Columbia Bancorp Releases Second Quarter Financial Results, Announces Reduction in...

Columbia Bancorp Releases Second Quarter Financial Results, Announces
Reduction in Quarterly Dividend

THE DALLES, Ore., July 23 /PRNewswire-FirstCall/ -- Columbia Bancorp
(Nasdaq: CBBO), the financial holding company for Columbia River Bank,
released financial results for the second quarter of 2008, announcing a loss
per share of $-0.02. Columbia President and CEO, Roger Christensen,
emphasized the need for dedicated balance sheet management and non-interest
expense reduction as necessary. "All possible cost savings strategies are
being analyzed and many will be implemented in the weeks and months to come.
Because we believe in aligning our interests with those of our shareholders,
employees and customers, our Board of Directors has decided to eliminate board
and committee fees for the balance of 2008, and I, as CEO, have decided to
reduce my compensation by $5,000 per month beginning August 1 and continuing
for the remainder of this year. We also took action to reduce the quarterly
dividend to $0.01 per share. As we maintain a strong emphasis on our core
banking fundamentals, we will take the steps necessary to keep a solid
Columbia River Bank presence in the communities we serve and to create the
experience that makes Columbia River Bank the bank of choice," said
Christensen.
KEY SECOND QUARTER ANALYTICS

-- 2Q08 Return on Equity (ROE) was -0.80%
-- 2Q08 Return on Assets (ROA) was -0.08%
-- 2Q08 Net Interest Margin (tax equivalent) (NIM) was 4.57%
-- 2Q08 Efficiency Ratio was 65.84%

KEY YEAR-TO-DATE ANALYTICS

-- YTD Total Assets were $1.1 billion, a YTD growth rate of 6%
-- YTD Gross Loans were $942.6 million, a YTD growth rate of 7%
-- YTD Deposits were $939.4 million, a YTD growth rate of 2%
-- YTD Return on Equity (ROE) was 1.98%
-- YTD Return on Assets (ROA) was 0.19%
-- YTD Net Interest Margin (tax equivalent) (NIM) was 4.86%
-- YTD Efficiency Ratio was 66.70%

INCOME STATEMENT PERFORMANCE
Interest income for the three months ended June 30, 2008, declined 19% to
$16.7 million, a decrease of $3.8 million over the same quarter 2007. Revenue
(net interest income plus non-interest income) for the second quarter dropped
11% to $14.4 million, as compared to $16.2 million in the second quarter of
2007. This contributed to 2008 year-to-date revenues of $29.7 million, a
decline of 6% or $2.0 million from the comparable period of the prior year.
"As we continue to monitor our net interest margin, we remain keenly aware of
deposit pressures and competition," said Staci Coburn, Chief Accounting
Officer. "Our interest income in the second quarter continued to be
influenced by degenerating market conditions and was further impacted by the
reversal of $830,000 in interest on non-accrual loans, resulting in a 0.33%
reduction in the net interest margin for the second quarter of 2008," she
added. Columbia's tax equivalent net interest margin (with the reversal) at
June 30, 2008 was 4.57%, compared to 4.90% pre-reversal. Net interest income
before provision for loan losses fell 16% in quarter two of 2008 to $11.2
million, compared to $13.4 million in the second quarter of 2007;
year-to-date, net interest income before the provision decreased 10% to $23.6
million, compared to $26.3 million in the prior year.
Columbia's loan loss provision increased 143% to $5.7 million in the
second quarter of 2008, a $3.3 million rise over the second quarter of 2007.
The provision for the six months ended June 30, 2008 was $8.7 million, or 160%
higher than the $3.4 million provision for the first six months of 2007. In
addition, during this quarter Columbia's residential construction borrowers
continued to be affected by the decline in the sale of lots and homes created
by the "subprime lending crisis" which continues from last year. "The
increase in the allowance is almost entirely in response to the larger risk
profile created in the residential construction portion of our portfolio. As
of June 30, 2008, our residential construction portfolio totaled $215.1
million and was concentrated primarily in our Central Oregon market and the
Portland, Oregon/Vancouver, Washington metropolitan area, with $78.0 million
and $104.4 million, respectively, located in those regions. The remaining
$32.7 million is distributed among our other markets in the Columbia River
Gorge and in Eastern Oregon and Eastern Washington. With reduced cash flows
due to sluggish sales, developer/builder reserves are being depleted and this,
coupled with declining appraisals on collateral values, requires the larger
allowance. One Portland-metro area client entered into a Chapter 11
bankruptcy proceeding in June due in part to his relationship with other
creditors. This is factored into our larger allowance for the quarter,"
explained Bob Card, Director of Risk Management.
Total non-interest income increased 15% to $3.2 million for the second
quarter of 2008, compared to $2.8 million in the same period last year. For
the six months ended June 30, 2008, total non-interest income grew 13% to $6.1
million, compared to $5.4 million in the last year. Mortgage loan origination
income and service charge discounts and fees continue to contribute to overall
growth in this area.
Operating expenses rose by 5% or $452,000, from $9.0 million in the second
quarter 2007 to $9.5 million in the same quarter of 2008. Columbia reduced
non-interest expense in the second quarter of 2008 by reversing the incentive
compensation accrual expense by $1.2 million, in accordance with the company's
bonus plan provisions.
Columbia's efficiency ratio increased in the three months ended June 30,
2008 to 65.84% from 55.81% in the same period of the prior year. Year-to-date
efficiency ratio for the first half of 2008 was 66.70% compared to 56.85% a
year ago. These increases are the net effect of the decrease in net interest
income and higher operating expenses related to the transition to the
Vancouver, Washington market. "Our focus over the last year has been to
strengthen our core back room functions; we accomplished this with the
centralization of our operations teams and our administrative expansion into
the Vancouver area," explained Greg Spear, Columbia CFO and Vice Chair. "We
incurred higher expenses during the transition, which is now complete," he
added.
BALANCE SHEET PERFORMANCE
Year-over-year growth for the quarter ended June 30, 2008 saw a gross loan
balance of $942.6 million, up $78.2 million, or 9% from the second quarter
2007 balance of $864.4 million. Compared to December 31, 2007, Columbia
realized a 7%, or $63.5 million gain in gross loans. "We have had loan growth
in the second quarter, but the majority of that growth stemmed from loans
already in our pipeline during the first quarter of this year," said Shane
Correa, Chief Banking Officer. "We have reduced our growth in residential
real estate construction in both the Central Oregon and Portland,
Oregon/Vancouver, Washington metro areas and are reducing our exposure to
acquisition and development-type loans. Columbia is slowing loan growth to
match our core deposit growth," Correa went on to say.
Total deposits at June 30, 2008 rose to $939.4 million from $911.2 in the
same quarter of the prior year. Interest bearing wholesale demand and
brokered certificates of deposit accounted for the 3% increase. Compared to
year end 2007, total deposits increased $16.5 million, or 2%, at June 30,
2008. While garnering non-interest deposits continues to be a challenge for
banks as a whole, Columbia has seen an increase in the number of new deposit
accounts opened in the last several quarters. "We are encouraged by the
number of non-interest bearing deposit accounts being opened, although account
balances are lower, more than likely due to the strain consumers are
experiencing related to spikes in fuel and consumables costs," stated Shane
Correa.
Shareholder's equity at June 30, 2008 increased 7% to $102.2 million, or
$10.14 per outstanding share, as compared to $96.0 million, or $9.57 per
outstanding share at June 30, 2007. Tangible book value stands at $9.41 per
share as of June 30, 2008, a 7% increase over the value of $8.83 at June 30,
2007.
CREDIT QUALITY
"Clearly, one of our challenges is the loss potential for our identified
risks," stated Craig Hummel, Chief Credit Officer. "The declining economy has
effectively accelerated adversely rated credits. Valuation in residential
real estate came down far more quickly than anyone anticipated. External
factors such as the overall increasing trend of loan losses and foreclosure
rates are also affecting how we do business. Maintaining balance sheet
stability is a priority," he said, adding that Columbia had instituted a
Reserve Adequacy Committee which regularly reviews loan loss provisions and
oversees problem loan management. Columbia also has an OREO (Other Real
Estate Owned) Committee which is concentrating on marketing current and future
OREO assets in a very structured manner.
LOOKING TO THE FUTURE
"These are challenging and unique times for the finance industry,
particularly community banks. As I have stated in the past, Columbia's
management is dedicated to maintaining a strong core administrative presence,
looking for new opportunities, addressing the needs of our customers and
ensuring our service levels remain above par," emphasized Christensen.
Conference Call and Audio Webcast
Roger Christensen, President and CEO, along with the executive management
team, will host a webcast for investors, analysts and other interested parties
beginning at 12:00 p.m. Pacific Time (3:00 p.m. Eastern Time) on Wednesday,
July 23, 2008. The 2008 second quarter earnings release will be distributed
before the market opens that day. To participate in the call, dial
1-877-407-9210. The webcast can also be heard by going to Columbia Bancorp's
Web site, http://www.columbiabancorp.com and selecting Presentations/Webcast
under Investor Relations.
A replay of the call will be available until July 31, 2008, starting two
hours after the completion of the call. To listen to the replay, dial
1-877-660-6853, account #286 and use access code 280108. A text version of
the webcast will be archived on Columbia Bancorp's web site.
ABOUT COLUMBIA BANCORP
Columbia Bancorp (http://www.columbiabancorp.com) is the financial holding
company for Columbia River Bank, which operates 22 branches located in The
Dalles (2), Hood River, Bend (3), Madras, Redmond (2), Pendleton, Hermiston,
McMinnville, Lake Oswego, Canby, and Newberg, Oregon, and in Goldendale, White
Salmon, Sunnyside, Yakima, Vancouver, Pasco and Richland, Washington. To
supplement its community banking services, Columbia River Bank also provides
mortgage-lending services through Columbia River Bank Mortgage Team and
brokerage services through CRB Financial Services Team.
FORWARD LOOKING STATEMENTS
This press release contains various forward-looking statements about plans
and anticipated results of operations and financial condition relating to
Columbia Bancorp. These statements include statements about management's
present plans and intentions about our strategy, growth, and deployment of
resources, and about management's expectations for future financial
performance. Readers can sometimes identify forward-looking statements by the
use of prospective language and context, including words like "may", "will",
"should", "expect", "anticipate", "estimate", "continue", "plans", "intends",
or other similar terminology. Because forward-looking statements are, in part,
an attempt to project future events and explain management's current plans,
they are subject to various risks and uncertainties which could cause our
actions and our financial and operational results to differ materially from
those set forth in such statements. These risks and uncertainties include,
without limitation, our ability to estimate accurately the collectibility of
our loans, economic and other factors which affect the collectibility of our
loans, the impact of competition and fluctuations in market interest rates on
Columbia's revenues and margins, and management's ability to open and generate
profitable growth from new branches. Other risks and uncertainties are
discussed in our filings with the Securities and Exchange Commission ("SEC"),
including those currently on file and those that we file in the future.
Information presented in this release is accurate as of the date the report
was filed with the SEC, and we cannot undertake to update our forward-looking
statements or the factors that may cause us to deviate from them, except as
required by law.

INCOME STATEMENT
(Unaudited)
(In thousands, except per share data and ratios)

Three Months Ended % Six Months Ended %
June 30, Change June 30, Change
2008 2007 2008 2007

Interest income $16,690 $20,495 -19% $35,155 $39,418 -11%
Interest expense 5,479 7,101 -23% 11,582 13,111 -12%
Net interest income
before provision for
loan losses 11,211 13,394 -16% 23,573 26,307 -10%
Provision for loan losses 5,650 2,325 143% 8,700 3,350 160%
Net interest income after
provision for loan losses 5,561 11,069 -50% 14,873 22,957 -35%

Non-interest income:
Service charges and fees 1,196 1,110 8% 2,354 2,112 11%
Mortgage loan
origination income 1,169 1,005 16% 2,094 2,018 4%
Financial services
revenue 292 304 -4% 562 524 7%
Credit card discounts
and fees 156 135 16% 299 250 20%
Other non-interest
income 368 224 64% 831 520 60%
Total non-interest
income 3,181 2,778 15% 6,140 5,424 13%

Non-interest expense:
Salaries and employee
benefits 4,924 5,259 -6% 10,798 10,301 5%
Occupancy expense 1,307 1,145 14% 2,618 2,268 15%
Other non-interest
expense 3,245 2,620 24% 6,404 5,469 17%
Total non-interest
expense 9,476 9,024 5% 19,820 18,038 10%

Income (loss) before
provision for income
taxes (734) 4,823 -115% 1,193 10,343 -88%
Provision for income taxes (528) 1,817 -129% 180 3,884 -95%
Net income (loss) $(206) $3,006 -107% $1,013 $6,459 -84%

Earnings (loss) per common
share
Basic $(0.02) $0.30 -107% $0.10 $0.65 -85%
Diluted (0.02) 0.30 -107% 0.10 0.63 -84%
Cumulative dividend per
common share 0.01 0.10 -90% 0.11 0.20 -45%

Book value per common
share $10.14 $9.57 6%
Tangible book value per
common share (1) 9.41 8.83 7%

Weighted average shares
outstanding
Basic 10,017 9,976 10,016 9,970
Diluted 10,017 10,171 10,063 10,187
Actual shares outstanding 10,082 10,029 10,082 10,029

Quarter Ended Year to Date
June 30, June 30, June 30, June 30,
RATIOS 2008 2007 2008 2007
Interest rate yield on
interest-earning assets,
tax equivalent 6.79% 8.46% 7.23% 8.48%
Interest rate expense on
interest-bearing
liabilities 2.95% 3.95% 3.19% 3.85%
Interest rate spread, tax
equivalent 3.83% 4.51% 4.05% 4.64%
Net interest margin, tax
equivalent 4.57% 5.54% 4.86% 5.67%
Efficiency ratio (2) 65.84% 55.81% 66.70% 56.85%
Return on average assets -0.08% 1.16% 0.19% 1.30%
Return on average equity -0.80% 12.66% 1.98% 13.84%
Average equity / average
assets 9.65% 9.17% 9.83% 9.39%

(1) Total common equity, less goodwill and other intangible assets,
divided by actual shares outstanding.
(2) Non-interest expense divided by net interest income and non-interest
income.

BALANCE SHEET
(Unaudited)
(In thousands)
Year Year
over to
Year Date
June 30, June 30, % December 31, %
ASSETS 2008 2007 Change 2007 Change
Cash and cash equivalents $92,821 $129,633 -28% $92,224 1%
Investment securities 27,764 35,467 -22% 34,182 -19%
Loans:
Commercial loans 143,967 130,143 11% 129,018 12%
Agricultural loans 79,877 82,027 -3% 70,095 14%
Real estate loans 392,468 335,583 17% 354,576 11%
Real estate loans -
construction 292,203 286,052 2% 294,398 -1%
Consumer loans 13,854 12,907 7% 11,630 19%
Loans held for sale 8,957 6,078 47% 8,139 10%
Other loans 11,284 11,576 -3% 11,208 1%
Total gross loans 942,610 864,366 9% 879,064 7%

Unearned loan fees (900) (1,286) 30% (1,060) 15%
Allowance for loan
losses (17,099) (10,168) -68% (11,174) -53%
Net loans 924,611 852,912 8% 866,830 7%

Property and equipment, net 23,973 20,299 18% 21,500 12%
Goodwill 7,389 7,389 - 7,389 -
Other assets 32,766 21,849 50% 20,583 59%
Total assets $1,109,324 $1,067,549 4% $1,042,708 6%

LIABILITIES
Deposits:
Non-interest bearing
demand deposits $218,450 $222,950 -2% $224,092 -3%
Interest bearing demand
deposits 344,623 301,729 14% 303,235 14%
Savings accounts 35,336 36,506 -3% 35,784 -1%
Time certificates 341,001 350,010 -3% 359,782 -5%
Total deposits 939,410 911,195 3% 922,893 2%

Borrowings 61,096 53,361 14% 10,402 487%
Other liabilities 6,574 7,032 -7% 7,175 -8%
Total liabilities 1,007,080 971,588 4% 940,470 7%

Shareholders' equity 102,244 95,961 7% 102,238 -
Total liabilities
and shareholders'
equity $1,109,324 $1,067,549 4% $1,042,708 6%

ADDITIONAL FINANCIAL INFORMATION
(Unaudited)
(In thousands, except ratios)

NON-PERFORMING ASSETS June 30, 2008 June 30, 2007
Delinquent loans on non-accrual status $34,885 $4,557
Delinquent loans on accrual status - -
Restructured loans 64 104
Total non-performing loans 34,949 4,661
Other real estate owned 7,289 -
Repossessed other assets - 32
Total non-performing assets $42,238 $4,693

Total non-performing assets / total assets 3.81% 0.44%

Quarter Ended Year to Date
June 30, June 30, June 30, June 30,
ALLOWANCE FOR CREDIT LOSSES 2008 2007 2008 2007
Allowance for loan losses,
beginning of period $13,264 $10,055 $11,174 $10,143
Provision for loan losses 5,650 2,325 8,700 3,350
Recoveries 85 98 169 178
Charge offs (1,900) (2,310) (2,944) (3,503)
Allowance for loan losses, end
of period 17,099 10,168 17,099 10,168
Liability for unfunded loan
commitments 981 838 981 838
Allowance for credit losses $18,080 $11,006 $18,080 $11,006

Allowance for loan losses /
gross loans 1.81% 1.18%
Allowance for credit losses /
gross loans 1.92% 1.27%
Non-performing loans /
allowance for loan losses 204.39% 45.84%

Quarter Ended Year to Date
June 30, June 30, June 30, June 30,
FINANCIAL PERFORMANCE 2008 2007 2008 2007
Average interest-earning
assets $992,442 $974,908 $980,611 $939,995
Average gross loans 921,096 857,155 906,410 842,612
Average assets 1,063,053 1,038,735 1,047,117 1,002,710
Average interest-bearing
liabilities 746,551 720,233 731,257 687,603
Average interest-bearing
deposits 699,006 701,715 699,833 659,704
Average deposits 906,747 922,556 906,544 877,676
Average liabilities 960,418 943,505 944,160 908,598
Average equity 102,635 95,230 102,956 94,112

June 30, 2008 June 30, 2007
CONSTRUCTION
LOANS BY
REGION Residential Commercial Total Residential Commercial Total
Columbia
River Gorge $13,300 $2,997 $16,297 $11,283 $6,861 $18,144
Columbia
Basin - Eastern
Washington 13,116 20,405 33,521 9,303 11,470 20,773
Columbia Basin -
Northeastern
Oregon 6,291 3,708 9,999 2,188 1,748 3,936
Central Oregon 78,008 40,297 118,305 90,742 45,039 135,781
Willamette
Valley (1) 104,388 9,693 114,081 94,749 12,669 107,418
$215,103 $77,100 $292,203 $208,265 $77,787 $286,052

(1) Includes Portland, Oregon and Vancouver, Washington metropolitan area

SOURCE Columbia Bancorp

Roger L. Christensen, President and CEO, +1-541-298-6633,
rchristensen@columbiabancorp.com, or Greg B. Spear, Vice Chair and CFO,
+1-541-298-6612, gspear@columbiabancorp.com, both of Columbia Bancorp