Roll on, Columbia.
Tacoma-based Columbia Banking System, parent of Columbia Bank, released its fourth-quarter and full-year 2010 financial results Friday.
The news, according to Columbia President and CEO Melanie Dressel, was good.
Net income for the quarter rose to $12.6 million, or 32 cents per share, compared with $447,000, or 2 cents per share, in the fourth quarter of 2009.
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For the year, net income rose to $25.8 million, or 72 cents per share, compared with a loss of $8.4 million, or minus-38 cents per share, in 2009.
With the acquisition last year of Columbia River Bank and American Marine Bank, Columbia now counts 84 branches, up 62 percent from 2009. The company’s footprint now extends beyond the I-5 corridor into Eastern Oregon, Eastern Washington and the Olympic Peninsula.
The physical changeover to the Columbia brand, which has so far cost $1.9 million, has gone better than expected, Dressel said.
“I can’t believe how well the transition has gone,” she said Friday morning, following a one-hour conference call with financial analysts. “There were not a lot of integration issues. People are really out there making calls and making new loans and bringing in new customers.”
“Staff turnover has been minimal. You would have expected to see more,” said Mark Nelson, Columbia chief operating officer. “Customer turnover has been minimal, and the loan portfolio has performed somewhat better than expected. Our conversions of operating systems went better than expected.”
Noting the increase in net profit, the company board late Thursday authorized a quarterly dividend of 3 cents per share.
The latest results were delayed from a planned release last month.
The decision to postpone the announcement “revolves around how we account for our acquired loan portfolio,” said Gary Schminkey, chief financial officer.
The complexities of accounting procedures and data testing, he said, required more time than initially expected.
In other news from Friday’s conversations:
Columbia has $2.1 billion in “available funding” or “liquidity.”
Might that money be used for making loans? “We actually make loans every day,” Dressel said. “The problem is that people are not using their lines of credit. Businesses are using their cash first.”
Also, she said, “you have to lend money to borrowers who show the capacity to pay. If you lend to borrowers who can’t pay you back, you will have another economic crisis. It’s a difficult economy out there still for many businesses. We do have a lot of capital that we want to lend. We want to get that money out the door.”
One number that was not as salubrious as the net profit was the so-called “efficiency ratio,” or the amount of money it costs a bank to earn $1. This latest figure, for the quarter, came in at 65.3 percent, up from 58.1 percent in 2009. A well-operated bank in a strong economy might expect a ratio closer to 50 percent.
“We’ve talked about that increase,” said Schminkey. He blamed “our investment in new branches and new teams of bankers and the expenses in managing problem loans acquired in the transition . When the business climate does pickup, we will come down very quickly.”
Of those problem loans, Columbia reported “nonaccrual loans” of $89.16 million for the quarter, down from $110.43 million the year before.
“We’re seeing a lot of healing in the community – individuals and businesses that are able to get back on track. They are now beginning to make money again. We continue to emphasize business loans. We could see the consumer come back into play, certainly by 2012,” said Andy McDonald, chief credit officer.
“We don’t expect a large increase in loan growth in 2011,” said Dressel.
During the conversation with analysts, McDonald warned about one significant loan in the “financial and insurance” sector.
The loan “has exhibited signs of significant stress and will lead to a protracted workout,” he said.
For the remainder of the year, Dressel said, Columbia will continue to seek opportunities – which might include further expansion through the acquisition of smaller banks.
“We’ll be relocating a couple of offices that we acquired from in-store to stand-alone facilities,” she said. Following the recent opening of a new branch in Everett, no other branch openings are planned until 2012.
Still, she said, “We would love to acquire other banks. There is a lot more discussion right now from boards that are very, very tired. That more than anything is an indicator that there will be some deals done this year.”
She said Columbia has “a wish list that we have identified (of banks) that could be an interesting possibility for us this year.”
She declined to identify those banks.