Earnings are up, bad loans are down, and there's money waiting to be spent.
Tacoma-based Columbia Bank announced its third-quarter results Thursday.
Net income for the quarter rose to $2.5 million. A year ago, the quarter saw a loss of $2.6 million.
Per-share earnings were six cents, compared to a loss of 11 cents per share a year ago.
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After the acquisition of Columbia River Bank and American Marine Bank, deposits were up 35 percent year-to-year, to a total of $3.3 billion.
The cost to convert those banks to the Columbia brand was $1.9 million. That transition is complete.
Nonperforming loans fell to 5.06 percent of all loans, down from 6.34 percent.
Bad loans that have been charged off – dropped from the books – were down to $6.4 million from last year’s $13.7 million, and down from $10.7 million at the end of the second quarter. This is the fifth consecutive quarter of declines.
Columbia repeated that it has paid a final total of $77.8 million to the U.S. Treasury to redeem investments made under the Capital Purchase Program. The total includes $918,504 in accrued and unpaid dividends.
“We have been gaining real momentum,” Columbia President and CEO Melanie Dressel said in a conference call with stock analysts Thursday afternoon.
And that momentum could continue, as Chief Financial Officer Gary Schminkey announced that the bank now has “excess capital” of $359 million.
“There will be a point in the fourth quarter when we will make a decision on what to do with that excess cash,” he said. “We’re currently looking at opportunities to deploy those funds.”
The money could be used to make further acquisitions of failing banks, or to otherwise invest it in securities or other financial instruments.
One number that did not fit Thursday’s successful figures came from the so-called “efficiency ratio,” which can be described as the amount it takes to earn one dollar. The figure, 68.33 percent, means Columbia is spending slightly more than 68 cents to make a dollar.
Schminkey said the bank’s goal “is in the mid-50s. It may not happen in the next quarter, and it might be later on in 2011 or 2012.”
Dressel said she was pleased to have repaid the CPP investment, but that she was not sure she would once again take such a fillip from the government.
“Knowing what we know today, it probably would have caused us to think again about doing it. You have to look at it in the perspective of what was going on when we agreed to take it,” she said.
Back then, credit was dead and money was not moving through the economy. Now, we’re in a recovery.
Bank officials on Thursday also discussed the outlook for the economy in areas Columbia serves. In different ways, each offered similar views.
“We’re getting a lot of mixed signals. It still feels like the recession persists,” Dressel said. “While the recovery has been slow, it has been a recovery.”
“We’re still facing a lingering softness in the economy,” said Schminkey.
“Somebody asked me the other day if we have turned the corner. I said it’s more like coming around the bend,” Chief Credit Officer Andy McDonald said. “We continue to be cautious.”
So do Columbia customers – the ones who, in a better economy, would be taking out loans.
“They’re cautious about making capital investments,” Dressel said. “Many are having good years, but we are not hearing that they are expanding their work force. They’re waiting on the election. They’re waiting on taxes. There seems to be a lot of wait-and-see.”