Columbia Banking System Repays all $76.9 Million in Capital Purchase Program Funds

TACOMA, Wash., Aug. 11 /PRNewswire-FirstCall/ -- Columbia Banking System, Inc. (Nasdaq: COLB) ("Columbia") announced today that it has redeemed all 76,898 shares of Series A preferred stock originally issued to the U.S. Department of Treasury on November 21, 2008 for approximately $76.9 million in capital under its Capital Purchase Program ("CPP"). On August 11, 2010, the Company paid a total of $77.8 million to the Treasury, consisting of $76.9 million in principal and $918,504 in accrued and unpaid dividends.

Melanie Dressel, President and Chief Executive Officer, said, "Our financial strength was originally affirmed when we were selected as one of the first regional banks to participate in the Treasury's voluntary CPP program, which was designed to stimulate the economy by providing capital to healthy banks. In addition to continuing our lending to businesses and consumers in the markets we serve, we were pleased to have successfully taken on the operations of a failed bank in Washington and one in Oregon State. We are also pleased, given our strong capital position, to repay the CPP at this early date."

Ms. Dressel further noted, "Since the fourth quarter of 2008, we have paid the U.S. Treasury over $6.5 million in dividends for its investment in our preferred stock, in addition to the full return of their original $76.9 million investment."

Columbia's total risk-based capital ratio was 27.3% at June 30, 2010; excluding the CPP funds, the total risked-based capital ratio still would have exceeded 24%, more than double the regulatory requirements for classification as a well-capitalized financial institution. Columbia's ratio of tangible common equity to tangible common assets was 13.7% as of June 30, 2010.

Earnings available to common shareholders will be reduced by $2.3 million upon repayment of the $76.9 million. This amount represents the remaining unamortized discount on the preferred stock.

In issuing the preferred stock in November 2008, the Company issued a warrant to the Treasury to purchase 796,046 shares of common stock at an exercise price of $14.49 per share. As a result of the completion of the Company's August, 2009 public offering, the amount of the warrant was reduced by 50% to 398,023 shares. The warrant is still held by the Treasury and remains outstanding. The Company intends to negotiate for the repurchase of the warrant; however, the repurchase price is subject to these negotiations and there is no assurance it will be repurchased now or in the future.

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