EX-99.1 2 dex991.htm PRESS RELEASE ANNOUNCING FIRST QUARTER ENDED MARCH 31,2008 FINANCIAL RESULTS Press Release announcing first quarter ended March 31,2008 financial results

Exhibit 99.1

FOR IMMEDIATE RELEASE

April 23, 2008

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

FIRST QUARTER 2008 EARNINGS

1st QUARTER 2008 HIGHLIGHTS

 

 

•

  

Earnings of $11 million, up 51% from $7.3 million for the 1st quarter 2007

 

 

•

  

Diluted earnings per share of $0.61, a 36% increase from $0.45 for the 1st quarter 2007

 

  •  

Core earnings of $8.6 million, or $0.48 per diluted share

 

 

•

  

Net interest margin increased to 4.38% from 4.37% in the 1st quarter of 2007 and from 4.29% in the 4th quarter of 2007

 

  •  

Non-performing assets to total assets remained at 0.46% from December 2007

TACOMA, Washington — Columbia Banking System, Inc. (NASDAQ: COLB) today announced earnings for the first quarter 2008 of $11.0 million, an increase of 51% from $7.3 million for the first quarter of 2007. Diluted earnings per share were $0.61, an increase of 36% from $0.45 per share one year ago. The increase in net income for first quarter 2008 as compared to the same period last year is primarily due to higher net interest income, and a 64% increase in noninterest income coupled with only a 15% increase in noninterest expense. Return on average assets and return on average equity for the first quarter 2008 were 1.39% and 12.60%, respectively, compared to 1.14% and 11.52%, respectively, for the same period in 2007. Revenue (net interest income plus noninterest income) was $40.5 million for the first quarter of 2008, up 31% from $30.9 million one year ago. Results for the first quarter reflect the financial consolidation of Mountain Bank Holding Company and Town Center Bancorp, which were both acquired on July 23, 2007; consequently, the first quarter 2007 financial information does not include the results of the two organizations. Additionally, first quarter 2008 earnings per diluted share were impacted due to an increase in the total number of shares outstanding as a result of shares issued in conjunction with the 2007 acquisitions.

Core Earnings

(A non-GAAP measure of income from customary business activities)

 

     Three months ended March 31,  

(Dollars in thousands, except per share data)

    2008     2007  

Net Income

    $ 10,977     $ 7,283  

Deduct:

     

Gain on sale of investment securities, net of tax

      573       —    

Redemption of Visa Shares, net of tax

      1,275       —    

Recapture of previously accrued Visa litigation expense, net of tax

      578       —    
                

Core Earnings

    $ 8,551     $ 7,283  
                

Earnings per Diluted Share:

     

GAAP earnings

    $ 0.61     $ 0.45  

Core earnings

    $ 0.48     $ 0.45  

Core Net Interest Margin

      4.30 %     4.37 %

During the first quarter, Columbia recorded a gain of $881,872 ($573,000 net of tax) on the sale of investment securities. The gain resulted from the execution of a strategy to extend the weighted average life of approximately $50 million of the portfolio that was maturing in 18 months or less. In March 2008, Visa Inc (“Visa”) completed its initial public offering (“IPO”) and as a result Columbia received 118,637 shares of Visa Inc. Class B stock which were subject to a partial mandatory redemption. On March 28, 2008 Visa redeemed 45,866 shares of Columbia’s stock for net cash proceeds of $1.96 million ($1.3 million net of tax). In conjunction with the completion of Visa’s IPO, Columbia also recognized a pre-tax recapture of previously accrued Visa litigation expense in the amount of $889,200 ($578,000 net of tax). For comparative purposes, the amounts contained in the above table have been tax affected by the statutory tax rate of 35% to illustrate their impact on net income. The first quarter 2008 net interest margin was impacted by a dividend received from a U.S. government-sponsored enterprise preferred security. Excluding this dividend, the first quarter 2008 net interest margin was 4.30 % compared to 4.37% for the first quarter 2007.

Melanie J. Dressel, President and Chief Executive Officer, commented, “We are pleased with the results of our continued focus on fundamentals and on attracting and expanding our customer relationships. Our core results reflect our stable net interest margin and effective control of our noninterest expense, which continues to be a high priority for us. Our concentration on fundamental business practices and core strategies has positioned us well for the softening economy and extremely competitive banking environment.”

Ms. Dressel noted, “We increased our net interest margin, a significant achievement in light of the 200 basis point drop in short-term rates during the first quarter and the margin compression that many of our peers are experiencing. Our net interest margin for the first quarter 2008 was 4.38% compared to 4.37% in the first quarter of 2007, and 4.29% in the fourth quarter of 2007. We were able to mitigate the impact of decreasing loan rates through appropriate deposit repricing and reduced wholesale funding costs. We will maintain our focus on actively managing our balance sheet to minimize contraction of our net interest margin if we see additional lowering of short-term interest rates.”

At March 31, 2008, Columbia’s total assets were $3.25 billion, an increase of 2% from $3.18 billion at December 31, 2007. Total loans were $2.30 billion at March 31, 2008, up slightly from $2.28 billion at year-end 2007. Total deposits were $2.53 billion at March 31, 2008, a slight increase from $2.50 billion at December 31, 2007. Core deposits were $1.68 billion at the end of the first quarter of 2008, up 11% from $1.52 billion at year-end 2007. Core deposits were 67% of total deposits at March 31, 2008.

Mark W. Nelson, Executive Vice President and Chief Operating Officer, said, “Our average loans for the first quarter 2008 were up $62.7 million over the fourth quarter 2007, although first quarter growth was moderated by loan payoffs late in the quarter. Period-end loans grew a net of $17.7 million for the first quarter 2008, primarily from commercial business loans, which rose $17.8 million, or 2.3% from year-end 2007, followed by an increase of $13.7 million primarily in advances under pre-existing relationships in our one-to-four family residential construction portfolio, and finally, from a $3.5 million increase in consumer loans. These increases were tempered by declines in our real estate and commercial construction loans, which declined by $17.3 million, due to contractual repayment and refinancing activity.”

Mr. Nelson further noted, “We are pleased with the positive trends in our deposit growth, despite tough competition for low-cost deposits. While historically we experience seasonal reductions in business-related balances during the first quarter, our period-end core deposit balances have regenerated quickly, increasing nearly $11 million since year-end 2007. We attribute this success to both our retail and commercial focus on building relationships and incentives for deposit generation. We continue to benefit from our long-term strategy to strengthen and deepen our relationships with our customers, bringing in lower cost core deposits and making it easier to manage our net interest margin.”

Revenue (net interest income plus noninterest income) was $40.5 million at March 31, 2008, up 31% from $30.9 million for the quarter ended March 31, 2007. Return on average assets and return on average equity for the first quarter 2008 increased to 1.39% and 12.60%, respectively, compared to 1.14% and 11.52%, respectively, for the first quarter of the prior year. The efficiency ratio improved to 62.36% at March 31, 2008, compared to 63.39% for the same period in 2007.

First Quarter 2008 Operating Results

Note: First quarter 2007 financial information does not include the results of Mountain Bank Holding Company and Town Center Bancorp, which were both acquired on July 23, 2007.

Net Interest Income

Net interest income increased $5.6 million to $30.3 million, in the first quarter 2008 compared to the first quarter 2007, primarily due to loan growth. The Company’s net interest margin increased slightly to 4.38% in the first quarter 2008, compared with 4.37% in the first quarter 2007 and with 4.29% during the fourth quarter of 2007.

Average interest-earning assets increased to $2.91 billion, or 21%, during the first quarter of 2008, compared with $2.39 billion during the first quarter 2007. The yield on average interest-earning assets decreased 27 basis points to 6.89% at March 31, 2008, from 7.16% at March 31, 2007. Average interest-bearing liabilities increased 24% to $2.34 billion from $1.89 billion last year. The cost of average interest-bearing liabilities decreased 42 basis points to 3.11% in the first quarter of 2008, compared to 3.53% in the first quarter of 2007.

Noninterest income

Total noninterest income for the first quarter 2008 increased to $10.2 million, or 64%, from $6.2 million a year ago. The increase in noninterest income during the first quarter of 2008 as compared to first quarter 2007 was primarily due to the gain recognized from both the Visa IPO and the sale of investment securities.

Noninterest expense

Noninterest expense for the first quarter of 2008 was $23.6 million, an increase of 15% from $20.4 million for the same period in 2007. This increase was primarily due to increased compensation and employee benefits as well as occupancy expenses. Legal and professional services were positively

impacted in the current quarter as a result of the partial reversal of legal expenses accrued in the fourth quarter of 2007 related to Visa litigation expenses. The Company’s efficiency ratio improved to 62.36% for the first quarter 2008, compared with 63.39% for the same period in 2007.

Nonperforming Assets and Loan Loss Provision

The Company added $2.1 million to its provision for loan losses in the first quarter, compared to $1.4 million in the fourth quarter of 2007 and $638,000 in the first quarter of 2007. The allowance for loan and lease losses at quarter-end totaled $27.9 million, representing 1.21% of total loans outstanding. Non-performing assets were $15.0 million, or 0.46% of total assets, at March 31, 2008, compared to $14.6 million, or 0.46%, at year-end 2007, and $3.4 million or 0.13% at March 31, 2007. The Company’s net charge-offs in the current quarter totaled $761,000, or 0.03% of average loans.

The increasing provision for loan and lease losses is a reflection of the continuing weakness in the for-sale housing industry and the economy in general. While the Pacific Northwest continues to outperform the rest of the nation, Columbia is not immune to the challenges faced outside the Northwest region as many customers are engaged in business activities which are impacted by the national economy as a whole. Thus, the increase in the provision expense in comparison to 2007 is reflective of the slowing economy and weakening credit quality. However, management considers that the net charge-offs remain reasonable and will continue to build reserves for possible loan losses.

Conference Call

Columbia will discuss the quarterly results on a conference call on Thursday, April 24, 2008 at 8:00 a.m. PDT (11:00 a.m. EDT). Ms. Dressel noted, “Although we do not typically conduct a conference call with each earnings release, we intend to hold them on a quarterly basis for the foreseeable future in light of the rapidly changing and challenging economy.” Interested investors, analysts, media representatives and the public are invited to listen to this discussion by calling 1-888-318-7969; Conference ID code 43670620. A conference call replay will be available from approximately 11:00 a.m. PDT on April 24 through midnight PDT on Thursday, May 1, 2008. The conference call replay can be accessed by dialing 1-800-642-1687 and entering Conference ID code 43670620.

About Columbia

Headquartered in Tacoma, Washington, Columbia Banking System, Inc. is the holding company of Columbia Bank, a Washington state-chartered full-service commercial bank. With the 2007 acquisitions of Mountain Bank Holding Company and Town Center Bancorp and the 2008 internal merger of its subsidiary, Bank of Astoria, into Columbia Bank, Columbia Banking System has 55 banking offices in Pierce, King, Cowlitz, Kitsap, Thurston and Whatcom counties in Washington State, and Clackamas, Clatsop, Tillamook and Multnomah counties in Oregon. Included in Columbia Bank are former branches of Mt. Rainier National Bank, doing business as Mt. Rainier Bank, with 7 branches in King and Pierce counties. Columbia Bank does business under the Bank of Astoria name at the Bank of Astoria’s former branches located in Astoria, Warrenton, Seaside and Cannon Beach in Clatsop County and 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 management’s expectations regarding future events and developments such as future operating results, growth in loans and deposits, continued success of our 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 our 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 and national economic conditions are less favorable than expected or have a more direct and pronounced effect on us than expected and adversely affect our ability to continue internal growth at historical rates and maintain the quality of our earning assets; (2) a continued decline in the housing/real estate market; (3) changes in interest rates significantly reduce interest margins and negatively affect funding sources; (4) deterioration of credit quality that could, among other things, increase defaults and delinquency risks in the Banks’ loan portfolios (5) projected business increases following strategic expansion activities are lower than expected; (6) competitive pressure among financial institutions increases significantly; (7) legislation or regulatory requirements or changes adversely affect the businesses in which we are engaged; and (8) our ability to realize the efficiencies we expect to receive from our investments in personnel, acquisitions and infrastructure.

FINANCIAL STATISTICS  

Columbia Banking System, Inc.

Unaudited

       
     Three Months Ended
March 31,		  

(in thousands, except per share amounts)

    2008     2007  

Earnings

     

Net interest income

    $ 30,327     $ 24,703  

Provision for loan and lease losses

    $ 2,076     $ 638  

Noninterest income

    $ 10,157     $ 6,177  

Noninterest expense

    $ 23,554     $ 20,402  

Net income

    $ 10,977     $ 7,283  

Per Share

     

Net income (basic)

    $ 0.61     $ 0.45  

Net income (diluted)

    $ 0.61     $ 0.45  

Averages

     

Total assets

    $ 3,186,013     $ 2,586,025  

Interest-earning assets

    $ 2,906,172     $ 2,392,372  

Loans

    $ 2,304,588     $ 1,765,692  

Securities

    $ 582,056     $ 597,952  

Deposits

    $ 2,455,190     $ 2,001,136  

Core deposits

    $ 1,610,345     $ 1,444,210  

Shareholders’ equity

    $ 350,271     $ 256,292  

Financial Ratios

     

Return on average assets

      1.39 %     1.14 %

Return on average equity

      12.60 %     11.52 %

Return on average tangible equity(1)

      18.33 %     13.38 %

Average equity to average assets

      10.99 %     9.91 %

Net interest margin

      4.38 %     4.37 %

Efficiency ratio (tax equivalent) (2)

     62.36 %     63.39 %

 

     March 31,     December 31,
2007		  
     2008     2007    

Period end

       

Total assets

    $ 3,246,586     $ 2,676,204     $ 3,178,713  

Loans

    $ 2,300,465     $ 1,833,852     $ 2,282,728  

Allowance for loan and lease losses

    $ 27,914     $ 20,819     $ 26,599  

Securities

    $ 598,470     $ 599,306     $ 572,973  

Deposits

    $ 2,526,514     $ 2,081,026     $ 2,498,061  

Core deposits

    $ 1,682,255     $ 1,518,797     $ 1,671,659  

Shareholders’ equity

    $ 351,667     $ 261,329     $ 341,731  

Book value per share

    $ 19.45     $ 16.17     $ 19.03  

Tangible book value per share

    $ 13.77     $ 14.16     $ 13.29  

Nonperforming assets

       

Nonaccrual loans

    $ 14,368     $ 2,580     $ 14,005  

Restructured loans

      468       806       456  

Other personal property owned

      187       —         —    

Other real estate owned

      —         —         181  
                        

Total nonperforming assets

    $ 15,023     $ 3,386     $ 14,642  
                        

Nonperforming loans to period-end loans

      0.64 %     0.18 %     0.63 %

Nonperforming assets to period-end assets

      0.46 %     0.13 %     0.46 %

Allowance for loan and lease losses to period-end loans

      1.21 %     1.14 %     1.17 %

Allowance for loan and lease losses to nonperforming loans

      188.15 %     614.86 %     183.94 %

Allowance for loan and lease losses to nonperforming assets

      185.81 %     614.86 %     181.66 %

Net loan charge-offs

    $ 761 (3)   $ 1 (4)   $ 380 (5)

 

 

(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 gain/loss on sale of investment securities, net cost (gain) of OREO, gain on redemption of Visa shares, and recapture of previously accrued Visalitigation expense

 

(3)

For the three months ended March 31, 2008.

 

(4)

For the three months ended March 31, 2007.

 

(5)

For the twelve months ended December 31, 2007.

FINANCIAL STATISTICS  

Columbia Banking System, Inc.

Unaudited

  
      Period End  
     March 31,     December 31,  

(in thousands)

    2008     2007     2007  

Loan Portfolio Composition

       

Commercial business

    $ 780,177     $ 681,534     $ 762,365  

Real Estate:

       

One-to-four family residential

      62,733       47,876       60,991  

Five or more family residential and commercial

      843,148       691,758       852,139  
                        

Total Real Estate

      905,881       739,634       913,130  

Real Estate Construction:

       

One-to-four family residential

      282,797       139,806       269,115  

Five or more family residential and commercial

      155,362       128,728       165,490  
                        

Total Real Estate Construction

      438,159       268,534       434,605  

Consumer

      180,016       147,435       176,559  
                        

Subtotal loans

      2,304,233       1,837,137       2,286,659  

Less: Deferred loan fees

      (3,768 )     (3,285 )     (3,931 )
                        

Total loans

    $ 2,300,465     $ 1,833,852     $ 2,282,728  
                        

Loans held for sale

    $ 5,944     $ 2,999     $ 4,482  
                        

Deposit Composition

       

Demand and other noninterest bearing

    $ 508,955     $ 447,052     $ 468,237  

Interest bearing demand

      471,980       430,967       478,596  

Money market

      584,834       530,542       609,502  

Savings

      116,486       110,236       115,324  

Certificates of deposit

      844,259       562,229       826,402  
                        

Total deposits

    $ 2,526,514     $ 2,081,026     $ 2,498,061  
                        

QUARTERLY FINANCIAL STATISTICS  

Columbia Banking System, Inc.

Unaudited

       
      Three Months Ended  

(in thousands, except per share amounts)

    Mar 31
2008		     Dec 31
2007		     Sept 30
2007		     Jun 30
2007		     Mar 31
2007		  

Earnings

           

Net interest income

    $ 30,327     $ 29,562     $ 28,860     $ 25,695     $ 24,703  

Provision for loan and lease losses

    $ 2,076     $ 1,407     $ 1,231     $ 329     $ 638  

Noninterest income

    $ 10,157     $ 7,199     $ 7,631     $ 6,741     $ 6,177  

Noninterest expense

    $ 23,554     $ 25,736     $ 22,425     $ 20,266     $ 20,402  

Net income

    $ 10,977     $ 7,298     $ 9,256     $ 8,544     $ 7,283  

Per Share

           

Net income [basic]

    $ 0.61     $ 0.41     $ 0.53     $ 0.53     $ 0.45  

Net income [diluted]

    $ 0.61     $ 0.41     $ 0.53     $ 0.53     $ 0.45  

Averages

           

Total assets

    $ 3,186,013     $ 3,131,122     $ 2,969,197     $ 2,654,863     $ 2,586,025  

Interest-earning assets

    $ 2,906,172     $ 2,836,045     $ 2,702,487     $ 2,460,603     $ 2,392,372  

Loans

    $ 2,304,588     $ 2,241,893     $ 2,102,281     $ 1,846,163     $ 1,765,692  

Securities

    $ 582,056     $ 572,412     $ 572,124     $ 582,378     $ 597,952  

Deposits

    $ 2,455,190     $ 2,487,356     $ 2,382,881     $ 2,090,273     $ 2,001,136  

Core deposits

    $ 1,610,345     $ 1,632,722     $ 1,610,523     $ 1,485,966     $ 1,444,210  

Shareholders’ equity

    $ 350,271     $ 335,510     $ 301,499     $ 262,905     $ 256,292  

Financial Ratios

           

Return on average assets

      1.39 %     0.92 %     1.24 %     1.29 %     1.14 %

Return on average equity

      12.60 %     8.63 %     12.18 %     13.04 %     11.52 %

Return on average tangible equity

      18.33 %     13.08 %     15.81 %     15.04 %     13.38 %

Average equity to average assets

      10.99 %     10.72 %     10.15 %     9.90 %     9.91 %

Net interest margin

      4.38 %     4.29 %     4.40 %     4.36 %     4.37 %

Efficiency ratio (tax equivalent)

      62.36 %     62.83 %     59.23 %     60.04 %     63.39 %

Period end

           

Total assets

    $ 3,246,586     $ 3,178,713     $ 3,122,744     $ 2,660,946     $ 2,676,204  

Loans

    $ 2,300,465     $ 2,282,728     $ 2,212,751     $ 1,859,592     $ 1,833,852  

Allowance for loan and lease losses

    $ 27,914     $ 26,599     $ 25,380     $ 21,339     $ 20,819  

Securities

    $ 598,470     $ 572,973     $ 577,712     $ 570,742     $ 599,306  

Deposits

    $ 2,526,514     $ 2,498,061     $ 2,477,794     $ 2,117,325     $ 2,081,026  

Core deposits

    $ 1,682,255     $ 1,671,659     $ 1,637,530     $ 1,472,206     $ 1,518,797  

Shareholders’ equity

    $ 351,667     $ 341,731     $ 329,969     $ 259,773     $ 261,329  

Book value per share

    $ 19.45     $ 19.03     $ 18.45     $ 16.07     $ 16.17  

Tangible book value per share

    $ 13.77     $ 13.29     $ 12.79     $ 14.06     $ 14.16  

Nonperforming assets

           

Nonaccrual loans

    $ 14,368     $ 14,005     $ 9,983     $ 4,972     $ 2,580  

Restructured loans

      468       456       257       985       806  

Other personal property owned

      187       —         —         32       —    

Other real estate owned

      —         181       181       —         —    
                                        

Total nonperforming assets

    $ 15,023     $ 14,642     $ 10,421     $ 5,989     $ 3,386  
                                        

Nonperforming loans to period-end loans

      0.64 %     0.63 %     0.46 %     0.32 %     0.18 %

Nonperforming assets to period-end assets

      0.46 %     0.46 %     0.33 %     0.23 %     0.13 %

Allowance for loan and lease losses to period-end loans

      1.21 %     1.17 %     1.15 %     1.15 %     1.14 %

Allowance for loan and lease losses to nonperforming loans

      188.15 %     183.94 %     247.85 %     358.22 %     614.86 %

Allowance for loan and lease losses to nonperforming assets

      185.81 %     181.66 %     243.55 %     356.30 %     614.86 %

Net loan charge-offs (recoveries)

    $ 761     $ 188     $ 382     $ (191 )   $ 1  

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

Columbia Banking System, Inc.

(Unaudited)

 

     Three Months Ended
March 31,

(in thousands except per share)

    2008     2007

Interest Income

     

Loans

    $ 41,303     $ 34,030

Taxable securities

      4,429       4,774

Tax-exempt securities

      2,001       1,960

Dividends

      551       11

Federal funds sold and deposits with banks

      149       371
              

Total interest income

      48,433       41,146

Interest Expense

     

Deposits

      14,835       12,159

Federal Home Loan Bank advances

      2,582       3,179

Long-term obligations

      487       507

Other borrowings

      202       598
              

Total interest expense

      18,106       16,443
              

Net Interest Income

      30,327       24,703

Provision for loan and lease losses

      2,076       638
              

Net interest income after provision for loan and lease losses

      28,251       24,065

Noninterest Income

     

Service charges and other fees

      3,568       2,959

Merchant services fees

      1,916       1,969

Gain on sale of investment securities, net

      882       —  

Gain on redemption of Visa shares

      1,962       —  

Bank owned life insurance (“BOLI”)

      505       426

Other

      1,324       823
              

Total noninterest income

      10,157       6,177

Noninterest Expense

     

Compensation and employee benefits

      13,396       11,358

Occupancy

      3,259       2,837

Merchant processing

      866       823

Advertising and promotion

      581       547

Data processing

      815       567

Legal & professional services

      (51 )     823

Taxes, licenses & fees

      751       613

Net gain of other real estate owned

      (23 )     —  

Other

      3,960       2,834
              

Total noninterest expense

      23,554       20,402
              

Income before income taxes

      14,854       9,840

Provision for income taxes

      3,877       2,557
              

Net Income

    $ 10,977     $ 7,283
              

Net income per common share:

     

Basic

    $ 0.61     $ 0.45

Diluted

    $ 0.61     $ 0.45

Dividend paid per common share

    $ 0.17     $ 0.15

Average number of common shares outstanding

      17,850       16,104

Average number of diluted common shares outstanding

      17,978       16,262

CONSOLIDATED CONDENSED BALANCE SHEETS

Columbia Banking System, Inc.

(Unaudited)

(in thousands)

            March 31,
2008		    December 31,
2007

Assets

          

Cash and due from banks

    $ 82,950    $ 82,735

Interest-earning deposits with banks

      9,165      11,240

Federal funds sold

      31,500      —  
                 

Total cash and cash equivalents

      123,615      93,975

Securities available for sale at fair value (amortized cost of $576,372 and $558,685, respectively)

      582,029      561,366

Federal Home Loan Bank stock at cost

      16,441      11,607

Loans held for sale

      5,944      4,482

Loans, net of deferred loan fees of ($3,768) and ($3,931), respectively

      2,300,465      2,282,728

Less: allowance for loan and lease losses

      27,914      26,599
                 

Loans, net

      2,272,551      2,256,129

Interest receivable

      14,200      14,622

Premises and equipment, net

      56,291      56,122

Other real estate owned

      —        181

Goodwill

      95,981      96,011

Core deposit intangible, net

      6,754      7,050

Other assets

      72,780      77,168
                 

Total Assets

    $ 3,246,586    $ 3,178,713
                 

Liabilities and Shareholders’ Equity

      

Deposits:

      

Noninterest-bearing

    $ 508,955    $ 468,237

Interest-bearing

      2,017,559      2,029,824
                 

Total deposits

      2,526,514      2,498,061

Short-term borrowings:

      

Federal Home Loan Bank advances

      256,400      257,670

Securities sold under agreements to repurchase

      25,000      —  

Other borrowings

      5,321      5,061
                 

Total short-term borrowings

      286,721      262,731

Long-term subordinated debt

      25,540      25,519

Other liabilities

      56,144      50,671
                 

Total liabilities

      2,894,919      2,836,982

Shareholders’ equity:

      

Preferred stock (no par value)

          

Authorized, 2 million shares; none outstanding

          —        —  
    March 31,
2008		   December 31,
2007		          

Common stock (no par value)

          

Authorized shares

   63,034   63,034      

Issued and outstanding

   18,084   17,953      228,156      226,550

Retained earnings

          115,932      110,169

Accumulated other comprehensive income

          7,579      5,012
                 

Total shareholders’ equity

          351,667      341,731

Total Liabilities and Shareholders’ Equity

        $ 3,246,586    $ 3,178,713