CBMD Columbia Bancorp (MM)

COLUMBIA, Md., Oct. 19 /PRNewswire-FirstCall/ -- Columbia Bancorp (NASDAQ:CBMD), parent company of The Columbia Bank (the "Bank"), today announced net income for the nine months ended September 30, 2005 of $11.84 million compared to $9.61 million for the same period during 2004, an increase of 23.1%. Fully diluted earnings per share increased 26.2%, from $1.30 for the first nine months of 2004 to $1.64 in 2005. Returns on average equity were 17.32% and 14.50% for the nine months ended September 30, 2005 and 2004, respectively. Return on average assets was 1.27% for the nine months ended September 30, 2005 compared to 1.19% for the same period in 2004. Net income for the third quarter 2005 totaled $4.17 million compared to $3.52 million for the third quarter 2004, an 18.4% increase. Fully diluted earnings per share for the quarter increased 20.8% to $.58 for 2005 compared to $.48 for 2004. Returns on average equity for the third quarter 2005 and 2004 were 17.73% and 15.60%, respectively. Returns on average assets for the third quarter 2005 and 2004 were 1.29% and 1.24%, respectively. THIRD QUARTER FINANCIAL HIGHLIGHTS - Net interest income (FTE) increased $2.73 million, or 22.9%, over the third quarter of 2004 and increased $7.72 million, or 22.8%, over the first nine months of 2004. - Return on average equity and return on average assets increased to 17.73% and 1.29%, respectively, for the third quarter of 2005 compared to 15.60% and 1.24%, respectively, reported for the third quarter of 2004. - The net interest margin (FTE) improved to 4.75% during the third quarter of 2005 as compared to 4.41% during third quarter 2004 and 4.64% during the second quarter of 2005. - The efficiency ratio (FTE) improved to 54.97% for the third quarter of 2005 compared to 56.14% for the same period of 2004. - Total assets ($1.31 billion), loans, net of unearned income ($1.04 billion) and customer funding sources ($1.15 billion) reached record levels at September 30, 2005 and represented growth since September 30, 2004 of 10.8%, 10.8% and 9.5%, respectively. During the nine months of 2005, loans, net of unearned income, and customer funding sources grew at annualized rates of 12.2% and 16.8%, respectively. - Non-performing assets decreased to .04% of total assets at September 30, 2005 compared to .06% at September 30, 2004. DETAILED REVIEW OF FINANCIAL PERFORMANCE Total assets at September 30, 2005 were $1.31 billion, representing growth of $127.41 million, or 10.8%, since September 30, 2004. Loans, net of unearned income, totaled $1.04 billion compared to $936.00 million at September 30, 2004, representing growth of $101.02 million, or 10.8%. Growth in the loan portfolio during the twelve months since September 30, 2004 has been driven by the Company's continued success in the real estate development and construction and commercial and industrial lending markets, which netted increases in the respective portfolios of $77.40 million (23.3%) and $35.04 million (15.3%). Growth in the consumer loan portfolio, mainly consisting of second mortgage and real estate equity lines of credit, contributed an additional $3.25 million (1.7%). The commercial real estate portfolio declined by $12.69 million (8.0%), primarily due to very aggressive market competition relative to pricing terms and deal structuring. Customer funding sources, representing deposits plus other short-term borrowings from core customers, increased 9.5% to $1.15 billion at September 30, 2005. Shareholders' equity rose to $94.43 million, or 4.8%, at September 30, 2005. Operating performance through September 30, 2005 was primarily driven by a net interest income (FTE) increase of 22.9% during the third quarter 2005 and 22.8% during the nine months ended September 30, 2005 as compared to the corresponding periods of 2004. The increase in net interest income resulted from continued growth in earning assets, most specifically, the loan portfolio. The Company remained asset sensitive at September 30, 2005 and has benefited from a series of short-term rate increases during the quarter and throughout the year. As a result, the net interest margin (FTE) increased .34% during the third quarter 2005 as compared to the third quarter 2004 and .26% during the nine months ended September 30, 2005 as compared to the same period in 2004. The potential ongoing benefit to the Company from a rising interest rate environment may be muted by the increasing pressure of market forces on the Company's overall cost of funding sources. Non-interest income increased $92,000, or 5.3%, for the third quarter and decreased $153,000, or 2.8%, for the first nine months of 2005 as compared to the same periods in 2004, primarily resulting from a decline in deposit service charges, including lower fees charged on overdraft deposit accounts and commercial account analysis charges. Mortgage-banking activities improved during the third quarter of 2005, resulting in an increase in corresponding revenues of $128,000 compared to the same period in 2004, while revenues for the nine months ended September 30, 2005 were up 1.7% or $19,000. Commission revenue on financial services sales was even with the comparable 2004 quarter and was up $97,000, or 22.9%, for the first nine months of 2005 compared to the same period in 2004. Other non-interest income increased $126,000 and $315,000 for the third quarter and first nine months of 2005, respectively, compared to 2004, principally due to fees generated from the prepayment of several large commercial loan relationships. Non-interest expense rose 18.1% and 13.7% for the third quarter and nine months ended September 30, 2005, respectively, as compared to the corresponding periods in 2004. The increase for the quarter and the year was primarily due to an increase in salary and benefit expense reflecting additional staffing costs, and increased costs associated with the Company's Deferred Compensation Plan, which are largely determined by appreciation in the Company's stock. Expenses incurred in preparation for the Company's merger with Fulton Financial Corporation totaling $247,000 also contributed to the overall non-interest expense increase. Despite the overall increase in operating expenses, the efficiency ratio (FTE) improved to 55.32% for the nine months ended September 30, 2005 compared to 58.04% for the same period in 2004. Asset quality remained strong at September 30, 2005, with non-performing assets and past-due loans totaling $587,000. As of September 30, 2005, non- performing assets and past-due loans represented only .04% of total assets. The ratio of non-performing loans and past-due loans to total loans improved from .07% at September 30, 2004 to .06% at September 30, 2005. Net charge- offs totaled $522,000 during the third quarter of 2005 and included a $450,000 charge-off of a single commercial relationship. Net charge-offs for the nine months ended September 30, 2005 totaled $469,000 compared to net charge-offs of $6,000 for the nine months ended September 30, 2004. At September 30, 2005, the allowance for credit losses totaled $12.56 million, or 1.21% of loans, net of unearned income, compared to $11.51 million, or 1.23% of net loans at September 30, 2004. ABOUT COLUMBIA BANCORP Columbia Bancorp, headquartered in Columbia, Maryland, is a bank holding company and parent company of The Columbia Bank, a commercial bank. The Columbia Bank currently operates twenty-four banking offices in the Baltimore/Washington Corridor and provides a full range of financial services to consumers and businesses. Columbia Bancorp's Common Stock is traded on the National Market tier of The Nasdaq Stock Market(SM) under the symbol "CBMD". On July 26, 2005, the Company entered into a definitive Agreement and Plan of Merger (the "Merger Agreement") with Fulton Financial Corporation ("Fulton"). Pursuant to the Merger Agreement, the Company will merge (the "Merger") with and into Fulton, with Fulton surviving, and all of the outstanding shares of common stock of the Company ("Company Common Stock") will be converted into the right to receive shares of common stock of Fulton ("Fulton Common Stock"), cash, or a combination of both. Following the Merger, the Company's wholly-owned banking subsidiary, The Columbia Bank, a Maryland corporation (the "Bank") and certain other subsidiaries of the Company and the Bank will continue operations as subsidiaries of Fulton. Under the terms of the Merger Agreement, each share of Company Common Stock will be, at the Effective Time (as defined in the Merger Agreement) of the Merger and at the election of the holder exchanged for (i) 2.325 shares of Fulton Common Stock; (ii) cash of $42.48; or (iii) a combination of (i) and (ii). This election is subject to proration so that, in the aggregate, a minimum of 20% and a maximum of 50% of total consideration for the shares of Company Common Stock will be paid in cash. Completion of the Merger is subject to customary conditions, including, among others, the approval of the Merger by applicable bank regulatory authorities and the approval of the Merger and the Merger Agreement by the stockholders of the Company. In connection with the execution and delivery of the Merger Agreement, the Company issued Fulton a warrant to acquire up to 1,881,809 shares (subject to adjustment) of Company Common Stock at an exercise price of $37.26 per share, such warrant to be exercisable only upon the occurrence of certain events in connection with a competing acquisition proposal. Assuming that all conditions are satisfied without unexpected delay, it is anticipated that the Merger will be consummated in the first quarter of 2006. NON-GAAP PRESENTATION This press release includes disclosure and discussion of the net interest margin and efficiency ratio that are reported on a fully tax-equivalent basis ("FTE"). These amounts and ratios are non-GAAP financial measures as defined in Securities and Exchange Commission ("SEC") Regulation G and Item 10 of SEC Regulation S-K. Management believes that these measures are better indicators of operating performance than the GAAP-based ratios and better tools for managing net interest income, non-interest income, and non-interest expenses. A complete reconciliation of the GAAP-based and non-GAAP information included in this press release is provided in the following schedules. Non-GAAP information presented by other companies may not be comparable to that presented herein, since each company may define non-GAAP measures differently. FORWARD-LOOKING STATEMENTS Certain statements contained in this Press Release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements are based on Columbia Bancorp's current intent, belief and expectations. These statements are not guarantees of future performance and are subject to certain risks and uncertainties that are difficult to predict. Actual results may differ materially from these forward-looking statements because of interest rate fluctuations, a deterioration of economic conditions in the Baltimore/Washington metropolitan area, a downturn in the real estate market, losses from impaired loans, an increase in non-performing assets, potential exposure to environmental laws, federal and state bank laws and regulations, the highly competitive nature of the banking industry, a loss of key personnel, changes in accounting standards and other risks described in this filing and the Company's other filings with the Securities and Exchange Commission. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today's date. Columbia Bancorp undertakes no obligation to update or revise the information contained in this filing whether as a result of new information, future events or circumstances or otherwise. Past results of operations may not be indicative of future results. COLUMBIA BANCORP Financial Highlights (dollars in thousands, except per share data) (unaudited) As of and Nine Months Ended September 30, -------------------------------- 2005 2004 % Change -------------------------------- SUMMARY OF OPERATING RESULTS: Tax equivalent interest income $56,910 $42,307 34.5% Interest expense 15,349 8,466 81.3% Tax equivalent net interest income 41,561 33,841 22.8% Tax equivalent adjustment 986 811 21.6% Net interest income 40,575 33,030 22.8% Provision for credit losses 1,441 692 108.2% Noninterest income 5,238 5,391 (2.8%) Noninterest expense 25,889 22,770 13.7% Income before taxes 18,483 14,959 23.6% Income tax provision 6,646 5,347 24.3% Net income 11,837 9,612 23.1% PER SHARE DATA: Net income: Basic $1.70 $1.34 26.9% Diluted 1.64 1.30 26.2% Average number of shares outstanding: Basic 6,947,046 7,160,055 (3.0%) Diluted 7,218,696 7,398,029 (2.4%) Book value, at period end $13.61 $12.66 7.5% Tangible book value, at period end 13.61 12.66 7.5% Cash dividends declared $0.51 $0.45 13.3% PERIOD END DATA: Loans, net of unearned income $1,037,021 $936,000 10.8% Investment securities held-to- maturity and securities available-for-sale 186,374 150,454 23.9% Assets 1,306,522 1,179,107 10.8% Noninterest-bearing deposits 252,503 246,092 2.6% Interest-bearing deposits 720,661 669,250 7.7% Total deposits 973,164 915,342 6.3% Customer funding sources (a) 1,154,035 1,053,771 9.5% Stockholders' equity 94,428 90,100 4.8% PERFORMANCE RATIOS: Return on average assets 1.27% 1.19% Return on average stockholders' equity 17.32% 14.50% Net interest margin 4.54% 4.28% Net interest margin (FTE) 4.65% 4.39% Efficiency ratio (FTE)(b) 55.32% 58.04% CAPITAL RATIOS: Period-end capital to risk- weighted assets: Tier 1 10.00% 9.23% Total 11.15% 10.35% Period-end tier 1 leverage ratio 8.58% 8.51% ASSET QUALITY: Allowance for credit losses to loans, net of unearned income, at period-end 1.21% 1.23% Net recoveries (charge-offs) $(469) $(6) 7716.7% Annualized net recoveries (charge-offs) to average loans, net of unearned income (0.06%) 0.00% Nonperforming assets: Nonaccrual loans $453 $635 (28.7%) Loans 90+ days past due and accruing 134 22 509.1% Other real estate owned - - na ------- ------- Total nonperforming assets $587 $657 (10.7%) ------- ------- Nonperforming and past due loans to total loans, net of unearned income, at period-end 0.06% 0.07% Nonperforming assets and past due loans to total assets, at period- end 0.04% 0.06% NONINTEREST INCOME AND EXPENSE BREAKDOWN: Noninterest income: Fees charged for services $2,450 $2,975 (17.6%) Gains on sales of mortgage loans, net of costs 1,169 1,150 1.7% Net loss on other real estate owned - 59 (100.0%) Commissions earned on financial services sales 520 423 22.9% Other noninterest income 1,099 784 40.2% ---------------------- $5,238 $5,391 (2.8%) ---------------------- Noninterest expenses: Salaries and employee benefits $14,730 $12,065 22.1% Occupancy 2,891 2,838 1.9% Equipment 1,308 1,486 (12.0%) Data processing 1,295 1,575 (17.8%) Marketing 1,006 736 36.7% Professional fees 897 602 49.0% Postage 324 280 15.7% Stationery and supplies 344 334 3.0% Cash management services 348 411 (15.3%) Other noninterest expenses 2,746 2,443 12.4% ---------------------- $25,889 $22,770 13.7% ---------------------- AVERAGE BALANCES: Federal funds sold and interest- bearing deposits (c) $14,421 $22,354 (35.5%) Investment securities held-to- maturity and securities available-for-sale 171,831 121,973 40.9% Loans, net of unearned income 1,000,390 879,715 13.7% Loans originated for sale (c) 7,706 6,080 26.7% Total earning assets 1,194,348 1,030,122 15.9% Total assets 1,246,833 1,077,454 15.7% Interest-bearing deposits: NOW accounts 86,632 88,257 (1.8%) Savings and money market accounts 183,790 198,994 (7.6%) Time deposits 433,387 341,462 26.9% Noninterest-bearing deposits 246,987 213,725 15.6% Total deposits 950,796 842,438 12.9% Short-term borrowings (c) 162,911 117,538 38.6% Long-term borrowings 34,638 22,230 55.8% Total interest-bearing liabilities 901,358 768,481 17.3% Stockholders' equity 91,351 88,555 3.2% YIELD ANALYSIS: Federal funds sold and interest- bearing deposits (c) 2.73% 1.05% Investment securities held-to- maturity and securities available-for-sale (FTE) 3.84% 4.19% Loans, net of unearned income (FTE) 6.85% 5.77% Total yield on earning assets (FTE) 6.37% 5.49% Interest-bearing deposits NOW accounts 0.17% 0.14% Savings and money market accounts 0.76% 0.38% Time deposits 2.93% 2.40% Short-term borrowings 2.72% 0.90% Long-term borrowings 5.36% 5.25% Total cost of interest-bearing liabilities 2.28% 1.47% As of and Three Months Ended September 30, --------------------------------- 2005 2004 % Change --------------------------------- SUMMARY OF OPERATING RESULTS: Tax equivalent interest income $20,640 $15,097 36.7% Interest expense 5,939 3,131 89.7% Tax equivalent net interest income 14,701 11,966 22.9% Tax equivalent adjustment 317 264 20.1% Net interest income 14,384 11,702 22.9% Provision for credit losses 631 192 228.6% Noninterest income 1,830 1,738 5.3% Noninterest expense 9,087 7,693 18.1% Income before taxes 6,496 5,555 16.9% Income tax provision 2,330 2,037 14.4% Net income 4,166 3,518 18.4% PER SHARE DATA: Net income: Basic $0.60 $0.49 22.4% Diluted 0.58 0.48 20.8% Average number of shares outstanding: Basic 6,935,658 7,128,359 (2.7%) Diluted 7,240,074 7,350,901 (1.5%) Book value, at period end Tangible book value, at period end Cash dividends declared $0.17 $0.15 13.3% PERIOD END DATA: Loans, net of unearned income Investment securities held-to- maturity and securities available- for-sale Assets Noninterest-bearing deposits Interest-bearing deposits Total deposits Customer funding sources (a) Stockholders' equity PERFORMANCE RATIOS: Return on average assets 1.29% 1.24% Return on average stockholders' equity 17.73% 15.60% Net interest margin 4.65% 4.31% Net interest margin (FTE) 4.75% 4.41% Efficiency ratio (FTE)(b) 54.97% 56.14% CAPITAL RATIOS: Period-end capital to risk- weighted assets: Tier 1 Total Period-end tier 1 leverage ratio ASSET QUALITY: Allowance for credit losses to loans, net of unearned income, at period-end Net recoveries (charge-offs) $(522) $81 (744.4%) Annualized net recoveries (charge-offs) to average loans, net of unearned income (0.20%) 0.04% Nonperforming assets: Nonaccrual loans Loans 90+ days past due and accruing Other real estate owned Total nonperforming assets Nonperforming and past due loans to total loans, net of unearned income, at period-end Nonperforming assets and past due loans to total assets, at period- end NONINTEREST INCOME AND EXPENSE BREAKDOWN: Noninterest income: Fees charged for services $832 $920 (9.6%) Gains on sales of mortgage loans, net of costs 420 292 43.8% Net loss on other real estate owned - 73 (100.0%) Commissions earned on financial services sales 145 146 (0.7%) Other noninterest income 433 307 41.0% ----------------------- $1,830 $1,738 5.3% ----------------------- Noninterest expenses: Salaries and employee benefits $5,379 $4,144 29.8% Occupancy 955 978 (2.4%) Equipment 417 468 (10.9%) Data processing 406 525 (22.7%) Marketing 268 140 91.4% Professional fees 449 264 70.1% Postage 105 79 32.9% Stationery and supplies 123 121 1.7% Cash management services 117 131 (10.7%) Other noninterest expenses 868 843 3.0% ----------------------- $9,087 $7,693 18.1% ----------------------- AVERAGE BALANCES: Federal funds sold and interest-bearing deposits (c) $14,849 $20,056 (26.0%) Investment securities held-to- maturity and securities available-for-sale 178,739 140,143 27.5% Loans, net of unearned income 1,025,465 914,052 12.2% Loans originated for sale (c) 9,130 4,738 92.7% Total earning assets 1,228,183 1,078,989 13.8% Total assets 1,284,080 1,126,923 13.9% Interest-bearing deposits: NOW accounts 86,517 89,532 (3.4%) Savings and money market accounts 174,078 208,538 (16.5%) Time deposits 453,346 361,653 25.4% Noninterest-bearing deposits 252,142 228,429 10.4% Total deposits 966,083 888,152 8.8% Short-term borrowings (c) 180,185 118,077 52.6% Long-term borrowings 36,496 26,186 39.4% Total interest-bearing liabilities 930,622 803,986 15.8% Stockholders' equity 93,219 89,730 3.9% YIELD ANALYSIS: Federal funds sold and interest-bearing deposits (c) 3.29% 1.29% Investment securities held-to- maturity and securities available-for-sale (FTE) 3.79% 4.07% Loans, net of unearned income (FTE) 7.21% 5.89% Total yield on earning assets (FTE) 6.67% 5.57% Interest-bearing deposits NOW accounts 0.17% 0.15% Savings and money market accounts 1.12% 0.41% Time deposits 3.04% 2.42% Short-term borrowings 3.14% 1.17% Long-term borrowings 5.51% 5.09% Total cost of interest-bearing liabilities 2.53% 1.55% ------------------------------------------------------------------------- (a) Deposits plus customer-related short-term borrowings in the form of commercial paper and repurchase agreements. (b) The efficiency ratio (FTE) is defined as total noninterest expense as a percentage of net interest income, on a tax-equivalent basis, plus noninterest income. (c) Variances reflect significant fluctuations in account balances due to the nature of the accounts. ------------------------------------------------------------------------- Certain reclassifications of information previously reported have been made to conform with current presentation. COLUMBIA BANCORP Consolidated Statements of Condition (dollars in thousands, except per share data) September 30, December 31, 2005 2004 2004 ---------------------------------- (unaudited) (audited) Assets Cash and due from banks $39,314 $37,959 $30,012 Interest-bearing deposits with banks 205 206 208 Federal funds sold 15,905 36,409 9,904 Investment securities held-to-maturity 110,072 99,295 116,170 Securities available-for-sale 76,302 51,159 47,980 Residential mortgage loans originated for sale 10,636 2,587 8,698 Loan receivables: Real estate - development and construction 409,662 332,258 345,375 Commercial 264,626 229,589 226,763 Real estate - mortgage: Residential 19,750 17,564 17,272 Commercial 145,894 158,585 163,985 Consumer, principally second mortgage loans and residential equity lines of credit 197,277 194,031 196,198 Other 322 4,056 668 ---------------------------------- Total loans 1,037,531 936,083 950,261 Less: Unearned income, net of origination costs (510) (83) (91) Allowance for credit losses (12,555) (11,514) (11,583) ---------------------------------- Loans, net 1,024,466 924,486 938,587 Property and equipment, net 6,546 6,910 6,647 Prepaid expenses and other assets 23,076 20,096 20,800 ---------------------------------- Total assets $1,306,522 $1,179,107 $1,179,006 ================================== Liabilities Deposits: Noninterest-bearing demand deposits $252,503 $246,092 $256,132 Interest-bearing deposits 720,661 669,250 656,446 ---------------------------------- Total deposits 973,164 915,342 912,578 Short-term borrowings 194,280 141,031 135,825 Subordinated debentures 16,496 6,186 10,310 Long-term borrowings 20,000 20,000 20,000 Accrued expenses and other liabilities 8,154 6,448 7,945 ---------------------------------- Total liabilities 1,212,094 1,089,007 1,086,658 ---------------------------------- Stockholders' equity Common stock, $.01 par value per share; authorized 10,000,000 shares; outstanding 6,938,276, 7,117,317 and 7,114,267 shares, respectively 69 71 71 Additional paid-in capital 39,361 45,925 45,739 Retained earnings 54,724 43,956 46,419 Accumulated other comprehensive income (loss) 274 148 119 ---------------------------------- Total stockholders' equity 94,428 90,100 92,348 ---------------------------------- Total liabilities and stockholders' equity $1,306,522 $1,179,107 $1,179,006 ================================== Certain reclassifications of information previously reported have been made to conform with current presentation. COLUMBIA BANCORP Consolidated Statements of Income (dollars in thousands, except per share data) Nine Months Ended Three Months Ended September 30, September 30, ------------------------------------ 2005 2004 2005 2004 ------------------------------------ (unaudited) (unaudited) Interest income: Loans $50,959 $37,717 $18,582 $13,428 Investment securities 4,671 3,603 1,618 1,340 Federal funds sold and interest- bearing deposits with banks 294 176 123 65 ------------------------------------ Total interest income 55,924 41,496 20,323 14,833 ------------------------------------ Interest expense: Deposits 10,650 6,796 4,004 2,450 Borrowings 4,699 1,670 1,935 681 ------------------------------------ Total interest expense 15,349 8,466 5,939 3,131 ------------------------------------ Net interest income 40,575 33,030 14,384 11,702 Provision for credit losses 1,441 692 631 192 ------------------------------------ Net interest income after provision for credit losses 39,134 32,338 13,753 11,510 ------------------------------------ Noninterest income: Fees charged for services 2,450 2,975 832 920 Gains on sales of mortgage loans, net of costs 1,169 1,150 420 292 Net gain on other real estate owned - 59 - 73 Commissions earned on financial services sales 520 423 145 146 Other 1,099 784 433 307 ------------------------------------ Total noninterest income 5,238 5,391 1,830 1,738 ------------------------------------ Noninterest expense: Salaries and employee benefits 14,730 12,065 5,379 4,144 Occupancy 2,891 2,838 955 978 Equipment 1,308 1,486 417 468 Data processing 1,295 1,575 406 525 Marketing 1,006 736 268 140 Professional fees 897 602 449 264 Postage 324 280 105 79 Stationery and supplies 344 334 123 121 Cash management services 348 411 117 131 Other 2,746 2,443 868 843 ------------------------------------ Total noninterest expense 25,889 22,770 9,087 7,693 ------------------------------------ Income before income taxes 18,483 14,959 6,496 5,555 Income tax provision 6,646 5,347 2,330 2,037 ------------------------------------ Net income $11,837 $9,612 $4,166 $3,518 ==================================== Per common share data: Net income: Basic $1.70 $1.34 $0.60 $0.49 Diluted 1.64 1.30 0.58 0.48 Cash dividends declared $0.51 $0.45 $0.17 $0.15 Certain reclassifications of information previously reported have been made to conform with current presentation. COLUMBIA BANCORP Reconciliation of GAAP-based Operating Performance Measures and Core Operating Performance Measures (dollars in thousands, except per share data) Nine Months Ended Three Months Ended September 30, September 30, ------------------------------------ 2005 2004 2005 2004 ------------------------------------ (unaudited) (unaudited) GAAP-based Operating Performance Measures: Net interest income $40,575 $33,030 $14,384 $11,702 Provision for credit losses 1,441 692 631 192 Noninterest income 5,238 5,391 1,830 1,738 Noninterest expense 25,889 22,770 9,087 7,693 Income before taxes 18,483 14,959 6,496 5,555 Income tax provision 6,646 5,347 2,330 2,037 Net income 11,837 9,612 4,166 3,518 Return on average assets 1.27% 1.19% 1.29% 1.24% Return on average equity 17.32% 14.50% 17.73% 15.60% Net interest margin 4.54% 4.28% 4.65% 4.31% Efficiency ratio 56.51% 59.26% 56.04% 57.24% Net income per share - diluted $1.64 $1.30 $0.58 $0.48 ------------------------------------------------------------------------- Non-GAAP adjustments Interest income on tax-exempt loans $718 $525 $89 $169 Interest income on tax-exempt securities 268 286 228 95 ------------------------------------ Total tax equivalent adjustment - net interest income $986 $811 $317 $264 ==================================== -------------------------------------------------------------------------- Core Operating Performance Measures: (a)(b) Net interest income - tax equivalent $41,561 $33,841 $14,701 $11,966 Tax equivalent adjustment (986) (811) (317) (264) ------------------------------------ Net interest income 40,575 33,030 14,384 11,702 Provision for credit losses 1,441 692 631 192 Noninterest income 5,238 5,391 1,830 1,738 Noninterest expense 25,889 22,770 9,087 7,693 Income before taxes 18,483 14,959 6,496 5,555 Income tax provision 6,646 5,347 2,330 2,037 Net income 11,837 9,612 4,166 3,518 Return on average assets 1.27% 1.19% 1.29% 1.24% Return on average equity 17.32% 14.50% 17.73% 15.60% Net interest margin (FTE) 4.65% 4.39% 4.75% 4.41% Efficiency ratio (FTE) 55.32% 58.04% 54.97% 56.14% Net income per share - diluted $1.64 $1.30 $0.58 $0.48 ------------------------------------------------------------------------- (a) Core operating performance reflects GAAP-based performance presented on a fully tax-equivalent basis, exclusive of non-recurring items, where applicable. There were no non-recurring items in the periods presented. (b) The efficiency ratio (FTE) is defined as total noninterest expense as a percentage of net interest income, on a tax-equivalent basis, plus noninterest income. ------------------------------------------------------------------------- Certain reclassifications of information previously reported have been made to conform with current presentation. COLUMBIA BANCORP Quarterly Highlights (dollars in thousands, except per share data) 3Q05 2Q05 1Q05 ---------------------------------- (unaudited) SUMMARY OF OPERATING RESULTS: GAAP-based: Interest income $20,323 $18,657 $16,944 Interest expense 5,939 5,111 4,299 Net interest income 14,384 13,546 12,645 Provision for credit losses 631 560 250 Noninterest income 1,830 1,777 1,631 Noninterest expense 9,087 8,767 8,035 Income before taxes 6,496 5,996 5,991 Income tax provision 2,330 2,154 2,162 Net income 4,166 3,842 3,829 Based on core operating performance (a): Tax-equivalent interest income $20,640 $18,953 $17,317 Interest expense 5,939 5,111 4,299 Tax-equivalent net interest income 14,701 13,842 13,018 Tax-equivalent adjustment 317 296 373 Net interest income 14,384 13,546 12,645 Provision for credit losses 631 560 250 Noninterest income 1,830 1,777 1,631 Noninterest expense 9,087 8,767 8,035 Income before taxes 6,496 5,996 5,991 Income tax provision 2,330 2,154 2,162 Net income 4,166 3,842 3,829 ------------------------------------------------------------------------- PER SHARE DATA: Net income: GAAP-based: Basic $0.60 $0.56 $0.55 Diluted 0.58 0.54 0.53 Based on core operating performance (a): Basic $0.60 $0.56 $0.55 Diluted 0.58 0.54 0.53 Average number of shares outstanding: Basic 6,935,658 6,921,811 6,984,185 Diluted 7,240,074 7,173,060 7,242,967 Book value, at period end $13.61 $13.17 $12.74 Tangible book value, at period end 13.61 13.17 12.74 Cash dividends declared 0.17 0.17 0.17 ------------------------------------------------------------------------- PERIOD END DATA: Loans, net of unearned income $1,037,021 $1,029,568 $978,941 Investment securities held-to- maturity and securities available-for-sale 186,374 173,212 170,595 Assets 1,306,522 1,284,115 1,240,496 Noninterest-bearing deposits 252,503 263,834 248,122 Interest-bearing deposits 720,661 712,657 720,503 Total deposits 973,164 976,491 968,625 Customer funding sources (b) 1,154,035 1,137,342 1,104,701 Stockholders' equity 94,428 91,331 87,971 ------------------------------------------------------------------------- PERFORMANCE RATIOS: GAAP-based: Return on average assets 1.29% 1.23% 1.29% Return on average stockholders' equity 17.73% 17.08% 17.14% Net interest margin 4.65% 4.54% 4.43% Efficiency ratio 56.04% 57.21% 56.28% Based on core operating performance (a): Return on average assets 1.29% 1.23% 1.29% Return on average stockholders' equity 17.73% 17.08% 17.14% Net interest margin (FTE) 4.75% 4.64% 4.56% Efficiency ratio (FTE) 54.97% 56.13% 54.85% ------------------------------------------------------------------------- CAPITAL RATIOS: Period-end capital to risk-weighted assets: Tier 1 10.00% 9.67% 9.62% Total 11.15% 10.81% 10.73% Period-end tier 1 leverage ratio 8.58% 8.57% 8.62% ------------------------------------------------------------------------- ASSET QUALITY: Allowance for credit losses to loans, net of unearned income, at period-end 1.21% 1.21% 1.22% Net recoveries (charge-offs) $(522) $(20) $73 Annualized net recoveries (charge- offs) to average loans, net of unearned income (0.20%) (0.01%) 0.03% Nonperforming assets: Nonaccrual loans $453 $1,043 $588 Loans 90+ days past due and accruing 134 128 128 Other real estate owned - - - ------- ------- ------- Total nonperforming assets $587 $1,171 $716 ------- ------- ------- Nonperforming and past due loans to total loans, net of unearned income, at period-end 0.06% 0.11% 0.07% Nonperforming assets and past due loans to total assets, at period-end 0.04% 0.09% 0.06% ------------------------------------------------------------------------- NONINTEREST INCOME AND EXPENSE BREAKDOWN: Noninterest income: Fees charged for deposit services $832 $824 $794 Gains on sales of mortgage loans, net of costs 420 397 352 Commissions earned on financial services sales 145 183 192 Other noninterest income 433 373 293 ------- ------- ------- Total noninterest income $1,830 $1,777 $1,631 ------- ------- ------- Noninterest expenses: Salaries and payroll taxes $4,501 $4,146 $3,940 Employee benefits - health and welfare 371 371 365 Employee benefits - retirement 507 507 22 Occupancy 955 938 998 Equipment 417 467 424 Data processing 406 437 452 Marketing 268 381 357 Professional fees 449 174 274 Postage 105 96 123 Stationery and supplies 123 110 111 Cash management services 117 123 108 Other noninterest expenses 868 1,017 861 ------- ------- ------- Total noninterest expenses $9,087 $8,767 $8,035 ------- ------- ------- ------------------------------------------------------------------------- AVERAGE BALANCES: Federal funds sold and interest- bearing deposits $14,849 $14,296 $14,109 Investment securities and securities available-for-sale 178,739 172,833 163,757 Loans, net of unearned income 1,025,465 1,001,922 973,208 Loans originated for sale 9,130 8,070 5,883 Total earning assets 1,228,183 1,197,121 1,156,957 Total assets 1,284,080 1,248,918 1,206,651 Interest-bearing deposits: NOW accounts 86,517 87,262 86,113 Savings and money market accounts 174,078 184,600 192,899 Time deposits 453,346 441,267 405,018 Noninterest-bearing deposits 252,142 246,056 242,659 Total deposits 966,083 959,185 926,689 Short-term borrowings 180,185 155,492 152,754 Long-term borrowings 36,496 36,496 30,860 Total interest-bearing liabilities 930,622 905,117 867,644 Stockholders' equity 93,219 90,215 90,592 ------------------------------------------------------------------------- YIELD ANALYSIS: Federal funds sold and interest- bearing deposits 3.29% 2.69% 2.15% Investment securities and securities available-for-sale (FTE) 3.79% 3.84% 3.91% Loans, net of unearned income (FTE) 7.21% 6.83% 6.49% Total yield on earning assets (FTE) 6.67% 6.35% 6.07% Interest-bearing deposits NOW accounts 0.17% 0.16% 0.16% Savings and money market accounts 1.12% 0.65% 0.52% Time deposits 3.04% 2.96% 2.77% Short-term borrowings 3.14% 2.66% 2.26% Long-term borrowings 5.51% 5.32% 5.23% Total cost of interest-bearing liabilities 2.53% 2.26% 2.01% ------------------------------------------------------------------------- (a) Core operating performance reflects GAAP-based performance presented on a fully tax-equivalent basis, exclusive of non-recurring items, where applicable. There were no non-recurring items in the periods presented. (b) Deposits plus customer-related short-term borrowings in the form of commercial paper and repurchase agreements. ------------------------------------------------------------------------- Certain reclassifications of information previously reported have been made to conform with current presentation. COLUMBIA BANCORP Quarterly Highlights (dollars in thousands, except per share data) 4Q04 3Q04 2Q04 1Q04 -------------------------------------------- (unaudited) SUMMARY OF OPERATING RESULTS: GAAP-based: Interest income $16,050 $14,833 $13,408 $13,255 Interest expense 3,497 3,131 2,755 2,580 Net interest income 12,553 11,702 10,653 10,675 Provision for credit losses 36 192 190 310 Noninterest income 1,499 1,738 1,897 1,756 Noninterest expense 8,367 7,693 7,529 7,548 Income before taxes 5,649 5,555 4,831 4,573 Income tax provision 1,976 2,037 1,718 1,592 Net income 3,673 3,518 3,113 2,981 Based on core operating performance (a): Tax-equivalent interest income $16,376 $15,097 $13,681 $13,529 Interest expense 3,497 3,131 2,755 2,580 Tax-equivalent net interest income 12,879 11,966 10,926 10,949 Tax-equivalent adjustment 326 264 273 274 Net interest income 12,553 11,702 10,653 10,675 Provision for credit losses 36 192 190 310 Noninterest income 1,499 1,738 1,897 1,756 Noninterest expense 8,367 7,693 7,529 7,548 Income before taxes 5,649 5,555 4,831 4,573 Income tax provision 1,976 2,037 1,718 1,592 Net income 3,673 3,518 3,113 2,981 ------------------------------------------------------------------------- PER SHARE DATA: Net income: GAAP-based: Basic $0.52 $0.49 $0.43 $0.42 Diluted 0.50 0.48 0.42 0.40 Based on core operating performance (a): Basic $0.52 $0.49 0.43 0.42 Diluted 0.50 0.48 0.42 0.40 Average number of shares outstanding: Basic 7,113,768 7,128,359 7,170,585 7,178,797 Diluted 7,371,541 7,350,901 7,404,762 7,434,701 Book value, at period end $12.98 $12.66 $12.33 $12.23 Tangible book value, at period end 12.98 12.66 12.33 12.23 Cash dividends declared 0.17 0.15 0.15 0.15 ------------------------------------------------------------------------- PERIOD END DATA: Loans, net of unearned income $950,170 $936,000 $900,320 $864,753 Investment securities held-to-maturity and securities available- for-sale 164,150 150,604 122,430 104,211 Assets 1,179,006 1,179,107 1,126,916 1,083,798 Noninterest-bearing deposits 256,132 246,092 240,117 220,700 Interest-bearing deposits 656,446 669,250 650,884 625,311 Total deposits 912,578 915,342 891,001 846,011 Customer funding sources (b) 1,025,403 1,053,771 1,001,524 963,051 Stockholders' equity 92,348 90,100 88,039 87,934 ------------------------------------------------------------------------- PERFORMANCE RATIOS: GAAP-based: Return on average assets 1.25% 1.24% 1.16% 1.16% Return on average stockholders' equity 15.99% 15.60% 14.07% 13.75% Net interest margin 4.46% 4.31% 4.18% 4.34% Efficiency ratio 59.54% 57.24% 59.99% 60.72% Based on core operating performance (a): Return on average assets 1.25% 1.24% 1.16% 1.16% Return on average stockholders' equity 15.99% 15.60% 14.07% 13.75% Net interest margin (FTE) 4.57% 4.41% 4.29% 4.46% Efficiency ratio (FTE) 58.19% 56.14% 58.71% 59.41% ------------------------------------------------------------------------- CAPITAL RATIOS: Period-end capital to risk-weighted assets: Tier 1 9.74% 9.23% 9.45% 9.04% Total 10.85% 10.35% 10.58% 10.20% Period-end tier 1 leverage ratio 8.75% 8.51% 8.79% 8.34% ------------------------------------------------------------------------- ASSET QUALITY: Allowance for credit losses to loans, net of unearned income, at period-end 1.22% 1.23% 1.25% 1.28% Net recoveries (charge-offs) $33 $81 $10 $(97) Annualized net recoveries (charge-offs) to average loans, net of unearned income 0.01% 0.04% 0.00% (0.05%) Nonperforming assets: Nonaccrual loans $614 $635 $1,095 $1,168 Loans 90+ days past due and accruing 31 22 91 69 Other real estate owned - - 250 250 ------- ------- ------- ------- Total nonperforming assets $645 $657 $1,436 $1,487 ------- ------- ------- ------- Nonperforming and past due loans to total loans, net of unearned income, at period-end 0.07% 0.07% 0.13% 0.14% Nonperforming assets and past due loans to total assets, at period-end 0.05% 0.06% 0.13% 0.14% ------------------------------------------------------------------------- NONINTEREST INCOME AND EXPENSE BREAKDOWN: Noninterest income: Fees charged for deposit services $786 $920 $1,041 $1,014 Gains on sales of mortgage loans, net of costs 286 292 508 351 Net income (loss) on other real estate owned - 73 (5) (9) Commissions earned on financial services sales 166 146 137 140 Other noninterest income 261 307 216 260 ------- ------- ------- ------- Total noninterest income $1,499 $1,738 $1,897 $1,756 ------- ------- ------- ------- Noninterest expenses: Salaries and payroll taxes $4,014 $3,738 $3,610 $3,671 Employee benefits - health and welfare 365 258 245 237 Employee benefits - retirement 486 148 33 125 Occupancy 991 978 913 947 Equipment 426 468 505 513 Data processing 394 525 532 518 Marketing 193 140 296 300 Professional fees 343 264 174 164 Postage 99 79 93 108 Stationery and supplies 157 121 98 115 Cash management services 137 131 158 122 Other noninterest expenses 762 843 872 728 ------- ------- ------- ------- Total noninterest expenses $8,367 $7,693 $7,529 $7,548 ------- ------- ------- ------- ------------------------------------------------------------------------- AVERAGE BALANCES: Federal funds sold and interest-bearing deposits $15,512 $20,056 $37,521 $9,513 Investment securities and securities available-for- sale 157,348 140,143 103,384 122,192 Loans, net of unearned income 940,368 914,052 873,278 851,436 Loans originated for sale 7,068 4,738 8,320 5,196 Total earning assets 1,120,296 1,078,989 1,022,503 988,337 Total assets 1,167,536 1,126,923 1,071,793 1,033,102 Interest-bearing deposits: NOW accounts 87,742 89,532 89,308 85,917 Savings and money market accounts 201,479 208,538 194,197 194,141 Time deposits 364,888 361,653 348,394 314,116 Noninterest-bearing deposits 245,886 228,429 221,033 191,551 Total deposits 899,995 888,152 852,932 785,725 Short-term borrowings 139,635 118,077 105,985 128,547 Long-term borrowings 26,231 26,186 20,462 20,000 Total interest-bearing liabilities 819,975 803,986 758,346 742,721 Stockholders' equity 91,367 89,730 88,743 87,180 ------------------------------------------------------------------------- YIELD ANALYSIS: Federal funds sold and interest-bearing deposits 1.59% 1.29% 0.96% 0.89% Investment securities and securities available-for- sale (FTE) 3.92% 4.07% 4.45% 4.30% Loans, net of unearned income (FTE) 6.20% 5.89% 5.68% 5.71% Total yield on earning assets (FTE) 5.81% 5.57% 5.38% 5.49% Interest-bearing deposits NOW accounts 0.16% 0.15% 0.15% 0.13% Savings and money market accounts 0.47% 0.41% 0.37% 0.36% Time deposits 2.48% 2.42% 2.39% 2.39% Short-term borrowings 1.74% 1.17% 0.77% 0.77% Long-term borrowings 5.22% 5.09% 5.35% 5.36% Total cost of interest- bearing liabilities 1.70% 1.55% 1.46% 1.40% ------------------------------------------------------------------------- (a) Core operating performance reflects GAAP-based performance presented on a fully tax-equivalent basis, exclusive of non-recurring items, where applicable. There were no non-recurring items in the periods presented. (b) Deposits plus customer-related short-term borrowings in the form of commercial paper and repurchase agreements. ------------------------------------------------------------------------- Certain reclassifications of information previously reported have been made to conform with current presentation. DATASOURCE: Columbia Bancorp CONTACT: John A. Scaldara, Jr., President and COO, +1-410-423-8012, or James P. Radick, CFO, +1-410-423-8020, both of Columbia Bancorp Web site: http://www.columbank.com/ Company News On-Call: http://www.prnewswire.com/comp/127921.html

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