earnings (basic) $0.34 $0.37 $1.16 $1.22
Earnings (diluted) $0.34 $0.37 $1.16 $1.21
Book value $19.25 $19.23 $19.25 $19.23
Averages
--------
Total assets $4,925,736 $4,755,222 $4,826,283 $4,509,010
Interest-earning assets $4,388,487 $4,098,603 $4,246,724 $3,871,424
Loans, including covered
loans $2,926,825 $2,817,279 $2,900,520 $2,607,266
Securities $1,007,059 $957,727 $1,011,294 $928,891
Deposits $4,012,764 $3,791,169 $3,875,666 $3,541,399
Core deposits $3,769,409 $3,472,023 $3,609,467 $3,218,425
Interest-bearing deposits $2,714,292 $2,664,133 $2,683,630 $2,557,179
Interest-bearing
liabilities $2,796,155 $2,808,497 $2,808,968 $2,717,243
Noninterest-bearing
deposits $1,298,472 $1,127,036 $1,192,036 $984,220
Shareholders' equity $767,781 $757,696 $761,185 $730,726
Financial Ratios
----------------
Return on average assets 1.09% 1.23% 0.96% 1.07%
Return on average common
equity 6.98% 7.73% 6.06% 6.57%
Average equity to average
assets 15.59% 15.93% 15.77% 16.21%
Net interest margin 5.15% 7.14% 5.77% 6.27%
Efficiency ratio (tax
equivalent)(2) 68.26% 69.56% 69.17% 70.68%
December 31,
------------
Period end 2012 2011
---------- ---- ----
Total assets $4,906,335 $4,785,945
Covered assets, net $407,648 $560,055
Loans, excluding covered
loans, net $2,525,710 $2,348,371
Allowance for noncovered
loan and lease losses $52,244 $53,041
Securities $1,023,484 $1,050,325
Deposits $4,042,085 $3,815,529
Core deposits $3,802,366 $3,510,435
Shareholders' equity $764,008 $759,338
Nonperforming, noncovered
assets
-------------------------
Nonaccrual loans $37,395 $53,483
Other real estate owned
("OREO") and other
personal property owned
("OPPO") 11,108 31,905
Total nonperforming,
noncovered assets $48,503 $85,388
------- -------
Nonperforming assets to
period-end noncovered
loans + OREO and OPPO 1.91% 3.59%
Nonperforming loans to
period-end noncovered
loans 1.48% 2.28%
Nonperforming assets to
period-end noncovered
assets 1.08% 2.02%
Allowance for loan and
lease losses to period-
end noncovered loans 2.07% 2.26%
Allowance for loan and
lease losses to
nonperforming noncovered
loans 139.71% 99.17%
Net noncovered loan charge-
offs $14,272 (3) $15,352 (4)
(1) Provision (recapture) for losses on covered loans was partially
offset by $2.0 million in income and $3.7 million in expense
recorded to Change in FDIC loss-sharing asset in the Consolidated
Statements of Income for the three months ended December 31, 2012
and 2011, respectively. For the year ended December 31, 2012 and
2011, provision (recapture) for losses on covered loans was
partially offset by $20.7 million in income and $1.3 million in
expense, respectively.
(2) Noninterest expense, excluding net cost of operation of other
real estate, FDIC clawback liability expense and merger related
expenses, divided by the sum of net interest income, excluding
incremental accretion income on the acquired loan portfolio and
prepayment expenses on FHLB advances, and noninterest income on a
tax equivalent basis, excluding gain/loss on investment securities,
gain on bank acquisition, and the change in FDIC loss-sharing
asset.
(3) For the
year ended
December 31,
2012.
(4) For the
year ended
December 31,
2011.
FINANCIAL STATISTICS
Columbia Banking System, Inc.
Unaudited
December 31, December 31,
2012 2011
---- ----
Loan Portfolio
Composition (dollars in thousands)
--------------
Noncovered loans:
Commercial business $1,155,158 45.7% $1,031,721 43.9%
Real estate:
One-to-four family
residential 43,922 1.7% 64,491 2.8%
Commercial and
multifamily residential 1,061,201 42.0% 998,165 42.5%
--------- ---- ------- ----
Total real estate 1,105,123 43.7% 1,062,656 45.3%
Real estate construction:
One-to-four family
residential 50,602 2.0% 50,208 2.1%
Commercial and
multifamily residential 65,101 2.7% 36,768 1.6%
------ --- ------ ---
Total real estate
construction 115,703 4.7% 86,976 3.7%
Consumer 157,493 6.2% 183,235 7.8%
------- --- ------- ---
Subtotal loans 2,533,477 100.3% 2,364,588 100.7%
Less: Net unearned
income (7,767) (0.3)% (16,217) (0.7)%
------ ----- ------- -----
Total noncovered loans,
net of unearned income 2,525,710 100.0% 2,348,371 100.0%
===== =====
Less: Allowance for loan
and lease losses (52,244) (53,041)
------- -------
Noncovered loans, net 2,473,466 2,295,330
Covered loans, net of
allowance for loan
losses of ($29,157) and
($4,944), respectively 391,337 531,929
------- -------
Total loans, net $2,864,803 $2,827,259
========== ==========
Loans held for sale $2,563 $2,148
====== ======
December 31, December 31,
2012 2011
---- ----
Deposit Composition (dollars in thousands)
-------------------
Core deposits:
Demand and other non-
interest bearing $1,321,171 32.7% $1,156,610 30.3%
Interest bearing demand 870,821 21.5% 735,340 19.3%
Money market 1,043,459 25.8% 1,031,664 27.0%
Savings 314,371 7.8% 283,416 7.4%
Certificates of deposit
less than $100,000 252,544 6.2% 303,405 8.0%
------- --- ------- ---
Total core deposits 3,802,366 94% 3,510,435 92.0%
Certificates of deposit
greater than $100,000 212,924 5.3% 262,731 6.9%
Certificates of deposit
insured by CDARS(R) 26,720 0.7% 42,080 1.1%
------ --- ------ ---
Subtotal 4,042,010 100.0% 3,815,246 100.0%
===== =====
Premium resulting from
acquisition date fair
value adjustment 75 283
--- ---
Total deposits $4,042,085 $3,815,529
========== ==========
FINANCIAL STATISTICS
Columbia Banking System, Inc.
Unaudited
December 31, December 31,
2012 2011
---- ----
OREO OPPO OREO OPPO
---- ---- ---- ----
OREO and OPPO Composition (in thousands)
-------------------------
Covered $16,311 $45 $28,126 $ -
Noncovered 10,676 432 22,893 9,011
Total $26,987 $477 $51,019 $9,011
======= ==== ======= ======
Three Months Ended Year Ended
------------------ ----------
December 31, December 31,
------------ ------------
2012 2011 2012 2011
---- ---- ---- ----
OREO and OPPO Earnings Impact (in thousands)
-----------------------------
Net cost of operation of
noncovered OREO $664 $1,567 $4,766 $7,416
Net benefit of operation of
covered OREO (2,097) (2,166) (6,735) (8,438)
Net benefit of operation of
OREO $(1,433) $(599) $(1,969) $(1,022)
======= ===== ======= =======
Noncovered OPPO cost
(benefit), net $(271) $20 $1,971 $(1,088)
Covered OPPO benefit, net (197) (1) (213) (105)
OPPO expense, net (1) $(468) $19 $1,758 $(1,193)
===== === ====== =======
(1) OPPO expense, net is included in Other noninterest expense in the Consolidated Statements of Income.
QUARTERLY FINANCIAL STATISTICS
Columbia Banking System, Inc.
Unaudited
Three Months Ended
------------------
December 31, September 30, June 30, March 31, December 31,
2012 2012 2012 2012 2011
---- ---- ---- ---- ----
(dollars in thousands except per share)
Earnings
--------
Net interest income $54,898 $57,265 $59,701 $67,063 $72,124
Provision for loan and lease losses $2,350 $2,875 $3,750 $4,500 $4,750
Provision (recapture) for losses on covered
loans $2,511 $(3,992) $11,688 $15,685 $(3,960)
Noninterest income (loss) $6,567 $(911) $11,828 $9,574 $(9,602)
Noninterest expense $37,800 $40,936 $39,825 $44,352 $41,314
Net income $13,462 $11,880 $11,899 $8,902 $14,754
Per Common Share
----------------
Earnings (basic) $0.34 $0.30 $0.30 $0.22 $0.37
Earnings (diluted) $0.34 $0.30 $0.30 $0.22 $0.37
Book value $19.25 $19.20 $19.13 $18.97 $19.23
Averages
--------
Total assets $4,925,736 $4,828,102 $4,788,723 $4,776,186 $4,755,222
Interest-earning assets $4,388,487 $4,263,414 $4,194,281 $4,137,449 $4,098,603
Loans, including covered loans $2,926,825 $2,919,520 $2,895,436 $2,860,524 $2,817,279
Securities $1,007,059 $983,815 $1,029,337 $1,023,067 $957,727
Deposits $4,012,764 $3,859,284 $3,823,985 $3,805,324 $3,791,169
Core deposits $3,769,409 $3,599,246 $3,555,279 $3,512,490 $3,472,023
Interest-bearing deposits $2,714,292 $2,665,094 $2,682,092 $2,672,911 $2,664,133
Interest-bearing liabilities $2,796,155 $2,803,201 $2,820,857 $2,815,753 $2,808,497
Noninterest-bearing deposits $1,298,472 $1,194,190 $1,141,893 $1,132,413 $1,127,036
Shareholders' equity $767,781 $761,281 $758,391 $761,686 $757,696
Financial Ratios
----------------
Return on average assets 1.09% 0.98% 1.00% 0.75% 1.23%
Return on average common equity 6.98% 6.21% 6.31% 4.70% 7.73%
Average equity to average assets 15.59% 15.77% 15.84% 15.95% 15.93%
Net interest margin 5.15% 5.52% 5.88% 6.67% 7.14%
Efficiency ratio (tax equivalent) 68.26% 68.46% 68.54% 71.48% 69.56%
Period end
----------
Total assets $4,906,335 $4,903,049 $4,789,413 $4,815,432 $4,785,945
Covered assets, net $407,648 $445,797 $482,073 $526,043 $560,055
Loans, excluding covered loans, net $2,525,710 $2,476,844 $2,436,961 $2,371,818 $2,348,371
Allowance for noncovered loan and lease
losses $52,244 $51,527 $52,196 $52,283 $53,041
Securities $1,023,484 $965,641 $1,019,978 $1,021,428 $1,050,325
Deposits $4,042,085 $3,938,855 $3,830,817 $3,865,445 $3,815,529
Core deposits $3,802,366 $3,685,844 $3,568,307 $3,591,663 $3,510,435
Shareholders' equity $764,008 $761,977 $758,712 $752,703 $759,338
Nonperforming, noncovered assets
--------------------------------
Nonaccrual loans $37,395 $41,589 $49,465 $57,552 $53,483
OREO and OPPO 11,108 11,749 17,608 21,571 31,905
------ ------ ------ ------ ------
Total nonperforming, noncovered assets $48,503 $53,338 $67,073 $79,123 $85,388
------- ------- ------- ------- -------
Nonperforming assets to period-end
noncovered loans + OREO and OPPO 1.91% 2.14% 2.73% 3.31% 3.59%
Nonperforming loans to period-end noncovered
loans 1.48% 1.68% 2.03% 2.43% 2.28%
Nonperforming assets to period-end
noncovered assets 1.08% 1.20% 1.56% 1.84% 2.02%
Allowance for loan and lease losses to
period-end noncovered loans 2.07% 2.08% 2.14% 2.20% 2.26%
Allowance for loan and lease losses to
nonperforming noncovered loans 139.71% 123.90% 105.52% 90.84% 99.17%
Net noncovered loan charge-offs $1,633 $3,544 $3,836 $5,258 $2,131
CONSOLIDATED STATEMENTS OF INCOME
Columbia Banking System, Inc.
Unaudited
Three Months Ended Year Ended
December 31, December 31,
------------ ------------
2012 2011 2012 2011
---- ---- ---- ----
(in thousands except per share)
Interest Income
Loans $50,558 $66,974 $219,433 $218,420
Taxable securities 3,862 5,169 18,276 21,870
Tax-exempt securities 2,499 2,659 9,941 10,142
Federal funds sold and
deposits in banks 290 117 854 839
--- --- --- ---
Total interest income 57,209 74,919 248,504 251,271
Interest Expense
Deposits 1,208 1,909 5,887 10,478
Federal Home Loan Bank
advances 379 765 2,608 2,980
Prepayment charge on
Federal Home Loan Bank
advances 603 - 603 -
Long-term obligations - - - 579
Other borrowings 121 121 479 498
--- --- --- ---
Total interest expense 2,311 2,795 9,577 14,535
----- ----- ----- ------
Net Interest Income 54,898 72,124 238,927 236,736
Provision for loan and
lease losses 2,350 4,750 13,475 7,400
Provision (recapture)
for losses on covered
loans, net 2,511 (3,960) 25,892 (1,648)
----- ------ ------ ------
Net interest income
after provision
(recapture) for loan
and lease losses 50,037 71,334 199,560 230,984
Noninterest Income
(Loss)
Service charges and
other fees 7,776 6,886 29,998 26,632
Gain on bank
acquisitions, net of
tax - - - 1,830
Merchant services fees 1,987 1,992 8,154 7,385
Investment securities
gains (losses), net 3,671 (2,816) 3,733 (2,816)
Bank owned life
insurance 684 632 2,861 2,188
Change in FDIC loss-
sharing asset (9,680) (17,448) (24,467) (49,496)
Other 2,129 1,152 6,779 4,994
----- ----- ----- -----
Total noninterest
income (loss) 6,567 (9,602) 27,058 (9,283)
Noninterest Expense
Compensation and
employee benefits 20,950 21,780 85,434 81,552
Occupancy 4,721 5,363 20,031 18,963
Merchant processing 888 934 3,612 3,698
Advertising and
promotion 308 636 3,650 3,686
Data processing and
communications 2,451 2,452 9,714 8,484
Legal and professional
fees 2,694 1,618 8,915 6,486
Taxes, licenses and
fees 1,142 1,463 4,736 4,446
Regulatory premiums 824 784 3,384 4,337
Net benefit of
operation of other
real estate (1,433) (599) (1,969) (1,022)
Amortization of
intangibles 1,083 1,203 4,445 4,319
FDIC clawback liability
expense (recovery) (154) 362 (54) 3,656
Other 4,326 5,318 21,015 17,154
----- ----- ------ ------
Total noninterest
expense 37,800 41,314 162,913 155,759
------ ------ ------- -------
Income before income
taxes 18,804 20,418 63,705 65,942
Provision for income
taxes 5,342 5,664 17,562 17,905
----- ----- ------ ------
Net Income $13,462 $14,754 $46,143 $48,037
======= ======= ======= =======
Earnings per common
share
Basic $0.34 $0.37 $1.16 $1.22
Diluted $0.34 $0.37 $1.16 $1.21
Dividends paid per
common share $0.09 $0.13 $0.98 $0.27
Weighted average number
of common shares
outstanding 39,295 39,135 39,260 39,103
Weighted average number
of diluted common
shares outstanding 39,297 39,222 39,263 39,180
CONSOLIDATED BALANCE SHEETS
Columbia Banking System, Inc.
Unaudited
December 31, December 31,
2012 2011
---- ----
(in thousands)
ASSETS
Cash and due from banks $124,573 $91,364
Interest-earning deposits with banks and federal funds sold 389,353 202,925
------- -------
Total cash and cash equivalents 513,926 294,289
Securities available for sale at fair value (amortized cost of $969,359 and $987,560,
respectively) 1,001,665 1,028,110
Federal Home Loan Bank stock at cost 21,819 22,215
Loans held for sale 2,563 2,148
Loans, excluding covered loans, net of unearned income of ($7,767) and ($16,217),
respectively 2,525,710 2,348,371
Less: allowance for loan and lease losses 52,244 53,041
------ ------
Loans, excluding covered loans, net 2,473,466 2,295,330
Covered loans, net of allowance for loan losses of ($30,056) and ($4,944), respectively 391,337 531,929
------- -------
Total loans, net 2,864,803 2,827,259
FDIC loss-sharing asset 96,354 175,071
Interest receivable 14,268 15,287
Premises and equipment, net 118,708 107,899
Other real estate owned ($16,311 and $28,126 covered by FDIC loss-share, respectively) 26,987 51,019
Goodwill 115,554 115,554
Core deposit intangible, net 15,721 20,166
Other assets 113,967 126,928
Total assets $4,906,335 $4,785,945
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing $1,321,171 $1,156,610
Interest-bearing 2,720,914 2,658,919
--------- ---------
Total deposits 4,042,085 3,815,529
Federal Home Loan Bank advances 6,644 119,009
Securities sold under agreements to repurchase 25,000 25,000
Other liabilities 68,598 67,069
------ ------
Total liabilities 4,142,327 4,026,607
Commitments and contingent liabilities
December 31, December 31,
2012 2011
---- ----
Common stock (no par value)
Authorized shares 63,033 63,033
Issued and outstanding 39,686 39,506 581,471 579,136
Retained earnings 162,388 155,069
Accumulated other comprehensive income 20,149 25,133
------ ------
Total shareholders' equity 764,008 759,338
Total liabilities and shareholders' equity $4,906,335 $4,785,945
========== ==========
Contacts: Melanie J. Dressel,
President and
Chief Executive Officer
(253) 305-1911
Clint E. Stein, Executive
Vice President
and Chief Financial
Officer
(253) 593-8304
SOURCE Columbia Banking System, Inc.
