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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
[Fee Required]
For the fiscal year ended December 31, 1998 or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
[No Fee Required]
Commission File Number 0-20288
Columbia Banking System, Inc.
(Exact name of registrant as specified in its charter)
Washington 91-1422237
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1102 Broadway Plaza
Tacoma, Washington 98402
(Address of principal executive offices) (Zip code)
Registrant's Telephone Number, Including Area Code: (253) 305-1900
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, No Par Value
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------- -------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (17 C.F.R. 229.405) is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
The aggregate market value of Common Stock held by non-affiliates of registrant
at February 26, 1999 was $172,462,210.
The number of shares of registrant's Common Stock outstanding at February 26,
1999 was 10,070,786
Documents incorporated by reference and parts of Form 10-K
into which incorporated:
Registrant's Annual Report to Shareholders Parts I and II
for the year ended December 31, 1998
Registrant's definitive Proxy Statement Part III
Dated March 26, 1999
CROSS REFERENCE SHEET
Location in Annual Report to Shareholders and Definitive Proxy Statement
of Items required by Form 10-K
Annual Report to Shareholders and
Form 10-K Definitive Proxy Statement
- ------------------------------------------------------ -------------------------------------------------------------
Part and Page
Item No. Caption Caption Number
- ----------- -------------------------------------- ------------------------------------------- -------------
Part I Annual Report to Shareholders
Item 1 Business
Consolidated Average Balance Sheet Consolidated Five-Year Summary of
and Analysis of Net Interest Income Average Balances and Net Interest
and Expense Revenue 48
Management Discussion and Analysis of
Financial Condition and Results of
Operations ("Management Discussion") 13
Investments Note 5, Notes to Consolidated Financial
Statements 35
Management Discussion - Securities 20
Lending Activities Management Discussion - Loan Portfolio 16
Management Discussion - Nonperforming
Assets 17
Note 6, Notes to Consolidated Financial
Statements 36
Summary of Loan Loss Experience Note 7, Allowance for Loan Losses 37
Management Discussion - Provision and
Allowance for Loan Losses 18
Supervision and Regulation Management Discussion - Capital 24
Item 2 Properties Note 8, Notes to Consolidated Financial
Statements 37
Item 3 Legal Proceedings Note 14, Notes to Consolidated Financial
Statements 42
Part II Annual Report to Shareholders
Item 5 Market for the Registrant's Common Management Discussion - Quarterly Common
Stock and Related Stockholder Stock Prices and Dividend
Matters Payments 26
Annual Report to Shareholders and
Form 10-K Definitive Proxy Statement
- ----------------------------------------------------------- ---------------------------------------------------------
Part and Page
Item No. Caption Caption Number
- ----------- -------------------------------------- ------------------------------------------ -------------
Item 6 Selected Financial Data Consolidated Highlights 2
Consolidated Five-Year Statements of
Operations 47
Consolidated Five-Year Summary of
Average Balances and Net Interest
Revenue 48
Item 7 Management's Discussion and Management Discussion 13
Analysis of Financial Condition and
Results of Operations Consolidated Five-Year Summary of
Average Balances and Net Interest
Revenue 48
Item 7a Market Risk Disclosure Management Discussion- 16
Credit Risk Management
Item 8 Financial Statements and Audited Financial Statements 28
Supplementary Data
Note 17, Summary of Quarterly Financial
Information (Unaudited) 46
Part III Definitive Proxy Statement
Item 10 Directors and Executive Officers Election of Directors 4
of the Registrant Section 16(a) Beneficial Ownership
Reporting Compliance 15
Item 11 Executive Compensation Executive Compensation 7
Item 12 Security Ownership of Certain Security Ownership of Management 2
Beneficial Owners and Management
Item 13 Certain Relationships and Related Interest of Management in Certain
Transactions Transactions 16
COLUMBIA BANKING SYSTEM, INC.
FORM 10-K
December 31, 1998
TABLE OF CONTENTS
PART I Page
----------
Item 1. Business
General 1
Strategy 1
Market Area 2
Competition 4
Employees 4
Executive Officers of the Company 4
Effects of Governmental Monetary Policies 6
Consolidated Average Balance Sheet and Analysis of Net Interest Income and Expense 6
Consolidated Analysis of Changes in Interest Income and Expense 7
Investments 7
Lending Activities 10
Summary of Loan Loss Experience 11
Deposits 12
Significant Financial Ratios 12
Short-term Borrowings 12
Supervision and Regulation 12
Item 2. Properties 14
Item 3. Legal Proceedings 14
Item 4. Submission of Matters to a Vote of Security Holders 14
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters 14
Item 6. Selected Financial Data 14
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations 15
Item 7a. Market Risk Disclosure 15
Item 8. Financial Statements and Supplementary Data 15
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 15
PART III
Item 10. Directors and Executive Officers of the Registrant 15
Item 11. Executive Compensation 15
Item 12. Security Ownership of Certain Beneficial Owners and Management 15
Item 13. Certain Relationships and Related Transactions 16
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 16
PART I
Item 1. Business
General
Columbia Banking System, Inc. ("the Company"), a Washington corporation, is a
registered bank holding company whose wholly owned subsidiary, Columbia State
Bank ("Columbia Bank"), conducts a full-service commercial banking business.
Headquartered in Tacoma, Washington, the Company serves small and medium-sized
businesses, professionals and other individuals through 25 banking offices
located in the Tacoma metropolitan area and contiguous parts of the Puget Sound
region of Washington, as well as the Longview and Woodland communities in
southwestern Washington. At December 31, 1998, the Company had total assets of
$1.1 billion.
The Company was reorganized and additional management was added in 1993 in order
to take advantage of commercial banking business opportunities resulting from
increased consolidation of banks in the Company's principal market area,
primarily through acquisitions by out-of-state holding companies, and the
resulting dislocation of customers. Since the reorganization, Columbia Bank has
grown from four branch offices at January 1, 1993 to its present 25 branch
offices and has regulatory approval to open three additional branch offices in
its market area. Between January 1, 1993 and December 31, 1998, the Company
increased its consolidated assets to $1.1 billion from $198.2 million, its loans
to $828.6 million from $146.2 million and its deposits to $938.3 million from
$151.9 million. Net interest income per year increased to $42.0 million from
$14.8 million and net income per year increased to $10.2 million from a loss of
$139,000 during the 5 year period ending December 31, 1998. The Company's sole
subsidiary, Columbia Bank, is a Washington state-chartered commercial bank, the
deposits of which are insured by the Federal Deposit Insurance Corporation (the
"FDIC"). Columbia Bank is subject to regulation by the FDIC and the Washington
State Department of Financial Institutions, Division of Banks. Although
Columbia Bank is not a member of the Federal Reserve System, the Board of
Governors of the Federal Reserve System has certain supervisory authority over
the Company, which can also affect Columbia Bank.
Strategy
Management believes the ongoing consolidation among financial institutions in
Washington has created significant gaps in the ability of large banks operating
in Washington to serve certain customers, particularly the Company's target
customer base of small and medium-sized businesses, professionals and other
individuals. The Company's business strategy is to provide its customers with
the financial sophistication and breadth of products of a regional bank while
retaining the appeal and service level of a community bank. Management believes
that as a result of the Company's strong commitment to highly personalized
relationship-oriented customer service, its varied products, its strategic
branch locations and the long-standing community presence of its managers,
lending officers and branch personnel, it is well positioned to attract new
customers and to increase its market share of loans and deposits.
The Company's goal over the next several years is to create a well-capitalized,
customer focused, Pacific Northwest banking institution with a significant
presence in selected markets. The Company intends to effect this growth
strategy through a combination of growth at existing branch offices, new branch
openings (usually following the hiring of an experienced branch manager and/or
lending officer with strong community ties and banking relationships) and
acquisitions. In particular, the Company anticipates continued expansion in
Pierce County, north into King County (the location of Auburn and Bellevue),
south into Thurston County (the location of the state capitol, Olympia) and
northwest into Kitsap County (the location of Bremerton and Port Orchard).
Expansion by acquisition into these and other markets will be considered as
promising opportunities arise. In order to fund its lending activities and to
allow for increased contact with customers, the Company is establishing a branch
system catering primarily to retail depositors, supplemented by business
customer deposits and other borrowings. The Company believes this mix of
funding sources will enable it to expand its lending activities rapidly while
attracting a stable core deposit base. In order to support its strategy
1
of growth, without compromising its personalized banking approach or its
commitment to asset quality, the Company has made significant investments in
experienced branch, lending and administrative personnel and has incurred
significant costs related to its branch expansion. Although the Company's
expense ratios have improved since 1993, management anticipates that the ratios
will remain relatively high by industry standards for the foreseeable future due
to the Company's aggressive growth strategy and emphasis on convenience and
personal service. Management is placing increased emphasis on control of
noninterest expense.
The Company completed its first bank acquisitions during the fourth quarter of
1997, merging Cascade Bancorp, Inc. ("Cascade") and Bank of Fife ("Fife") into
Columbia Bank, thereby adding three branch office locations. Cascade operated
three banking offices in the south King County market area. Two of the branches
are located in Auburn (a market in which Columbia did not have a branch) and the
third in downtown Kent. Columbia consolidated its Kent branch office into the
Cascade branch location. Fife operated one banking office in the town of Fife, a
commercial market in which Columbia did not have a branch.
During 1998, Columbia Bank opened four new branches. The Westgate branch in
north Tacoma opened in January, and the 176th and Meridian branch in eastern
Pierce County opened in February. Both are newly constructed, full-service
facilities. In November, its fifteenth Pierce County location opened in the
Stadium district of Tacoma. Also, in November the Bank opened its fourth Cowlitz
County branch inside the Triangle Mall Thriftway store in Longview. The Company
opened its twenty-sixth branch and first Kitsap County location in mid-February
1999 in Port Orchard. The Company's future plans include new locations in
Pierce, King, and Thurston counties of western Washington. The Company currently
has regulatory approval to open three additional branch offices in its market
area. Management continues to pursue opportunities for expansion via a
combination of internal and external growth by acquisition. New branches
normally do not contribute to net income for many months after opening.
In addition to its ongoing expansion, the Company continuously reviews new
products and services to give its customers more banking options. In addition,
new technology and services are reviewed for business development and cost
saving purposes. During the third quarter, the Company occupied a new state-of-
the-art Operations Center that will allow for substantial future growth.
Market Area
The economy of the Company's principal market area, while primarily dependent
upon aerospace, foreign trade and natural resources, including agriculture and
timber, has become more diversified over the past decade as a result of the
success of software companies such as Microsoft and the establishment of
numerous research and biotechnology firms. The Washington economy and that of
the Puget Sound region generally have experienced strong growth and stability in
recent years. The Pierce County Economic Index, a regional publication providing
economic forecasts and commentary, reports that "Five years after it started in
late 1992, the Pierce County economy continued its growth through the first half
of 1998. The local economy has grown at an average rate of just under 2.5%,
that's 0.5% above the long-term historical growth rate. The outlook is for some
cooling off and slower growth over the six quarters from the second half of 1998
through 1999."
In the third quarter of 1998 the Company was named in the Fortune magazine
annual ranking of America's 100 fastest growing companies as judged by earnings
growth. The Company was the only banking company on the list and was ranked
82nd.
Pierce County, the area in which the Company's expansion is primarily focused,
is located in the South Puget Sound region. With 15 branch offices in Pierce
County at the end of 1998, the Company is positioning itself to increase its
market share in this County of approximately 687,000 residents, the second most
populous county in Washington State.
2
Bellevue, where the Company has two banking offices, is located in an area known
as the "Eastside," a metropolitan area with a population of approximately
230,000 that includes several King County cities located east of Seattle. A
large portion of that economy is linked to the aerospace, construction, computer
software and biotechnology industries. Microsoft is headquartered just north of
Bellevue and several biotech firms are located on the Eastside. In recent years,
the area has experienced relatively rapid growth in population and employment,
and household incomes are among the highest in Washington.
During 1997, the Company further expanded into neighboring south King County, an
area of several residential communities whose employment base is supported by
light industrial, aerospace, and forest products industries. In early 1997, the
Company opened a branch office in Kent and with the merger of Cascade added two
branches in Auburn, a market where Columbia had no branch offices. The newly
opened Kent branch was then consolidated into Cascade's Kent branch location.
The merger brought the Company's branch office total in south King County to
four, including the Federal Way office, which opened during 1995. With its close
proximity to Tacoma, the south King County market area is considered an
important natural extension of the Company's Pierce County market area. The
Weyerhaeuser Corporation maintains its world headquarters in Federal Way, which
is located in south King County adjacent to the King/Pierce County line. The
Auburn and Kent Valley areas to the east of Federal Way are high residential and
commercial growth markets and considered by management to be natural areas of
expansion for the Company.
The Company's market area also includes the Longview and Woodland communities in
southwest Washington. The population of Cowlitz County, in which Longview and
Woodland are located, is approximately 93,000. Cowlitz County's economy has
become more diversified in recent years, but remains materially dependent on the
forest products industry and, as a result, is relatively vulnerable to the
cyclical downturns of that industry as well as environmental disputes.
Olympia, with a population of approximately 39,000, and the neighboring
community of Lacey, with a population of approximately 28,000, are the principal
cities in Thurston County. The county has an approximate population of 200,000.
The area enjoys a stable economic climate due largely to state government
employment and the proximity of the Fort Lewis Army Base and McChord Air Force
Base. According to the Washington State Almanac (an annual publication of
demographic information of Washington State counties and cities), approximately
40% of the average employment in Thurston County was through federal, state, and
local government agencies. The area also has a significant population of retired
military personnel.
Kitsap County, with a population of approximately 229,000 (sixth largest in the
State), is home to the Bremerton Naval shipyard and the Trident Submarine Base.
Directly west of Seattle across Puget Sound, commuters and visitors are able to
travel by ferry in 30 to 60 minutes to jobs and entertainment in Seattle from
residences in Kitsap County. According to the Washington State Almanac,
approximately 39% of the average employment in Kitsap County was government
related.
3
Competition
The Company anticipates that the substantial consolidation among financial
institutions in Washington that has occurred to date will continue due in part
to recent federal legislation concerning interstate banking. Federal law allows
mergers or other combinations, relocations of a bank's main office and branching
across state lines. Several other financial institutions, which have greater
resources than the Company, compete with the Company for banking business in the
Company's market area. Among the advantages of some of these institutions are
their ability to make larger loans, finance extensive advertising campaigns,
access international money markets and allocate their investment assets to
regions of highest yield and demand. The Company currently does not have a
significant market share of the deposit-taking or lending activities in the
areas in which it conducts operations, other than in Pierce County where its
share of bank deposits has grown substantially over the last several years. In
June 1998, the Federal Deposit Insurance Corporation (FDIC) market share report
classified the Company with 13.4% of the deposit market share in Pierce County,
which placed the Company second in the County. Although, the Company has been
able to compete effectively in its market areas to date, there can be no
assurance that it will be able to continue to do so in the future.
Employees
At December 31, 1998, the Company had 439 full-time equivalent employees. The
Company has placed a high priority on staff development. This development
involves selective hiring and extensive training (including customer service
training). New hires are selected on the basis of both technical skills and
customer service capabilities. Emphasis has been placed upon hiring and
retaining additional key officers in areas such as lending, administration and
finance. None of the Company's employees are covered by a collective bargaining
agreement with the Company, and management believes that its relationship with
its employees is satisfactory.
Executive Officers of the Company
The following table sets forth certain information about the executive officers
of the Company.
Has Served as an
Executive Officer of
Name Age Position the Company Since
- ---------------------------------------------------------------------------------------------------------------
W. W. Philip/1/ 72 Director, Chairman, and Chief Executive Officer 1993
J. James Gallagher/2/ 60 Director and Vice Chairman 1998
Melanie J. Dressel/3/ 46 Director, Executive Vice President - the Company; 1997
President and Chief Operating Officer - Columbia
Bank,
H. R. Russell/4/ 44 Executive Vice President - Senior Credit Officer 1996
Gary R. Schminkey/5/ 41 Executive Vice President and Chief Financial 1993
Officer
Evans Q. Whitney/6/ 55 Executive Vice President, Retail Banking 1994
Donald A. Andersen/7/ 53 Senior Vice President, Senior Loan Production 1996
Officer - Columbia Bank
Janet D. Hildebrand/8/ 50 Senior Vice President, Credit Administrator - 1998
Columbia Bank
4
/1/ Mr. Philip has been a director of the Company since July 1993. He became
President and Chief Operating Officer of the Company and President and Chief
Executive Officer of Columbia Bank in August 1993 when the Company's
reorganization was completed and the Company began operations in Tacoma. In
November 1997, Mr. Philip was appointed Chairman, President and Chief Executive
Officer of the Company and Columbia Bank. Until his retirement in December 1992,
Mr. Philip was Chairman of the Board and Chief Executive Officer of Puget Sound
Bancorp ("PSB") since its inception in 1981 and was Chairman of the Board and
Chief Executive Officer of Puget Sound National Bank prior to and after the
inception of PSB, having served with that institution for more than 40 years.
/2/ Mr. Gallagher joined the Company as a Director and Vice Chairman in July
1998. From January 1994 until his appointment at Columbia, Mr. Gallagher was a
principal of Gordon, Thomas, Honeywell, Malanca, Peterson & Daheim, P.L.L.C., a
law firm headquartered in Tacoma, Washington, where he served as outside legal
counsel for the Company. Mr. Gallagher, who is a former bank regulator, has over
30 years of experience as legal counsel to financial institutions throughout the
Northwest.
/3/ Ms. Dressel joined Columbia Bank as Senior Vice President -- Private
Banking in June 1993. In November 1997, she was appointed Executive Vice
President -Retail Banking for Columbia Bank and subsequently was appointed
President and Chief Operating Officer in July 1998. She became a Director of the
Company in 1998. Ms. Dressel served as Senior Vice President and directed the
private banking division of Puget Sound National Bank for nearly five years and
was employed by Bank of California for over 14 years.
/4/ Mr. Russell joined Columbia Bank as Senior Vice President -- Commercial
Loans in October 1993. He was appointed Executive Vice President - Senior Credit
Officer for Columbia Bank in November 1997. Mr. Russell was employed by Puget
Sound National Bank and its successor institution for nearly 14 years, having
served as Vice President -- Commercial Loan Officer from 1991 to 1993.
/5/ Mr. Schminkey joined Columbia Bank as Vice President and Controller in
March 1993. In 1994, he was appointed Senior Vice President -- Chief Financial
Officer of Columbia Bank and the Company and subsequently was appointed
Executive Vice President -- Chief Financial Officer in December 1998. Mr.
Schminkey was employed by PSB, Puget Sound National Bank and its successor
institution for nearly 10 years, having served from 1991 to 1993 as Assistant
Vice President -- Assistant Controller for PSB and during that same period as
Vice President -- Accounting and Finance for Puget Sound National Bank and its
successor institution.
/6/ Mr. Whitney joined Columbia Bank as Senior Vice President -- Human
Resources in March 1993. In July 1998, Mr. Whitney was appointed Executive Vice
President -- Retail Banking for Columbia Bank and the Company. Mr. Whitney was
employed by PSB and Puget Sound National Bank for nearly 27 years, having served
as Senior Vice President -- Human Resources for PSB and Puget Sound National
Bank from 1991 to 1993.
/7/ Mr. Andersen joined Columbia Bank as Senior Vice President -- Commercial
Loans in January 1995. Mr. Andersen was employed by Puget Sound National Bank
and its successor institution for nearly 25 years, having served as Vice
President -- Commercial Loan Officer from 1991 to 1995.
/8/ Ms. Hildebrand joined Columbia Bank as Senior Vice President Credit
Administrator in August 1997. Ms. Hildebrand was employed by First Interstate
Bank of Washington and its successor, Wells Fargo Bank, for 23 years, having
served as Senior Vice President and Regional Manager of Loan Review prior to
leaving that institution in 1997.
All officers are elected by the Board of Directors and serve at the pleasure of
the Board for an unspecified term.
5
Effects of Governmental Monetary Policies
Profitability in banking depends on interest rate differentials. In general, the
difference between the interest earned on a bank's loans, securities and other
interest-earning assets and the interest paid on a bank's deposits and other
interest-bearing liabilities are the major source of a bank's earnings. Thus,
the earnings and growth of the Company are affected not only by general economic
conditions, but also by the monetary and fiscal policies of the United States
and its agencies, particularly the Federal Reserve. The Federal Reserve System
implements national monetary policy for such purposes as controlling inflation
and recession by its open-market operations in United States government
securities, control of the discount rate applicable to borrowings from the
Federal Reserve and the establishment of reserve requirements against certain
deposits. The actions of the Federal Reserve in these areas influence growth of
bank loans, investments and deposits and also affect interest rates charged on
loans and paid on deposits. The nature and impact of future changes in monetary
policies and their impact on the Company are not predictable.
Consolidated Average Balance Sheet and Analysis of Net Interest Income and
Expense
For information concerning consolidated daily average balances, along with
average yields for earning assets and average interest rates for interest-
bearing liabilities, see "Consolidated Five-Year Summary of Average Balances and
Net Interest Revenue" at page 48 of the Annual Report to Shareholders for the
year ended December 31, 1998 ("Annual Report"), which is incorporated herein by
reference. See also "Management Discussion and Analysis of Financial Condition
and Results of Operations" ("Management Discussion") beginning at page 13 of the
Annual Report for additional details on various asset and liability categories.
6
Consolidated Analysis of Changes in Interest Income and Expense
The following table sets forth the amounts of the changes in consolidated net
interest income attributable to changes in volume and changes in interest rates
for the Company. Changes attributable to the combined effect of volume and
interest rates have been allocated proportionately to the changes due to volume
and the changes due to interest rates.
1998 Compared to 1997 1997 Compared to 1996
Increase (Decrease) Due to Increase (Decrease) Due to
------------------------------- --------------------------
(in thousands) Volume Rate Total Volume Rate Total
- ----------------------------------------------------------------------------------------------------------------------
Interest Income
Loans:
Commercial business $ 8,086 $ (219) $ 7,867 $ 5,532 $ 487 $ 6,019
One- to four-family residential (1,188) (1,236) (2,424) (293) 761 468
Five or more family residential and
commercial properties 4,081 200 4,281 6,199 (945) 5,254
Consumer 1,095 (137) 958 916 279 1,195
- ----------------------------------------------------------------------------------------------------------------------
Total loans 12,074 (1,392) 10,682 12,354 582 12,936
Securities 763 (54) 709 1,284 102 1,386
Interest-earning deposits with banks 242 (45) 197 (205) 79 (126)
- ----------------------------------------------------------------------------------------------------------------------
Total interest revenue $13,079 $(1,491) $11,588 $13,433 $ 763 $14,196
======================================================================================================================
Interest Expense
Deposits:
Certificates of deposit $ 3,061 $ (161) $ 2,900 $ 2,414 $(168) $ 2,246
Savings accounts 43 (100) (57) 158 (47) 111
Interest-bearing demand 2,178 (37) 2,141 2,185 (137) 2,048
- ----------------------------------------------------------------------------------------------------------------------
Total interest on deposits 5,282 (298) 4,984 4,757 (352) 4,405
Federal Home Loan Bank advances (59) (4) (63) 80 (47) 33
Other borrowings (42) (42) (84) (99) (50) (149)
- ----------------------------------------------------------------------------------------------------------------------
Total interest expense $ 5,181 $ (344) $ 4,837 $ 4,738 $(449) $ 4,289
======================================================================================================================
Investments
For additional information concerning securities (securities available for sale
and held to maturity), see Note 5 of "Notes to Consolidated Financial
Statements" at page 35 of the Annual Report and "Management Discussion -
Securities" at page 20 of the Annual Report, all of which are incorporated
herein by reference.
Securities to be held for indefinite periods of time and not intended to be held
to maturity or on a long-term basis are classified as available for sale and
carried at market value. Unrealized gains and losses are recorded directly to a
component of shareholders' equity. Securities available for sale include
securities that management intends to use as part of its asset/liability
management strategy and that may be sold in response to changes in interest
rates and/or significant prepayment risk.
Securities held to maturity are those securities which the Company has the
ability and intent to hold to maturity. Events, which may be reasonably
anticipated, are considered when determining the Company's intent to hold
investment securities until maturity. Investment securities are carried at cost,
adjusted for amortization of premiums and accretion of discounts using a method
that approximates the interest method. Gains and losses on the sale of all
securities are determined using the specific identification method.
At December 31, 1998, there were no securities of any issuer, other than the
U.S. Government and its agencies and corporations, that exceeded ten percent of
shareholders' equity.
7
The following table summarizes the amortized cost, gross unrealized gains and
losses and the resulting market value of Company's securities available for sale
for the years ended December 31, 1998, 1997, and 1996.
Securities Available For Sale Gross Gross
Amortized Unrealized Unrealized Market
(in thousands) Cost Gains Losses Value
- ------------------------------------------------------------------------------------------------------------------
December 31, 1998:
U.S. Treasury & government agency $81,549 $474 $82,023
Mortgage-backed 10,672 1 10,673
Other securities 992 38 1,030
- ------------------------------------------------------------------------------------------------------------------
Total $93,213 $513 $93,726
==================================================================================================================
December 31, 1997:
U.S. Treasury & government agency $48,178 $ 78 $48,256
Mortgage-backed 7,046 $ (27) 7,019
Other securities 990 14 1,004
- ------------------------------------------------------------------------------------------------------------------
Total $56,214 $ 92 $ (27) $56,279
==================================================================================================================
December 31, 1996:
U.S. Treasury & government agency $40,562 $104 $ (19) $40,647
Mortgage-backed 10,874 (114) 10,760
FHLMC preferred stock 250 8 258
Other securities 249 (3) 246
State and municipal securities 130 3 133
- ------------------------------------------------------------------------------------------------------------------
Total $52,065 $115 $(136) $52,044
==================================================================================================================
The following table provides the carrying values, maturities and weighted
average yields of the Company's securities available for sale at December 31,
1998.
Securities Available For Sale Maturing
-------------------------------------------------------------------------------
After 5 But
After 1 But Within 10
(dollars in thousands) Within 1 Year Within 5 Years Years After 10 Years Total
- -----------------------------------------------------------------------------------------------------------------------
U.S. Treasury
Balance $ 3,521 $ 3,521
Weighted Average Yield 6.19% 6.19%
U.S. government agency
Balance 6,489 $32,293 $39,405 $ 293 78,502
Weighted Average Yield 5.08% 5.75% 5.98% 7.06% 5.81%
Mortgage-backed (1)
Balance 1,978 8,695 10,673
Weighted Average Yield 6.36% 5.92% 6.00%
Other Securities
Balance 1,030 1,030
Weighted Average Yield 6.75% 6.75%
- -----------------------------------------------------------------------------------------------------------------------
Total
Balance $10,010 $35,301 $39,405 $9,010 $93,726
Weighted Average Yield 5.47% 5.81% 5.98% 5.96% 5.86%
- -----------------------------------------------------------------------------------------------------------------------
(1) The maturities reported for mortgage-backed securities are based on
contractual maturities and principal amortization.
8
The following table summarizes the recorded value, gross unrealized gains and
losses and the resulting market value of securities held to maturity for the
years ended December 31, 1998, 1997, and 1996.
Securities Held To Maturity Gross Gross
Amortized Unrealized Unrealized Market
(in thousands) Cost Gains Losses Value
- ---------------------------------------------------------------------------------------------------------------
December 31, 1998:
U.S. government agency $ 497 $ 7 $ 504
State and municipal securities 5,115 121 5,236
Other Securities 496 18 515
FHLMC preferred stock 250 1 251
- ---------------------------------------------------------------------------------------------------------------
Total $ 6,358 $147 $ 6,505
===============================================================================================================
December 31, 1997:
U.S. Treasury & government agency $ 4,743 $ 8 $ 4,751
State and municipal securities 4,191 54 4,245
Other Securities 495 6 501
FHLMC preferred stock 250 7 257
- ---------------------------------------------------------------------------------------------------------------
Total $ 9,679 $ 75 $ 9,754
===============================================================================================================
December 31, 1996:
U.S. Treasury & government agency $ 8,484 $ 15 $(56) $ 8,443
State and municipal securities 2,482 31 (2) 2,511
Other Securities 655 1 656
- ---------------------------------------------------------------------------------------------------------------
Total $11,621 $ 47 $(58) $11,610
===============================================================================================================
The following table provides the carrying values, maturities and weighted
average yields of the Company's securities held to maturity at December 31,
1998.
Securities Held To Maturity Maturing
-------------------------------------------------------------------
After 1 But After 5 But
Within 1 Within 5 Within 10 After 10
(dollars in thousands) Year Years Years Years Total
- ------------------------------------------------------------------------------------------------------
U.S. government agency
Balance $ 497 $ 497
Weighted Average Yield 7.10% 7.10%
State and municipal securities *
Balance $ 732 2,670 $1,713 5,115
Weighted Average Yield 6.63% 6.46% 6.36% 6.45%
Other securities
Balance 496 496
Weighted Average Yield 6.77% 6.77%
FHLMC stock
Balance 250 250
Weighted Average Yield 6.72% 6.72%
- ------------------------------------------------------------------------------------------------------
Total
Balance $ 982 $3,663 $1,713 $6,358
Weighted Average Yield 6.65% 6.59% 6.36% 6.54%
- ------------------------------------------------------------------------------------------------------
* Yields on fully taxable equivalent basis, based on a marginal tax rate of
34%.
9
Lending Activities
The following table sets forth the composition of the Company's loan portfolio
by type of loan at the dates indicated.
(in thousands) December 31, 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------------
Commercial business $332,638 $270,946 $194,843 $133,885 $ 89,546
Real estate:
One-to four-family residential 61,132 71,095 77,359 77,603 83,582
Five or more family residential and
commercial properties 291,868 206,628 151,179 113,784 80,010
- ------------------------------------------------------------------------------------------------------------------------
Total real estate 353,000 277,723 228,538 325,272 253,138
Real estate construction:
One- to four-family residential 26,444 29,695 31,446 32,819 23,462
Five or more family residential and
commercial properties 23,213 33,806 10,724 8,985 4,307
- ------------------------------------------------------------------------------------------------------------------------
Total real estate construction 49,657 63,501 42,170 41,804 27,769
Consumer 94,572 74,710 58,249 51,788 38,120
- ------------------------------------------------------------------------------------------------------------------------
Subtotal 829,867 686,880 523,800 418,864 319,027
Less deferred loan fees and other (1,228) (991) (649) (807) (953)
- ------------------------------------------------------------------------------------------------------------------------
Total loans $828,639 $685,889 $523,151 $418,057 $318,074
========================================================================================================================
Loans held for sale $ 10,023 $ 4,377 $ 11,341 $ 1,367 $ 1,612
========================================================================================================================
Note: During 1994, as part of its focus on loan quality, management
developed more detailed statistical information on various types of
lending. In this connection, the December 31, 1994 through December 31,
1998 loan balances in the table above reflect changes in classifications
from prior periods. Due to the impracticality of developing similar
information for prior period balances, prior period balances have not been
restated and, as a result, are not comparable with balances at December
31, 1994 through December 31, 1998.
The following table presents at December 31, 1998, (i) the aggregate maturities
of loans in each major reportable category of the Company's loan portfolio and
(ii) the aggregate amounts of variable and fixed rate loans that mature after
one year.
Maturing
-----------------------------------------------------------------
(in thousands) Within 1 Year After 1 But After Five
Within 5 Years Years Total
- ------------------------------------------------------------------------------------------------------
Commercial business $191,824 $128,428 $12,386 $332,638
Real estate construction 44,332 2,707 2,618 49,657
- ------------------------------------------------------------------------------------------------------
Total $236,156 $131,135 $15,004 $382,295
======================================================================================================
Fixed rate loans $ 55,285 $ 6,363 $ 61,648
Variable rate loans 75,850 8,641 84,491
- ------------------------------------------------------------------------------------------------------
Total $131,135 $15,004 $146,139
======================================================================================================
10
The following table sets forth, at the dates indicated, information with respect
to nonaccrual loans, restructured loans, total nonperforming loans (nonaccrual
loans plus restructured loans), real estate owned, total nonperforming assets,
accruing loans past-due 90 days or more and potential problem loans of the
Company.
(in thousands)
December 31, 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------
Nonaccrual $3,603 $1,462 $2,256 $ 449 $ 452
Restructured 1,783 20 25 29 44
- ------------------------------------------------------------------------------------------------------------------
Total nonperforming loans $5,386 $1,482 $2,281 $ 478 496
Real estate owned 901 231 484 3,304 3,227
- ------------------------------------------------------------------------------------------------------------------
Total nonperforming assets $6,287 $1,713 $2,765 $3,782 $3,723
==================================================================================================================
Accruing loans past-due 90 days or more $ 40 $ 111 $ 154 $ 82
==================================================================================================================
Potential problem loans $1,862 $ 669 $ 346 $ 239
==================================================================================================================
For information pertaining to risk elements, see the appropriate sections in
"Management Discussion - Credit Risk Management" beginning at page 16 of the
Annual Report, "Management Discussion - Nonperforming Assets" beginning at page
17 of the Annual Report, "Management Discussion Provision and Allowance for
Loan Losses" beginning at page 18 of the Annual Report, and Note 7 of "Notes to
Consolidated Financial Statements" beginning at page 37 of the Annual Report,
all of which are incorporated herein by reference.
The table below shows the allocation of the Allowance for Loan Losses for the
last five years. The allocation is based on an evaluation of loan problems,
historical ratios of loan losses and other factors which may affect future loan
losses in the categories of loans shown.
(dollars in thousands)
December 31, 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
% of % of % of % of % of
Balance at End Amount Total Amount Total Amount Total Amount Total Amount Total
of Period Loans* Loans* Loans* Loans* Loans*
Applicable to:
- ------------------------------------------------------------------------------------------------------------------------------------
Commercial
business $5,540 40.0% $4,109 39.4% $3,178 37.2% $2,006 32.0% $1,537 28.1%
Real estate and
construction:
One- to four-family
residential 972 10.6 1,041 14.7 1,115 20.8 699 26.3 773 33.6
Five or more family
residential and
commercial properties 2,008 38.0 1,414 35.0 490 30.9 330 29.3 249 26.4
Consumer 482 11.4 334 10.9 499 11.1 386 12.4 295 11.9
Unallocated 1,542 919 321
- ------------------------------------------------------------------------------------------------------------------------------------
Total $9,002 100.0% $8,440 100.0% $5,282 100.0% $4,340 100.0% $3,175 100.0%
====================================================================================================================================
*Represents the total of all outstanding loans in each category as a percent of
total loans outstanding.
11
Deposits
The following table presents the average balances outstanding and weighted
average interest rate for each major category of deposits:
years ended December 31, 1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Average Average Average Average Average Average
(dollars in thousands) Balance Rate Paid Balance Rate Paid Balance Rate Paid
- ------------------------------------------------------------------------------------------------------------------------------------
Interest-bearing demand and
money market accounts $287,007 3.43% $223,514 3.45% $160,020 3.53%
Savings accounts 39,768 2.51 38,301 2.75 32,438 2.91
Certificates of deposit 337,557 5.60 282,899 5.66 240,214 5.73
- ------------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing deposits 664,332 4.48 544,714 4.55 432,672 4.71
Demand and other noninterest-
bearing 149,353 111,492 74,940
- ------------------------------------------------------------------------------------------------------------------------------------
Total deposits $813,685 $656,206 $507,612
====================================================================================================================================
The following table shows the amount and maturity of certificates of deposit
that had balances of more than $100,000:
(in thousands) December 31, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Remaining maturity
Three months or less $ 52,673
Over three through six months 23,827
Over six through twelve months 28,596
Over twelve months 7,681
- ------------------------------------------------------------------------------------------------------------------------------------
Total $112,777
====================================================================================================================================
Significant Financial Ratios
Ratios for the last three years, based on daily average balances, are as
follows:
1998 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Return on assets 1.09% 1.21% 0.78%
Return on equity 12.05 14.41 10.15
Dividend payout ratio
Equity to assets 9.02 8.42 7.67
Short-term Borrowings
At December 31, 1998, 1997 and 1996, there were no short-term (original maturity
of one year or less) borrowings that exceeded 30 percent of shareholders' equity
at the end of the period.
Supervision and Regulation
The Company is a bank holding company within the meaning of the Bank Holding
Company Act of 1956 ("BHC Act") registered with and subject to examination by
the Federal Reserve Board ("FRB"). The Company's Bank subsidiary is a Washington
state chartered bank and is subject to examination, supervision, and regulation
by the Washington State Department of Financial Institutions - Division of Banks
("Division"). The FDIC insures Columbia Bank's deposits and in that capacity
also regulates the Bank.
12
The Company's earnings and activities are affected by legislation, by actions of
the FRB, the Division, the FDIC and other regulators, and by local legislative
and administrative bodies and decisions of courts in Washington state. For
example, these include limitations on the ability of Columbia Bank to pay
dividends to the Company, numerous federal and state consumer protection laws
imposing requirements on the making, enforcement, and collection of consumer
loans, and restrictions by regulators on the sale of mutual funds and other
uninsured investment products to customers.
Legislation may be enacted or regulations imposed to further regulate banking
and financial services or to limit finance charges or other fees or charges
earned in such activities. There can be no assurance whether any such
legislation or regulation will place additional limitations on the Company's
operations or adversely affect its earnings.
Federal law imposes certain restrictions on transactions between the Company and
any nonbank subsidiaries, on the one hand, and Columbia Bank on the other. With
certain exceptions, federal law also imposes limitations on, and requires
collateral for, extensions of credit by insured depository institutions, such as
Columbia Bank, to their non-bank affiliates, such as the Company.
Subject to certain limitations and restrictions, a bank holding company, with
prior approval of the FRB, may acquire an out-of-state bank. Banks in states
that do not prohibit out-of-state mergers may merge with the approval of the
appropriate federal banking agency. A state bank may establish a de novo branch
out of state if such branching is expressly permitted by the other state.
The activities of bank holding companies are generally limited to managing or
controlling banks. Nonbank acquisitions are generally limited to 5% of voting
shares unless the FRB determines that the acquisition is so closely related to
banking as to be a proper incident to banking or managing or controlling banks.
Among other things, applicable federal and state statutes and regulations which
govern a bank's activities relate to minimum capital requirements, required
reserves against deposits, investments, loans, legal lending limits, mergers and
consolidations, borrowings, issuance of securities, payment of dividends,
establishment of branches and other aspects of its operations. The Division and
the FDIC also have authority to prohibit banks under their supervision from
engaging in what they consider to be unsafe and unsound practices.
Under longstanding FRB policy, a bank holding company is expected to act as a
source of financial strength for its subsidiary banks and to commit resources to
support such banks. The Company could be required to commit resources to its
subsidiary banks in circumstances where it might not do so, absent such policy.
The Company and Columbia Bank are subject to risk-based capital and leverage
guidelines issued by federal banking agencies for banks and bank holding
companies. These agencies are required by law to take specific prompt corrective
actions with respect to institutions that do not meet minimum capital standards
and have defined five capital tiers, the highest of which is "well-capitalized.
Columbia Bank is required to file periodic reports with the FDIC and the
Division and is subject to periodic examinations and evaluations by those
regulatory authorities. These examinations must be conducted every 12 months,
except that certain well-capitalized banks may be examined every 18 months. The
FDIC and the Division may each accept the results of an examination by the other
in lieu of conducting an independent examination.
In the liquidation or other resolution of a failed insured depository
institution, deposits in offices and certain claims for administrative expenses
and employee compensation are afforded a priority over other general unsecured
claims, including non-deposit claims, and claims of a parent company such as the
Company. Such priority creditors would include the FDIC, which succeeds to the
position of insured depositors.
The Company is also subject to the information, proxy solicitation, insider
trading restrictions and other requirements of the Securities Exchange Act of
1934.
13
The earnings of the Company are affected by general economic conditions and the
conduct of monetary policy by the U. S. government.
Item 2. Properties
The Company's executive offices and the Main Office of Columbia Bank are located
in approximately 51,000 square feet of leased space in downtown Tacoma. The
lease of the downtown Tacoma office has an initial lease term of seven years.
With an expiration of August 2000, the lease agreement provides for one renewal
option for three years and two additional renewal options for five years each.
The base rent is approximately $50,745 per month for the first four years,
subject to certain increases for landlord operating expenses. Beginning in the
sixth year of the lease and at each five-year renewal date, the base rent may be
adjusted pursuant to a formula which limits the adjustments to an average of 3%
of the base rent per year or 15% of the base rent over the five-year renewal
term. The downtown lease also includes customer and employee parking spaces at
rates at or below current market rates for downtown parking. As of December 31,
1998, Columbia Bank had 15 offices in Pierce County, including the Main Office
(7 leased and 8 owned), three offices in Longview (two owned and one leased),
two offices in Bellevue (1 leased and 1 owned), two offices in Auburn (both
owned), one office in Federal Way (owned), one office in Kent (owned) and one
office in Woodland (owned). Commerce Plaza, one of Columbia Bank's banking
offices in Longview, houses a retail banking office and other tenants.
For additional information pertaining to properties, see Note 8 of "Notes to
Consolidated Financial Statements" at page 37 of the Annual Report, which is
incorporated herein by reference.
Item 3. Legal Proceedings
For information concerning legal proceedings, see Note 14 of "Notes to
Consolidated Financial Statements" at page 42 of the Annual Report, which is
incorporated herein by reference.
Item 4. Submission of Matters to a Vote of Security Holders
None
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters
For information concerning the Company's common stock and related security
holder matters, see "Quarterly Common Stock Prices and Dividend Payments" at
page 26 of the Annual Report, which is incorporated herein by reference.
Item 6. Selected Financial Data
For selected financial data concerning the Company, see "Consolidated
Highlights," "Consolidated Five-Year Statements of Operations" and "Consolidated
Five-Year Summary of Average Balances and Net Interest Revenue" at pages 2, 47
and 48, respectively, of the Annual Report, which are incorporated herein by
reference.
14
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
For management's discussion and analysis, see "Consolidated Analysis of Changes
in Interest Income and Expense" in Part I of this report, "Management Discussion
and Analysis of Financial Condition and Results of Operations" at pages 13
through 26 of the Annual Report and "Consolidated Five-Year Summary of Average
Balances and Net Interest Revenue" at page 48 of the Annual Report, all of which
are incorporated herein by reference.
Item 7a. Market Risk Disclosure
For market risk disclosure, see "Credit Risk Management" at page 16 of the
Annual Report which is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
For consolidated financial statements of the Company, see "Audited Financial
Statements" beginning at page 28 of the Annual Report which is incorporated
herein by reference. Note 17, the "Summary of Quarterly Financial Information
(Unaudited)" on page 46 of the Annual Report is also incorporated herein by
reference.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
Information concerning directors of the registrant is incorporated herein by
reference to the section entitled "Election of Directors" beginning at page 4 of
the Company's definitive Proxy Statement dated March 26, 1999 (the "Proxy
Statement") for the annual meeting of shareholders to be held April 28, 1999.
The required information with respect to the executive officers of the Company
is included under the caption "Executive Officers of the Company" in Part I of
this report. Part I of this report is incorporated herein by reference.
The required information with respect to compliance with Section 16(a) of the
Exchange Act is incorporated herein by reference to the section entitled
"Section 16(a) Beneficial Ownership Reporting Compliance" beginning at page 15
of the Proxy Statement.
Item 11. Executive Compensation
For information concerning executive compensation see "Executive Compensation"
beginning at page 7 of the Proxy Statement, which is incorporated herein by
reference. Neither the Report of the Personnel and Compensation Committee on
Executive Compensation nor the Stock Performance Graph, both of which are
contained in the Proxy Statement, are incorporated by this reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
For information concerning security ownership of certain beneficial owners and
of management see "Security Ownership of Management" beginning at page 2 of the
Proxy Statement, which is incorporated herein by reference.
15
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
List of Financial Statements and Financial Statement Schedules.
(a) (1) Financial Statements:
The following consolidated financial statements of the Company, included
in the Annual Report of the registrant to its shareholders for the year
ended December 31, 1998, are incorporated by reference in Item 8:
Page
----
Consolidated Statements of Operations--Years ended December 31, 1998, 1997 and 1996 28
Consolidated Balance Sheets--December 31, 1998 and 1997 29
Consolidated Statements of Shareholders' Equity--Years ended
December 31, 1998, 1997, and 1996 30
Consolidated Statements of Cash Flows--Years ended December 31, 1998, 1997 and 1996 31
Notes to Consolidated Financial Statements 32
Report of Independent Auditors 27
(2) Exhibits:
See "Index to Exhibits" at page 19 of this Form 10-K.
(b) Reports on Form 8-K:
None
16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on the 26th day of March,
1999.
Columbia Banking System, Inc.
(Registrant)
By /s/ W. W. Philip
------------------
W. W. Philip
Chairman and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities indicated, on the 26th day of March, 1999.
Principal Executive Officer:
/s/ W. W. Philip
------------------
W. W. Philip
Chairman and
Chief Executive Officer
Principal Financial Officer:
/s/ Gary R. Schminkey
---------------------
Gary R. Schminkey
Executive Vice President and
Chief Financial Officer
17
W. W. Philip, pursuant to powers of attorney which are being filed with this
Annual Report on Form 10-K, has signed this report on March 26, 1999, as
attorney-in-fact for the following directors who constitute a majority of the
board of directors.
[Richard S. DeVine] [John Halleran]
[Melanie J. Dressel] [Thomas L. Matson]
[Jack Fabulich] [John Powell]
[Jonathan Fine] [Robert E. Quoidbach]
[John P. Folsom] [Donald Rodman]
[J. James Gallagher] [Sidney Snyder]
[Margel S. Gallagher] [William T. Weyerhaeuser]
[W. Kelso Gillenwater] [James M. Will]
/s/ W. W. Philip
------------------
W. W. Philip
Attorney-in-fact
March 26, 1999
18
INDEX TO EXHIBITS
Exhibit
No.
-------
3 (a) Restated Articles of Incorporation of the Company. (5)
(b) Restated Bylaws of the Company. (3)
10 (a) Lease dated May 7, 1993 between the Company and William B.
Swensen Enterprises for Tacoma Main Office premises of Columbia
Bank. (1)
(b) Stock Option Plan as amended and restated effective
April 23, 1997. (4)
*(c) Employment agreement between the Company and W. W. Philip
effective January 1, 1998, except with respect to sections 4.3
and 4.4 (granting restricted stock awards) which are effective
August 28, 1996 and January 28, 1998, respectively. (7)
*(d) Employment agreement between the Company and J. James Gallagher
effective July 1, 1998, except with respect to section 4.3
(granting restricted stock award) which is effective April 22,
1998.
(e) Data processing servicing agreement dated May 3, 1993 between the
Company and M&I Data Services. (2)
(f) Deferred Compensation Plan for directors and certain key
employees effective April 1, 1995. (7)
11 Statement re computation of per share earnings.
13 The Company's Annual Report to Shareholders for the fiscal year ended
December 31, 1998. (6)
21 Subsidiaries of the Company are:
(a) Columbia State Bank, Tacoma, Washington, a Washington state-
chartered commercial bank.
19
24 Powers of Attorney dated March 9, 10, and 12, 1999.
27 Financial Data Schedule
(1) Incorporated by reference to the Form SB-2 (Registration No. 33-66224)
previously filed by the Company, declared effective on August 16, 1993.
(2) Incorporated by reference to the Annual Report on Form 10-KSB for the
year ended December 31, 1993 previously filed by the Company.
(3) Incorporated by reference to the Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1997 previously filed by the Company.
(4) Incorporated by reference to the definitive Proxy Statement dated March
20, 1997 for the Annual Meeting of Shareholders held April 23, 1997.
(5) Incorporated by reference to the Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 1998 previously filed by the Company.
(6) Portions of the Annual Report to Shareholders have been specifically
incorporated by reference elsewhere in this report.
(7) Incorporated by reference to the Annual Report on Form 10-K for the year
ended December 31, 1997 previously filed by the Company.
* The listed documents are management contracts which contain compensatory
arrangements.
20