<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1999
[ ] 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)
420 East Third Street, Suite 200
The Dalles, Oregon 97058
(Address of principal executive offices)
(541) 298-6649
(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.
7,976,597 shares of common stock as of May 10, 1999
<PAGE> 2
COLUMBIA BANCORP
FORM 10-Q
MARCH 31, 1999
INDEX
<TABLE>
<CAPTION>
PAGE
PART I - FINANCIAL INFORMATION REFERENCE
- ------------------------------ ---------
<S> <C> <C>
Consolidated Balance Sheets as of March 31, 1999 and 3
December 31, 1998.
Consolidated Statements of Income and Comprehensive Income for the 4
quarters ended March 31, 1999 and 1998.
Consolidated Statements of Cash Flows for the three months ended March 5
31, 1999 and 1998.
Consolidated Statements of Changes in Shareholders' Equity for the 6
periods of December 31, 1996 to March 31, 1999.
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 9-10
Material Changes in Results of Operations 10-11
Loan Loss Provision 11
Liquidity and Capital Resources 11
Quantitative and Qualitative Disclosures about Market Risk 11
PART II - OTHER INFORMATION
Item 5 - Other Information 11-12
Item 6 - Exhibits and Reports on Form 8-K 12
Signatures 12
</TABLE>
2
<PAGE> 3
COLUMBIA BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------ ------------
ASSETS (Unaudited) (Audited)
<S> <C> <C>
Cash and due from banks $ 21,661,040 $ 22,643,895
Interest-bearing deposits with other banks 14,955,674 30,575,012
Federal funds sold 14,680,586 12,554,775
------------ ------------
Total cash and cash equivalents 51,297,300 65,773,682
Investment securities available-for-sale 34,031,046 29,466,769
Investment securities held-to-maturity 21,161,895 17,310,222
Restricted equity securities 1,166,450 1,117,200
------------ ------------
Total investment securities 56,359,391 47,894,191
Loans held-for-sale 7,033,373 7,818,603
Loans, net of allowance for loan losses and unearned loan fees 195,372,351 198,733,188
Property and equipment, net of depreciation 8,702,568 8,190,068
Accrued interest receivable 2,688,181 2,487,122
Goodwill 9,117,808 9,286,832
Other real estate owned 439,880 280,800
Other assets 3,543,939 1,948,763
------------ ------------
Total assets $334,554,791 $342,413,249
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest bearing demand deposits $ 64,680,007 $ 67,408,747
Interest bearing demand accounts 122,333,703 134,716,357
Savings accounts 29,654,321 27,969,402
Time certificates 71,317,926 65,585,883
------------ ------------
Total deposits 287,985,957 295,680,389
Notes payable 8,792,693 9,734,095
Accrued interest payable and other liabilities 2,449,211 2,242,545
------------ ------------
Total liabilities 299,227,861 307,657,029
------------ ------------
Shareholders' equity:
Common stock, no par value; 10,000,000 shares
authorized, 7,967,932 issued and outstanding
(7,949,032 at December 31, 1998) 14,208,691 14,125,315
Additional paid-in capital 6,317,732 6,317,732
Retained earnings 14,879,334 14,257,975
Accumulated other comprehensive income, net of tax -78,827 55,198
------------ ------------
Total shareholders' equity 35,326,930 34,756,220
------------ ------------
$334,554,791 $342,413,249
============ ============
</TABLE>
See accompanying notes.
3
<PAGE> 4
COLUMBIA BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
Three months ended
March 31,
--------------------------------
1999 1998
----------- -----------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 5,068,903 $ 4,034,363
Interest on investments
Taxable investment securities 426,140 413,481
Nontaxable investment securities 230,010 212,122
Other interest income 444,318 100,939
----------- -----------
Total interest income 6,169,371 4,760,905
INTEREST EXPENSE
Interest bearing demand and savings 984,778 858,484
Interest on time deposit accounts 938,374 682,640
Other borrowed funds 116,420 88,153
----------- -----------
Total interest expense 2,039,572 1,629,277
----------- -----------
NET INTEREST INCOME 4,129,799 3,131,628
PROVISION FOR LOAN LOSSES 350,000 225,000
----------- -----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,779,799 2,906,628
NONINTEREST INCOME
Service charges and fees 499,713 407,243
Credit card discounts and fees 99,381 81,092
Financial services department income 85,289 63,974
Mortgage servicing revenue 246,421 --
Gain on sale of loans, net of discount 64,890 88,785
Mortgage loan origination income 204,486 98,222
Other noninterest income 158,450 124,677
----------- -----------
Total noninterest income 1,358,630 863,993
NONINTEREST EXPENSE
Salaries and employee benefits 1,883,383 1,260,091
Occupancy expense 295,700 198,730
Credit card processing fees 69,571 49,150
Office Supplies 61,062 42,919
Data processing expense 138,934 86,331
Other noninterest expenses 995,543 639,670
----------- -----------
Total noninterest expense 3,444,193 2,276,891
----------- -----------
INCOME BEFORE INCOME TAXES 1,694,236 1,493,730
PROVISION FOR INCOME TAXES 594,926 487,853
----------- -----------
NET INCOME $ 1,099,310 $ 1,005,877
=========== ===========
OTHER COMPREHENSIVE INCOME, NET
Unrealized gain or loss on AFS securities, net (127,273) 5,469
Reclassification for gain included in net income (6,752) (30,960)
----------- -----------
(134,025) (25,491)
----------- -----------
COMPREHENSIVE INCOME $ 965,285 $ 980,386
=========== ===========
Earnings per share of common stock
Net Income Basic $ 0.14 $ 0.15
Net Income Diluted $ 0.14 $ 0.14
Weighted average common shares outstanding
Basic 7,959,859 6,898,983
Diluted 8,109,358 7,117,743
</TABLE>
See accompanying notes
4
<PAGE> 5
COLUMBIA BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three months ended
March 31,
----------------------------------
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOWS RELATED TO OPERATING ACTIVITIES
Net income $ 1,099,310 $ 1,005,877
Adjustments to reconcile net income to net cash from operating activities:
Loss (Gain) on sale or call of investments (6,610) (33,960)
Depreciation and amortization 322,064 119,553
Federal Home Loan Bank stock dividend (22,600) (14,400)
Provision for loan losses 350,000 225,000
Increase (decrease) in cash due to changes in assets/liabilities
Accrued interest receivable (201,059) (12,881)
Other assets (1,911,411) (397,341)
Accrued interest payable and other liabilities 206,666 (399,676)
------------ ------------
NET CASH FROM OPERATING ACTIVITIES (163,641) 492,172
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of available-for-sale securities -- 3,086,176
Proceeds from maturity of available-for-sale securities 5,840,157 8,664,868
Proceeds from the maturity of held-to-maturity securities 420,000 210,298
Purchases of held-to-maturity securities (3,685,880) --
Purchases of available-for-sale securities (11,457,783) (7,000,158)
Purchase of restricted equity securities (26,650) --
Net change in loans made to customers 4,496,067 (5,345,768)
Payments made for purchase of property and equipment (868,243) (86,143)
------------ ------------
NET CASH FROM INVESTING ACTIVITIES (5,282,332) (470,727)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in demand deposit and savings accounts (13,426,475) 814,292
Net proceeds from time deposits 5,732,043 5,551,254
Net borrowings of short term debt (941,403) 3,721,165
Dividends paid (477,951) (228,845)
Proceeds from stock options exercised and sales of common stock 83,376 390,043
------------ ------------
NET CASH FROM FINANCING ACTIVITIES (9,030,409) 10,247,909
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (14,476,382) 10,269,354
CASH AND CASH EQUIVALENTS, beginning of period 65,773,682 19,712,501
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 51,297,300 $ 29,981,855
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid in cash $ 2,024,679 $ 1,678,029
Taxes paid in cash $ 200,000 $ 69,000
SCHEDULE OF NONCASH ACTIVITIES
Change in unrealized loss on available-for-sale securities, net of tax $ (134,025) $ (25,491)
Cash dividend declared and payable after quarter-end $ 477,896 $ 346,800
</TABLE>
See accompanying notes.
5
<PAGE> 6
<TABLE>
<CAPTION>
Accumulated
Additional Other Total
Common Paid-in Retained Comprehensive Shareholders'
Shares Stock Capital Earnings Income Equity
------------ ------------ ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1996 2,254,841 $ 5,139,218 $ 6,317,732 $ 8,087,264 $ (11,232) $ 19,532,982
(Audited)
Stock options exercised 21,415 214,001 -- -- -- 214,001
Sale of common stock 12,195 174,999 -- -- -- 174,999
Cash dividend paid or declared -- -- -- (842,229) -- (842,229)
Net Income and Comprehensive
Income -- -- -- 3,886,409 21,324 3,907,733
------------ ------------ ------------ ------------ ------------ ------------
BALANCE, December 31, 1997 2,288,451 5,528,218 6,317,732 11,131,444 10,092 22,987,486
(Audited)
Stock options exercised 26,110 236,607 -- -- -- 236,607
Sale of common stock 1,009,375 8,360,490 -- -- -- 8,360,490
3 for 2 stock split 1,154,755 -- -- (4,037) -- (4,037)
2 for 1 stock split 3,470,341 -- -- -- -- --
Cash dividend paid or declared -- -- -- (1,587,285) -- (1,587,285)
Net Income and Comprehensive
Income -- -- -- 4,717,853 45,106 4,762,959
------------ ------------ ------------ ------------ ------------ ------------
BALANCE, December 31, 1998 7,949,032 14,125,315 6,317,732 14,257,975 55,198 34,756,220
(Audited)
Stock options exercised 18,900 83,376 -- -- -- 83,376
Cash dividend paid or declared -- -- -- (477,951) -- (477,951)
Net Income and Comprehensive
Income -- -- -- 1,099,310 (134,025) 965,285
------------ ------------ ------------ ------------ ------------ ------------
BALANCE, March 31, 1999 7,967,932 $ 14,208,691 $ 6,317,732 $ 14,879,334 $ (78,827) $ 35,326,930
(Unaudited) ============ ============ ============ ============ ============ ============
</TABLE>
See accompanying notes.
6
<PAGE> 7
COLUMBIA BANCORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Principles of Consolidation
The interim consolidated financial statements include the accounts of
Columbia Bancorp, a bank holding company ("Columbia"), and its wholly-owned
subsidiaries, Columbia River Bank ("CRB"), Valley Community Bank ("VCB")
and Valley Community Mortgage Services, Inc., after elimination of
intercompany transactions and balances. CRB and VCB are Oregon
state-chartered banks, headquartered in The Dalles and McMinnville, Oregon,
respectively. Substantially all activity of Columbia is conducted through
its subsidiary banks.
The interim financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. The financial information included in this interim report has
been prepared by management without audit by independent public
accountants. Columbia's annual report will contain audited financial
statements. All adjustments including normal recurring accruals necessary
for fair presentation of results of operations for the interim periods
included herein have been made. The results of operations for the three
months ended March 31, 1999 are not necessarily indicative of results to be
anticipated for the year ending December 31, 1999.
Certain reclassifications have been made to prior period financial
statements to conform with current period presentation.
2. Recent Corporate Activity
On November 30, 1998, Columbia completed its acquisition of Valley
Community Bancorp and its wholly owned subsidiaries, VCB and Valley
Community Mortgage Services, Inc. Following the acquisition, Valley
Community Bancorp was effectively dissolved and its subsidiaries became
direct subsidiaries of Columbia. The acquisition price of $15,101,542.50 or
$16.30 per share of VCB common stock was accounted for as a purchase
transaction.
On October 19, 1998, CRB ceased using the "Juniper Banking Company" and
"Klickitat Valley Bank" assumed business names. After that date, all bank
branches began using the "Columbia River Bank" name.
3. Loans and Reserve for Loan Losses
The composition of the loan portfolio was as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------- -------------
(Unaudited) (Audited)
<S> <C> <C>
Commercial $ 44,713,099 $ 41,274,990
Agriculture 31,589,947 34,603,691
Real estate 105,834,784 108,516,555
Consumer 15,938,751 16,568,629
Other 797,990 933,494
------------- -------------
198,874,571 201,897,359
Allowance for loan losses (2,694,006) (2,380,220)
Deferred loan fees (808,214) (783,951)
------------- -------------
$ 195,372,351 $ 198,733,188
============= =============
</TABLE>
7
<PAGE> 8
Transactions in the reserve for loan losses were as follows for the three
months ended March 31:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Balance at beginning of period $ 2,380,220 $ 1,638,633
Provision charged to operations 350,000 250,000
Recoveries 36,248 24,390
Loans charged off (72,462) (15,492)
----------- -----------
Balance at end of period $ 2,694,006 $ 1,872,531
=========== ===========
</TABLE>
Columbia has adopted a policy for placement of loans on nonaccrual status
after they become 90 days past due unless otherwise formally waived.
Further, Columbia may place loans that are not contractually past due or
the are deemed fully collateralized on nonaccrual status to promote better
oversight and review of loan arrangements. Loans on nonaccrual status at
March 31, 1999 and December 31, 1998 were approximately $1,349,000 and
$1,082,000, respectively.
As of March 31, 1999, Columbia identified loans totaling $675,000 on
which the interest rate or payment schedule was modified from original
terms to accommodate a borrower's weakened financial position. There was
$825,000 of loans in this category at December 31, 1998.
At March 31, 1999, Columbia had $440,000 in the other real estate owned
("OREO") category, which represents assets held through loan foreclosure or
recovery activities. There were $281,000 in OREO at December 31, 1998.
4. Earnings Per Share
Basic earning per share excludes dilution and is computed by dividing net
income by the weighted average common shares outstanding for the period.
Diluted earnings per share reflect the potential dilution that could occur
if common shares were issued pursuant to the exercise of options under
stock option plans. 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 for all prior stock dividends or splits.
5. Recently Issued Accounting Standards
Columbia does not expect the recently issued SFAS No. 133, 134 and 135 to
materially impact the financial condition or results of operations of
Columbia.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD LOOKING INFORMATION
Forward-looking statements with respect to the financial condition, results
of operations and the business of Columbia are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
set forth in such statements. These include, without limitation: Columbia's
dependence on the timely development, introduction and customer acceptance of
new products; the impact of competition on revenues and margins; and other risks
and uncertainties, including statements relating to the year 2000, as may be
detailed from time to time in Columbia's public announcements and filings with
the SEC. Forward-looking statements can be identified by the use of
forward-looking terminology, such as "may", "will", "should", "expect",
"anticipate", "estimate", "continue", "plans", "intends", or other similar
terminology. Columbia does not intend to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the date of
the Report, other than in its periodic filings with the SEC, or to reflect the
occurrence of unanticipated events.
OVERVIEW
Columbia Bancorp ("Columbia") achieved another record for first quarter
earnings while continuing with aggressive expansion plans evidenced by the
opening of an office in Pendleton, Oregon in January 1999.
Columbia reported net income of $1,099,310, or $.14 per diluted share for
the three months ended March 31, 1999. This represented a 9% increase in net
income, as compared to $1,005,877, or $.14 per diluted share, for the three
months ended March 31, 1998. The increased earnings during the quarter ended
March 31, 1999 reflected both the expansion of Columbia's interest-earning
assets and increased net interest income and noninterest income.
The net income added to shareholders' equity during the first three months
of 1999 was offset, in part, by dividends declared and paid of $477,951. A first
quarter dividend of $.06 per share was paid May 1 to shareholders of record
April 15. With the payment of the declared dividend, approximately 43% of
earnings will have been returned to shareholders, the remainder being retained
to fund the continued strong growth of Columbia.
Columbia's subsidiary, Columbia River Bank ("CRB") continues an aggressive
expansion plan and, on January 4, 1999, opened its first branch in Pendleton,
Oregon. Pendleton is the largest town in eastern Oregon, with a population of
over 16,000. This is the second branch CRB has opened in Eastern Oregon. On
September 14, 1998, CRB opened a branch in the rapidly growing city of
Hermiston, which is 26 miles west of Pendleton. The Hermiston office was a new
market for CRB and a natural extension for CRB's brand of relationship banking.
The branch is operating out of leased facilities with plans for a permanent
facility in the future. Management believes that the Bank's agricultural and
small business lending expertise and commitment to exceptional customer service
will be well received in the both Eastern Oregon communities.
Columbia's plans to open a second branch in Bend, Oregon are proceeding as
planned. Construction is under way on purchased property in West Bend in the
Shevlin Business Park, an office park development. Bend is the largest market in
which CRB operates, and the potential for strong growth in CRB's downtown office
and the development of Bend's west side allow significant opportunities.
Growth in current markets, the expansion of its base of interest earning
assets, and increased revenue generated from non-interest income all contribute
to the goal of achieving Columbia's mission of being a high performing banking
corporation providing superior financial services to the communities it serves.
MATERIAL CHANGES IN FINANCIAL CONDITION
Changes in the balance sheet for the three months ended March 31, 1999
include a decrease in total assets, primarily in cash and cash equivalents and
loans. Investment securities increased, while total deposits and notes payable
decreased.
9
<PAGE> 10
At March 31, 1999, total assets decreased 2.3%, or approximately $7.9
million, over total assets at December 31, 1998. Major components of the change
in total assets were:
- $3.4 million decrease in loans
- $14.5 million decrease in cash and cash equivalents
- $8.5 million increase in investment securities
The decrease in loans is reflected in decreases in all loan categories,
except commercial loans. Management attributes the change to seasonal reduction
in real estate construction and agricultural operating loans. The market areas
Columbia serve continue to experience robust local economies.
Columbia experienced a decrease in deposits of approximately $7.7 million
during the first three months of 1999, specifically as follows:
- Interest bearing demand deposits decreased $12.4 million
- Non-interest bearing deposits decreased $2.7 million
- Savings deposits increased $1.7 million
- Time certificate deposits increased $5.7 million
The decrease in interest bearing demand deposits, and related decrease in
cash and cash equivalents, was due primarily to a customer's withdrawal
from a sinking fund account for debt payment at another financial institution.
Notwithstanding this deposit withdrawal, management believes deposit increases
are due to continuing expansion in current market areas served.
All other changes experienced in asset and liability categories during the
first three months of 1999 were comparatively modest.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Total interest income increased $1,408,466 for the quarter ended March 31,
1999, as compared to the same period in 1998. This increase is primarily due to
the increase in loans held in 1999 as compared to 1998.
Total interest expense also increased $410,295 for the three months ended
March 31, 1999, as compared to the same period in 1998. This increase is
primarily due to the increase in interest bearing deposits held during 1999 as
compared to 1998.
Columbia's net interest income increased by $998,172 for the three months
ended March 31, 1999. Diluted net income per common share remained flat at $.14
for the first three months of 1999 compared to $.14 for the first three months
of 1998. Cash earnings in the first quarter were $.16 per diluted share compared
to $.14 per diluted share in the like quarter a year ago.
Noninterest income increased approximately $494,600 for the three months
ended March 31, 1999 as compared to the same period in 1998. This increase is
primarily attributable to increases in income generated by CRB's mortgage group
as well as increased income generated by service charges and fees on deposit
accounts.
Noninterest expense increased approximately $1,167,300 for the three months
ended March 31, 1999 as compared to the comparable 1998 period. The increase for
the three-month period was primarily attributable to increases in salaries and
employee benefits and other expenses. The formation and staffing of the newly
opened Hermiston and Pendleton branches of CRB, and growth in the CRB mortgage
group, and the commitment and investment in technology and new products, were
primary forces in the increased expense in these categories.
Columbia's "Y2K" efforts (the enterprise-wide program to prepare Columbia's
computer systems and applications for the year 2000) are within planned
timelines and proceeding according to internal plans. Columbia is committed to
addressing these Y2K challenges in a prompt and responsible manner and has
dedicated resources to do so. Management has completed an assessment of its
automated systems and has implemented a plan to resolve these issues, including
purchasing appropriate computer technology. Columbia's Y2K compliance plan has
five phases. These phases are (1) project management, (2) awareness, (3)
assessment, (4) testing, and (5) remediation and implementation. Columbia has
substantially completed phases (1) through (4), although appropriate follow-up
activities are continuing to occur, and Columbia is currently involved in the
testing phase of the Y2K plan. Expected completion of phase 5 will be June 30,
1999. However, Columbia will continue to monitor its systems for
10
<PAGE> 11
compliance and state of readiness. Completed and ongoing efforts also include
community seminars on the subject and the education of customers.
LOAN LOSS PROVISION
During the three months ended March 31, 1999, Columbia charged a $350,000
loan loss provision to operations, as compared to $225,000 charged during the
same period in 1998. Loans charged off, net of loan recoveries, was $36,214
during the three months ended March 31, 1999, as compared to net recoveries of
$8,898 for the like period in 1998.
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 Columbia.
LIQUIDITY AND CAPITAL RESOURCES
Columbia has adopted policies to maintain a relatively liquid position to
enable it to respond to changes in the financial environment and ensure
sufficient funds are available to meet customers' needs for borrowing and
deposit withdrawals. Generally, Columbia'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 also includes a review of the changes that appear
in the consolidated statement of cash flows for the first three months of 1999.
The statement of cash flows includes operating, investing and financing
categories. Operating activities include net income of $1,099,310, which is
adjusted for non-cash items and increases or decreases in cash due to changes in
certain assets and liabilities. Investing activities consist 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 deposit
accounts, and reflect the dividend paid to shareholders.
The Federal Reserve Board ("FRB") and Federal Deposit Insurance Corporation
("FDIC") have established minimum requirements for capital adequacy for bank
holding companies and member banks. The requirements address both risk-based
capital and leveraged capital. The regulatory agencies may establish higher
minimum requirements if, for example, a corporation has previously received
special attention or has a high susceptibility to interest rate risk. The
following reflects Columbia's various capital ratios at March 31, 1999, as
compared to regulatory minimums.
<TABLE>
<CAPTION>
At March 31, 1999 Regulatory Minimum
----------------- ------------------
<S> <C> <C>
Tier-one capital 11.36% 4%
Total risk-based capital 12.53% 8%
Leverage ratio 8.18% 4%
</TABLE>
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has not been a material change in the quantitative and qualitative
market risks faced by Columbia from the risk disclosures reported in Columbia's
form 10-K covering the fiscal year ended December 31, 1998.
PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
CRB Branching Activities
On January 4, 1999 CRB opened a new branch in Pendleton, Oregon. Pendleton
is the largest town in eastern Oregon with a population of over 16,000. The new
branch operates from 1,776 square feet of leased space in downtown Pendleton.
Columbia has acquired land for the construction of a permanent branch facility.
11
<PAGE> 12
In September of 1998 CRB opened a new branch in Hermiston, Oregon.
Hermiston, which has a population of over 11,000, is 100 miles east of The
Dalles. Hermiston and Pendleton represent the major population bases of Umatilla
County in eastern Oregon. Agricultural activities in the area include cattle
ranching and field corps such as wheat, onions, potatoes and hay. The area also
supports a growing service and small business economy based on expanding
government employment and the construction of a Wal-Mart distribution center
outside of Hermiston.
Columbia's plans to open a second CRB branch in Bend, Oregon are proceeding
as planned. Construction of a new facility in the Shevlin Business Park, an
office park development in the western part of Bend, is in progress, and the new
branch should be open by the summer of 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit 27 - Article 9 Financial Data Schedule for Form 10-Q
(b) No current reports on Form 8-K were filed during the quarter ended March
31, 1999.
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 12, 1999 /s/ TERRY L. COCHRAN
--------------------------------------------
Terry L. Cochran
President & Chief Executive Officer
Dated: May 12, 1999 /s/ NEAL T. MCLAUGHLIN
--------------------------------------------
Neal T. McLaughlin, EVP, Chief Financial
Officer - Columbia River Bank; and
Chief Financial Officer - Columbia Bancorp
12
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM COLUMBIA
BANCORP'S CONSOLIDATED FINANCIAL STATEMENTS CONTAINED IN ITS QUARTERLY REPORT ON
FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 21,661,040
<INT-BEARING-DEPOSITS> 14,955,674
<FED-FUNDS-SOLD> 14,680,586
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 35,197,496
<INVESTMENTS-CARRYING> 21,161,895
<INVESTMENTS-MARKET> 0
<LOANS> 205,099,730
<ALLOWANCE> 2,694,006
<TOTAL-ASSETS> 334,554,791
<DEPOSITS> 287,985,957
<SHORT-TERM> 8,492,693
<LIABILITIES-OTHER> 2,449,211
<LONG-TERM> 300,000
14,208,691
0
<COMMON> 0
<OTHER-SE> 21,118,239
<TOTAL-LIABILITIES-AND-EQUITY> 334,554,791
<INTEREST-LOAN> 5,068,903
<INTEREST-INVEST> 656,150
<INTEREST-OTHER> 444,318
<INTEREST-TOTAL> 6,169,371
<INTEREST-DEPOSIT> 1,923,152
<INTEREST-EXPENSE> 2,039,572
<INTEREST-INCOME-NET> 4,129,799
<LOAN-LOSSES> 350,000
<SECURITIES-GAINS> 6,752
<EXPENSE-OTHER> 2,092,315
<INCOME-PRETAX> 1,694,236
<INCOME-PRE-EXTRAORDINARY> 1,099,310
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,099,310
<EPS-PRIMARY> .14
<EPS-DILUTED> .14
<YIELD-ACTUAL> 866
<LOANS-NON> 1,349,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 675,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,380,220
<CHARGE-OFFS> 72,462
<RECOVERIES> 36,248
<ALLOWANCE-CLOSE> 2,694,006
<ALLOWANCE-DOMESTIC> 2,694,006
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
