Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - COLUMBIA BANKING SYSTEM, INC. | colb8-k6302012.htm |
| EX-99.2 - DIVIDENDS PRESS RELEASE - COLUMBIA BANKING SYSTEM, INC. | a992colb6302012prdividends.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
July 26, 2012
Contacts: Melanie J. Dressel, President and Chief Executive Officer
(253) 305-1911
Clint Stein, Senior Vice President
and Acting Chief Financial Officer
(253) 593-8304
Columbia Banking System Announces Solid Second Quarter 2012 Earnings
Highlights
• |
• | Net income increased 38%, to $11.9 million compared to net income of $8.6 million for the 2nd quarter 2011 |
• | Net income per diluted common share increased to $0.30, as compared to $0.22 per common share for the 2nd quarter 2011 |
• | Noncovered loans increased 3% during the current quarter |
• | Business loans increased 8% from year-end 2011 |
• | Credit metrics continue to improve; noncovered nonperforming assets decreased for the sixth consecutive quarter, falling 21% from year-end 2011 |
• | Strong core deposits at 93% of total deposits |
• | Named one of Puget Sound Business Journal's “Washington's Best Workplaces” for the sixth consecutive year |
TACOMA, Washington, July 26, 2012 -- Columbia Banking System, Inc. (NASDAQ: COLB) (“Columbia”) today announced net income of $11.9 million for the quarter ended June 30, 2012, an increase of 38% compared to net income of $8.6 million for the same quarter of 2011. Earnings per diluted common share rose 36% to $0.30 for the second quarter, compared with earnings of $0.22 per diluted common share a year earlier.
1
Melanie Dressel, President and Chief Executive Officer commented, “Our solid second quarter performance was achieved through our continued external focus on attracting and enhancing new and current customer relationships throughout our Pacific Northwest footprint. We are pleased with our loan growth despite the unsettled economic environment and intensified competitive challenges. Our commercial business loans have grown 8% and our total noncovered loan portfolio has grown 4% since year-end 2011.”
Significant Influences on the Quarter Ended June 30, 2012
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 | Six Months Ended | |||||||||||||||
June 30, 2012 | June 30, 2011 | June 30, 2012 | June 30, 2011 | |||||||||||||
(in thousands) | ||||||||||||||||
Incremental accretion income on acquired impaired loans | $ | 13,875 | $ | 8,883 | $ | 33,196 | $ | 21,254 | ||||||||
Incremental accretion income on other acquired loans | 1,137 | — | 4,238 | — | ||||||||||||
(Provision) recapture for losses on covered loans | (11,688 | ) | (2,301 | ) | (27,373 | ) | (1,879 | ) | ||||||||
Change in FDIC loss-sharing asset | (168 | ) | (6,419 | ) | (1,836 | ) | (21,193 | ) | ||||||||
Claw back liability (expense) recapture | 208 | (448 | ) | 234 | (2,148 | ) | ||||||||||
Pre-tax earnings impact | $ | 3,364 | $ | (285 | ) | $ | 8,459 | $ | (3,966 | ) | ||||||
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. As of June 30, 2012, the remaining accretable yield on acquired impaired loans was $214.1 million and the remaining loan discount on other acquired loans was $7.0 million, down from $239.7 million and $8.2 million, respectively at March 31, 2012.
The $11.7 million in provision for losses on covered loans in the current period is offset by an 80%, or $9.4 million, favorable adjustment to the change in the FDIC loss-sharing asset resulting in a net pre-tax earnings impact of $2.3 million. The provision for losses on covered loans was due to incremental loan losses incurred in the current period which were in excess of those expected from the re-measurement of cash flows during the first quarter of 2012. These incremental loan losses reduced expected future cash flows and, when discounted at current yields, resulted in impairment.
2
The $168 thousand change in the FDIC loss sharing asset in the current quarter affected noninterest income and consists of $9.9 million of scheduled amortization expense, the $9.4 million favorable adjustment described above and approximately $300 thousand of expense related to covered other real estate owned.
Net Interest Margin
Columbia's net interest margin increased to 5.88% in the second quarter of 2012, up from 5.49% for the same period last year and down from 6.67% for the first quarter of 2012. The Company'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 additional accretion income related to the acquired loans, which peaked during the last six months of 2011.
The Company's net interest margin, excluding incremental accretion income, decreased to 4.44% in the second quarter of 2012, down from 4.53% for the same period last year and down from 4.49% for the first quarter of 2012. The net interest margin, excluding incremental accretion income, was negatively impacted during the second quarter of 2012 by the overall decreasing trend in rates, impacting both the Company's loan and investment portfolios. Average noncovered loan yields have decreased due to a combination of repricing of existing loans and new originations at lower rates. The average yield on investments declined as portfolio cash flows were reinvested at lower prevailing rates.
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 | Six Months Ended | |||||||||||||||
June 30, 2012 | June 30, 2011 | June 30, 2012 | June 30, 2011 | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Interest income as recorded | $ | 24,486 | $ | 16,782 | $ | 57,389 | $ | 38,084 | ||||||||
Less: Interest income at stated note rate | 9,474 | 7,899 | 19,955 | 16,830 | ||||||||||||
Incremental accretion income | $ | 15,012 | $ | 8,883 | $ | 37,434 | $ | 21,254 | ||||||||
Incremental accretion income due to: | ||||||||||||||||
Acquired impaired loans | $ | 13,875 | $ | 8,883 | $ | 33,196 | $ | 21,254 | ||||||||
Other acquired loans | 1,137 | — | 4,238 | — | ||||||||||||
Incremental accretion income | $ | 15,012 | $ | 8,883 | $ | 37,434 | $ | 21,254 | ||||||||
Reported net interest margin | 5.88 | % | 5.49 | % | 6.27 | % | 5.64 | % | ||||||||
Net interest margin excluding additional accretion income | 4.44 | % | 4.53 | % | 4.46 | % | 4.48 | % | ||||||||
3
Balance Sheet
At June 30, 2012, Columbia's total assets were $4.79 billion, a slight decrease from $4.82 billion at March 31, 2012, and virtually unchanged from December 31, 2011. Noncovered loans were $2.44 billion at June 30, 2012, up 3% from $2.37 billion at March 31, 2012 and up 4% from $2.35 billion at December 31, 2011. Net noncovered loan growth for the second quarter 2012 was approximately $65 million from March 31, 2012 and $89 million from year-end 2011. Securities were $1.02 billion at June 30, 2012, relatively unchanged from March 31, 2012 and down 3% from $1.05 billion at December 31, 2011.
Total deposits at June 30, 2012 remained stable at $3.83 billion compared to $3.87 billion at March 31, 2012, and increased less than 1% from $3.82 billion at December 31, 2011. Core deposits (defined as demand, savings, money market accounts and certificates of deposit under $100,000) comprised 93% of total deposits, and were $3.57 billion at June 30, 2012, relatively unchanged from $3.59 billion at March 31, 2012, and an increase of 2% from $3.51 billion at December 31, 2011.
Total shareholder equity was $758.7 million at June 30, 2012, compared to $752.7 and $759.3 at March 30, 2012 and December 31, 2011, respectively. In accordance with the Company's recent capital and dividend strategies, total shareholders' equity has remained relatively unchanged over the past three quarters. Melanie Dressel commented, “Our high capital ratios put us in a good position to take advantage of strategic opportunities that may arise."
Asset Quality
At June 30, 2012, nonperforming noncovered assets were $67.1 million, decreases of 15% from $79.1 million at March 31, 2012, and 21% from $85.4 million at December 31, 2011. The decrease in nonperforming loans for the quarter was driven by payments of $7.2 million, charge-offs of $4.6 million and the return of $1.4 million of nonperforming loans to accrual status. In addition, noncovered other real estate owned (OREO) and other personal property owned (OPPO) were reduced by $5.5 million, as a result of $3.3 million in sales and $2.2 million in write-downs. These reductions were partially offset by new additions to nonperforming assets of $6.7 million, resulting in a net decrease in nonperforming, noncovered assets of $12.0 million.
4
The following table sets forth, at the dates indicated, information with respect to noncovered nonaccrual loans and total noncovered nonperforming assets.
June 30, 2012 | March 31, 2012 | December 31, 2011 | ||||||||||
(dollars in thousands) | ||||||||||||
Nonaccrual noncovered loans: | ||||||||||||
Commercial business | $ | 13,052 | $ | 14,791 | $ | 10,243 | ||||||
Real estate: | ||||||||||||
One-to-four family residential | 2,244 | 2,624 | 2,696 | |||||||||
Commercial and multifamily residential | 23,302 | 24,872 | 19,485 | |||||||||
Total real estate | 25,546 | 27,496 | 22,181 | |||||||||
Real estate construction: | ||||||||||||
One-to-four family residential | 5,223 | 8,793 | 10,785 | |||||||||
Commercial and multifamily residential | 3,754 | 5,023 | 7,067 | |||||||||
Total real estate construction | 8,977 | 13,816 | 17,852 | |||||||||
Consumer | 1,890 | 1,449 | 3,207 | |||||||||
Total nonaccrual loans | 49,465 | 57,552 | 53,483 | |||||||||
Noncovered other real estate owned and other personal property owned | 17,608 | 21,571 | 31,905 | |||||||||
Total nonperforming noncovered assets | $ | 67,073 | $ | 79,123 | $ | 85,388 | ||||||
For the quarter ended June 30, 2012, net loan charge-offs were $3.8 million, compared to $3.4 million for the same period a year ago, and $5.3 million last quarter. Net charge-offs were primarily centered in commercial business and commercial real estate loans.
5
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 June 30, | Six Months Ended June 30, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
(in thousands) | ||||||||||||||||
Beginning balance | $ | 52,283 | $ | 55,315 | $ | 53,041 | $ | 60,993 | ||||||||
Charge-offs: | ||||||||||||||||
Commercial business | (2,044 | ) | (834 | ) | (4,403 | ) | (4,205 | ) | ||||||||
One-to-four family residential real estate | (334 | ) | (216 | ) | (449 | ) | (664 | ) | ||||||||
Commercial and multifamily residential real estate | (1,839 | ) | (1,554 | ) | (4,516 | ) | (1,919 | ) | ||||||||
One-to-four family residential real estate construction | (897 | ) | (805 | ) | (1,102 | ) | (2,232 | ) | ||||||||
Commercial and multifamily residential real estate construction | (93 | ) | (1,078 | ) | (93 | ) | (1,565 | ) | ||||||||
Consumer | (374 | ) | (271 | ) | (1,467 | ) | (1,196 | ) | ||||||||
Total charge-offs | (5,581 | ) | (4,758 | ) | (12,030 | ) | (11,781 | ) | ||||||||
Recoveries: | ||||||||||||||||
Commercial business | 378 | 592 | 1,036 | 697 | ||||||||||||
One-to-four family residential real estate | 2 | — | 45 | — | ||||||||||||
Commercial and multifamily residential real estate | 822 | 13 | 892 | 86 | ||||||||||||
One-to-four family residential real estate construction | 455 | 700 | 502 | 1,804 | ||||||||||||
Commercial and multifamily residential real estate construction | 1 | — | 1 | — | ||||||||||||
Consumer | 86 | 45 | 459 | 108 | ||||||||||||
Total recoveries | 1,744 | 1,350 | 2,935 | 2,695 | ||||||||||||
Net charge-offs | (3,837 | ) | (3,408 | ) | (9,095 | ) | (9,086 | ) | ||||||||
Provision charged to expense | 3,750 | 2,150 | 8,250 | 2,150 | ||||||||||||
Ending balance | $ | 52,196 | $ | 54,057 | $ | 52,196 | $ | 54,057 | ||||||||
For the second quarter of 2012, the company made a provision of $3.8 million for noncovered loan losses. For the comparable quarter last year the company made a provision of $2.2 million. The provision for noncovered loan losses were primarily driven by net charge offs experienced in the quarter and to a lesser extent by the $65 million in noncovered loan growth experienced during the quarter. The growth in noncovered loans was centered in commercial business loans and term commercial real estate loans.
The allowance for noncovered loan losses to period end loans was 2.14% at June 30, 2012 compared to 2.20% at March 31, 2012 and 2.26% at December 31, 2011.
6
Andy McDonald, Executive Vice President and Chief Credit Officer commented, “We are encouraged with our improving credit metrics, resulting in a decrease in our nonperforming assets for the past six consecutive quarters. However, with the ongoing lackluster national and international economies, we will continue to maintain a prudent level in our allowance for loan and lease losses.”
Second Quarter 2012 Operating Results
Quarter ended June 30, 2012
Net Interest Income
Net interest income for the second quarter of 2012 was $59.7 million, an increase of 21% from $49.4 million for the same quarter in 2011, primarily due to organic loan growth and the impact of our 2011 FDIC-assisted transactions.
Compared to the first quarter of 2012, net interest income decreased 11% from $67.1 million primarily due to the moderation of accretion income on acquired loans. During the second quarter of 2012, the Company recorded $15.0 million in accretion income on acquired loans compared to $22.4 million for the first quarter of 2012.
Noninterest Income (Loss)
Total noninterest income was $11.8 million for the second quarter of 2012, compared to $3.5 million a year earlier. The increase from the prior year was primarily due to the change in the FDIC loss-sharing asset, which accounted for $6.3 million of the increase. For the prior year period, the change in the FDIC loss-sharing asset was a $6.4 million reduction of noninterest income. For the second quarter of 2012, the change in the FDIC loss-sharing asset was a reduction of noninterest income of only $168 thousand due to the increase in income related to the impairment on the covered loans. Also contributing to the increase in noninterest income for the second quarter compared to the prior year was an increase in service charges and other fee income of $969 thousand. Service charges and other fee income increased due to the implementation of new fee schedules.
7
Compared to the first quarter of 2012, noninterest income increased 24%, from $9.6 million primarily due to the change in the FDIC loss-sharing asset, which accounted for $1.5 million of the increase. For the first quarter of 2012, the change in the FDIC loss-sharing asset was a reduction of noninterest income of $1.7 million, compared to $168 thousand for the second quarter of 2012.
The following table reflects the components of the change in the FDIC loss-sharing asset for the three month periods indicated.
Three Months Ended | ||||||||||||
June 30, | March 31, | |||||||||||
2012 | 2011 | 2012 | ||||||||||
(in thousands) | ||||||||||||
Adjustments reflected in income | ||||||||||||
Amortization, net | (9,851 | ) | (8,059 | ) | (13,873 | ) | ||||||
Impairment | 9,350 | 1,841 | 12,548 | |||||||||
Sale of other real estate | (1,498 | ) | (1,149 | ) | (2,067 | ) | ||||||
Write-downs of other real estate | 1,732 | 443 | 1,629 | |||||||||
Other | 99 | 505 | 95 | |||||||||
Change in FDIC loss-sharing asset | $ | (168 | ) | $ | (6,419 | ) | $ | (1,668 | ) | |||
Noninterest Expense
Total noninterest expense for the second quarter of 2012 was $39.8 million, an increase of 7% from $37.2 million for the same quarter in 2011. The increase was attributable to the additional operating expenses of the three FDIC-assisted bank acquisitions completed since May 2011. The most significant increases were in compensation and employee benefits, occupancy, and data processing. Compensation and employee benefits increased $1.5 million compared to the same period in 2011, primarily due to an increase in the number of employees related to our acquisitions. Occupancy expense increased $703 thousand mainly as a result of the addition of 17 acquired branch locations. Data processing increased $638 thousand due to the additional data processing costs associated with the recent FDIC-assisted bank acquisitions. These increases were partially offset by a $656 thousand reduction in FDIC clawback liability expense and a $591 thousand decrease in the cost of operation of other real estate owned.
Compared to the first quarter of 2012, noninterest expense declined $4.5 million, or 10%. The decline was attributable to the decrease of $2.5 million in other noninterest expense, which was primarily due to lower OPPO expenses during the second quarter of 2012. Also contributing to the decrease was a reduction in the net cost of operation of other real estate owned of $1.3 million and a decrease of $1.0 million in compensation and benefits.
8
Conference Call
Columbia's management will discuss the second quarter 2012 results on a conference call scheduled for Thursday, July 26, 2012 at 1:00 p.m. PDT. Interested parties may listen to this discussion by calling 1-866-378-3802; Conference ID code #92629197.
A conference call replay will be available from approximately 4:00 p.m. PDT on July 26, 2012 through midnight PDT on August 3, 2012. The conference call replay can be accessed by dialing 1-855-859-2056 and entering Conference ID code #92629197.
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 102 banking offices, including 77 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.
9
# # #
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) costs or difficulties related to the integration of acquisitions may be greater than expected; (5) competitive pressure among financial institutions may increase significantly; and (6) 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.
10
FINANCIAL STATISTICS | |||||||||||||||||||||
Columbia Banking System, Inc. | Three Months Ended | Six Months Ended | |||||||||||||||||||
Unaudited | June 30, | June 30, | |||||||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||||||||
Earnings | (in thousands except per share amounts) | ||||||||||||||||||||
Net interest income | $ | 59,701 | $ | 49,375 | $ | 126,764 | $ | 99,824 | |||||||||||||
Provision for loan and lease losses | $ | 3,750 | $ | 2,150 | $ | 8,250 | $ | 2,150 | |||||||||||||
Provision for losses on covered loans, net (5) | $ | 11,688 | $ | 2,301 | $ | 27,373 | $ | 1,879 | |||||||||||||
Noninterest income (loss) | $ | 11,828 | $ | 3,542 | $ | 21,402 | $ | (1,877 | ) | ||||||||||||
Noninterest expense | $ | 39,825 | $ | 37,164 | $ | 84,177 | $ | 74,510 | |||||||||||||
Net income | $ | 11,899 | $ | 8,632 | $ | 20,801 | $ | 14,411 | |||||||||||||
Per Common Share | |||||||||||||||||||||
Earnings (basic) | $ | 0.30 | $ | 0.22 | $ | 0.52 | $ | 0.37 | |||||||||||||
Earnings (diluted) | $ | 0.30 | $ | 0.22 | $ | 0.52 | $ | 0.36 | |||||||||||||
Book value | $ | 19.13 | $ | 18.43 | $ | 19.13 | $ | 17.97 | |||||||||||||
Averages | |||||||||||||||||||||
Total assets | $ | 4,788,723 | $ | 4,324,390 | $ | 4,782,454 | $ | 4,296,494 | |||||||||||||
Interest-earning assets | $ | 4,194,281 | $ | 3,719,558 | $ | 4,167,048 | $ | 3,676,351 | |||||||||||||
Loans, including covered loans | $ | 2,895,436 | $ | 2,439,439 | $ | 2,877,980 | $ | 2,413,899 | |||||||||||||
Securities | $ | 1,029,337 | $ | 988,839 | $ | 1,027,385 | $ | 878,712 | |||||||||||||
Deposits | $ | 3,823,985 | $ | 3,382,486 | $ | 3,814,655 | $ | 3,344,538 | |||||||||||||
Core deposits | $ | 3,555,279 | $ | 3,073,068 | $ | 3,533,885 | $ | 3,031,677 | |||||||||||||
Interest-bearing deposits | $ | 2,682,092 | $ | 2,479,485 | $ | 2,677,502 | $ | 2,454,790 | |||||||||||||
Interest-bearing liabilities | $ | 2,820,857 | $ | 2,647,990 | $ | 2,818,359 | $ | 2,621,987 | |||||||||||||
Noninterest-bearing deposits | $ | 1,141,893 | $ | 903,001 | $ | 1,137,153 | $ | 889,748 | |||||||||||||
Shareholders' equity | $ | 758,391 | $ | 719,165 | $ | 760,038 | $ | 714,748 | |||||||||||||
Financial Ratios | |||||||||||||||||||||
Return on average assets | 1.00 | % | 0.80 | % | 0.87 | % | 0.68 | % | |||||||||||||
Return on average common equity | 6.31 | % | 4.81 | % | 5.50 | % | 4.07 | % | |||||||||||||
Average equity to average assets | 15.84 | % | 16.63 | % | 15.89 | % | 16.64 | % | |||||||||||||
Net interest margin | 5.88 | % | 5.49 | % | 6.27 | % | 5.64 | % | |||||||||||||
Efficiency ratio (tax equivalent)(1) | 68.54 | % | 69.49 | % | 70.00 | % | 71.35 | % | |||||||||||||
June 30, | December 31, | ||||||||||||||||||||
Period end | 2012 | 2011 | 2011 | ||||||||||||||||||
Total assets | $ | 4,789,413 | $ | 4,429,143 | $ | 4,785,945 | |||||||||||||||
Covered assets, net | $ | 482,073 | $ | 631,549 | $ | 560,055 | |||||||||||||||
Loans, excluding covered loans, net | $ | 2,436,961 | $ | 1,987,474 | $ | 2,348,371 | |||||||||||||||
Allowance for noncovered loan and lease losses | $ | 52,196 | $ | 54,057 | $ | 53,041 | |||||||||||||||
Securities | $ | 1,019,978 | $ | 1,008,559 | $ | 1,050,325 | |||||||||||||||
Deposits | $ | 3,830,817 | $ | 3,475,167 | $ | 3,815,529 | |||||||||||||||
Core deposits | $ | 3,568,307 | $ | 3,142,975 | $ | 3,510,435 | |||||||||||||||
Shareholders' equity | $ | 758,712 | $ | 727,680 | $ | 759,338 | |||||||||||||||
Nonperforming, noncovered assets | |||||||||||||||||||||
Nonaccrual loans | $ | 49,465 | $ | 59,404 | $ | 53,483 | |||||||||||||||
Other real estate owned ("OREO") and other personal property owned ("OPPO") | 17,608 | 37,116 | 31,905 | ||||||||||||||||||
Total nonperforming, noncovered assets | $ | 67,073 | $ | 96,520 | $ | 85,388 | |||||||||||||||
Nonperforming assets to period-end noncovered loans + OREO and OPPO | 2.73 | % | 4.77 | % | 3.59 | % | |||||||||||||||
Nonperforming loans to period-end noncovered loans | 2.03 | % | 2.99 | % | 2.28 | % | |||||||||||||||
Nonperforming assets to period-end noncovered assets | 1.56 | % | 2.54 | % | 2.02 | % | |||||||||||||||
Allowance for loan and lease losses to period-end noncovered loans | 2.14 | % | 2.72 | % | 2.26 | % | |||||||||||||||
Allowance for loan and lease losses to nonperforming noncovered loans | 105.52 | % | 91.00 | % | 99.17 | % | |||||||||||||||
Net noncovered loan charge-offs | $ | 9,094 | (2) | $ | 9,086 | (3) | $ | 15,352 | (4) | ||||||||||||
(1) Noninterest expense, excluding net cost of operation of other real estate and FDIC clawback liability 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, impairment charge on investment securities, gain on bank acquisition, incremental accretion income on the acquired loan portfolio and the change in FDIC indemnification asset. | |||||||||||||||||||||
(2) For the six months ended June 30, 2012. | |||||||||||||||||||||
(3) For the six months ended June 30, 2011. | |||||||||||||||||||||
(4) For the twelve months ended December 31, 2011. | |||||||||||||||||||||
(5) Provision for losses on covered loans was partially offset by $9.4 million and $1.8 million in income recorded to Change in FDIC loss-sharing asset in the Consolidated Statements of Income for the three months ended June 30, 2012 and 2011, respectively. | |||||||||||||||||||||
11
FINANCIAL STATISTICS | ||||||||||||||
Columbia Banking System, Inc. | ||||||||||||||
Unaudited | June 30, | December 31, | ||||||||||||
2012 | 2011 | |||||||||||||
Loan Portfolio Composition | (dollars in thousands) | |||||||||||||
Noncovered loans: | ||||||||||||||
Commercial business | $ | 1,111,440 | 45.6 | % | $ | 1,031,721 | 43.9 | % | ||||||
Real estate: | ||||||||||||||
One-to-four family residential | 55,883 | 2.3 | % | 64,491 | 2.8 | % | ||||||||
Commercial and multifamily residential | 1,017,736 | 41.8 | % | 998,165 | 42.5 | % | ||||||||
Total real estate | 1,073,619 | 44.1 | % | 1,062,656 | 45.3 | % | ||||||||
Real estate construction: | ||||||||||||||
One-to-four family residential | 47,417 | 1.9 | % | 50,208 | 2.1 | % | ||||||||
Commercial and multifamily residential | 48,765 | 2.0 | % | 36,768 | 1.6 | % | ||||||||
Total real estate construction | 96,182 | 3.9 | % | 86,976 | 3.7 | % | ||||||||
Consumer | 167,387 | 6.9 | % | 183,235 | 7.8 | % | ||||||||
Subtotal loans | 2,448,628 | 100.5 | % | 2,364,588 | 100.7 | % | ||||||||
Less: Net unearned income | (11,667 | ) | (0.5 | )% | (16,217 | ) | (0.7 | )% | ||||||
Total noncovered loans, net of unearned income | 2,436,961 | 100.0 | % | 2,348,371 | 100.0 | % | ||||||||
Less: Allowance for loan and lease losses | (52,196 | ) | (53,041 | ) | ||||||||||
Noncovered loans, net | 2,384,765 | 2,295,330 | ||||||||||||
Covered loans, net of allowance for loan losses of ($31,784) and ($4,944), respectively | 462,994 | 531,929 | ||||||||||||
Total loans, net | $ | 2,847,759 | $ | 2,827,259 | ||||||||||
Loans held for sale | $ | 2,088 | $ | 2,148 | ||||||||||
June 30, | December 31, | |||||||||||||
2012 | 2011 | |||||||||||||
Deposit Composition | (dollars in thousands) | |||||||||||||
Core deposits: | ||||||||||||||
Demand and other non-interest bearing | $ | 1,159,462 | 30.3 | % | $ | 1,156,610 | 30.3 | % | ||||||
Interest bearing demand | 794,430 | 20.7 | % | 735,340 | 19.3 | % | ||||||||
Money market | 1,040,787 | 27.2 | % | 1,031,664 | 27.0 | % | ||||||||
Savings | 296,679 | 7.7 | % | 283,416 | 7.4 | % | ||||||||
Certificates of deposit less than $100,000 | 276,949 | 7.2 | % | 303,405 | 8.0 | % | ||||||||
Total core deposits | 3,568,307 | 93.1 | % | 3,510,435 | 92.0 | % | ||||||||
Certificates of deposit greater than $100,000 | 239,279 | 6.3 | % | 262,731 | 6.9 | % | ||||||||
Certificates of deposit insured by CDARS® | 23,062 | 0.6 | % | 42,080 | 1.1 | % | ||||||||
Subtotal | 3,830,648 | 100.0 | % | 3,815,246 | 100.0 | % | ||||||||
Premium resulting from acquisition date fair value adjustment | 169 | 283 | ||||||||||||
Total deposits | $ | 3,830,817 | $ | 3,815,529 | ||||||||||
12
FINANCIAL STATISTICS | ||||||||||||||||
Columbia Banking System, Inc. | ||||||||||||||||
Unaudited | ||||||||||||||||
June 30, | December 31, | |||||||||||||||
2012 | 2011 | |||||||||||||||
OREO | OPPO | OREO | OPPO | |||||||||||||
OREO and OPPO Composition | (in thousands) | |||||||||||||||
Covered | $ | 19,079 | $ | 45 | $ | 28,126 | $ | 45 | ||||||||
Noncovered | 13,925 | 3,683 | 22,893 | 8,966 | ||||||||||||
Total | $ | 33,004 | $ | 3,728 | $ | 51,019 | $ | 9,011 | ||||||||
Three Months Ended | ||||||||||||||||
June 30, | March 31, | |||||||||||||||
OREO and OPPO Earnings Impact | 2012 | 2011 | 2012 | |||||||||||||
Net cost of operation of noncovered OREO | $ | 1,472 | $ | 2,440 | $ | 2,693 | ||||||||||
Net benefit of operation of covered OREO | (1,849 | ) | (2,226 | ) | (1,783 | ) | ||||||||||
Net cost (benefit) of operation of OREO | $ | (377 | ) | $ | 214 | $ | 910 | |||||||||
Noncovered OPPO expense, net | $ | 187 | $ | — | $ | 2,154 | ||||||||||
Covered OPPO expense (benefit), net | (10 | ) | — | 2 | ||||||||||||
OPPO expense, net (1) | $ | 177 | $ | — | $ | 2,156 | ||||||||||
(1) OPPO expense, net is included in Other noninterest expense in the Consolidated Statements of Income. | ||||||||||||||||
13
QUARTERLY FINANCIAL STATISTICS | ||||||||||||||||||||
Columbia Banking System, Inc. | Three Months Ended | |||||||||||||||||||
Unaudited | June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||||||
2012 | 2012 | 2011 | 2011 | 2011 | ||||||||||||||||
(dollars in thousands except per share) | ||||||||||||||||||||
Earnings | ||||||||||||||||||||
Net interest income | $ | 59,701 | $ | 67,063 | $ | 72,124 | $ | 64,788 | $ | 49,375 | ||||||||||
Provision for loan and lease losses | $ | 3,750 | $ | 4,500 | $ | 4,750 | $ | 500 | $ | 2,150 | ||||||||||
Provision (recapture) for losses on covered loans | $ | 11,688 | $ | 15,685 | $ | (3,960 | ) | $ | 433 | $ | 2,301 | |||||||||
Noninterest income (loss) | $ | 11,828 | $ | 9,574 | $ | (9,602 | ) | $ | 2,196 | $ | 3,542 | |||||||||
Noninterest expense | $ | 39,825 | $ | 44,352 | $ | 41,314 | $ | 39,935 | $ | 37,164 | ||||||||||
Net income | $ | 11,899 | $ | 8,902 | $ | 14,754 | $ | 18,872 | $ | 8,632 | ||||||||||
Per Common Share | ||||||||||||||||||||
Earnings (basic) | $ | 0.30 | $ | 0.22 | $ | 0.37 | $ | 0.48 | $ | 0.22 | ||||||||||
Earnings (diluted) | $ | 0.30 | $ | 0.22 | $ | 0.37 | $ | 0.48 | $ | 0.22 | ||||||||||
Book value | $ | 19.13 | $ | 18.97 | $ | 19.23 | $ | 18.99 | $ | 18.43 | ||||||||||
Averages | ||||||||||||||||||||
Total assets | $ | 4,788,723 | $ | 4,776,186 | $ | 4,755,222 | $ | 4,680,901 | $ | 4,324,390 | ||||||||||
Interest-earning assets | $ | 4,194,281 | $ | 4,137,449 | $ | 4,098,603 | $ | 4,028,029 | $ | 3,719,558 | ||||||||||
Loans, including covered loans | $ | 2,895,436 | $ | 2,860,524 | $ | 2,817,279 | $ | 2,777,681 | $ | 2,439,439 | ||||||||||
Securities | $ | 1,029,337 | $ | 1,023,067 | $ | 957,727 | $ | 998,775 | $ | 988,839 | ||||||||||
Deposits | $ | 3,823,985 | $ | 3,805,324 | $ | 3,791,169 | $ | 3,678,931 | $ | 3,382,486 | ||||||||||
Core deposits | $ | 3,555,279 | $ | 3,512,490 | $ | 3,472,023 | $ | 3,332,234 | $ | 3,073,068 | ||||||||||
Interest-bearing deposits | $ | 2,682,092 | $ | 2,672,911 | $ | 2,664,133 | $ | 2,651,664 | $ | 2,479,485 | ||||||||||
Interest-bearing liabilities | $ | 2,820,857 | $ | 2,815,753 | $ | 2,808,497 | $ | 2,813,396 | $ | 2,647,990 | ||||||||||
Noninterest-bearing deposits | $ | 1,141,893 | $ | 1,132,413 | $ | 1,127,036 | $ | 1,027,268 | $ | 903,001 | ||||||||||
Shareholders' equity | $ | 758,391 | $ | 761,686 | $ | 757,696 | $ | 735,192 | $ | 719,165 | ||||||||||
Financial Ratios | ||||||||||||||||||||
Return on average assets | 1.00 | % | 0.75 | % | 1.23 | % | 1.60 | % | 0.80 | % | ||||||||||
Return on average common equity | 6.31 | % | 4.70 | % | 7.73 | % | 10.18 | % | 4.81 | % | ||||||||||
Average equity to average assets | 15.84 | % | 15.95 | % | 15.93 | % | 15.71 | % | 16.63 | % | ||||||||||
Net interest margin | 5.88 | % | 6.67 | % | 7.14 | % | 6.53 | % | 5.49 | % | ||||||||||
Efficiency ratio (tax equivalent) | 68.54 | % | 71.48 | % | 69.56 | % | 69.17 | % | 69.49 | % | ||||||||||
Period end | ||||||||||||||||||||
Total assets | $ | 4,789,413 | $ | 4,815,432 | $ | 4,785,945 | $ | 4,755,832 | $ | 4,429,143 | ||||||||||
Covered assets, net | $ | 482,073 | $ | 526,043 | $ | 560,055 | $ | 595,640 | $ | 631,549 | ||||||||||
Loans, excluding covered loans, net | $ | 2,436,961 | $ | 2,371,818 | $ | 2,348,371 | $ | 2,257,899 | $ | 1,987,474 | ||||||||||
Allowance for noncovered loan and lease losses | $ | 52,196 | $ | 52,283 | $ | 53,041 | $ | 50,422 | $ | 54,057 | ||||||||||
Securities | $ | 1,019,978 | $ | 1,021,428 | $ | 1,050,325 | $ | 1,018,069 | $ | 1,008,559 | ||||||||||
Deposits | $ | 3,830,817 | $ | 3,865,445 | $ | 3,815,529 | $ | 3,795,499 | $ | 3,475,167 | ||||||||||
Core deposits | $ | 3,568,307 | $ | 3,591,663 | $ | 3,510,435 | $ | 3,464,705 | $ | 3,142,975 | ||||||||||
Shareholders' equity | $ | 758,712 | $ | 752,703 | $ | 759,338 | $ | 749,966 | $ | 727,680 | ||||||||||
Nonperforming, noncovered assets | ||||||||||||||||||||
Nonaccrual loans | $ | 49,465 | $ | 57,552 | $ | 53,483 | $ | 55,183 | $ | 59,404 | ||||||||||
OREO and OPPO | 17,608 | 21,571 | 31,905 | 34,069 | 37,116 | |||||||||||||||
Total nonperforming, noncovered assets | $ | 67,073 | $ | 79,123 | $ | 85,388 | $ | 89,252 | $ | 96,520 | ||||||||||
Nonperforming assets to period-end noncovered loans + OREO and OPPO | 2.73 | % | 3.31 | % | 3.59 | % | 3.89 | % | 4.77 | % | ||||||||||
Nonperforming loans to period-end noncovered loans | 2.03 | % | 2.43 | % | 2.28 | % | 2.44 | % | 2.99 | % | ||||||||||
Nonperforming assets to period-end noncovered assets | 1.56 | % | 1.84 | % | 2.02 | % | 2.15 | % | 2.54 | % | ||||||||||
Allowance for loan and lease losses to period-end noncovered loans | 2.14 | % | 2.20 | % | 2.26 | % | 2.23 | % | 2.72 | % | ||||||||||
Allowance for loan and lease losses to nonperforming noncovered loans | 105.52 | % | 90.84 | % | 99.17 | % | 91.37 | % | 91.00 | % | ||||||||||
Net noncovered loan charge-offs | $ | 3,836 | $ | 5,258 | $ | 2,131 | $ | 4,135 | $ | 3,408 | ||||||||||
14
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
Columbia Banking System, Inc. | Three Months Ended | Six Months Ended | ||||||||||||||
Unaudited | June 30, | June 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
(in thousands except per share) | ||||||||||||||||
Interest Income | ||||||||||||||||
Loans | $ | 54,498 | $ | 44,362 | $ | 116,275 | $ | 91,791 | ||||||||
Taxable securities | 4,951 | 6,247 | 10,196 | 10,664 | ||||||||||||
Tax-exempt securities | 2,495 | 2,516 | 5,020 | 4,983 | ||||||||||||
Federal funds sold and deposits in banks | 170 | 184 | 335 | 482 | ||||||||||||
Total interest income | 62,114 | 53,309 | 131,826 | 107,920 | ||||||||||||
Interest Expense | ||||||||||||||||
Deposits | 1,561 | 2,848 | 3,340 | 5,927 | ||||||||||||
Federal Home Loan Bank advances | 734 | 714 | 1,484 | 1,408 | ||||||||||||
Long-term obligations | — | 253 | — | 504 | ||||||||||||
Other borrowings | 118 | 119 | 238 | 257 | ||||||||||||
Total interest expense | 2,413 | 3,934 | 5,062 | 8,096 | ||||||||||||
Net Interest Income | 59,701 | 49,375 | 126,764 | 99,824 | ||||||||||||
Provision for loan and lease losses | 3,750 | 2,150 | 8,250 | 2,150 | ||||||||||||
Provision for losses on covered loans, net | 11,688 | 2,301 | 27,373 | 1,879 | ||||||||||||
Net interest income after provision | 44,263 | 44,924 | 91,141 | 95,795 | ||||||||||||
Noninterest Income (Loss) | ||||||||||||||||
Service charges and other fees | 7,436 | 6,467 | 14,613 | 12,755 | ||||||||||||
Merchant services fees | 2,095 | 1,808 | 4,113 | 3,441 | ||||||||||||
Gain on sale of investment securities, net | — | — | 62 | — | ||||||||||||
Bank owned life insurance | 719 | 528 | 1,430 | 1,033 | ||||||||||||
Change in FDIC loss-sharing asset | (168 | ) | (6,419 | ) | (1,836 | ) | (21,193 | ) | ||||||||
Other | 1,746 | 1,158 | 3,020 | 2,087 | ||||||||||||
Total noninterest income (loss) | 11,828 | 3,542 | 21,402 | (1,877 | ) | |||||||||||
Noninterest Expense | ||||||||||||||||
Compensation and employee benefits | 20,966 | 19,459 | 42,961 | 38,380 | ||||||||||||
Occupancy | 5,091 | 4,388 | 10,424 | 8,785 | ||||||||||||
Merchant processing | 930 | 905 | 1,803 | 1,788 | ||||||||||||
Advertising and promotion | 1,119 | 1,012 | 2,001 | 1,913 | ||||||||||||
Data processing and communications | 2,551 | 1,913 | 4,764 | 3,837 | ||||||||||||
Legal and professional fees | 1,829 | 1,498 | 3,438 | 2,911 | ||||||||||||
Taxes, licenses and fees | 1,115 | 907 | 2,470 | 1,772 | ||||||||||||
Regulatory premiums | 925 | 1,279 | 1,785 | 2,979 | ||||||||||||
Net cost (benefit) of operation of other real estate | (377 | ) | 214 | 533 | (228 | ) | ||||||||||
Amortization of intangibles | 1,119 | 955 | 2,269 | 1,939 | ||||||||||||
FDIC clawback liability (recovery) | (208 | ) | 448 | (234 | ) | 2,148 | ||||||||||
Other | 4,765 | 4,186 | 11,963 | 8,286 | ||||||||||||
Total noninterest expense | 39,825 | 37,164 | 84,177 | 74,510 | ||||||||||||
Income before income taxes | 16,266 | 11,302 | 28,366 | 19,408 | ||||||||||||
Provision for income taxes | 4,367 | 2,670 | 7,565 | 4,997 | ||||||||||||
Net Income | $ | 11,899 | $ | 8,632 | $ | 20,801 | $ | 14,411 | ||||||||
Earnings per common share | ||||||||||||||||
Basic | $ | 0.30 | $ | 0.22 | $ | 0.52 | $ | 0.37 | ||||||||
Diluted | $ | 0.30 | $ | 0.22 | $ | 0.52 | $ | 0.36 | ||||||||
Dividends paid per common share | $ | 0.22 | $ | 0.05 | $ | 0.59 | $ | 0.08 | ||||||||
Weighted average number of common shares outstanding | 39,260 | 39,107 | 39,228 | 39,073 | ||||||||||||
Weighted average number of diluted common shares outstanding | 39,308 | 39,166 | 39,306 | 39,159 | ||||||||||||
15
CONSOLIDATED BALANCE SHEETS | |||||||||||||
Columbia Banking System, Inc. | |||||||||||||
Unaudited | June 30, | December 31, | |||||||||||
2012 | 2011 | ||||||||||||
(in thousands) | |||||||||||||
ASSETS | |||||||||||||
Cash and due from banks | $ | 98,940 | $ | 91,364 | |||||||||
Interest-earning deposits with banks and federal funds sold | 270,873 | 202,925 | |||||||||||
Total cash and cash equivalents | 369,813 | 294,289 | |||||||||||
Securities available for sale at fair value (amortized cost of $956,636 and $987,560, respectively) | 997,763 | 1,028,110 | |||||||||||
Federal Home Loan Bank stock at cost | 22,215 | 22,215 | |||||||||||
Loans held for sale | 2,088 | 2,148 | |||||||||||
Loans, excluding covered loans, net of unearned income of ($11,666) and ($16,217), respectively | 2,436,961 | 2,348,371 | |||||||||||
Less: allowance for loan and lease losses | 52,196 | 53,041 | |||||||||||
Loans, excluding covered loans, net | 2,384,765 | 2,295,330 | |||||||||||
Covered loans, net of allowance for loan losses of ($31,784) and ($4,944), respectively | 462,994 | 531,929 | |||||||||||
Total loans, net | 2,847,759 | 2,827,259 | |||||||||||
FDIC loss-sharing asset | 140,003 | 175,071 | |||||||||||
Interest receivable | 15,560 | 15,287 | |||||||||||
Premises and equipment, net | 116,400 | 107,899 | |||||||||||
Other real estate owned ($19,079 and $28,126 covered by Federal Deposit Insurance Corporation loss-share, respectively) | 33,004 | 51,019 | |||||||||||
Goodwill | 115,554 | 115,554 | |||||||||||
Core deposit intangible, net | 17,896 | 20,166 | |||||||||||
Other assets | 111,358 | 126,928 | |||||||||||
Total assets | $ | 4,789,413 | $ | 4,785,945 | |||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||
Deposits: | |||||||||||||
Noninterest-bearing | $ | 1,159,462 | $ | 1,156,610 | |||||||||
Interest-bearing | 2,671,355 | 2,658,919 | |||||||||||
Total deposits | 3,830,817 | 3,815,529 | |||||||||||
Federal Home Loan Bank advances | 113,145 | 119,009 | |||||||||||
Securities sold under agreements to repurchase | 25,000 | 25,000 | |||||||||||
Other liabilities | 61,739 | 67,069 | |||||||||||
Total liabilities | 4,030,701 | 4,026,607 | |||||||||||
Commitments and contingent liabilities | |||||||||||||
June 30, | December 31, | ||||||||||||
2012 | 2011 | ||||||||||||
Common stock (no par value) | |||||||||||||
Authorized shares | 63,033 | 63,033 | |||||||||||
Issued and outstanding | 39,655 | 39,506 | 580,358 | 579,136 | |||||||||
Retained earnings | 152,519 | 155,069 | |||||||||||
Accumulated other comprehensive income | 25,835 | 25,133 | |||||||||||
Total shareholders' equity | 758,712 | 759,338 | |||||||||||
Total liabilities and shareholders' equity | $ | 4,789,413 | $ | 4,785,945 | |||||||||
16