Columbia reports profits

The numbers are good at Tacoma's largest hometown bank.

Columbia Banking System on Thursday reported net income of $3.9 million for the second quarter – compared with a loss of $6.6 million for the second quarter of 2009.

This equates to a net per-share profit of 11 cents, compared with a loss of 37 cents a year ago.

In a conference call with market analysts, Columbia President and CEO Melanie Dressel said the bank holding company is well capitalized and well positioned to execute its strategic plan.

She outlined parts of that plan, which have recently included the acquisition of two failed institutions, American Marine Bank of Bainbridge Island and Columbia River Bank of The Dalles, Ore.

Dressel further defined Columbia’s ongoing strategy by outlining growth in Northwest Washington – in Skagit, Snohomish and Whatcom counties – and in the Salem, Ore., area.

“We are continuing to implement our strategic initiatives to benefit from the current disruptions in our industry and to extend our presence in the Pacific Northwest,” she said in a news release Thursday.

The increase into the northern end of the Interstate 5 corridor and into Oregon comes with the addition of experienced bankers hired from existing banks. Eventually, Dressel said in an interview Thursday, Columbia expects to add “a couple of branches up north and a branch in Salem.”

Details of the new branches likely will come within the next 90 days, according to Columbia Chief Operating Officer Mark Nelson.

Dressel on Thursday also discussed Columbia’s continued husbandry of $77 million in Capital Purchase Program funds. Some banks that accepted funds as part of a federal assistance program – including the growing Umpqua Bank of Oregon – have repaid the funds they received.

Columbia has chosen, for now, to keep the money in reserve.

“The board absolutely discusses it all the time,” Dressel said.

“It’s one of those things you weigh against other strategic activities.”

In speaking with an analyst, she characterized the retention of the funds as more of “a growth concern” instead of “a safety concern.”

Dressel said the addition of the two regional banks to Columbia’s portfolio of branches has not had a major effect on the Tacoma bank’s culture, and that she has stressed to newly added staff that “the culture is not controlled at the pointy end of this building,” but rather in the branches themselves.

Columbia has gone from some 775 employees before the acquisitions to approximately 1,100 today.

Turnover among employees added through the acquisitions “have been very modest,” Nelson said.

Among other numbers and points from Thursday’s conversations:

• Columbia continues to raise capital. During the second quarter, it raised $240 through a public offering by issuing more than 11 million shares of common stock. After expenses, the transaction netted some $229 million.

• At the end of the quarter, total assets were $4.29 billion, an increase of 34 percent from $3.2 billion at the end of December.

• The bank’s current loan portfolio remains diversified, with approximately 39 percent in commercial business loans, 10 percent in consumer loans and 42 percent in commercial real estate loans. Only 6 percent derives from the troubled construction sector.

• Columbia reported the nonperforming loans have risen to 5.61 percent of the portfolio, up from 5.43 percent at the end of the first quarter. “It doesn’t keep us up at night, but we’re not very happy with that level. We’re working through the cycle,” Chief Credit Officer Andy McDonald said.

• The Columbia board of directors has declared a 1 cent per-share dividend for the quarter.

• Columbia stock on Thursday rose 46 cents to $18.25. Bloomberg News reports the stock has risen nearly 60 percent over the past year, and nearly 13 percent since January.