Columbia Banking System Announces Third Quarter 2009 Results and Declares Cash Dividend

Columbia Banking System Announces Third Quarter 2009 Results and Declares Cash
Dividend
Business Fundamentals Remain Strong; Company is Very Well Capitalized, With
Strong Liquidity and Excellent Core Deposit Base

TACOMA, Wash., Oct. 29 /PRNewswire-FirstCall/ -- Columbia Banking System, Inc.
(Nasdaq: COLB) ("Columbia") today announced third quarter 2009 results
reflecting a net loss applicable to common shareholders of $2.6 million,
compared with a net loss of $8.8 million for the third quarter of 2008. On a
diluted earnings per common share basis, the net loss was $0.11, compared with
a loss of $0.49 per share a year earlier. The loss for the quarter reflected a
provision for loan losses of $16.5 million due to the continued decline in
real estate values, principally relating to residential land, lots and lot
development loans.

"While we continue to be challenged by the ongoing decline of real estate
values, our fundamental strength provides the foundation to move forward with
strategies that are improving our franchise," said Melanie Dressel, President
and Chief Executive Officer. "We raised $120 million in capital through a
public offering, which validated the success and strength of our company. We
are maintaining our aggressive focus on managing our credit issues, and are
continuing to work toward improving earnings and increasing market share in
the areas we serve. To that end, we have brought on board talented bankers in
our new and existing market areas, who, along with our current experienced
bankers, help us attract new customers and take advantage of disruptions in
the market."

The net loss applicable to common shareholders for the nine months ended
September 30, 2009 was $8.8 million, compared with earnings of $4.2 million
for the first nine months of 2008. On a diluted per common share basis, the
net loss was $0.45, compared with income of $0.23 a year earlier.

Ms. Dressel continued, "In spite of the challenges inherent in the banking
industry today, we believe our business model places us in a strong position,
particularly as the economy improves.
The following factors reinforce our confidence in the future:

-- We remain very well capitalized, with a total risk-based capital ratio
of 19.06% at September 30, 2009, or about $224 million above the
threshold set by banking regulations to be considered well
capitalized,
which is the highest rating. Our capital ratio was 14.61% at the end
of
the second quarter 2009, and was 14.47% at the end of the first
quarter
2009
-- Our historically stable net interest margin was at 4.34%, unchanged
from
September 30, 2008.
-- We have an exceptional core deposit level of 83% of our total
deposits,
reflecting the strength of the relationships we have built with our
customers, and are an important factor in the relatively stable net
interest margin we have maintained.
-- Our diverse loan portfolio has helped us avoid concentration of risk
in
any one segment. Only 6% of the total portfolio are loans in the
residential real estate construction area, which continues to be a
challenging segment in the Pacific Northwest. Approximately 37% of
our
total portfolio is in commercial business loans.
-- Columbia's liquidity ratio of approximately 50% for the quarter
translates into over $1.5 billion of available funding for our general
operations and to meet the loan and deposit needs of our customers.
-- We continue to look to our future growth by hiring experienced teams
of
bankers who give us access to new clients and markets, and by adding
retail locations that make strategic sense for us.

-- We are proud to have received another award designating Columbia Bank
as
a great place to work. In August, we received a "Washington's Best
Workplaces 2009" award from the Puget Sound Business Journal

Capital Raise
In August 2009, Columbia raised $120 million in capital through a public
offering of 9,775,000 common shares, including 1,275,000 shares pursuant to
the underwriters' over-allotment option, at a price of $12.25 per share. The
net proceeds to the company after deducting underwriting expenses were
approximately $113.8 million. As a result of the completion of a qualifying
offering prior to December 31, 2009, the number of shares of common stock
subject to the warrant issued to the United States Treasury in connection with
Columbia's participation in the Capital Purchase Program has been reduced by
50%, from 796,046 to 398,023. Ms. Dressel commented, "We were extremely
pleased with the result of our public offering, which was a real testament to
the strength of our company. This additional capital, when added to our
already strong capital levels, gives us the flexibility to respond quickly and
effectively to business opportunities as they arise."

Revenue
Revenue (net interest income plus noninterest income) was $36.3 million for
the third quarter of 2009, up 95% from $18.6 million one year ago. The
significant increase was primarily due to the $18.5 million impairment charge
in the third quarter 2008 related to the decline in the fair value of an
investment in preferred stock issued by the Federal Home Loan Mortgage
Corporation ("Freddie Mac") and the Federal National Mortgage Association
("Fannie Mae"). Excluding the impairment charge, revenue for the third quarter
2009 was down 2% from third quarter 2008, primarily due to the impact of
nonperforming loans, and decreases in loan balances and line of credit usage.

Revenue for the nine months ended September 30, 2009 was $106.7 million, an
increase of 8% from $98.7 million for the same period in 2008. Excluding the
2008 non-recurring items consisting of the impairment charge, redemption of
Visa and MasterCard shares and gain on the sale of investment securities,
revenue for the first nine months of 2009 was down 6% from the first nine
months of 2008.

At September 30, 2009, Columbia's total assets were $3.17 billion, compared
with $3.10 billion at December 31, 2008. Total loans were $2.06 billion at
September 30, 2009, down from $2.23 billion at year-end 2008. Total
securities increased $118 million to $658.2 million at September 30, 2009 as a
result of management's asset/liability strategies. Total deposits were $2.44
billion at September 30, 2009, compared with $2.38 billion at December 31,
2008, and $2.35 billion at June 30, 2009. Core deposits, defined as demand,
savings, money market accounts and certificates of deposit under $100,000,
totaled $2.03 billion at September 30, 2009, comprising 83% of total deposits.

Ms. Dressel noted, "We have been successful in achieving a lower cost deposit
mix, as we continue to focus on core deposits and developing our customer
relationships though our community banking model. The decrease in our total
loans reflects the soft market and the resulting lower demand, as well as
payoffs in the construction loan portfolio. The decrease in our commercial
business loans is primarily a result of loan pay-downs and a decrease in line
of credit usage."

Third Quarter 2009 Operating Results

Net Interest Income
Net interest income for the third quarter of 2009 was relatively stable at
$29.1 million, a decrease of $475,000, or 2%, from $29.6 million for the third
quarter 2008, primarily due to a decrease in earning assets from the prior
year. For the nine months ended September 30, 2009, net interest income
decreased 5% to $85.6 million from $90.2 million a year earlier.

Columbia's net interest margin was 4.34% for the third quarter 2009, unchanged
from 4.34% for the third quarter of 2008, and down from 4.38% in the second
quarter 2009. On a quarterly basis, the net interest margin was 4.26% for the
first quarter of 2009, and 4.39% for the fourth quarter of 2008. Interest
reversals impacting the net interest margin for the third quarter 2009 were
$569,000, representing approximately 8 basis points.

Average interest-earning assets decreased 2% to $2.78 billion in the third
quarter of 2009, from $2.83 billion in the third quarter of 2008. The yield
on average interest-earning assets decreased 85 basis points to 5.28% in the
third quarter of 2009, from 6.13% in the third quarter of 2008. Average
interest-bearing liabilities decreased to $2.02 billion from $2.26 billion
last year. The cost of average interest-bearing liabilities decreased 95 basis
points to 1.29% in the third quarter of 2009, compared with 2.24% in the third
quarter of 2008. Ms. Dressel noted, "These results reflect the rapid decline
in interest rates during 2008. The prime rate was 5.00% at the end of the
third quarter 2008, compared to the current rate of 3.25%."

During the first nine months of 2009, Columbia's net interest margin decreased
to 4.34% from 4.37% a year earlier. Average interest-earning assets decreased
to $2.75 billion in the first nine months of 2009 from $2.88 billion in the
2008 period. The yield on average interest-earning assets decreased 107 basis
points to 5.39% in the first nine months of 2009, from 6.46% in 2008. Average
interest-bearing liabilities were $2.08 billion compared to $2.31 billion for
the first nine months of 2008. The cost of average interest-bearing
liabilities decreased 120 basis points to 1.40% in the first nine months of
2009, compared with 2.60% for the 2008 period. Interest reversals impacting
the net interest margin for the first nine months of 2009 were $1.9 million,
representing approximately 9 basis points.

Noninterest income

Total noninterest income for the third quarter 2009 was $7.2 million, compared
to a loss of $11.0 million a year earlier. The increase was primarily due to
the $18.5 million impairment charge in the third quarter 2008 related to the
decline in the fair value of an investment in preferred stock issued by the
Federal Home Loan Mortgage Corporation ("Freddie Mac") and the Federal
National Mortgage Association ("Fannie Mae"). Excluding the impact of the
impairment charge, noninterest income was down 5% from September 30, 2008.
This reduction was due to a combination of reduced volumes of merchant
services activity and decreases in other income items. Other income was down
approximately 20% from September 30, 2008 primarily due to reduced fees from
mortgage banking activity, as well as reduced income from the customer
interest rate swap program.

For the nine months ended September 30, 2009, noninterest income was $21.2
million, an increase of $12.6 million, or 149%, from the 2008 period. The
increase was primarily due to the impairment charge in the third quarter 2008
noted above. Excluding the impact of the impairment charge, noninterest income
declined 22% from the same period in 2008. Proceeds from the redemption of
Visa and MasterCard shares for the nine months ended September 30, 2009
declined $3 million from the same period in 2008, and other income for the
nine months ended September 30, 2009 declined $1.3 million, or 30% from the
same period in 2008 partially due to the receipt of life insurance proceeds of
$612,000 received in the prior year, as well as reduced fees from mortgage
banking activity and less participation in the customer interest rate swap
program.

Noninterest expense

Noninterest expense for the third quarter of 2009 was $23.1 million, a
decrease of $245,000 or 1%, from $23.4 million a year earlier. Decreases in
compensation and benefits, advertising and promotion and other expenses
resulting from the continued focus on expense control were offset by higher
regulatory premiums and additional costs of operating other real estate owned.
Regulatory premiums increased $642,000, or 111%, from the third quarter of
2008, resulting from increased FDIC assessment rates. Other real estate owned
balances increased to $18.1 million at September 30, 2009, compared to $1.3
million for the same period in 2008, contributing to a $314,000 increase in
cost of operating from September 30, 2008.

Total noninterest expense for the first nine months of 2009 was $71.6 million,
an increase of $1.3 million, or 2%, from $70.3 million a year earlier.
Decreases of 5% in compensation and employee benefits, and 7% in occupancy
expenses were again significantly offset by legal and professional fees and
FDIC regulatory premium expenses. Legal and professional fees were $2.8
million for the first nine months of 2009, compared to $1.5 million for the
first nine months of 2008. FDIC regulatory premium expenses were $4.7 million
for the first nine months of 2009, compared to $1.4 million for the same
period one year ago.

Asset Quality

Nonperforming assets as of September 30, 2009 were $148.8 million, compared to
$109.6 million at December 31, 2009, $136.1 million at June 30, 2009 and $78.2
million at September 30, 2008. Residential construction assets continue to
be the weakest part of the loan portfolio, encompassing the largest component
of nonperforming assets and the largest contributor to charge-offs.

Residential construction nonperforming assets increased $9.3 million to $81.3
million during the period, primarily due to two King County relationships
which were placed on nonaccrual status during the quarter. One is a $6.9
million lot development loan; we are pursuing a troubled debt restructure with
the borrower and have set aside a specific reserve of $2.3 million pending the
final outcome of the restructure. The other relationship comprises a
combination of vertical construction and lot loans which total $8.2 million.
We have set aside specific reserves of $2.4 million for this relationship.

At September 30, 2009, nonaccrual 1-4 family residential construction loans
totaled $65.5 million, down $4.1 million from December 31, 2008 and relatively
unchanged from June 30, 2009. Nonaccrual 1-4 family residential construction
loans accounted for 50% of the 1-4 family residential construction loan
portfolio.

Commercial real estate assets account for another $48.0 million, or 32%, of
nonperforming assets. Broken out by property type, the commercial real estate
nonperforming assets include: condominiums at $13.8 million; commercial
office-warehouse facilities of approximately $10.3 million; retail properties
of approximately $8.1 million; and office properties of about $4.0 million,
with a variety of other property types accounting for the balance of $11.8
million. Commercial real estate nonperforming assets were essentially
unchanged for the quarter.

Nonaccrual commercial real estate loans were $26.7 million, up $20.9 million
from December 31, 2009 and up $2.4 million from June 30, 2009. Nonaccrual
commercial real estate loans represent approximately 3.1% of total commercial
real estate loans at September 30, 2009, 2.8% at June 30, 2009 and 0.7% at
December 31, 2008.

Nonperforming commercial business loans increased $2.7 million during the
third quarter. At September 30, 2009, nonperforming commercial business loans
were $15 million, an increase of $12 million from December 31, 2009. This
represents approximately 2% of total commercial business loans at September
30, 2009 up from 0.4% as of December 31, 2009 and 1.6% as of June 30, 2009.

Other Real Estate Owned was $18.1 million at September 30, 2009, up $15.3
million. from $2.9 million at December 31, 2008. OREO increased $9.8 million
from June 30, 2009, consisting primarily of 1-4 family residential
construction assets. The net cost of operation of Other Real Estate Owned was
$318,000 and $590,000 for the three months and nine months ended September 30,
2009, respectively, compared to $4,000 and $(19,000) for the same periods last
year. Ms. Dressel commented, "As we have been discussing, OREO increased this
quarter as we saw natural migration."

For the quarter ended September 30, 2009, net loan charge-offs were
approximately $13.7 million, compared to $16.4 million for the same period a
year ago, and $16.4 million during the second quarter of 2009. Net
charge-offs in the 1-4 family residential construction portfolio of $5.7
million for the quarter were centered in residential land and lot development
loans. Commercial real estate charge offs of $2.4 million were primarily
related to retail construction loans. The commercial business pool had
charge-offs of approximately $4.9 million and were centered in loans related
to the construction and real estate development industries. The balance, or
approximately $700,000, was distributed across the rest of the loan portfolio.

Past due loans were $12.0 million, or 0.58% of total loans, as of September
30, 2009, down from $16.4 million, or 0.77%, of total loans as of June 30,
2009 and up from $10.4 million, or 0.46%, of total loans, at December 31,
2008.

Organizational Update
Ms. Dressel said, "We are taking advantage of strategic opportunities to fill
in our geographic footprint, while continuing our expense reduction
initiatives. Our long-awaited, full service branch in Renton opened in July.
We have received regulatory approval for a branch location in Vancouver,
Washington, which we expect to open in late fourth quarter 2009, and have
applied for a new location in Portland, Oregon , which we anticipate opening
during the first quarter of 2010."

Ms. Dressel continued, "As noted earlier, our entire banking team is focused
on increasing market share in every community we serve. With our capacity and
willingness to lend, we have attracted excellent, experienced banking teams,
most of whom were added in our Portland and Vancouver markets. Our complete
complement of products and services, including a full spectrum of investment
and wealth management capabilities and our status as a preferred SBA lender,
position us very well to meet the needs of our business, retail and private
banking customers.".

Cash Dividend Announcement
The Board of Directors has announced a quarterly cash dividend of $0.01 per
common share, which will be paid on November 25, 2009 to shareholders of
record as of the close of business on November 12, 2009.

Conference Call
Columbia's management will discuss third quarter 2009 results on a conference
call scheduled for October 29, 2009 at 1:00 p.m. PDT (4:00 p.m. EDT).
Interested parties may listen to this discussion by calling 1-888-318-7969;
Conference ID code #34709998.

A conference call replay will be available from approximately 4:00 p.m. PDT on
October 29, 2009 through midnight PST on Thursday, November 5, 2009. The
conference call replay can be accessed by dialing 1-800-642-1687 and entering
Conference ID code #34709998.

About Columbia
Headquartered in Tacoma, Washington, Columbia Banking System, Inc. is the
holding company of Columbia Bank, a Washington state-chartered full-service
commercial bank which was awarded second place in the large employer category
by Seattle Business Magazine's 100 Best Companies to Work For 2009 and was
designated one of Puget Sound Business Journal's "Washington's Best
Workplaces 2009". With the 2007 acquisitions of Mountain Bank Holding Company
and Town Center Bancorp and the 2008 internal merger of its subsidiary, Bank
of Astoria, into Columbia Bank, Columbia Banking System has 51 banking offices
in Pierce, King, Cowlitz, Kitsap, Thurston and Whatcom counties in Washington
State, and Clackamas, Clatsop, Tillamook and Multnomah counties in Oregon.
Columbia Bank does business under the Bank of Astoria name at the Bank of
Astoria's former branches located in Astoria, Warrenton, Seaside and Cannon
Beach in Clatsop County and in Manzanita and Tillamook in Tillamook County.
More information about Columbia can be found on its website at
www.columbiabank.com.

Note Regarding Forward Looking Statements

This news release includes forward looking statements, which management
believes are a benefit to shareholders. These forward looking statements
describe management's expectations regarding future events and developments
such as future operating results, growth in loans and deposits, continued
success of our style of banking and the strength of the local economy. The
words "will," "believe," "expect," "should," and "anticipate" and words of
similar construction are intended in part to help identify forward looking
statements. Future events are difficult to predict, and the expectations
described above are necessarily subject to risk and uncertainty that may cause
actual results to differ materially and adversely. In addition to discussions
about risks and uncertainties set forth from time to time in our filings with
the SEC, factors that may cause actual results to differ materially from those
contemplated by such forward looking statements include, among others, the
following possibilities: (1) local and national economic conditions are less
favorable than expected or have a more direct and pronounced effect on us than
expected and adversely affect our ability to continue internal growth at
historical rates and maintain the quality of our earning assets; (2) a
continued decline in the housing/real estate market; (3) changes in interest
rates significantly reduce interest margins and negatively affect funding
sources; (4) deterioration of credit quality that could, among other things,
increase defaults and delinquency risks in the Banks' loan portfolios (5)
projected business increases following strategic expansion activities are
lower than expected; (6) competitive pressure among financial institutions
increases significantly; (7) legislation or regulatory requirements or changes
adversely affect the businesses in which we are engaged; and (8) our ability
to realize the efficiencies we expect to receive from our investments in
personnel, acquisitions and infrastructure

Contacts: Melanie J. Dressel, President and
Chief Executive Officer
(253) 305-1911

Gary R. Schminkey, Executive Vice President
and Chief Financial Officer
(253) 305-1966

FINANCIAL STATISTICS
Columbia Banking System, Inc.

Unaudited Three Months Ended Nine Months Ended
(in thousands except per September 30, September 30,
share) -------------- -----------------
2009 2008 2009 2008
---- ---- ---- ----
Earnings
--------
Net interest income $29,118 $29,593 $85,552 $90,194
Provision for loan and
lease losses $16,500 $10,500 $48,500 $27,926
Noninterest income $7,190 $(10,946) $21,164 $8,516
Noninterest expense $23,146 $23,391 $71,641 $70,312
Net income (loss) $(1,502) $(8,759) $(5,520) $4,154
Net income (loss)
applicable to common
shareholders $(2,605) $(8,759) $(8,818) $4,154

Per Common Share
----------------
Earnings (loss) (basic) $(0.11) $(0.49) $(0.45) $0.23
Earnings (loss) (diluted) $(0.11) $(0.49) $(0.45) $0.23

Averages
--------
Total assets $3,077,005 $3,106,556 $3,053,189 $3,158,293
Interest-earning assets $2,783,121 $2,830,894 $2,753,877 $2,879,660
Loans $2,088,478 $2,241,574 $2,154,793 $2,281,129
Securities $593,516 $558,990 $563,914 $575,215
Deposits $2,395,311 $2,365,222 $2,352,774 $2,411,045
Core deposits $1,977,977 $1,925,780 $1,913,195 $1,927,515
Interest-bearing
deposits $1,857,708 $1,896,767 $1,858,977 $1,950,133
Interest-bearing
liabilities $2,019,051 $2,259,655 $2,075,524 $2,305,621
Noninterest-bearing
deposits $537,603 $468,455 $493,797 $460,912
Shareholders' equity $478,589 $344,158 $438,983 $349,754

Financial Ratios
----------------
Return on average assets (0.19%) (1.12%) (0.24%) 0.18%
Return on average common
equity (2.56%) (10.10%) (3.23%) 1.59%
Average equity to
average assets 15.55% 11.08% 14.38% 11.07%
Net interest margin 4.34% 4.34% 4.34% 4.37%
Efficiency ratio
(tax equivalent)(1) 60.85% 60.34% 62.72% 60.62%

September 30,
-------------- December 31,
Period end 2009 2008 2008
---------- ---- ---- ----
Total assets $3,167,028 $3,104,980 $3,097,079
Loans $2,063,398 $2,216,133 $2,232,332
Allowance for loan and
lease losses $51,688 $35,814 $42,747
Securities $658,227 $551,062 $540,525
Deposits $2,443,567 $2,355,821 $2,382,151
Core deposits $2,027,482 $1,944,779 $1,941,047
Shareholders' equity $527,920 $336,435 $415,385

Book value per share $16.15 $18.54 $18.82

Nonperforming assets
--------------------
Nonaccrual loans $130,718 $76,164 $106,163
Restructured loans
accruing interest - 746 587
Other real estate owned 18,137 1,288 2,874
------ ----- -----
Total nonperforming
assets $148,855 $78,198 $109,624
-------- ------- --------
Nonperforming loans to
period-end loans 6.34% 3.47% 4.78%
Nonperforming assets to
period-end assets 4.70% 2.52% 3.54%
Allowance for loan and lease
losses to period-end loans 2.50% 1.62% 1.91%
Allowance for loan and lease
losses to nonperforming
loans 39.54% 46.57% 40.04%
Allowance for loan and lease
losses to nonperforming
assets 34.72% 45.80% 38.99%
Net loan charges-offs $39,559(2) $18,711(3) $25,028(4)

(1) Noninterest expense divided by the sum of net interest income and
noninterest income on a tax equivalent basis, excluding gain/loss on
sale of investment securities, net cost (gain) of OREO, proceeds from
redemption of Visa and Mastercard shares, reversal of previously
accrued Visa litigation expense, net income from BOLI policy swap
transactions, death benefit insurance proceeds and other than
temporary security impairment charge.
(2) For the nine months ended September 30, 2009.
(3) For the nine months ended September 30, 2008.
(4) For the twelve months ended December 31, 2008.

FINANCIAL STATISTICS
Columbia Banking System, Inc.

Unaudited September 30, December 31,
------------- ------------
(in thousands) 2009 2008
---------------- ----------------
Loan Portfolio Composition
--------------------------
Commercial business $754,191 36.6% $810,922 36.3%

Real Estate:
One-to-four family residential 64,342 3.1% 57,237 2.6%
Five or more family residential
and commercial 862,730 41.8% 862,595 38.7%
------- ---- ------- ----
Total Real Estate 927,072 44.9% 919,832 41.3%

Real Estate Construction:
One-to-four family residential 130,704 6.3% 209,682 9.4%
Five or more family residential
and commercial 51,735 2.6% 81,176 3.6%
------ --- ------ ---
Total Real Estate Construction 182,439 8.9% 290,858 13.0%

Consumer 204,314 9.9% 214,753 9.6%
------- --- ------- ---
Subtotal loans 2,068,016 100.2% 2,236,365 100.2%
Less: Deferred loan fees (4,618) (0.2%) (4,033) (0.2%)
------ ---- ------ ----
Total loans $2,063,398 100.0% $2,232,332 100.0%
========== ===== ========== =====

Loans held for sale $- $1,964
=== ======

September 30, December 31,
------------- ------------
2009 2008
---------------- ----------------
Deposit Composition
-------------------
Core deposits:
Demand and other non-interest
bearing $490,512 20.1% $466,078 19.6%
Interest bearing demand 447,019 18.3% 519,124 21.8%
Money market 691,399 28.3% 530,065 22.3%
Savings 136,739 5.6% 122,076 5.1%
Certificates of deposit less than
$100,000 261,813 10.7% 303,704 12.7%
------- ---- ------- ----
Total core deposits 2,027,482 83.0% 1,941,047 81.5%

Certificates of deposit greater than
$100,000 264,982 10.8% 338,971 14.2%
Wholesale certificates of deposit
(CDARS(R)) 92,890 3.8% 39,903 1.7%
Wholesale certificates of deposit 58,213 2.4% 62,230 2.6%
------ --- ------ ---
Total deposits $2,443,567 100.0% $2,382,151 100.0%
========== ===== ========== =====

QUARTERLY FINANCIAL STATISTICS
Columbia Banking System, Inc.

Unaudited Three Months Ended
(in thousands ----------------------------------------------------
except per Sep 30 Jun 30 Mar 31 Dec 31 Sep 30
share) 2009 2009 2009 2008 2008
---- ---- ---- ---- ----
Earnings
--------
Net interest
income $29,118 $28,531 $27,903 $29,319 $29,593
Provision for
loan and
lease losses $16,500 $21,000 $11,000 $13,250 $10,500
Noninterest
income $7,190 $7,000 $6,974 $6,334 $(10,946)
Noninterest
expense $23,146 $25,314 $23,181 $21,813 $23,391
Net income
(loss) $(1,502) $(5,530) $1,512 $1,814 $(8,759)
Net income
(loss)
applicable
to common
shareholders $(2,605) $(6,631) $419 $1,344 $(8,759)

Per Common Share
----------------
Earnings (loss)
(basic) $(0.11) $(0.37) $0.02 $0.07 $(0.49)
Earnings (loss)
(diluted) $(0.11) $(0.37) $ 0.02 $ 0.07 $(0.49)

Averages
--------
Total
assets $3,077,005 $3,024,491 $3,057,861 $3,061,867 $3,106,556
Interest-
earning
assets $2,783,121 $2,728,086 $2,774,259 $2,767,854 $2,830,894
Loans $2,088,478 $2,159,415 $2,217,908 $2,214,918 $2,241,574
Securities $593,516 $554,270 $543,403 $535,763 $558,990
Deposits $2,395,311 $2,337,385 $2,324,853 $2,297,422 $2,365,222
Core
deposits $1,977,977 $1,893,419 $1,867,001 $1,865,402 $1,925,780
Interest-
bearing
deposits $1,857,708 $1,850,193 $1,869,155 $1,837,166 $1,896,767
Interest-
bearing
liabilities $2,019,051 $2,073,750 $2,135,045 $2,193,437 $2,259,655
Noninterest-
bearing
deposits $537,603 $487,192 $455,698 $460,257 $468,455
Shareholders'
equity $478,589 $417,961 $419,752 $368,184 $344,158

Financial
Ratios
---------
Return on
average
assets (0.19)% (0.73%) 0.20% 0.24% (1.12%)
Return on
average
common
equity (2.56)% (7.73%) 0.49% 1.60% (10.10%)
Average
equity to
average
assets 15.55% 13.82% 13.73% 12.02% 11.08%
Net interest
margin 4.34% 4.38% 4.26% 4.39% 4.34%
Efficiency
ratio (tax
equivalent) 60.85% 63.79% 63.59% 57.62% 60.34%

Period end
----------
Total assets $3,167,028 $3,021,857 $3,045,757 $3,097,079 $3,104,980
Loans $2,063,398 $2,119,443 $2,185,755 $2,232,332 $2,216,133
Allowance
for loan
and lease
losses $51,688 $48,880 $44,249 $42,747 $35,814
Securities $658,227 $558,011 $555,974 $540,525 $551,062
Deposits $2,443,567 $2,353,326 $2,344,406 $2,382,151 $2,355,821
Core
deposits $2,027,482 $1,932,771 $1,873,626 $1,941,047 $1,944,779
Shareholders'
equity $527,920 $411,871 $415,717 $415,385 $336,435

Book value per
common share $16.15 $18.50 $18.73 $18.82 $18.54

Nonperforming
assets
-------------
Nonaccrual
loans $130,718 $127,767 $117,340 $106,163 $76,164
Restructured
loans
accruing
interest - - - 587 746
Other real
estate
owned 18,137 8,369 4,312 2,874 1,288
------ ----- ----- ----- -----
Total
nonperforming
assets $148,855 $136,136 $121,652 $109,624 $78,198
-------- -------- -------- -------- -------
Nonperforming
loans to period-
end loans 6.34% 6.03% 5.37% 4.78% 3.47%
Nonperforming
assets to
period-end
assets 4.70% 4.51% 3.99% 3.54% 2.52%
Allowance for
loan and lease
losses to
period-end loans 2.50% 2.31% 2.02% 1.91% 1.62%
Allowance for
loan and lease
losses to
nonperforming
loans 39.54% 38.26% 37.71% 40.04% 46.57%
Allowance for
loan and lease
losses to
nonperforming
assets 34.72% 35.91% 36.37% 38.99% 45.80%
Net loan
charge-offs $13,692 $16,369 $9,498 $6,317 $16,410

CONSOLIDATED CONDENSED STATEMENTS OF INCOME
Columbia Banking System, Inc.

Three Months Nine Months
Ended Ended
(Unaudited) September 30, September 30,
------------- -------------
(in thousands except per share) 2009 2008 2009 2008
------------------------------- ---- ---- ---- ----
Interest Income
Loans $29,151 $35,590 $88,202 $114,227
Taxable securities 4,327 4,615 12,730 14,490
Tax-exempt securities 2,169 1,997 6,258 5,997
Federal funds sold and deposits in
banks 53 135 69 379
---------------------------------- -- --- -- ---
Total interest income 35,700 42,337 107,259 135,093

Interest Expense
Deposits 5,531 10,148 18,297 36,444
Federal Home Loan Bank advances 651 1,887 2,116 6,464
Long-term obligations 280 423 937 1,339
Other borrowings 120 286 357 652
---------------- --- --- --- ---
Total interest expense 6,582 12,744 21,707 44,899
---------------------- ----- ------ ------ ------

Net Interest Income 29,118 29,593 85,552 90,194
Provision for loan and lease losses 16,500 10,500 48,500 27,926
----------------------------------- ------ ------ ------ ------
Net interest income after
provision for loan and lease
losses 12,618 19,093 37,052 62,268

Noninterest Income
Service charges and other fees 3,806 3,823 10,982 11,129
Merchant services fees 1,957 2,081 5,607 6,159
Redemption of Visa and Mastercard
shares - - 49 3,028
Gain on sale of investment
securities, net - - - 882
Loss on impairment of equity
securities - (18,517) - (18,517)
Bank owned life insurance ("BOLI") 515 533 1,532 1,587
Other 912 1,134 2,994 4,248
----- --- ----- ----- -----
Total noninterest income 7,190 (10,946) 21,164 8,516

Noninterest Expense
Compensation and employee benefits 11,869 12,173 36,017 37,917
Occupancy 3,023 3,248 9,005 9,706
Merchant processing 896 961 2,589 2,731
Advertising and promotion 296 579 1,675 1,797
Data processing 1,010 909 2,974 2,507
Legal and professional fees 793 765 2,779 1,479
Taxes, licenses and fees 582 720 1,975 2,267
Regulatory premiums 1,220 578 4,719 1,414
Net cost of operation of other
real estate 318 4 590 (19)
Other 3,139 3,454 9,318 10,513
----- ----- ----- ----- ------
Total noninterest expense 23,146 23,391 71,641 70,312
------------------------- ------ ------ ------ ------

Income (loss) before income taxes (3,338) (15,244) (13,425) 472
Income tax benefit (1,836) (6,485) (7,905) (3,682)
------------------ ------ ------ ------ ------

Net Income (Loss) $(1,502) $(8,759) $(5,520) $4,154
================= ======= ======= ======= ======
Net Income (Loss) Applicable to
Common Shareholders $(2,605) $(8,759) $(8,818) $4,154
=============================== ======= ======= ======= ======

Earnings (loss) per common share
Basic $(0.11) $(0.49) $(0.45) $0.23
Diluted $(0.11) $(0.49) $(0.45) $0.23
Dividends paid per common share $0.01 $0.17 $0.06 $0.51
Weighted average common shares
outstanding 23,468 17,948 19,837 17,898
Weighted average diluted common
shares outstanding 23,468 17,948 19,837 17,994

CONSOLIDATED CONDENSED BALANCE SHEETS
Columbia Banking System, Inc.

(Unaudited) September 30, December 31,
(in thousands) 2009 2008
-------------- ---- ----
ASSETS
Cash and due from banks $74,563 $84,787
Interest-earning deposits with banks 126,355 3,943
------------------------------------ ------- -----
Total cash and cash equivalents 200,918 88,730
Securities available for sale at fair value
(amortized cost of $629,294 and $525,110,
respectively) 646,620 528,918
Federal Home Loan Bank stock at cost 11,607 11,607
Loans held for sale - 1,964
Loans, net of deferred loan fees of ($4,618)
and ($4,033), respectively 2,063,398 2,232,332
Less: allowance for loan and lease losses 51,688 42,747
----------------------------------------- ------ ------
Loans, net 2,011,710 2,189,585
Interest receivable 11,185 11,646
Premises and equipment, net 63,066 61,139
Other real estate owned 18,137 2,874
Goodwill 95,519 95,519
Core deposit intangible, net 5,112 5,908
Other assets 103,154 99,189
------------ ------- ------
Total Assets $3,167,028 $3,097,079
============ ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing $490,512 $466,078
Interest-bearing 1,953,055 1,916,073
---------------- --------- ---------
Total deposits 2,443,567 2,382,151
Federal Home Loan Bank and Federal Reserve
Bank borrowings 101,000 200,000
Securities sold under agreements to repurchase 25,000 25,000
Other borrowings 51 201
Long-term subordinated debt 25,653 25,603
Other liabilities 43,837 48,739
----------------- ------ ------
Total liabilities 2,639,108 2,681,694
Commitments and contingent liabilities

September 30, December 31,
2009 2008
---- ----
Preferred stock (no par
value, 76,898 aggregate
liquidation preference)
Authorized shares 2,000 2,000
Issued and outstanding 77 77 74,157 73,743
Common Stock (no par value)
Authorized shares 63,033 63,033
Issued and outstanding 28,099 18,151 348,431 233,192
Retained earnings 93,150 103,061
Accumulated other
comprehensive income 12,182 5,389
--------------------- ------ -----
Total shareholders'
equity 527,920 415,385
------------------- ------- -------
Total Liabilities and
Shareholders' Equity $3,167,028 $3,097,079
===================== ========== ==========

SOURCE Columbia Banking System, Inc.

Melanie J. Dressel, President and Chief Executive Officer, +1-253-305-1911; or
Gary R. Schminkey, Executive Vice President and Chief Financial Officer,
+1-253-305-1966, both of Columbia Banking System, Inc.