<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
/ X / Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1996
/ / Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
---------- ----------
Commission file number 0-27938
---------
COLUMBIA BANCORP
(Exact name of registrant as specified in its charter)
93-1193156
Oregon (I.R.S. Employer
(State of Incorporation) Identification Number)
316 East Third Street
The Dalles, Oregon 97058
(Address of principal executive offices)
(541) 298-6647
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
1,310,733 shares as of May 7, 1996
<PAGE> 2
COLUMBIA BANCORP
FORM 10-QSB
MARCH 31, 1996
INDEX
<TABLE>
<CAPTION>
PAGE
PART I - FINANCIAL INFORMATION REFERENCE
- - ------------------------------ ---------
<S> <C>
Consolidated Balance Sheets as of March 31, 1996 and
December 31, 1995. 3
Consolidated Statements of Income for the three months ended March 31,
1996 and 1995. 4
Consolidated Statements of Cash Flows for the three months ended March
31, 1996 and 1995. 5
Consolidated Statements of Changes in Shareholders' Equity for the
periods of December 31, 1994 to March 31, 1996. 6
Notes to Consolidated Financial Statements 7-8
Management's Discussion and Analysis of Financial
Condition and Results of Operations:
Overview 9
Material Changes in Financial Condition 9
Material Changes in Results of Operations 9-10
Loan Loss Provision 10
Liquidity and Capital Resources 10-11
Pro forma financial statements for Columbia Bancorp
and Klickitat Valley Bank (proposed acquisition
by Columbia Bancorp) 12-15
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K 16
Signatures 17
Exhibit Index 18
</TABLE>
2
<PAGE> 3
COLUMBIA BANCORP
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------- -------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 6,361,407 $ 9,116,982
Federal funds sold 12,565,240 5,272,765
------------- -------------
Total cash and cash equivalents 18,926,647 14,389,747
Investment securities available-for-sale 7,998,388 7,665,899
Investment securities held-to-maturity 5,111,550 4,667,326
Federal Home Loan Bank stock 374,400 374,400
------------- -------------
Total investment securities 13,484,338 12,707,625
Loans net of allowance for loan losses and unearned loan fees 70,055,937 71,626,519
Property and equipment, net of depreciation 3,048,823 3,001,157
Accrued interest receivable 968,716 1,032,995
Other assets 311,302 379,645
------------- -------------
Total Assets $ 106,795,763 $ 103,137,688
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest bearing demand deposits $ 21,947,000 $ 22,415,285
Interest bearing demand accounts 31,894,597 29,433,688
Savings accounts 15,819,536 15,219,688
Time certificates and IRA accounts 25,376,646 24,424,614
------------- -------------
Total deposits 95,037,779 91,493,275
Notes payable to Federal Home Loan Bank 1,200,000 1,200,000
Accrued interest payable and other liabilities 483,892 406,502
------------- -------------
Total liabilities 96,721,671 93,099,777
Employee stock ownership plan shares subject to put option 866,471 866,471
Shareholders' equity:
Common stock, no par value; 4,000,000 shares
authorized, 1,310,733 issued and outstanding
(1,306,693 at December 31, 1995) 2,914,803 2,903,770
Additional paid-in capital 3,647,483 3,619,583
Retained earnings 3,534,395 3,537,895
Net unrealized loss on securities available-for-sale, net of tax (22,589) (23,337)
------------- -------------
10,074,092 10,037,911
Less: employee stock ownership plan shares subject to put option (866,471) (866,471)
------------- -------------
Total shareholders' equity 9,207,621 9,171,440
------------- -------------
$ 106,795,763 $ 103,137,688
============= =============
</TABLE>
See accompanying notes.
3
<PAGE> 4
COLUMBIA BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
The Quarter Ended
March 31,
-----------------------
1996 1995
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $1,863,325 $1,697,965
Interest on investments:
Taxable investment securities 129,011 160,320
Nontaxable investment securities 63,309 78,642
Interest on federal funds sold 119,033 1,336
---------- ----------
2,174,678 1,938,263
INTEREST EXPENSE
Interest bearing deposit and savings accounts 402,017 352,535
Interest on time deposit accounts 335,417 192,017
Other borrowed funds 16,231 46,753
---------- ----------
Net interest income before provision
for loan losses 1,421,013 1,346,958
PROVISION FOR LOAN LOSSES 30,000 20,500
Net interest income after provision ---------- ----------
for loan losses 1,391,013 1,326,458
NONINTEREST INCOME
Service charges and fees 199,300 221,249
Credit card discounts and fees 61,852 47,304
Financial services department, net of expenses 25,229 19,682
Other noninterest income 50,778 26,987
---------- ----------
Total noninterest income 337,159 315,222
NONINTEREST EXPENSE
Salaries and employee benefits 653,833 628,305
Occupancy expense 74,560 77,744
Credit card processing fees 42,164 39,056
Office Supplies 18,441 47,546
FDIC assessment 500 44,701
Data processing expense 47,036 52,171
Other noninterest expenses 383,940 291,340
---------- ----------
Total noninterest expense 1,220,474 1,180,863
---------- ----------
INCOME BEFORE INCOME TAXES 507,698 460,817
PROVISION FOR INCOME TAXES 183,640 175,195
---------- ----------
NET INCOME $ 324,058 $ 285,622
========== ==========
Earnings per share of common stock $ .25 $ .22
========== ==========
</TABLE>
4
<PAGE> 5
COLUMBIA BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
The Three Months Ended
March 31,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 324,058 $ 285,622
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation 61,468 53,712
Provision for loan losses 30,000 20,500
Gain on sale of assets (5,313) --
Increase (decrease) in cash due to changes in certain assets and liabilities:
Accrued interest receivable 64,279 73,140
Other assets 68,343 (159,372)
Accrued interest payable and other liabilities 77,390 131,627
------------ ------------
Net cash provided by operating activities 620,225 405,229
Cash flows from investing activities:
Proceeds from the maturity of available-for-sale securities 1,429,361 1,450,000
Proceeds from the maturity of held-to-maturity securities 105,542 --
Purchases of available-for-sale securities (1,758,824) --
Purchases of held-to-maturity securities (549,833) --
Net change in loans made to customers 1,540,582 (268,085)
Purchases of premises and equipment (148,929) (23,103)
Proceeds from the sale of premises and equipment 40,000 --
------------ ------------
Net cash provided by investing activities 657,899 1,158,812
Cash flows from financing activities:
Net change in demand deposits and savings accounts 2,592,472 (2,336,054)
Proceeds from issuance of and (payments) for maturing time deposits, net 952,032 (490,647)
Net increase in federal funds purchased -- 200,000
Dividends paid (327,558) (281,210)
Proceeds from stock options 41,830 3,800
Payment of mortgage indebtedness -- (7,937)
------------ ------------
Net cash provided (used) by financing activities 3,258,776 (2,912,048)
Net increase (decrease) in cash and cash equivalents 4,536,900 (1,348,007)
Cash and cash equivalents at beginning of period 14,389,747 6,914,625
------------ ------------
Cash and cash equivalents at end of period $ 18,926,647 $ 5,566,618
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid in cash $ 1,410,092 $ 1,336,023
============ ============
SCHEDULE OF NONCASH ACTIVITIES
Change in unrealized loss on available-for-sale
securities, net of tax $ 748 $ 81,385
------------ ------------
</TABLE>
See accompanying notes.
5
<PAGE> 6
COLUMBIA BANCORP
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
Unrealized gain
(Loss) on ESOP
Additional available for sale plan shares Total
Paid-in Retained investment subject to Shareholder
Shares Amount Capital Earnings securities put options Equity
------ ------ --------- -------- ------------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1994 432,631 2,884,221 3,567,638 2,332,649 (315,391) (504,750) 7,964,367
Cash dividends -- -- -- (281,210) -- -- (281,210)
Stock options exercised 1,000 6,668 16,730 -- -- -- 23,398
3 for 1 stock split 867,262 -- -- -- -- -- --
Stock options exercised 5,800 12,881 35,215 -- -- -- 48.096
Changes in unrealized loss on
AFS securities, net of tax -- -- -- -- 292,054 -- 292,054
Changes in ESOP shares subject
to put option -- -- -- -- -- (361,721) (361,721)
Net income -- -- -- 1,486,456 -- -- 1,486,456
--------- ---------- ---------- ---------- -------- -------- ----------
BALANCE, December 31, 1995 1,306,693 2,903,770 3,619,583 3,537,895 $(23,337) (866,471) $9,171,440
Stock options exercised 3,540 7,868 27,900 -- -- -- 35,768
Cash dividends -- -- -- (327,558) -- -- (327,558)
Stock options exercised 500 3,165 -- -- -- -- 3,165
Changes in unrealized loss on
AFS securities, net of tax -- -- -- -- 748 -- 748
Net income -- -- -- 324,058 -- -- 324,058
--------- ---------- ---------- ---------- -------- --------- ----------
BALANCE, March 31, 1996 1,310,733 $2,914,803 $3,647,483 $3,534,395 $(22,589) $(866,471) $9,207,621
========= ========== ========== ========== ======== ========= ==========
</TABLE>
See accompanying notes.
6
<PAGE> 7
COLUMBIA BANCORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
The interim consolidated financial statements include the accounts of
Columbia Bancorp, a bank holding company (Bancorp), and its wholly owned
subsidiary, Columbia River Banking Company (Bank). Bancorp was incorporated
on October 3, 1995, and became the holding company of the Bank through
merger. The effective date of the merger was January 1, 1996, and the
transaction was consummated on January 13, 1996, on which date Bancorp
acquired 100% of the common stock of the Bank, and the shareholders of the
Bank became shareholders of Bancorp. The accompanying financial statements
have been prepared to reflect the change in reporting entity as of December
31, 1995. Substantially all activity of Bancorp is conducted through its
subsidiary bank. The Bank is an Oregon state-chartered bank which provides
commercial banking services.
The interim consolidated financial statements are unaudited, but include
all adjustments, consisting only of normal accruals, which Bancorp
considers necessary for a fair presentation of the results of operations
for such interim periods.
All significant intercompany balances and transactions have been eliminated
in consolidation.
The interim consolidated financial statements should be read in conjunction
with the consolidated financial statements, including the notes thereto,
included in Bancorp's 1995 Annual Report to Shareholders.
2. Business Combination
In January 1996, Columbia Bancorp entered into an Agreement and Plan of
Merger with Klickitat Valley Bank (Klickitat), a community bank
headquartered in Goldendale, Washington, with branch operations in White
Salmon, Washington. The merger, if approved by the shareholders of
Klickitat, will occur no later than October 31, 1996. It is anticipated the
business combination will be accomplished through the exchange of 8.5
shares Bancorp common stock for each share of Klickitat common stock. The
transaction is expected to be accounted for as a pooling of interests.
3. Loans and Reserve for Loan Losses
The composition of the loan portfolio was as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Commercial 16,836,625 15,681,009
Agriculture 11,864,281 13,469,863
Real estate 30,782,129 32,097,048
Consumer 10,731,570 10,591,334
Other 838,753 723,469
------------ ------------
71,053,358 72,562,723
Allowance for loan losses (751,960) (723,862)
Less deferred loan fees (245,461) (212,342)
------------ ------------
$ 70,055,937 $ 71,626,519
============ ============
</TABLE>
7
<PAGE> 8
Transactions in the reserve for loan losses were as follows for the three
months ended March 31:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Balance at beginning of period $ 723,862 $ 605,839
Provision charged to operations 30,000 20,500
Recoveries 28,065 12,190
Loans charged off (29,967) (4,382)
--------- ---------
Balance at end of period $ 751,960 $ 634,147
========= =========
</TABLE>
It is Bancorp's policy to place loans on nonaccrual status whenever the
collection of all or a part of the principal balance is in doubt. Loans
placed on nonaccrual status may or may not be contractually past due at the
time of such determination, and may or may not be secured by collateral.
Loans on nonaccrual status at March 31, 1996 and December 31, 1995 were
approximately $260,451 and $257,000, respectively.
Loans past due 90 days or more on which Bancorp continued to accrue
interest were approximately $800 at March 31, 1996, and approximately
$29,000 at December 31, 1995. There were no loans on which the interest
rate or payment schedule were modified from their original terms to
accommodate a borrower's weakened financial position at March 31, 1996 or
December 31, 1995.
4. Earnings Per Common Share
Primary earnings per common share is calculated by dividing net income by
the weighted average shares outstanding. Weighted average shares
outstanding consist of common shares outstanding and common stock
equivalents attributable to outstanding stock options.
The weighted average number of shares and common share equivalents have
been adjusted to give retroactive effect to the 3-for-1 stock split in
September 1995.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Columbia Bancorp reported net income of $324,058, or $.25 per share for the
three months ended March 31, 1996. This represented a 13.5% increase in net
income, as compared to $285,622, or $.22 per share, for the three months ended
March 31, 1995. The increased earnings during the quarter ended March 31, 1996
reflected primarily the expansion of Bancorp's interest-earning assets and
increased net interest income.
The net income added to shareholders' equity during the first quarter of
1996 was offset by dividends paid to shareholders of $327,558. The $.25 per
share dividend reflected an 15% increase over the per share dividend paid in
1995.
MATERIAL CHANGES IN FINANCIAL CONDITION
Material changes in financial condition for the three months ended March
31, 1996 include an increase in total assets, primarily in securities and
federal funds sold. Funds were provided for these changes primarily by an
increase in total deposits.
At March 31, 1996, total assets increased 3.5%, or approximately $3.66
million, over total assets at December 31, 1995. An increase of $4.5 million in
cash and cash equivalents, a $.8 million increase in investment securities, and
a $1.6 million decrease in loans were the major components of the change in
total assets. The decrease in loans was primarily due to a decrease in
agricultural borrowings. This is caused by farmers delaying 1995 crop sales
until the first quarter of the new year in order delay income recognition until
1996. Proceeds from the crop sales are then used to decrease outstanding
borrowings. This is a normal trend and is not a cause for concern to management.
The Bank usually experiences some run off of loans during the first quarter of
the year.
At March 31, 1996, Bancorp held $12.6 million in federal funds sold. The
increase in this category represented the increase in cash and cash equivalents
as compared to cash and cash equivalents at December 31, 1995. Federal funds
sold represents overnight investments of surplus funds, which can fluctuate
widely on a day-to-day basis depending on cash needs.
Bancorp experienced an increase in deposits of $3.5 million during the
first three months of 1996. Interest bearing deposits increased $2.5 million,
and time certificates and IRA accounts increased $1.0 million at March 31, 1996
as compared to December 31, 1995. Management believes this increase is due to
continuing marketing efforts and helped by continued customer dissatisfaction
with merger and consolidation activities by competition in the markets served by
the Bank.
All other changes experienced in asset and liability categories during the
first three months of 1996 were comparatively modest.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Total interest income increased $236,415 for the three months ended March
31, 1996 as compared to the same periods in 1995. This increase is primarily due
to the increase in loans and federal funds held in 1996 as compared to 1995.
Total interest expense also increased $162,360 for the quarter ended March
31, 1996 as compared to 1995. This increase is primarily due to the increase in
deposits held during 1996 as compared to 1995.
9
<PAGE> 10
The increase in interest earned, offset in part by the increase in interest
paid, served to increase Bancorp's net interest income by $74,055 for the first
quarter of 1996 over the comparable quarter of 1995. Net income per common share
increased to $.25 for the first three months of 1996 from $.22 for the first
three months of 1995.
Noninterest income increased approximately $22,000 for the three months
ended March 31, 1996 as compared to the same period in 1995. This increase is
attributable to increases in income generated by the Banks credit card program,
the financial services division of the Bank, and from other noninterest income.
These increases were offset in part by a decrease in service charges and fees on
deposit accounts.
Noninterest expense increased approximately $40,000 for the three months
ended March 31, 1996 as compared to the comparable 1995 period. The increase for
the three month period was primarily attributable to increases in salaries and
employee benefits and other noninterest expenses. Other noninterest expenses
increased primarily due to professional expenses related to the formation of
Bancorp as the holding company for the Bank, the initial filing of registration
of Bancorp with the Securities and Exchange Commission, and the proposed merger
with Klickitat. Decreases in Office Supplies expense, FDIC Assessments and Data
Processing expenses partially offset other increases.
Salaries and employee benefits increased approximately $25,500, or 4%,
during the first three months of 1996 as compared to the 1995 three-month
period. Management believes this increase was primarily due to deferred
compensation expense and routine adjustments in officer and staff salary.
LOAN LOSS PROVISION
During the three months ended March 31, 1996, Bancorp charged a $30,000
loan loss provision to operations, as compared to $20,500 charged during the
same period in 1995. Loans charged off, net of loan recoveries, was $1,902
during the quarter ended March 31, 1996 as compared to net recoveries of $7,808
for the 1995 three-month period.
Management believes that the reserve for loan losses is adequate for
potential loan losses, based on management's assessment of various factors,
including present delinquent and nonperforming loans, past history of industry
loan loss experience, and present and anticipated future economic trends
impacting the areas and customers served by Bancorp.
LIQUIDITY AND CAPITAL RESOURCES
Bancorp's subsidiary, Columbia River Banking Company, has adopted policies
to maintain a relatively liquid position to enable it to respond to changes in
the Bank's needs and financial environment. Generally, the Bank's major sources
of liquidity are customer deposits, sales and maturities of investment
securities, the use of federal funds markets and net cash provided by operating
activities. Scheduled loan repayments are a relatively stable source of funds,
while deposit inflows and unscheduled loan prepayments, which are influenced by
general interest rate levels, interest rates available on other investments,
competition, economic conditions and other factors, are not.
The analysis of liquidity should also include a review of the changes that
appear in the consolidated statement of cash flows for the first quarter of
1996. The statement of cash flows includes operating, investing and financing
categories. Operating activities include net income of $324,058, which is
adjusted for non-cash items and increases or decreases in cash due to changes in
certain assets and liabilities. Investing activities consisted primarily of both
proceeds from and purchases of securities, and the impact of the net growth in
loans. Financing activities present the cash flows associated with the Bank's
deposit accounts, and reflect the dividend paid to shareholders.
10
<PAGE> 11
At March 31, 1996, the Bank's Tier 1 and total risk-based capital ratios
under the Federal Reserve Board's ("FRB") risk-based capital guidelines were
11.50% and 12.37%, respectively. The FRB's minimum risk-based capital ratio
guidelines for Tier 1 and total capital are 4% and 8%, respectively.
At March 31, 1996, the Bank's capital-to-assets ratio under leverage ratio
guidelines was approximately 9.54%. The FRB's current minimum leverage capital
ratio guideline is 3%.
11
<PAGE> 12
COLUMBIA BANCORP AND KLICKITAT VALLEY BANK
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 1996
<TABLE>
<CAPTION>
KLICKITAT
COLUMBIA VALLEY PRO FORMA PRO FORMA
BANCORP BANK ADJUSTMENTS COMBINED
------- ---- ----------- --------
(Note 1)
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 18,926,647 $ 3,064,303 $ 21,990,950
Investment securities:
Investments available-for-sale 8,372,788 -- 8,372,788
Investments held-to-maturity 5,111,550 36,526,954 41,638,504
------------- ------------- -------------
Total investment securities 13,484,338 36,526,954 50,011,292
Loans 70,807,897 33,989,937 104,797,834
Allowance for loan loss (751,960) (347,632) (1,099,592)
------------- ------------- -------------
Loans, net 70,055,937 33,642,305 103,698,242
Property and equipment, net 3,048,823 704,537 3,753,360
Other assets 1,280,018 949,444 2,229,462
------------- ------------- -------------
Total assets $ 106,795,763 $ 74,887,543 $ 181,683,306
============= ============= =============
LIABILITIES
Deposits:
Demand $ 21,947,000 $ 8,228,195 $ 30,175,195
Savings and interest-bearing demand 47,714,133 33,516,597 81,230,730
Certificates of deposit 25,376,646 24,794,817 50,171,463
------------- ------------- -------------
Total deposits 95,037,779 66,539,609 161,577,388
Short-term borrowings -- 406,810 406,810
Notes payable 1,200,000 -- 1,200,000
Other liabilities 483,892 350,977 834,869
------------- ------------- -------------
Total liabilities 96,721,671 67,297,396 164,019,067
Employee stock ownership plan shares
subject to put option 866,471 -- 866,471
STOCKHOLDERS' EQUITY
Common stock 2,914,803 1,095,460 975,208 4,985,471
Additional paid-in capital 3,647,483 2,204,540 (975,208) 4,876,815
Retained earnings 3,534,395 4,290,147 -- 7,824,542
Unrealized gain (loss) on investments
available-for-sale, net of tax (22,589) -- -- (22,589)
------------- ------------- ------------- -------------
10,074,092 7,590,147 -- 17,664,239
Less: employee stock ownership plan
shares subject to put option (866,471) -- -- (866,471)
------------- ------------- ------------- -------------
Total stockholders' equity 9,207,621 7,590,147 -- 16,797,768
Total liabilities and stock-
holders' equity $ 106,795,763 $ 74,887,543 $ -- $ 181,683,306
============= ============= ============= =============
</TABLE>
12
<PAGE> 13
COLUMBIA BANCORP AND KLICKITAT VALLEY BANK
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1996
---------------------------------
KLICKITAT
COLUMBIA VALLEY PRO FORMA
BANCORP BANK COMBINED
---------- ---------- ----------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $1,863,325 $ 870,338 $2,733,663
Interest on investment securities 192,320 495,666 687,986
Other interest income 119,033 23,150 142,183
---------- ---------- ----------
Total interest income 2,174,678 1,389,154 3,563,832
---------- ---------- ----------
INTEREST EXPENSE
Interest on deposit accounts 737,434 658,536 1,395,970
Interest on borrowings 16,231 3,162 19,393
---------- ---------- ----------
Total interest expense 753,665 661,698 1,415,363
---------- ---------- ----------
NET INTEREST INCOME 1,421,013 727,456 2,148,469
PROVISION FOR LOAN LOSSES 30,000 -- 30,000
---------- ---------- ----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,391,013 727,456 2,118,469
---------- ---------- ----------
NONINTEREST INCOME
Service charges, commissions and fees 286,381 44,985 331,366
Other noninterest income 50,778 26,538 77,316
---------- ---------- ----------
Total noninterest income 337,159 71,523 408,682
---------- ---------- ----------
NONINTEREST EXPENSE
Salaries and employee benefits 653,833 265,440 919,273
Occupancy and data processing 121,596 25,933 147,529
Other noninterest expense 445,045 247,350 692,395
---------- ---------- ----------
Total noninterest expense 1,220,474 538,723 1,759,197
---------- ---------- ----------
INCOME BEFORE INCOME TAXES 507,698 260,256 767,954
PROVISION FOR INCOME TAXES 183,640 55,840 239,480
---------- ---------- ----------
NET INCOME $ 324,058 $ 204,416 $ 528,474
========== ========== ==========
AVERAGE COMMON EQUIVALENT
SHARES OUTSTANDING (Note 2) 1,310,056 109,546 2,241,197
========== ========== ==========
NET INCOME PER SHARE $ .25 $ 1.87 $ .24
========== ========== ==========
</TABLE>
13
<PAGE> 14
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1995
---------------------------------
KLICKITAT
COLUMBIA VALLEY PRO FORMA
BANCORP BANK COMBINED
---------- ---------- ----------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $1,697,965 $ 750,913 $2,448,878
Interest on investment securities 238,962 470,062 709,024
Other interest income 1,336 21,407 22,743
---------- ---------- ----------
Total interest income 1,938,263 1,242,382 3,180,645
---------- ---------- ----------
INTEREST EXPENSE
Interest on deposit accounts 544,552 555,189 1,099,741
Interest on borrowings 46,753 3,651 50,404
---------- ---------- ----------
Total interest expense 591,305 558,840 1,150,145
---------- ---------- ----------
NET INTEREST INCOME 1,346,958 683,542 2,030,500
PROVISION FOR LOAN LOSSES 20,500 -- 20,500
---------- ---------- ----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,326,458 683,542 2,010,000
---------- ---------- ----------
NONINTEREST INCOME
Service charges, commissions and fees 288,235 41,969 330,204
Other noninterest income 26,987 19,105 46,092
---------- ---------- ----------
Total noninterest income 315,222 61,074 376,296
---------- ---------- ----------
NONINTEREST EXPENSE
Salaries and employee benefits 628,305 256,641 884,946
Occupancy and data processing 129,915 23,449 153,364
Other noninterest expense 422,643 192,681 615,324
---------- ---------- ----------
Total noninterest expense 1,180,863 472,771 1,653,634
---------- ---------- ----------
INCOME BEFORE INCOME TAXES 460,817 271,845 732,662
PROVISION FOR INCOME TAXES 175,195 60,860 236,055
---------- ---------- ----------
NET INCOME $ 285,622 $ 210,985 $ 496,607
========== ========== ==========
AVERAGE COMMON EQUIVALENT
SHARES OUTSTANDING (Note 2) 1,298,186 109,546 2,229,327
========== ========== ==========
NET INCOME PER SHARE $ .22 $ 1.93 $ .22
========== ========== ==========
</TABLE>
14
<PAGE> 15
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The pro forma combined balance sheet and statement of income present the
combined financial position of Columbia Bancorp and Klickitat Valley Bank as of
March 31, 1996 and for the quarters ended March 31 1996 and 1995, and assuming
that the proposed merger had occurred as of March 31, 1996. Such pro forma
financial information is based upon the historical balance sheet data of
Columbia Bancorp and Klickitat Valley Bank, giving effect to the proposed merger
on the pooling of interests method of accounting and to the pro forma
adjustments described below. The pro forma combined balance sheet and statement
of income should be read in conjunction with the historical financial statements
and notes thereto of Columbia Bancorp and Klickitat Valley Bank.
1. The unaudited pro forma combined balance sheet reflects the issuance of
931,141 shares of Columbia Bancorp common stock to holders of Klickitat
Valley Bank common stock using the exchange ratio of 8.5 to 1, derived by
using the outstanding shares of Klickitat Valley Bank at March 31, 1996. A
pro forma adjustment of $975,208 to common stock and additional paid-in
capital is necessary to reflect the difference between issuance of 931,141
shares of Columbia Bancorp common stock with an aggregate value of
$2,070,668 and the par value of Klickitat Valley Bank stock that will be
canceled of $1,095,460. There were no other significant pro forma
adjustments made to the balance sheets or statements of income for Bancorp
or Klickitat Valley Bank to arrive at the unaudited pro forma combined
balance sheet and unaudited pro forma combined statements of income. Total
costs to be incurred by Bancorp and Klickitat Valley Bank in connection
with the merger are estimated at $325,000. These costs, relating to legal,
accounting, printing, and other expenses, will be charged to expenses of
the respective Banks in the periods incurred and no pro forma adjustment
have been made for anticipated merger costs.
2. Pro forma weighted average shares outstanding for the quarter ended March
31, 1996 and 1995, reflect the issuance of 8.5 shares of Bancorp common
stock for each share of Klickitat Valley Bank common stock.
3. The historical financial statements of Klickitat Valley Bank are included
as Item 16.1 in the exhibits to this Form 10-QSB filing.
15
<PAGE> 16
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
6.1 Financial Statements for Klickitat Valley Bank
(proposed acquisition by Columbia Bancorp)
6.2 Agreement and Plan of Merger Between Columbia Bancorp and Klickitat Valley
Bank, January 13, 1996 (proposed acquisition by Columbia Bancorp): A copy
of this exhibit was attached as Exhibit 15.1 to Columbia Bancorp's Form
10-SB filed March 1, 1996, and is hereby incorporated herein by this
reference.
6.3 No reports on Form 8-K were filed during the period for which this report
is filed.
16
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COLUMBIA BANCORP
Dated: May __, 1996 ___________________________________
Terry L. Cochran
President & Chief Executive Officer
Dated: May __, 1996 ___________________________________
Richard J. Croghan, Chief Financial Officer and
Chief Accounting Officer - Columbia River Banking
Company; Acting Chief Financial Officer and Chief
Accounting Officer - Columbia Bancorp
17
<PAGE> 18
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
EXHIBITS PAGE
- - -------- ----
<S> <C> <C>
6.1 Financial Statements for Klickitat Valley Bank 19-24
(proposed acquisition by Columbia Bancorp)
6.2 Agreement and Plan of Merger Between Columbia Bancorp and Klickitat Valley
Bank, January 13, 1996 (proposed acquisition by Columbia Bancorp): A copy
of this exhibit was attached as Exhibit 15.1 to Columbia Bancorp's Form
10-SB filed March 1, 1996, and is hereby incorporated herein by this
reference.
6.3 No reports on Form 8-K were filed during the period for which this report
is filed.
</TABLE>
18
<PAGE> 1
EXHIBIT 6.1
KLICKITAT VALLEY BANK
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Cash and due from banks $ 2,164,303 $ 3,493,105
Federal funds sold 900.000 1,000,000
----------- -----------
Total cash and cash equivalents 3,064,303 4,493,105
Investment securities 36,278,954 36,498,182
Federal Home Loan Bank Stock 248,000 248,000
----------- -----------
Total investment securities 36,526,954 36,746,182
Loans 33,989,937 32,899,135
Less allowance for loan losses 347,632 347,632
----------- -----------
Loans - net 33,642,305 32,551,503
Bank premises and equipment, net 704,537 717,916
Accrued interest receivable 906,555 782,881
Other assets 42,889 56,262
----------- -----------
1,653,981 1,557,059
$74,887,543 $75,347,849
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest bearing demand deposits $ 8,228,195 $ 9,401,965
Interest bearing demand accounts 26,532,008 27,454,841
Savings accounts 6,984,589 6,984,069
Time certificates and IRA accounts 24,794,817 23,541,048
----------- -----------
Total deposits 66,539,609 67,381,923
Treasury tax and loan note payable 406,810 97,381
Accrued interest payable 217,545 203,877
Accrued profit sharing payable 28,890 107,728
Accrued federal income tax payable 60,424 55,096
Other liabilities 44,118 55,863
----------- -----------
757,787 519,945
Total liabilities 67,297,396 67,901,868
Shareholders' equity:
Common stock, no par value; 500,000 shares authorized, 109,546
issued and outstanding (109,546 at December 31, 1995) 1,095,460 1,095,460
Surplus 2,204,540 2,204,540
Retained earnings 4,290,147 4,145,981
----------- -----------
Total shareholders' equity 7,590,147 7,445,981
----------- -----------
$74,887,543 $75,347,849
=========== ===========
</TABLE>
19
<PAGE> 2
KLICKITAT VALLEY BANK
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
The Quarter Ended
March 31,
-----------------------
1996 1995
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 870,338 $ 750,913
Interest on investments:
Taxable investment securities 374,900 365,425
Nontaxable investment securities 120,766 104,637
Interest on federal funds sold 14,984 17,848
Other interest and dividend income 8,166 3,559
---------- ----------
1,389,154 1,242,382
INTEREST EXPENSE
Interest bearing deposit and savings accounts 360,611 336,306
Interest on time deposit accounts 297,925 218,883
Other borrowed funds 3,162 3,651
---------- ----------
Total interest expense 661,698 558,840
---------- ----------
NET INTEREST INCOME 727,456 683,542
OTHER NONINTEREST INCOME
Service charges and fees 44,985 41,969
Other noninterest income 26,538 19,105
---------- ----------
Total other noninterest income 71,523 61,074
OTHER NONINTEREST EXPENSE
Salaries and employee benefits 265,440 256,641
Occupancy expense 19,849 16,611
Office Supplies 13,494 10,878
FDIC assessment 500 35,563
Data processing expense 6,084 6,838
Other noninterest expenses 233,356 146,240
---------- ----------
Total noninterest expense 538,723 472,771
---------- ----------
INCOME BEFORE INCOME TAXES 260,256 271,845
PROVISION FOR INCOME TAXES 55,840 60,860
---------- ----------
$ 204,416 $ 210,985
========== ==========
Earnings per share of common stock $ 1.87 $ 1.93
========== ==========
</TABLE>
20
<PAGE> 3
KLICKITAT VALLEY BANK
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
The Three Months Ended
March 31,
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
Net Income $ 204,416 $ 210,985
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation 26,369 25,039
Amortization of premiums and discounts on
investment securities 9,906 6,702
Gain on sale of investments (6,798) (175)
Increase (decrease) in cash due to changes in certain assets and liabilities:
Accrued interest receivable (123,674) (23,769)
Other assets 13,373 (132,223)
Federal income tax payable 5,328 58,350
Accrued interest payable 13,668 51,269
Profit Sharing Payable (78,838) (72,940)
Other liabilities (11,745) (6,289)
----------- -----------
Net cash provided by operating activities 52,005 116,949
Cash flows from investing activities:
Net increase in loans (1,090,802) (811,502)
Purchases of investment securities (6,473,238) (2,031,335)
Proceeds from maturities and calls of investment
securities 6,689,230 3,446,987
Purchases of premises and equipment (12,862) (2,102)
----------- -----------
Net cash provided (used) by investing activities (887,672) 602,048
Cash flows from financing activities:
Net increase (decrease) in treasury tax and loan
note payable 309,429 (39,012)
Payment of dividends (60,250) (54,773)
Net increase (decrease) in deposits (842,314) 1,960,566
----------- -----------
Net cash provided (used) by financing activities (593,135) 1,866,781
Net increase (decrease) in cash and cash equivalents (1,428,802) 2,585,778
Cash and cash equivalents at beginning of period 4,493,105 3,404,141
----------- -----------
Cash and cash equivalents at end of period $ 3,064,303 $ 5,989,919
=========== ===========
</TABLE>
21
<PAGE> 4
KLICKITAT VALLEY BANK
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
TOTAL
COMMON RETAINED STOCKHOLDER
STOCK SURPLUS EARNINGS EQUITY
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1994 $1,095,460 $2,204,540 $3,417,141 $6,717,141
Net income -- -- 1,002,704 1,002,704
Cash dividends ($2.50 per share) -- -- (273,864) (273,864)
---------- ---------- ---------- ----------
BALANCE, December 31, 1995 1,095,460 2,204,540 4,145,981 $7,445,981
Net income -- -- 204,416 204,416
Cash dividends ($.55 per share) -- -- (60,250) (60,250)
---------- ---------- --------- ----------
BALANCE, March 31, 1996 $1,095,460 $2,204,540 $4,290,147 $7,590,147
========== ========== ========== ==========
</TABLE>
See accompanying notes.
22
<PAGE> 5
KLICKITAT VALLEY BANK
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
The interim financial statements present the accounts of Klickitat Valley
Bank ("KVB"), a Washington state-chartered bank which provides commercial
banking services.
The interim financial statements are unaudited, but include all adjustments,
consisting only of normal accruals, which KVB considers necessary for a fair
presentation of the results of operations for such interim periods.
The interim financial statements should be read in conjunction with the
consolidated financial statements, including the notes thereto, included in
KVB's 1995 Annual Report to Shareholders.
2. Business Combination
In January 1996, KVB entered into an Agreement and Plan of Merger with
Columbia Bancorp ("Bancorp"), a bank holding company. (Bancorp was
incorporated on October 3, 1995, and became the holding company of Columbia
River Banking Company ("Bank") through merger. The effective date of the
merger was January 1, 1996, and the transaction was consummated on January
13, 1996, on which date Bancorp acquired 100% of the common stock of the
Bank, and the shareholders of the Bank became shareholders of Bancorp.
Substantially all activity of Bancorp is conducted through its subsidiary
bank. The Bank is an Oregon state-chartered bank which provides commercial
banking services.) The merger, if approved by the shareholders of KVB, will
occur no later than October 31, 1996. It is anticipated the business
combination will be accomplished through the exchange of 8.5 shares Bancorp
common stock for each share of KVB common stock. The transaction is expected
to be accounted for as a pooling of interests.
3. Loans and Reserve for Loan Losses
The composition of the loan portfolio was as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
---------- ------------
<S> <C> <C>
Commercial and Agricultural 8,116,370 7,119,941
Real estate
Residential 17,777,000 17,550,000
Commercial 4,858,000 5,029,000
Consumer 2,640,232 2,622,976
Dealer & other 598,335 577,218
----------- -----------
33,989,937 32,899,135
Allowance for loan losses (347,632) (347,632)
----------- -----------
$33,642,305 $32,551,503
----------- -----------
</TABLE>
23
<PAGE> 6
Transactions in the reserve for loan losses were as follows for the three
months ended March 31:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Balance at beginning of period $347,632 $348,516
Provision charged to operations -- --
Recoveries -- 1,565
Loans charged off -- (2,449)
-------- --------
Balance at end of period $347,632 $347,632
======== ========
</TABLE>
It is KVB's policy to place loans on nonaccrual status whenever the
collection of all or a part of the principal balance is in doubt. Loans
placed on nonaccrual status may or may not be contractually past due at
the time of such determination, and may or may not be secured by
collateral. Loans on nonaccrual status at March 31, 1996 and December 31,
1995 were approximately $31,000 and $51,000, respectively.
Loans past due 90 days or more on which KVB continued to accrue interest
were approximately $75,000 at March 31, 1996, and approximately $31,000 at
December 31, 1995. There were no loans on which the interest rate or
payment schedule were modified from their original terms to accommodate a
borrower's weakened financial position at March 31, 1996 or December 31,
1995.
4. Earnings Per Common Share
Primary earnings per common share is calculated by dividing net income by
the weighted average shares outstanding. Weighted average shares
outstanding consist of common shares outstanding.
24
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 6,361,407
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 12,565,240
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 5,111,550
<INVESTMENTS-MARKET> 8,372,788
<LOANS> 70,807,897
<ALLOWANCE> (751,960)
<TOTAL-ASSETS> 106,795,763
<DEPOSITS> 95,037,779
<SHORT-TERM> 1,200,000
<LIABILITIES-OTHER> 483,892
<LONG-TERM> 0
0
0
<COMMON> 2,914,803
<OTHER-SE> 5,426,347
<TOTAL-LIABILITIES-AND-EQUITY> 106,795,763
<INTEREST-LOAN> 1,863,325
<INTEREST-INVEST> 311,353
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 2,174,678
<INTEREST-DEPOSIT> 737,434
<INTEREST-EXPENSE> 753,665
<INTEREST-INCOME-NET> 1,421,013
<LOAN-LOSSES> 30,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,220,474
<INCOME-PRETAX> 507,698
<INCOME-PRE-EXTRAORDINARY> 507,698
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 324,058
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>