<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/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 0-20288
COLUMBIA BANKING SYSTEM, INC.
(Exact name of small business issuer as specified in its charter)
Washington 91-1422237
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1102 Broadway Plaza
Tacoma, Washington 98402
(Address of principal executive offices) (Zip Code)
(206) 305-1900
(Issuer's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the issuer: (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
The number of shares of the issuer's Common Stock outstanding at
April 30, 1996 was 3,286,221.
<PAGE>
TABLE OF CONTENTS
PART I -- FINANCIAL INFORMATION
Page
Item 1. Financial statements
Consolidated Statements of Operations - three months
ended March 31, 1996 and 1995 2
Consolidated Balance Sheets - March 31, 1996
and December 31, 1995 3
Consolidated Statements of Shareholders' Equity -
twelve months ended December 31, 1995 and
three months ended March 31, 1996 4
Consolidated Statements of Cash Flows -
three months ended March 31, 1996 and 1995 5
Notes to consolidated financial statements 6
Item 2. Management discussion and analysis of financial
condition and results of operations 8
PART II -- OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K 13
Signatures 13
1
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
Columbia Banking System, Inc.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
(in thousands except per share) 1996 1995
- - -----------------------------------------------------------------------------
<S> <C> <C>
Interest Income
Loans $ 8,198 $ 6,583
Investment securities 270
Securities available for sale 410 50
Deposits with banks 178 39
- - -----------------------------------------------------------------------------
Total interest income 8,786 6,942
Interest Expense
Deposits 3,795 2,765
Federal Home Loan Bank advances 437 256
Other borrowings 64 72
- - -----------------------------------------------------------------------------
Total interest expense 4,296 3,093
Net Interest Income 4,490 3,849
Provision for loan losses 330 300
- - -----------------------------------------------------------------------------
Net interest income after provision for loan losses 4,160 3,549
Noninterest Income
Service charges and other fees 551 441
Mortgage banking 160 88
Credit card fees and other 454 354
- - -----------------------------------------------------------------------------
Total noninterest income 1,165 883
Noninterest Expense
Compensation and employee benefits 1,819 1,872
Occupancy 816 681
Professional Services 124 116
Advertising and promotion 180 131
Printing and supplies 89 102
Regulatory premiums and assessments 64 160
Data processing 158 142
Gains on, and net cost of, real estate owned (110)
Other 1,267 893
- - -----------------------------------------------------------------------------
Total noninterest expense 4,517 3,987
Income before income taxes 808 445
Provision for income taxes
- - -----------------------------------------------------------------------------
Net Income $ 808 $ 445
=============================================================================
Per share (on average shares outstanding):
Net Income $ 0.23 $ 0.13
Fully diluted net income 0.23 0.13
Average number of common and common equivalent
shares outstanding 3,543 3,482
Fully diluted average common and common equivalent
shares oustanding 3,796 3,741
See accompanying notes to consolidated financial statements.
</TABLE>
2
<PAGE>
CONSOLIDATED BALANCE SHEETS
Columbia Banking System, Inc.
<TABLE>
<CAPTION>
March 31, December 31,
(in thousands) 1996 1995
- - -----------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and due from banks $ 15,935 $ 18,244
Interest-earning deposits with banks 24,181 12,635
Securities available for sale:
U.S. Treasury & Government Agencies 16,713 6,948
Mortgage-backed 11,955 12,446
FHLB stock 4,005 3,281
- - -----------------------------------------------------------------------------
Total securities available for sale 32,673 22,675
Loans held for sale 2,545 1,367
Loans 370,158 353,093
Less: allowance for loan losses 4,015 3,748
- - -----------------------------------------------------------------------------
Loans, net 366,143 349,345
Interest Receivable 2,517 2,469
Premises and equipment, net 13,373 13,736
Real estate owned 3,304
Other 1,560 1,431
- - -----------------------------------------------------------------------------
Total Assets $458,927 $425,206
=============================================================================
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing $ 53,712 $ 52,991
Interest-bearing 332,017 308,884
- - -----------------------------------------------------------------------------
Total Deposits 385,729 361,875
Federal Home Loan Bank advances 35,000 25,000
Other liabilities 2,849 3,669
Convertible subordinated notes 2,680 2,695
- - ----------------------------------------------------------------------------
Total liabilities 426,258 393,239
Shareholders' equity:
Preferred stock (no par value)
Authorized, 2,000,000 shares;
None outstanding
March 31, December 31,
Common stock (no par value) 1996 1995
--------- ----------
<S> <C> <C>
Authorized shares 10,000 10,000
Issued and outstanding 3,286 3,274 30,873 30,806
Retained Earnings 2,082 1,274
Unrealized losses on securities available for sale (286) (113)
- - -----------------------------------------------------------------------------
Total shareholders' equity 32,669 31,967
- - -----------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $458,927 $425,206
=============================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Columbia Banking System, Inc.
<TABLE>
<CAPTION>
Common stock Unrealized Total
Number of Retained Gains and Shareholders'
(in thousands) Shares Amount Earnings (Losses) Equity
- - -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at
December 31, 1994 3,258 $30,703 ($1,481) ($361) $28,861
Net income 2,755 2,755
Issuance of shares
of common stock, net 16 103 103
Change in unrealized
gains and (losses) 248 248
- - -----------------------------------------------------------------------------
Balance at
December 31, 1995 3,274 30,806 1,274 (113) 31,967
Net income 808 808
Issuance of shares
of common stock, net 12 67 67
Change in unrealized
gains and (losses) (173) (173)
- - -----------------------------------------------------------------------------
Balance at
March 31, 1996 3,286 $30,873 $2,082 ($286) $32,669
=============================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Columbia Banking System, Inc.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
(in thousands) 1996 1995
- - -----------------------------------------------------------------------------
<S> <C> <C>
Operating Activities
Net income $ 808 $ 445
Adjustments to reconcile net income (loss)
to net cash provided (used) by operating activities:
Provision for loan losses 330 300
Losses (gains) on real estate owned 41 (12)
Provision for depreciation and amortization 464 295
Net losses (gains) on sale of investing assets 40 (22)
(Increase) decrease in loans held for sale (1,178) 846
Increase in interest receivable (48) (196)
Increase in interest payable 49 304
Net changes in other assets and liabilities (1,017) (211)
- - -----------------------------------------------------------------------------
Net cash provided (used) by operating activities (511) 1,749
Investing Activities
Proceeds from maturities of securities
available for sale 207
Proceeds from maturities of mortgage-backed
securities available for sale 333
Proceeds from maturities of mortgage-backed securities 645
Purchases of securities available for sale (10,626)
Purchases of investment securities (527)
Loans originated and acquired, net of principal collected (17,201) (24,072)
Purchases of premises and equipment (275) (2,190)
Proceeds from disposal of premises and equipment 140
Proceeds from sale of real estate owned 3,263
Other, net (43)
- - -----------------------------------------------------------------------------
Net cash used by investing activities (24,159) (26,187)
Financing Activities
Net increase in deposits 23,854 27,922
Proceeds from FHLB advances and other long-term debt 10,000
Proceeds from issuance of common stock 53 5
- - -----------------------------------------------------------------------------
Net cash provided by financing activities 33,907 27,927
- - -----------------------------------------------------------------------------
Increase in cash and cash equivalents 9,237 3,489
Cash and cash equivalents at beginning of period 30,879 13,658
- - -----------------------------------------------------------------------------
Cash and cash equivalents at end of period $40,116 $17,147
=============================================================================
Supplemental information:
Cash paid for interest $ 4,246 $ 2,789
Loans foreclosed and transferred to real estate owned
Issuance of common stock from conversion of
convertible subordinated notes 14
See accompanying notes to consolidated financial statements.
</TABLE>
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Columbia Banking System, Inc.
1. Basis of Presentation
The interim unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial
information and with instructions to Form 10-Q. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments including normal recurring accruals
necessary for a 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, 1996 are not necessarily indicative of results
to be anticipated for the year ending December 31, 1996. Certain amounts in
the 1995 financial statements have been reclassified to conform with the 1996
presentation. For additional information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report on
Form 10-K for the year ended December 31, 1995.
2. Summary of Significant Accounting Policies
In December 1995, the FASB issued Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"). The
statement requires the Company to elect to account for stock-based
compensation on a fair value basis or an intrinsic value basis. The intrinsic
value basis is currently used by the Company and is the accounting principle
prescribed by Accounting Principles Board No. 25 "Accounting for Stock Issued
to Employees" (APB 25). SFAS 123 requires among other things, disclosure in
the footnotes of the pro forma impact on net income and earnings per share of
the difference between compensation expense using the intrinsic value method
and the fair value method if the fair value method of accounting is not used.
The adoption of SFAS 123 is required for the fiscal year ended December 31,
1996. As of March 31, 1996, the Company had not decided which method will be
used for fiscal year ending December 31, 1996.
3. Susequent Event
On April 24, 1996, the Company announced a 5% stock dividend payable on
May 22, 1996, to shareholders of record on May 8, 1996. Average shares
outstanding and net income per share have been adjsuted to give retroactive
effect to the quarters ending March 31, 1996 and 1995.
6
<PAGE>
CONSOLIDATED AVERAGE BALANCES--NET CHANGES
Columbia Banking System, Inc.
<TABLE>
<CAPTION>
Three Months Ended Increase
March 31, (Decrease)
(in thousands) 1996 1995 Amount
- - ----------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Loans receivable $364,528 $283,287 $81,241
Securities 28,748 22,359 6,389
Interest-earning deposits with banks 13,236 2,641 10,595
- - ----------------------------------------------------------------------------
Total interest-earning assets 406,512 308,287 98,225
Noninterest-earning assets 29,073 24,216 4,857
- - ----------------------------------------------------------------------------
Total assets $435,585 $332,503 $103,082
============================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing deposits $316,817 $245,068 $ 71,749
Federal Home Loan Bank advances 31,295 17,449 13,846
Convertible subordinated notes 2,684 2,735 (51)
- - ----------------------------------------------------------------------------
Total interest-bearing liabilities $350,796 265,252 85,544
Noninterest-bearing deposits 49,837 36,566 13,271
Other noninterest-bearing liabilities 2,951 2,106 845
Shareholders' Equity 32,001 28,579 3,422
- - ----------------------------------------------------------------------------
Total liabilities and shareholders'equity $435,585 $332,503 $103,082
============================================================================
</TABLE>
7
<PAGE>
MANAGEMENT DISCUSSION AND FINANCIAL REVIEW
Columbia Banking System, Inc.
Earnings Summary
For the first quarter of 1996 the Company recorded net income of $808,000,
compared with net income of $445,000 in the first quarter of 1995. First
quarter 1996 net income per share was $0.23 increasing from a net income per
share of $0.13 in the first quarter of 1995. Net income for the first quarter
of 1996 was positively affected by an increase in net interest income, service
charges on deposit accounts and bank card fees.
The Company continues to benefit from utilization of its net operating loss
carryforwards for federal income tax purposes. Therefore, the Company has no
federal income tax provision for the three months ending March 31, 1996. Had
the earnings been fully taxable, net income would have been $520,000.
Management has determined that in order to successfully pursue the perceived
potential for Columbia Bank, it is necessary to establish strategic branch
coverage in the Tacoma/Pierce County area. Columbia Bank opened four new
branches during 1995, three in Pierce County and one in south King County.
Construction began in the first quarter of 1996 on a permanent facility for
the Gig Harbor branch. Plans are also underway for a new Spanaway branch at
176th and Pacific Avenue which will open in the summer of 1996 in a temporary
facility. Additional upcoming expansion opportunities in Pierce County include
two new branches in Puyallup and a branch in Dupont, all areas of high growth
or recently announced business expansion. Establishment of new branches and
relocation of existing temporary branches can be expected to utilize
considerable resources in 1996 and beyond. New branches normally do not
contribute to net income for many months after opening.
Net Interest Income
Net interest income for the first quarter increased to $4.5 million, or 18.4%,
from $3.8 million in the first quarter of 1995. The increase in net interest
income in the first quarter of 1996 is largely due to the overall growth of
Company. Net interest income was favorable affected by average interest-
earning assets increasing more rapidly than average interest-bearing
liabilities, with the difference funded by noninterest-bearing deposits and
shaholders' equity. Specifically, average interest-earning assets increased
$98.2 million, while average interest-bearing liabilities increased only $85.5
million, compared with the same period in 1995. The 1996 increase in average
interest earning assets and average interest-bearing liabilities is primarily
due to the ongoing expansion of Columbia Bank.
Net interest margin (net interest income divided by average interest-earning
assets) decreased to 4.43% in the first quarter of 1996 from 4.99% in the
first quarter of 1995. The decrease in net interest margin is primarily the
result of growth in earning assets at reduced spreads. While interest-
earning-assets grew, the average yield decreased 0.46% to 8.67% for the first
quarter of 1996 from 9.13% in the same period of 1995. The average cost of
interest-bearing liabilities increased 0.18% to 4.91% for the first quarter of
1996 from 4.73% in the same period of 1995. The decrease in net interest margin
and spread is the result of increased competition in the Company's market area
accompanied by interest-earning assets repricing faster than interest-bearing
liabilities.
8
<PAGE>
Noninterest Income and Expense
Total noninterest income increased $282,000, or 31.9%, in the first quarter
of 1996, compared to the same period a year ago. Increases in noninterest
income in the first quarter of 1996 were centered in account service charges,
bank card revenue, and mortgage banking income.
Total noninterest expense increased $530,000, or 13.3%, in the first quarter
of 1996, compared with the same period in 1995. The increase is primarily
due to expenses associated with the expansion of Columbia Bank. Total
noninterest expense was 79.9% and 84.3% of total revenues (the sum of net
interest income plus noninterest income less nonrecurring gains) for the
first quarter of 1996 and 1995, respectively. Increases in noninterest
expense are centered in occupancy, advertising, business & occupation taxes,
data processing and other expense. In general, increases in noninterest
expense are due to the growth of the Company and the associated "volume driven"
expenses.
Total noninterest expense for the Company is expected to decline in relation
to revenues as the Company pursues its commitment to more efficient
operations and as projected asset growth materializes.
In February 1996, the Company recorded a loss of $41,000 on the sale of its'
"real estate owned" (which consisted of one property in the state of
Washington). Also, in March 1996, the Company recorded a loss of $38,000 on
a branch real estate transaction.
Loan Portfolio
Following is a summary of loans by type:
<TABLE>
<CAPTION>
March 31, December 31
(in thousands) 1996 1995
- - -----------------------------------------------------------------------------
<S> <C> <C>
Real estate:
One-to four-family residential $ 66,564 $ 67,991
Five or more family residential and
commercial properties 109,664 97,103
- - -----------------------------------------------------------------------------
Total real estate 176,228 165,094
Real estate construction:
One-to four-family residential 22,206 22,741
Five or more family residential and
commercial properties 10,030 8,884
- - -----------------------------------------------------------------------------
Total real estate construction 32,236 31,625
Commercial business 117,053 113,775
Consumer 45,221 43,343
- - -----------------------------------------------------------------------------
Sub-total loans 370,738 353,837
Less: Deferred loan fees (580) (744)
- - -----------------------------------------------------------------------------
Total loans $370,158 $353,093
=============================================================================
Loans held for sale $ 2,545 $ 1,367
=============================================================================
</TABLE>
9
<PAGE>
Total loans increased $17.1 million, or 4.8%, from year-end 1995. All loan
categories contributed to the increase except for one-to-four family
residential and construction loans which declined slightly. The category of
five or more family residential and commercial properties loans increased
$12.6 million, or 12.9%, from year-end, while five or more family residential
and commercial property construction loans increased $1.1 million, or 12.9%,
from year-end. Commercial business loans increased $3.3 million, or 2.9%, to
$117.1 million at March 31, 1996 from $113.8 million at December 31, 1995.
Consumer loans increased $1.9 million, or 4.3%, from year-end. Loans held for
sale increased $1.2 million, or 86.2%. The increases are primarily the
result of Columbia Bank's continued expansion in the Tacoma/Pierce County
market, as well as a rise in loan demand. Commercial business loans and
consumer loans will likely continue to represent an increasing proportion of
the total loan portfolio as a result of the expansion of Columbia Bank in
Pierce County.
At March 31, 1996, the Company had no foreign loans or loans related to
highly leveraged transactions.
Nonperforming Assets
Below is an analysis of the composition of the Company's nonperforming assets
which consist of nonaccrual loans, restructured loans and real estate owned
("REO").
<TABLE>
<CAPTION>
March 31, December 31,
(in thousands) 1996 1995
- - -----------------------------------------------------------------------------
<S> <C> <C>
Nonaccrual:
One-to four-family residential $ 853 $ 329
Commercial business 42 86
Consumer 119 20
- - -----------------------------------------------------------------------------
Total $1,014 $ 435
=============================================================================
Restructured:
One-to four-family residential $ 28 $ 29
- - -----------------------------------------------------------------------------
Total $ 28 $ 29
=============================================================================
Real estate owned:
Five or more family residential and
commercial properties $3,304
- - -----------------------------------------------------------------------------
Total $3,304
=============================================================================
Total nonperforming assets $1,042 $3,768
=============================================================================
</TABLE>
The current policy of the Company generally is to discontinue the accrual of
interest on all loans past due 90 days or more and place them on nonaccrual
status.
Total nonperforming loans increased $578,000 to $1.0 million, or 0.28% of
total loans (excluding loans held for sale), at March 31, 1996, compared with
$464,000, or 0.13% of total loans, at December 31, 1995. In February 1996,
the Company sold all of its' "real estate owned" (which consisted of one
property in the state of Washington), thus reducing total nonperforming
assets to $1.0 million from $3.8 million at year-end 1995.
10
<PAGE>
Provision and Allowance for Loan Losses
Net loan charge-offs amounted to $63,000 for the first quarter of 1996,
compared with net loan charge-offs of $1,000 for the same period in 1995.
The Company's provision for loan losses was $330,000 for the first quarter of
1996, compared with $300,000 for the first quarter of 1995. During the first
quarter of 1996, the allowance for loan losses increased by $267,000,
increasing to 1.08% of loans at March 31, 1996 from 1.06% of loans (excluding
loans held for sale) at December 31, 1995.
Management considers the allowance for loan losses at March 31, 1996 to be
adequate to cover anticipated loan losses based on management's assessment of
various factors affecting the loan portfolio, including the level of problem
loans, business conditions, estimated collateral values, loss experience and
credit concentrations.
The following table summarizes the changes in the allowance for loan losses
for the three months ended March 31, 1996 and 1995:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
(in thousands) 1996 1995
- - ----------------------------------------------------------------------------
<S> <C> <C>
Beginning balance $3,748 $2,711
Charge offs:
Commercial business (26)
Consumer (39) (13)
- - ----------------------------------------------------------------------------
Total charge-offs (65) (13)
Recoveries:
Commercial business 2 12
- - ----------------------------------------------------------------------------
Total recoveries 2 12
- - ----------------------------------------------------------------------------
Net (charge-offs) recoveries (63) (1)
Provision charged to expense 330 300
- - ----------------------------------------------------------------------------
Ending balance $4,015 $3,010
============================================================================
</TABLE>
Liquidity and Sources of Funds
The Company's primary sources of funds are customer deposits and advances
from the Federal Home Loan Bank (the "FHLB"). These funds, together with loan
repayments, loan sales, retained earnings, equity and other borrowed funds, are
used to make loans, to acquire securities and other assets, and to fund
continuing operations. Total deposits increased 6.6% to $385.7 million at
March 31, 1996 from $361.9 million at December 31, 1995. FHLB advances
increased $10.0 million during the first three months of 1996 to $35.0 million.
Management anticipates that the Company will continue to rely on the same
sources of funds in the future and will use those funds primarily to make loans
and purchase securities.
Management determined that in order to successfully pursue the perceived
potential for Columbia Bank, it is necessary to establish broad branch
coverage in the Tacoma/Pierce County area and hire experienced bank
personnel. To fund the growth of the Company, management's strategy has been
to make use of brokered and other wholesale deposits while working to build
"core" deposits as rapidly as practical. Brokered and wholesale deposits can
be more expensive and more volatile in comparison with core deposits obtained in
the Company's market area. The deposit increase of $23.8 million during the
first quarter of 1996 occurred entirely in "core deposits". Brokered and
other wholesale deposits (excluding public deposits) decreased $4.9 million
to $43.4 million, or 11.3% of total deposits at March 31, 1996, from
$48.3 million, or 13.3% of total deposits at December 31, 1995.
11
<PAGE>
Capital
Shareholders' equity at March 31, 1996 was $32.7 million compared with
$32.0 million at December 31, 1995. The increase is primarily due to
improved net income during the first three months of 1996. Shareholders'
equity was 7.1% and 7.5% of total period-end assets at March 31, 1996 and
December 31, 1995, respectively.
Banking regulations require bank holding companies to maintain a minimum
"leverage" ratio of core capital to adjusted quarterly average total assets
of at least 3%. At March 31, 1996, the Company's leverage ratio was 7.47%,
compared with 7.72% at December 31, 1995. In addition, banking regulators
have adopted risk-based capital guidelines, under which risk percentages are
assigned to various categories of assets and off-balance sheet items to
calculate a risk-adjusted capital ratio. Tier I capital generally consists of
common shareholders' equity, less goodwill and certain identifiable assets,
while Tier II capital includes the allowance for loan losses and subordianted
debt, both subject to certain limitations. Regulatory minimum risk-based
capital guidelines require Tier I capital of 4% of risk-adjusted assets and
total capital (combined Tier I and Tier II) of 8%. The Company's Tier I and
total capital ratios were 8.90% and 10.73%, respectively, at March 31, 1996,
compared with 9.10% and 10.95%, respectively, at December 31, 1995.
During 1992, the Federal Deposit Insurance Corporation (the "FDIC") published
the qualifications necessary to be classified as a "well capitalized" bank,
primarily for assignment of FDIC insurance premium rates beginning in 1993.
To qualify as "well capitalized," banks must have a Tier I risk-adjusted
capital ratio of at least 6%, a total risk-adjusted capital ratio of at least
10%, and a leverage ratio of at least 5%. Columbia Bank qualified as "well
capitalized" at March 31, 1996. In addition, in accordance with the 1993 order
by the FDIC granting insurance for the deposits of Columbia Bank, the Bank is
required to obtain a leverage ratio of 8% by August 1996.
Under Washington State banking regulations, Columbia Bank's ability to
declare or pay dividends to the Company is limited to the amount of the
Bank's profits then on hand, less any required transfers to additional
paid-in capital. The Company's ability to pay dividends is substantially
dependent upon receipt of dividends from the Bank. The Company presently
intends to retain earnings to support anticipated growth. Accordingly, the
Company does not intend to pay cash dividends on its common stock in the
foreseeable future.
On April 24, 1996, the Company announced a 5% stock dividend payable on
May 22, 1996, to shareholders of record on May 8, 1996.
12
<PAGE>
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 11 - Computation of Fully Diluted Earnings per Common Share
Exhibit 27 - Financial Data Schedule
(b) On April 30, 1996, the Company filed a Form 8-K reporting that
W.W. Philip, the Company's President and Chief Operating Officer had
agreed to remain in his present position with the Company and its
subsidiary bank for two additional years, through the end of calendar
year 1998.
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 BANKING SYSTEM, INC.
(Registrant)
Date May 10, 1996 By /s/ A. G. Espe
----------------------------- -----------------------------
A. G. Espe
Chairman and
Chief Executive Officer
Date May 10, 1996 By /s/ Gary R. Schminkey
----------------------------- -----------------------------
Gary R. Schminkey
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
13
<PAGE>
Exhibit 11
Statement re computation of per share earnings
Columbia Banking System, Inc.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
(in thousands, except per share data) 1996 1995
- - ----------------------------------------------------------------------------
<S> <C> <C>
Earnings
Net income applicable to common stock $808 $445
Interest on convertible subordinated notes, net of
income tax effects--Note 1 60 62
- - ----------------------------------------------------------------------------
Pro forma net income available to common stock $868 $507
============================================================================
Shares
Weighted average number of common and common
equivalent shares outstanding 3,543 3,482
Additional shares assuming conversion of convertible
subordinated notes--Note 1 253 259
- - ----------------------------------------------------------------------------
Pro forma shares 3,796 3,741
============================================================================
Fully diluted earnings per share - as reported $ 0.23 $0.13
============================================================================
Fully diluted earnings per share - as calculated $ 0.23 $0.14
============================================================================
</TABLE>
Note 1. Earnings per share and fully diluted earnings per share as reported
are the same for the three months ended March 31, 1996, and 1995. The
inclusion of convertible subordinated notes would produce an antidilutive
effect. Additional average shares, assuming the conversion of convertible
subordinated notes, represent 253,742 shares and 258,948 shares for the three
months ended March 31, 1996, and 1995, respectively. The related interest
expense on these notes (net of income tax effects) was $60,265 and $61,502 for
the three months ended March 31, 1996, and 1995, respectively.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
FINANCIAL DATA SCHEDULE
Columbia Banking System, Inc.
(in thousands except per share)
</LEGEND>
<CIK> 0000887343
<NAME> COLUMBIA BANKING SYSTEM, INC.
<MULTIPLIER> 1000
<CURRENCY> $
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 15935
<INT-BEARING-DEPOSITS> 24181
<FED-FUNDS-SOLD> 0
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0
0
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