Attached files
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| 8-K - 8-K - COLUMBIA BANKING SYSTEM, INC. | colb8-k12312012filing.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
January 24, 2013
Contacts: Melanie J. Dressel, President and Chief Executive Officer
(253) 305-1911
Clint E. Stein, Executive Vice President
and Chief Financial Officer
(253) 593-8304
Columbia Banking System Announces Fourth Quarter and Full Year 2012 Earnings; Increased Quarterly Cash Dividend
Highlights for the quarter include strong loan growth, exceptional core deposit levels and continued improving credit quality
TACOMA, Washington, January 24, 2013 -- Melanie Dressel, President and Chief Executive Officer of Columbia Banking System and Columbia Bank (NASDAQ: COLB (“Columbia”) said today upon the release of Columbia's fourth quarter 2012 earnings, “Our core performance measures continue their positive trend, the result of our ongoing strategic initiatives. These initiatives have resulted in solid loan growth, improved credit quality metrics, as well as increased levels of noninterest income, coupled with reduced expenses."
Ms. Dressel continued, "In general, our core performance measures for the fourth quarter 2012 and the full year 2012 are improved when compared to the results of the same periods in the prior year. Prior period comparisons are distorted by the favorable impact resulting from one of our FDIC-assisted acquisitions, which bolstered earnings during the fourth quarter by $0.15 per share, or $6 million. With loan growth of 8%, our high level of core deposits and the pending merger with West Coast Bancorp, we feel we are well-positioned heading into 2013.”
Columbia's net income was $13.5 million for the quarter ended December 31, 2012 compared to net income of $14.8 million for the same quarter of 2011. Earnings per diluted common share were $0.34 for the fourth quarter, compared with earnings of $0.37 per diluted common share a year earlier. The decline in
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earnings was due to the enhanced benefits realized in the fourth quarter of 2011 from Columbia's FDIC-assisted transactions.
Significant Influences on the Quarter Ended December 31, 2012
Net Interest Margin
Columbia's net interest margin decreased to 5.15% for the fourth quarter of 2012, down from 7.14% for the same period last year and down from 5.52% for the third quarter of 2012. Columbia's net interest margin is impacted significantly by the accounting for acquired loans. The net interest margin for the current quarter reflects a moderating trend in the incremental accretion income related to the acquired loans, which peaked during the last six months of 2011.
Columbia's net interest margin, excluding incremental accretion income, interest reversals on nonaccrual loans and prepayment charge on Federal Home Loan Bank advances, decreased to 4.14% for the fourth quarter of 2012, down from 4.68% for the same period last year and down from 4.40% for the third quarter of 2012. The net interest margin, excluding incremental accretion income, was negatively impacted during the fourth quarter of 2012 by the overall decreasing trend in rates, impacting both the loan and investment portfolios. The average yield on investments declined as portfolio cash flows were reinvested at lower prevailing rates. Also contributing to the lower net interest margin was the additional cash held in overnight funds in anticipation of payment of the cash portion of the West Coast Bancorp merger consideration.
Ms. Dressel commented, “Our operating net interest margin compressed during the current quarter at a similar rate as much of the industry experienced in the previous quarter. During the fourth quarter, we executed on several initiatives to supplement the net interest margin in 2013, the results of which were beginning to be realized in December.”
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The following table shows the impact to interest income and the related impact to the net interest margin resulting from accretion of income on acquired loan portfolios for the periods presented.
Three Months Ended | Year Ended | |||||||||||||||
December 31, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | |||||||||||||
(dollars in thousands) | ||||||||||||||||
Interest income as recorded | $ | 19,719 | $ | 38,722 | $ | 98,583 | $ | 109,581 | ||||||||
Less: Interest income at stated note rate | 7,848 | 12,316 | 37,406 | 42,221 | ||||||||||||
Incremental accretion income | $ | 11,871 | $ | 26,406 | $ | 61,177 | $ | 67,360 | ||||||||
Incremental accretion income due to: | ||||||||||||||||
Acquired impaired loans | $ | 10,850 | $ | 17,222 | $ | 55,305 | $ | 53,079 | ||||||||
Other acquired loans | 1,021 | 9,184 | 5,872 | 14,281 | ||||||||||||
Incremental accretion income | $ | 11,871 | $ | 26,406 | $ | 61,177 | $ | 67,360 | ||||||||
Reported net interest margin | 5.15 | % | 7.14 | % | 5.77 | % | 6.29 | % | ||||||||
Net interest margin excluding incremental accretion income, interest reversals on nonaccrual loans and prepayment charge on FHLB advances | 4.14 | % | 4.68 | % | 4.36 | % | 4.53 | % | ||||||||
Impact of Acquired Loan Accounting
The following table illustrates the significant impact to earnings associated with Columbia's acquired loan portfolios:
Acquired Loan Portfolio Activity | ||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
December 31, 2012 | December 31, 2011 | December 31, 2012 | December 31, 2011 | |||||||||||||
(in thousands) | ||||||||||||||||
Incremental accretion income on acquired impaired loans | $ | 10,850 | $ | 17,222 | $ | 55,305 | $ | 53,079 | ||||||||
Incremental accretion income on other acquired loans | 1,021 | 9,184 | 5,872 | 14,281 | ||||||||||||
(Provision) recapture for losses on covered loans | (2,511 | ) | 3,960 | (25,892 | ) | 1,648 | ||||||||||
Change in FDIC loss-sharing asset | (9,680 | ) | (17,448 | ) | (24,467 | ) | (49,496 | ) | ||||||||
Claw back liability benefit (expense) | 154 | (362 | ) | 54 | (3,656 | ) | ||||||||||
Pre-tax earnings impact | $ | (166 | ) | $ | 12,556 | $ | 10,872 | $ | 15,856 | |||||||
The incremental accretion income in the table above represents the amount of income recorded on acquired loans above the contractual rate stated in the individual loan notes and stems from the discount established at the time these loan portfolios were acquired. At December 31, 2012, the accretable yield on acquired impaired loans was $166.9 million and the net discount on other acquired loans was $2.4 million.
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The accretable yield and net discount represent income to be recorded by Columbia over the remaining life of the acquired loans. Accretable yield is subject to change based upon expected future loan cash flows, which are re-measured by Columbia on a quarterly basis.
The $2.5 million net provision for losses on covered loans in the current period is partially offset by an 80%, or $2.0 million, benefit to the change in the FDIC loss-sharing asset, resulting in a negative net pre-tax earnings impact of $502 thousand. The provision for losses on covered loans was primarily due to decreased expected future cash flows as re-measured during the current quarter when compared to the prior quarter's re-measurement.
The $9.7 million change in the FDIC loss-sharing asset in the current quarter negatively affected noninterest income and consists of $9.5 million of scheduled amortization expense and approximately $2.2 million of expense related to covered other real estate owned partially offset by the $2.0 million favorable adjustment described above.
Balance Sheet
Ms. Dressel commented, "Our focus on developing and enhancing customer relationships resulted in 8% growth in noncovered loans and a 12% increase in our business loans from the end of last year.”
Noncovered loans were $2.53 billion at December 31, 2012, up 2% from $2.48 billion at the prior quarter and up 8% from $2.35 billion at prior year end. Net noncovered loan growth was approximately $49 million from prior quarter and $177 million from prior year end. The growth in noncovered loans for the quarter was centered in commercial and multifamily residential real estate loans and commercial and multifamily residential real estate construction loans. At December 31, 2012, Columbia's total assets were $4.91 billion, a 3% increase from $4.79 billion in total assets at prior year end and virtually unchanged from the prior quarter.
Securities, including FHLB stock, were $1.02 billion at December 31, 2012, up 6% from $965.6 million at prior quarter and down 3% from $1.05 billion at prior year end.
Total deposits at December 31, 2012 were $4.04 billion, a 3% increase from $3.94 billion at September 30, 2012, and a 6% increase from $3.82 billion at December 31, 2011. Core deposits comprised 94% of total deposits, and were $3.80 billion at December 31, 2012, an increase of 3% from $3.69 billion at September 30, 2012, and an increase of 8% from $3.51 billion at December 31, 2011.
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During the fourth quarter of 2012, the Company repaid $106.4 million of FHLB advances. Associated with this repayment, the Company incurred $603 thousand in prepayment expense.
Total shareholders' equity was $764.0 million at December 31, 2012, compared to $762.0 million and $759.3 million at September 30, 2012 and December 31, 2011, respectively. In accordance with the Columbia's recent capital and dividend strategies, total shareholders' equity has remained relatively unchanged over the past four quarters.
Asset Quality
At December 31, 2012, nonperforming noncovered assets were $48.5 million, a decrease of 9% from $53.3 million at September 30, 2012, and 43% from $85.4 million at December 31, 2011. Nonaccrual loans declined $4.2 million during the fourth quarter. The decrease in nonaccrual loans for the quarter was driven by payments of $4.4 million, charge-offs of $2.7 million, the return of $2.5 million of nonaccrual loans to accrual status, and $935 thousand of loans transferred to OREO, partially offset by $6.3 million of new nonaccrual loans. Noncovered other real estate owned (OREO) and other personal property owned (OPPO) were reduced by $641 thousand during the fourth quarter, as a result of $991 thousand in sales and $585 thousand in write-downs, partially offset by loan foreclosures of $935 thousand. Columbia's allowance for loan losses to nonperforming, noncovered loans ratio was 140% for the quarter, up from 124% for the third quarter 2012 and 99% for the same period last year.
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The following table sets forth, at the dates indicated, information with respect to noncovered nonaccrual loans and total noncovered nonperforming assets.
December 31, 2012 | September 30, 2012 | December 31, 2011 | ||||||||||
(dollars in thousands) | ||||||||||||
Nonaccrual noncovered loans: | ||||||||||||
Commercial business | $ | 9,299 | $ | 12,564 | $ | 10,243 | ||||||
Real estate: | ||||||||||||
One-to-four family residential | 2,349 | 2,220 | 2,696 | |||||||||
Commercial and multifamily residential | 19,204 | 19,459 | 19,485 | |||||||||
Total real estate | 21,553 | 21,679 | 22,181 | |||||||||
Real estate construction: | ||||||||||||
One-to-four family residential | 4,900 | 5,359 | 10,785 | |||||||||
Commercial and multifamily residential | — | — | 7,067 | |||||||||
Total real estate construction | 4,900 | 5,359 | 17,852 | |||||||||
Consumer | 1,643 | 1,987 | 3,207 | |||||||||
Total nonaccrual loans | 37,395 | 41,589 | 53,483 | |||||||||
Noncovered other real estate owned and other personal property owned | 11,108 | 11,749 | 31,905 | |||||||||
Total nonperforming noncovered assets | $ | 48,503 | $ | 53,338 | $ | 85,388 | ||||||
For the quarter ended December 31, 2012, net loan charge-offs were $1.6 million, compared to $2.1 million for the same period a year ago, and $3.5 million last quarter. Net charge-offs during the current quarter were primarily centered in commercial business loans.
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The following table provides an analysis of the Company's allowance loan and lease losses at the dates and the periods indicated.
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
(in thousands) | ||||||||||||||||
Beginning balance | $ | 51,527 | $ | 50,422 | $ | 53,041 | $ | 60,993 | ||||||||
Charge-offs: | ||||||||||||||||
Commercial business | (1,903 | ) | (1,758 | ) | (10,173 | ) | (7,909 | ) | ||||||||
One-to-four family residential real estate | (50 | ) | — | (549 | ) | (717 | ) | |||||||||
Commercial and multifamily residential real estate | (365 | ) | (1,325 | ) | (5,474 | ) | (3,687 | ) | ||||||||
One-to-four family residential real estate construction | (181 | ) | (72 | ) | (1,606 | ) | (2,487 | ) | ||||||||
Commercial and multifamily residential real estate construction | — | (503 | ) | (93 | ) | (2,213 | ) | |||||||||
Consumer | (658 | ) | (620 | ) | (2,534 | ) | (3,918 | ) | ||||||||
Total charge-offs | (3,157 | ) | (4,278 | ) | (20,429 | ) | (20,931 | ) | ||||||||
Recoveries: | ||||||||||||||||
Commercial business | 234 | 1,441 | 1,548 | 2,598 | ||||||||||||
One-to-four family residential real estate | 83 | 2 | 285 | 80 | ||||||||||||
Commercial and multifamily residential real estate | 261 | 363 | 1,599 | 459 | ||||||||||||
One-to-four family residential real estate construction | 582 | 168 | 1,488 | 2,091 | ||||||||||||
Commercial and multifamily residential real estate construction | 2 | — | 66 | — | ||||||||||||
Consumer | 362 | 173 | 1,171 | 351 | ||||||||||||
Total recoveries | 1,524 | 2,147 | 6,157 | 5,579 | ||||||||||||
Net charge-offs | (1,633 | ) | (2,131 | ) | (14,272 | ) | (15,352 | ) | ||||||||
Provision charged to expense | 2,350 | 4,750 | 13,475 | 7,400 | ||||||||||||
Ending balance | $ | 52,244 | $ | 53,041 | $ | 52,244 | $ | 53,041 | ||||||||
For the fourth quarter of 2012, Columbia made a provision of $2.4 million for noncovered loan losses. For the comparable quarter last year the company made a provision of $4.8 million. The provision for noncovered loan losses during the current quarter was primarily driven by net charge-offs realized in the quarter and to a lesser extent by the $49 million in noncovered loan growth experienced during the quarter.
The allowance for noncovered loan losses to period end loans was 2.07% at December 31, 2012 compared to 2.08% at September 30, 2012 and 2.26% at December 31, 2011.
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Fourth Quarter 2012 Operating Results
Quarter ended December 31, 2012
Net Interest Income
Net interest income for the fourth quarter of 2012 was $54.9 million, a decrease of 24% from $72.1 million for the same quarter in 2011, primarily due to the accretion income recorded during the fourth quarter of 2011 related to our acquired loan portfolios. During the fourth quarter of 2012, the Company recorded $11.9 million in incremental accretion income on acquired loans compared to $26.4 million for the fourth quarter of 2011.
Compared to the third quarter of 2012, net interest income decreased 4% from $57.3 million primarily due to lower yields on the loan and securities portfolios.
Noninterest Income (Loss)
Total noninterest income was $6.6 million for the fourth quarter of 2012, compared to a loss of $9.6 million for the fourth quarter of 2011. The increase from the prior-year period was due to a combination of the change in the FDIC loss-sharing asset, which accounted for $7.8 million of the increase, and an increase of $6.5 million in investment securities gains. The increase in securities gains was primarily due to the $3.0 million gain recorded in the current quarter on a municipal bond that was determined to be other than temporarily impaired in the fourth quarter of 2011. The Company received full payment on this security in the current quarter.
The following table reflects the components of the change in the FDIC loss-sharing asset for the three month periods indicated.
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
(in thousands) | ||||||||||||||||
Adjustments reflected in income | ||||||||||||||||
Amortization, net | (9,522 | ) | (13,493 | ) | (42,940 | ) | (46,049 | ) | ||||||||
Loan impairment (recapture) | 2,009 | (3,742 | ) | 20,714 | (1,318 | ) | ||||||||||
Sale of other real estate | (2,908 | ) | (859 | ) | (7,789 | ) | (4,346 | ) | ||||||||
Write-downs of other real estate | 687 | 563 | 5,190 | 1,474 | ||||||||||||
Other | 54 | 83 | 358 | 743 | ||||||||||||
Change in FDIC loss-sharing asset | $ | (9,680 | ) | $ | (17,448 | ) | $ | (24,467 | ) | $ | (49,496 | ) | ||||
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Noninterest Expense
Total noninterest expense for the fourth quarter of 2012 was $37.8 million, a decrease of 9% from $41.3 million for the same quarter in 2011. The decrease from the prior-year period was due to a decreases of $830 thousand in compensation and benefits, $642 thousand in occupancy and $992 thousand in other noninterest expense as well as an increase of $834 thousand in net benefit of operation of other real estate. These decreases were partially offset by a $1.1 million increase in legal and professional fees, which includes $649 thousand of costs recorded during the fourth quarter of 2012 related to the announced merger with West Coast Bancorp.
Compared to the third quarter of 2012, noninterest expense decreased $3.1 million, or 8%. The decrease was primarily attributable to a decrease of $1.0 million in advertising and promotion, $573 thousand in compensation and benefit expense, and a $489 thousand change in the FDIC clawback liability.
Organizational Update
Melanie Dressel commented, “As an important component of our ongoing effort to improve efficiencies without compromising customer service, we continually evaluate the profitability of our customer delivery channels. A total of three branches were closed during 2012; during the fourth quarter, we consolidated our Port Townsend and Belfair branches, both located in grocery stores in Washington, into nearby, full-service locations.”
Ms. Dressel continued, “As we announced last quarter, we signed a definitive merger agreement with West Coast Bancorp (“West Coast”) headquartered in Lake Oswego, Oregon. After the merger, Columbia will rank as the number one community bank in deposit market share in both Oregon and Washington, and we will have extensive coverage throughout both states with about 150 branches and over $7 billion in assets. We expect this transaction to be completed within the next three months, subject to the approval of the shareholders of each company and the necessary regulatory approvals.”
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Cash Dividend Announcement
The Board of Directors announced that a quarterly cash dividend of $0.10 per common share will be paid on February 20, 2013 to shareholders of record on February 6, 2013. This is an increase of 11% from $0.09 paid the prior quarter.
Conference Call
Columbia's management will discuss the fourth quarter and full year 2012 results on a conference call scheduled for Thursday, January 24, 2013 at 1:00 p.m. PDT (4:00 pm EDT). Interested parties may listen to this discussion by calling 1-866-378-3802; Conference ID code #86908552.
A conference call replay will be available from approximately 4:00 p.m. PDT on January 24, 2013 through midnight PDT on January 31, 2013. The conference call replay can be accessed by dialing 1-855-859-2056 and entering Conference ID code #86908552.
About Columbia
Headquartered in Tacoma, Washington, Columbia Banking System, Inc. is the holding Company of Columbia State Bank, a Washington state-chartered full-service commercial bank. For the sixth consecutive year, the bank was named in 2012 as one of Puget Sound Business Journal's “Washington's Best Workplaces.”
Columbia Banking System has 99 banking offices, including 74 branches in Washington State and 25 branches in Oregon. Columbia Bank does business under the Bank of Astoria name in Astoria, Warrenton, Seaside, Cannon Beach, Manzanita and Tillamook in Oregon. More information about Columbia can be found on its website at www.columbiabank.com.
# # #
Note Regarding Forward-Looking Statements
This news release includes forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders. These forward looking statements describe Columbia's management's expectations regarding future events and developments such as future operating results, growth in loans and deposits, continued success of Columbia's style of banking and the strength of the local economy. The words “will,” “believe,” “expect,” “intend,” “should,” and “anticipate” and words of similar construction are intended in part to help identify forward looking statements. Future events are difficult to predict, and the expectations described above are necessarily subject to risk and uncertainty that may cause actual results to differ materially and adversely. In addition to discussions about risks and uncertainties set forth from time to time in Columbia's filings with the Securities and Exchange Commission, available at the SEC's website at www.sec.gov and the Company's website at www.columbiabank.com, including the “Risk Factors,” “Business” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” sections of our annual reports on Form 10-K and
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quarterly reports on Form 10-Q, factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following: (1) local, national and international economic conditions may be less favorable than expected or have a more direct and pronounced effect on Columbia than expected and adversely affect Columbia's ability to continue its internal growth at historical rates and maintain the quality of its earning assets; (2) changes in interest rates may reduce interest margins more than expected and negatively affect funding sources; (3) projected business increases following strategic expansion or opening or acquiring new branches may be lower than expected; (4) the proposed merger with West Coast Bancorp may not close when expected or at all because required regulatory, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all, which may have an effect on the trading prices of Columbia's stock; (5) costs or difficulties related to the integration of acquisitions may be greater than expected; (6) competitive pressure among financial institutions may increase significantly; and (7) legislation or regulatory requirements or changes may adversely affect the businesses in which Columbia is engaged. We believe the expectations reflected in our forward-looking statements are reasonable, based on information available to us on the date hereof. However, given the described uncertainties and risks, we cannot guarantee our future performance or results of operations and you should not place undue reliance on these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The factors noted above and the risks and uncertainties described in our SEC filings should be considered when reading any forward-looking statements in this release.
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FINANCIAL STATISTICS | |||||||||||||||||||||
Columbia Banking System, Inc. | Three Months Ended | Year Ended | |||||||||||||||||||
Unaudited | December 31, | December 31, | |||||||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||||||||
Earnings | (dollars in thousands except per share amounts) | ||||||||||||||||||||
Net interest income | $ | 54,898 | $ | 72,124 | $ | 238,927 | $ | 236,736 | |||||||||||||
Provision for loan and lease losses | $ | 2,350 | $ | 4,750 | $ | 13,475 | $ | 7,400 | |||||||||||||
Provision (recapture) for losses on covered loans, net (1) | $ | 2,511 | $ | (3,960 | ) | $ | 25,892 | $ | (1,648 | ) | |||||||||||
Noninterest income (loss) | $ | 6,567 | $ | (9,602 | ) | $ | 27,058 | $ | (9,283 | ) | |||||||||||
Noninterest expense | $ | 37,800 | $ | 41,314 | $ | 162,913 | $ | 155,759 | |||||||||||||
Net income | $ | 13,462 | $ | 14,754 | $ | 46,143 | $ | 48,037 | |||||||||||||
Per Common Share | |||||||||||||||||||||
Earnings (basic) | $ | 0.34 | $ | 0.37 | $ | 1.16 | $ | 1.22 | |||||||||||||
Earnings (diluted) | $ | 0.34 | $ | 0.37 | $ | 1.16 | $ | 1.21 | |||||||||||||
Book value | $ | 19.25 | $ | 19.23 | $ | 19.25 | $ | 19.23 | |||||||||||||
Averages | |||||||||||||||||||||
Total assets | $ | 4,925,736 | $ | 4,755,222 | $ | 4,826,283 | $ | 4,509,010 | |||||||||||||
Interest-earning assets | $ | 4,388,487 | $ | 4,098,603 | $ | 4,246,724 | $ | 3,871,424 | |||||||||||||
Loans, including covered loans | $ | 2,926,825 | $ | 2,817,279 | $ | 2,900,520 | $ | 2,607,266 | |||||||||||||
Securities | $ | 1,007,059 | $ | 957,727 | $ | 1,011,294 | $ | 928,891 | |||||||||||||
Deposits | $ | 4,012,764 | $ | 3,791,169 | $ | 3,875,666 | $ | 3,541,399 | |||||||||||||
Core deposits | $ | 3,769,409 | $ | 3,472,023 | $ | 3,609,467 | $ | 3,218,425 | |||||||||||||
Interest-bearing deposits | $ | 2,714,292 | $ | 2,664,133 | $ | 2,683,630 | $ | 2,557,179 | |||||||||||||
Interest-bearing liabilities | $ | 2,796,155 | $ | 2,808,497 | $ | 2,808,968 | $ | 2,717,243 | |||||||||||||
Noninterest-bearing deposits | $ | 1,298,472 | $ | 1,127,036 | $ | 1,192,036 | $ | 984,220 | |||||||||||||
Shareholders' equity | $ | 767,781 | $ | 757,696 | $ | 761,185 | $ | 730,726 | |||||||||||||
Financial Ratios | |||||||||||||||||||||
Return on average assets | 1.09 | % | 1.23 | % | 0.96 | % | 1.07 | % | |||||||||||||
Return on average common equity | 6.98 | % | 7.73 | % | 6.06 | % | 6.57 | % | |||||||||||||
Average equity to average assets | 15.59 | % | 15.93 | % | 15.77 | % | 16.21 | % | |||||||||||||
Net interest margin | 5.15 | % | 7.14 | % | 5.77 | % | 6.27 | % | |||||||||||||
Efficiency ratio (tax equivalent)(2) | 68.26 | % | 69.56 | % | 69.17 | % | 70.68 | % | |||||||||||||
December 31, | |||||||||||||||||||||
Period end | 2012 | 2011 | |||||||||||||||||||
Total assets | $ | 4,906,335 | $ | 4,785,945 | |||||||||||||||||
Covered assets, net | $ | 407,648 | $ | 560,055 | |||||||||||||||||
Loans, excluding covered loans, net | $ | 2,525,710 | $ | 2,348,371 | |||||||||||||||||
Allowance for noncovered loan and lease losses | $ | 52,244 | $ | 53,041 | |||||||||||||||||
Securities | $ | 1,023,484 | $ | 1,050,325 | |||||||||||||||||
Deposits | $ | 4,042,085 | $ | 3,815,529 | |||||||||||||||||
Core deposits | $ | 3,802,366 | $ | 3,510,435 | |||||||||||||||||
Shareholders' equity | $ | 764,008 | $ | 759,338 | |||||||||||||||||
Nonperforming, noncovered assets | |||||||||||||||||||||
Nonaccrual loans | $ | 37,395 | $ | 53,483 | |||||||||||||||||
Other real estate owned ("OREO") and other personal property owned ("OPPO") | 11,108 | 31,905 | |||||||||||||||||||
Total nonperforming, noncovered assets | $ | 48,503 | $ | 85,388 | |||||||||||||||||
Nonperforming assets to period-end noncovered loans + OREO and OPPO | 1.91 | % | 3.59 | % | |||||||||||||||||
Nonperforming loans to period-end noncovered loans | 1.48 | % | 2.28 | % | |||||||||||||||||
Nonperforming assets to period-end noncovered assets | 1.08 | % | 2.02 | % | |||||||||||||||||
Allowance for loan and lease losses to period-end noncovered loans | 2.07 | % | 2.26 | % | |||||||||||||||||
Allowance for loan and lease losses to nonperforming noncovered loans | 139.71 | % | 99.17 | % | |||||||||||||||||
Net noncovered loan charge-offs | $ | 14,272 | (3) | $ | 15,352 | (4) | |||||||||||||||
(1) Provision (recapture) for losses on covered loans was partially offset by $2.0 million in income and $3.7 million in expense recorded to Change in FDIC loss-sharing asset in the Consolidated Statements of Income for the three months ended December 31, 2012 and 2011, respectively. For the year ended December 31, 2012 and 2011, provision (recapture) for losses on covered loans was partially offset by $20.7 million in income and $1.3 million in expense, respectively. | |||||||||||||||||||||
(2) Noninterest expense, excluding net cost of operation of other real estate, FDIC clawback liability expense and merger related expenses, divided by the sum of net interest income, excluding incremental accretion income on the acquired loan portfolio and prepayment expenses on FHLB advances, and noninterest income on a tax equivalent basis, excluding gain/loss on investment securities, gain on bank acquisition, and the change in FDIC loss-sharing asset. | |||||||||||||||||||||
(3) For the year ended December 31, 2012. | |||||||||||||||||||||
(4) For the year ended December 31, 2011. | |||||||||||||||||||||
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FINANCIAL STATISTICS | ||||||||||||||
Columbia Banking System, Inc. | ||||||||||||||
Unaudited | December 31, | December 31, | ||||||||||||
2012 | 2011 | |||||||||||||
Loan Portfolio Composition | (dollars in thousands) | |||||||||||||
Noncovered loans: | ||||||||||||||
Commercial business | $ | 1,155,158 | 45.7 | % | $ | 1,031,721 | 43.9 | % | ||||||
Real estate: | ||||||||||||||
One-to-four family residential | 43,922 | 1.7 | % | 64,491 | 2.8 | % | ||||||||
Commercial and multifamily residential | 1,061,201 | 42.0 | % | 998,165 | 42.5 | % | ||||||||
Total real estate | 1,105,123 | 43.7 | % | 1,062,656 | 45.3 | % | ||||||||
Real estate construction: | ||||||||||||||
One-to-four family residential | 50,602 | 2.0 | % | 50,208 | 2.1 | % | ||||||||
Commercial and multifamily residential | 65,101 | 2.7 | % | 36,768 | 1.6 | % | ||||||||
Total real estate construction | 115,703 | 4.7 | % | 86,976 | 3.7 | % | ||||||||
Consumer | 157,493 | 6.2 | % | 183,235 | 7.8 | % | ||||||||
Subtotal loans | 2,533,477 | 100.3 | % | 2,364,588 | 100.7 | % | ||||||||
Less: Net unearned income | (7,767 | ) | (0.3 | )% | (16,217 | ) | (0.7 | )% | ||||||
Total noncovered loans, net of unearned income | 2,525,710 | 100.0 | % | 2,348,371 | 100.0 | % | ||||||||
Less: Allowance for loan and lease losses | (52,244 | ) | (53,041 | ) | ||||||||||
Noncovered loans, net | 2,473,466 | 2,295,330 | ||||||||||||
Covered loans, net of allowance for loan losses of ($29,157) and ($4,944), respectively | 391,337 | 531,929 | ||||||||||||
Total loans, net | $ | 2,864,803 | $ | 2,827,259 | ||||||||||
Loans held for sale | $ | 2,563 | $ | 2,148 | ||||||||||
December 31, | December 31, | |||||||||||||
2012 | 2011 | |||||||||||||
Deposit Composition | (dollars in thousands) | |||||||||||||
Core deposits: | ||||||||||||||
Demand and other non-interest bearing | $ | 1,321,171 | 32.7 | % | $ | 1,156,610 | 30.3 | % | ||||||
Interest bearing demand | 870,821 | 21.5 | % | 735,340 | 19.3 | % | ||||||||
Money market | 1,043,459 | 25.8 | % | 1,031,664 | 27.0 | % | ||||||||
Savings | 314,371 | 7.8 | % | 283,416 | 7.4 | % | ||||||||
Certificates of deposit less than $100,000 | 252,544 | 6.2 | % | 303,405 | 8.0 | % | ||||||||
Total core deposits | 3,802,366 | 94 | % | 3,510,435 | 92.0 | % | ||||||||
Certificates of deposit greater than $100,000 | 212,924 | 5.3 | % | 262,731 | 6.9 | % | ||||||||
Certificates of deposit insured by CDARS® | 26,720 | 0.7 | % | 42,080 | 1.1 | % | ||||||||
Subtotal | 4,042,010 | 100.0 | % | 3,815,246 | 100.0 | % | ||||||||
Premium resulting from acquisition date fair value adjustment | 75 | 283 | ||||||||||||
Total deposits | $ | 4,042,085 | $ | 3,815,529 | ||||||||||
13
FINANCIAL STATISTICS | ||||||||||||||||
Columbia Banking System, Inc. | ||||||||||||||||
Unaudited | ||||||||||||||||
December 31, | December 31, | |||||||||||||||
2012 | 2011 | |||||||||||||||
OREO | OPPO | OREO | OPPO | |||||||||||||
OREO and OPPO Composition | (in thousands) | |||||||||||||||
Covered | $ | 16,311 | $ | 45 | $ | 28,126 | $ | — | ||||||||
Noncovered | 10,676 | 432 | 22,893 | 9,011 | ||||||||||||
Total | $ | 26,987 | $ | 477 | $ | 51,019 | $ | 9,011 | ||||||||
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
OREO and OPPO Earnings Impact | (in thousands) | |||||||||||||||
Net cost of operation of noncovered OREO | $ | 664 | $ | 1,567 | $ | 4,766 | $ | 7,416 | ||||||||
Net benefit of operation of covered OREO | (2,097 | ) | (2,166 | ) | (6,735 | ) | (8,438 | ) | ||||||||
Net benefit of operation of OREO | $ | (1,433 | ) | $ | (599 | ) | $ | (1,969 | ) | $ | (1,022 | ) | ||||
Noncovered OPPO cost (benefit), net | $ | (271 | ) | $ | 20 | $ | 1,971 | $ | (1,088 | ) | ||||||
Covered OPPO benefit, net | (197 | ) | (1 | ) | (213 | ) | (105 | ) | ||||||||
OPPO expense, net (1) | $ | (468 | ) | $ | 19 | $ | 1,758 | $ | (1,193 | ) | ||||||
(1) OPPO expense, net is included in Other noninterest expense in the Consolidated Statements of Income. | ||||||||||||||||
14
QUARTERLY FINANCIAL STATISTICS | ||||||||||||||||||||
Columbia Banking System, Inc. | Three Months Ended | |||||||||||||||||||
Unaudited | December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||||
2012 | 2012 | 2012 | 2012 | 2011 | ||||||||||||||||
(dollars in thousands except per share) | ||||||||||||||||||||
Earnings | ||||||||||||||||||||
Net interest income | $ | 54,898 | $ | 57,265 | $ | 59,701 | $ | 67,063 | $ | 72,124 | ||||||||||
Provision for loan and lease losses | $ | 2,350 | $ | 2,875 | $ | 3,750 | $ | 4,500 | $ | 4,750 | ||||||||||
Provision (recapture) for losses on covered loans | $ | 2,511 | $ | (3,992 | ) | $ | 11,688 | $ | 15,685 | $ | (3,960 | ) | ||||||||
Noninterest income (loss) | $ | 6,567 | $ | (911 | ) | $ | 11,828 | $ | 9,574 | $ | (9,602 | ) | ||||||||
Noninterest expense | $ | 37,800 | $ | 40,936 | $ | 39,825 | $ | 44,352 | $ | 41,314 | ||||||||||
Net income | $ | 13,462 | $ | 11,880 | $ | 11,899 | $ | 8,902 | $ | 14,754 | ||||||||||
Per Common Share | ||||||||||||||||||||
Earnings (basic) | $ | 0.34 | $ | 0.30 | $ | 0.30 | $ | 0.22 | $ | 0.37 | ||||||||||
Earnings (diluted) | $ | 0.34 | $ | 0.30 | $ | 0.30 | $ | 0.22 | $ | 0.37 | ||||||||||
Book value | $ | 19.25 | $ | 19.20 | $ | 19.13 | $ | 18.97 | $ | 19.23 | ||||||||||
Averages | ||||||||||||||||||||
Total assets | $ | 4,925,736 | $ | 4,828,102 | $ | 4,788,723 | $ | 4,776,186 | $ | 4,755,222 | ||||||||||
Interest-earning assets | $ | 4,388,487 | $ | 4,263,414 | $ | 4,194,281 | $ | 4,137,449 | $ | 4,098,603 | ||||||||||
Loans, including covered loans | $ | 2,926,825 | $ | 2,919,520 | $ | 2,895,436 | $ | 2,860,524 | $ | 2,817,279 | ||||||||||
Securities | $ | 1,007,059 | $ | 983,815 | $ | 1,029,337 | $ | 1,023,067 | $ | 957,727 | ||||||||||
Deposits | $ | 4,012,764 | $ | 3,859,284 | $ | 3,823,985 | $ | 3,805,324 | $ | 3,791,169 | ||||||||||
Core deposits | $ | 3,769,409 | $ | 3,599,246 | $ | 3,555,279 | $ | 3,512,490 | $ | 3,472,023 | ||||||||||
Interest-bearing deposits | $ | 2,714,292 | $ | 2,665,094 | $ | 2,682,092 | $ | 2,672,911 | $ | 2,664,133 | ||||||||||
Interest-bearing liabilities | $ | 2,796,155 | $ | 2,803,201 | $ | 2,820,857 | $ | 2,815,753 | $ | 2,808,497 | ||||||||||
Noninterest-bearing deposits | $ | 1,298,472 | $ | 1,194,190 | $ | 1,141,893 | $ | 1,132,413 | $ | 1,127,036 | ||||||||||
Shareholders' equity | $ | 767,781 | $ | 761,281 | $ | 758,391 | $ | 761,686 | $ | 757,696 | ||||||||||
Financial Ratios | ||||||||||||||||||||
Return on average assets | 1.09 | % | 0.98 | % | 1.00 | % | 0.75 | % | 1.23 | % | ||||||||||
Return on average common equity | 6.98 | % | 6.21 | % | 6.31 | % | 4.70 | % | 7.73 | % | ||||||||||
Average equity to average assets | 15.59 | % | 15.77 | % | 15.84 | % | 15.95 | % | 15.93 | % | ||||||||||
Net interest margin | 5.15 | % | 5.52 | % | 5.88 | % | 6.67 | % | 7.14 | % | ||||||||||
Efficiency ratio (tax equivalent) | 68.26 | % | 68.46 | % | 68.54 | % | 71.48 | % | 69.56 | % | ||||||||||
Period end | ||||||||||||||||||||
Total assets | $ | 4,906,335 | $ | 4,903,049 | $ | 4,789,413 | $ | 4,815,432 | $ | 4,785,945 | ||||||||||
Covered assets, net | $ | 407,648 | $ | 445,797 | $ | 482,073 | $ | 526,043 | $ | 560,055 | ||||||||||
Loans, excluding covered loans, net | $ | 2,525,710 | $ | 2,476,844 | $ | 2,436,961 | $ | 2,371,818 | $ | 2,348,371 | ||||||||||
Allowance for noncovered loan and lease losses | $ | 52,244 | $ | 51,527 | $ | 52,196 | $ | 52,283 | $ | 53,041 | ||||||||||
Securities | $ | 1,023,484 | $ | 965,641 | $ | 1,019,978 | $ | 1,021,428 | $ | 1,050,325 | ||||||||||
Deposits | $ | 4,042,085 | $ | 3,938,855 | $ | 3,830,817 | $ | 3,865,445 | $ | 3,815,529 | ||||||||||
Core deposits | $ | 3,802,366 | $ | 3,685,844 | $ | 3,568,307 | $ | 3,591,663 | $ | 3,510,435 | ||||||||||
Shareholders' equity | $ | 764,008 | $ | 761,977 | $ | 758,712 | $ | 752,703 | $ | 759,338 | ||||||||||
Nonperforming, noncovered assets | ||||||||||||||||||||
Nonaccrual loans | $ | 37,395 | $ | 41,589 | $ | 49,465 | $ | 57,552 | $ | 53,483 | ||||||||||
OREO and OPPO | 11,108 | 11,749 | 17,608 | 21,571 | 31,905 | |||||||||||||||
Total nonperforming, noncovered assets | $ | 48,503 | $ | 53,338 | $ | 67,073 | $ | 79,123 | $ | 85,388 | ||||||||||
Nonperforming assets to period-end noncovered loans + OREO and OPPO | 1.91 | % | 2.14 | % | 2.73 | % | 3.31 | % | 3.59 | % | ||||||||||
Nonperforming loans to period-end noncovered loans | 1.48 | % | 1.68 | % | 2.03 | % | 2.43 | % | 2.28 | % | ||||||||||
Nonperforming assets to period-end noncovered assets | 1.08 | % | 1.20 | % | 1.56 | % | 1.84 | % | 2.02 | % | ||||||||||
Allowance for loan and lease losses to period-end noncovered loans | 2.07 | % | 2.08 | % | 2.14 | % | 2.20 | % | 2.26 | % | ||||||||||
Allowance for loan and lease losses to nonperforming noncovered loans | 139.71 | % | 123.90 | % | 105.52 | % | 90.84 | % | 99.17 | % | ||||||||||
Net noncovered loan charge-offs | $ | 1,633 | $ | 3,544 | $ | 3,836 | $ | 5,258 | $ | 2,131 | ||||||||||
15
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
Columbia Banking System, Inc. | Three Months Ended | Year Ended | ||||||||||||||
Unaudited | December 31, | December 31, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
(in thousands except per share) | ||||||||||||||||
Interest Income | ||||||||||||||||
Loans | $ | 50,558 | $ | 66,974 | $ | 219,433 | $ | 218,420 | ||||||||
Taxable securities | 3,862 | 5,169 | 18,276 | 21,870 | ||||||||||||
Tax-exempt securities | 2,499 | 2,659 | 9,941 | 10,142 | ||||||||||||
Federal funds sold and deposits in banks | 290 | 117 | 854 | 839 | ||||||||||||
Total interest income | 57,209 | 74,919 | 248,504 | 251,271 | ||||||||||||
Interest Expense | ||||||||||||||||
Deposits | 1,208 | 1,909 | 5,887 | 10,478 | ||||||||||||
Federal Home Loan Bank advances | 379 | 765 | 2,608 | 2,980 | ||||||||||||
Prepayment charge on Federal Home Loan Bank advances | 603 | — | 603 | — | ||||||||||||
Long-term obligations | — | — | — | 579 | ||||||||||||
Other borrowings | 121 | 121 | 479 | 498 | ||||||||||||
Total interest expense | 2,311 | 2,795 | 9,577 | 14,535 | ||||||||||||
Net Interest Income | 54,898 | 72,124 | 238,927 | 236,736 | ||||||||||||
Provision for loan and lease losses | 2,350 | 4,750 | 13,475 | 7,400 | ||||||||||||
Provision (recapture) for losses on covered loans, net | 2,511 | (3,960 | ) | 25,892 | (1,648 | ) | ||||||||||
Net interest income after provision (recapture) for loan and lease losses | 50,037 | 71,334 | 199,560 | 230,984 | ||||||||||||
Noninterest Income (Loss) | ||||||||||||||||
Service charges and other fees | 7,776 | 6,886 | 29,998 | 26,632 | ||||||||||||
Gain on bank acquisitions, net of tax | — | — | — | 1,830 | ||||||||||||
Merchant services fees | 1,987 | 1,992 | 8,154 | 7,385 | ||||||||||||
Investment securities gains (losses), net | 3,671 | (2,816 | ) | 3,733 | (2,816 | ) | ||||||||||
Bank owned life insurance | 684 | 632 | 2,861 | 2,188 | ||||||||||||
Change in FDIC loss-sharing asset | (9,680 | ) | (17,448 | ) | (24,467 | ) | (49,496 | ) | ||||||||
Other | 2,129 | 1,152 | 6,779 | 4,994 | ||||||||||||
Total noninterest income (loss) | 6,567 | (9,602 | ) | 27,058 | (9,283 | ) | ||||||||||
Noninterest Expense | ||||||||||||||||
Compensation and employee benefits | 20,950 | 21,780 | 85,434 | 81,552 | ||||||||||||
Occupancy | 4,721 | 5,363 | 20,031 | 18,963 | ||||||||||||
Merchant processing | 888 | 934 | 3,612 | 3,698 | ||||||||||||
Advertising and promotion | 308 | 636 | 3,650 | 3,686 | ||||||||||||
Data processing and communications | 2,451 | 2,452 | 9,714 | 8,484 | ||||||||||||
Legal and professional fees | 2,694 | 1,618 | 8,915 | 6,486 | ||||||||||||
Taxes, licenses and fees | 1,142 | 1,463 | 4,736 | 4,446 | ||||||||||||
Regulatory premiums | 824 | 784 | 3,384 | 4,337 | ||||||||||||
Net benefit of operation of other real estate | (1,433 | ) | (599 | ) | (1,969 | ) | (1,022 | ) | ||||||||
Amortization of intangibles | 1,083 | 1,203 | 4,445 | 4,319 | ||||||||||||
FDIC clawback liability expense (recovery) | (154 | ) | 362 | (54 | ) | 3,656 | ||||||||||
Other | 4,326 | 5,318 | 21,015 | 17,154 | ||||||||||||
Total noninterest expense | 37,800 | 41,314 | 162,913 | 155,759 | ||||||||||||
Income before income taxes | 18,804 | 20,418 | 63,705 | 65,942 | ||||||||||||
Provision for income taxes | 5,342 | 5,664 | 17,562 | 17,905 | ||||||||||||
Net Income | $ | 13,462 | $ | 14,754 | $ | 46,143 | $ | 48,037 | ||||||||
Earnings per common share | ||||||||||||||||
Basic | $ | 0.34 | $ | 0.37 | $ | 1.16 | $ | 1.22 | ||||||||
Diluted | $ | 0.34 | $ | 0.37 | $ | 1.16 | $ | 1.21 | ||||||||
Dividends paid per common share | $ | 0.09 | $ | 0.13 | $ | 0.98 | $ | 0.27 | ||||||||
Weighted average number of common shares outstanding | 39,295 | 39,135 | 39,260 | 39,103 | ||||||||||||
Weighted average number of diluted common shares outstanding | 39,297 | 39,222 | 39,263 | 39,180 | ||||||||||||
16
CONSOLIDATED BALANCE SHEETS | |||||||||||||
Columbia Banking System, Inc. | |||||||||||||
Unaudited | December 31, | December 31, | |||||||||||
2012 | 2011 | ||||||||||||
(in thousands) | |||||||||||||
ASSETS | |||||||||||||
Cash and due from banks | $ | 124,573 | $ | 91,364 | |||||||||
Interest-earning deposits with banks and federal funds sold | 389,353 | 202,925 | |||||||||||
Total cash and cash equivalents | 513,926 | 294,289 | |||||||||||
Securities available for sale at fair value (amortized cost of $969,359 and $987,560, respectively) | 1,001,665 | 1,028,110 | |||||||||||
Federal Home Loan Bank stock at cost | 21,819 | 22,215 | |||||||||||
Loans held for sale | 2,563 | 2,148 | |||||||||||
Loans, excluding covered loans, net of unearned income of ($7,767) and ($16,217), respectively | 2,525,710 | 2,348,371 | |||||||||||
Less: allowance for loan and lease losses | 52,244 | 53,041 | |||||||||||
Loans, excluding covered loans, net | 2,473,466 | 2,295,330 | |||||||||||
Covered loans, net of allowance for loan losses of ($30,056) and ($4,944), respectively | 391,337 | 531,929 | |||||||||||
Total loans, net | 2,864,803 | 2,827,259 | |||||||||||
FDIC loss-sharing asset | 96,354 | 175,071 | |||||||||||
Interest receivable | 14,268 | 15,287 | |||||||||||
Premises and equipment, net | 118,708 | 107,899 | |||||||||||
Other real estate owned ($16,311 and $28,126 covered by FDIC loss-share, respectively) | 26,987 | 51,019 | |||||||||||
Goodwill | 115,554 | 115,554 | |||||||||||
Core deposit intangible, net | 15,721 | 20,166 | |||||||||||
Other assets | 113,967 | 126,928 | |||||||||||
Total assets | $ | 4,906,335 | $ | 4,785,945 | |||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||
Deposits: | |||||||||||||
Noninterest-bearing | $ | 1,321,171 | $ | 1,156,610 | |||||||||
Interest-bearing | 2,720,914 | 2,658,919 | |||||||||||
Total deposits | 4,042,085 | 3,815,529 | |||||||||||
Federal Home Loan Bank advances | 6,644 | 119,009 | |||||||||||
Securities sold under agreements to repurchase | 25,000 | 25,000 | |||||||||||
Other liabilities | 68,598 | 67,069 | |||||||||||
Total liabilities | 4,142,327 | 4,026,607 | |||||||||||
Commitments and contingent liabilities | |||||||||||||
December 31, | December 31, | ||||||||||||
2012 | 2011 | ||||||||||||
Common stock (no par value) | |||||||||||||
Authorized shares | 63,033 | 63,033 | |||||||||||
Issued and outstanding | 39,686 | 39,506 | 581,471 | 579,136 | |||||||||
Retained earnings | 162,388 | 155,069 | |||||||||||
Accumulated other comprehensive income | 20,149 | 25,133 | |||||||||||
Total shareholders' equity | 764,008 | 759,338 | |||||||||||
Total liabilities and shareholders' equity | $ | 4,906,335 | $ | 4,785,945 | |||||||||
17