Magazine article American Banker

1Q Margin Warning Hurts Shares of Ore.'s Columbia

Magazine article American Banker

1Q Margin Warning Hurts Shares of Ore.'s Columbia

Article excerpt

Shares of Columbia Bancorp of The Dalles, Ore., plunged Monday in the first trading session after the company announced that it would report lower-than-expected first-quarter earnings as a result of margin contraction and a sizable loan chargeoff.

In heavy trading, the shares fell 10%, to close at $22.25, near its 52-week low.

The $1 billion-asset Columbia has consistently reported net interest margins well above industry averages, and James Bradshaw, an analyst at D.A. Davidson & Co. in Portland, Ore., said investors were clearly spooked by the prospect of a steep margin drop. He had predicted Columbia would report a margin of 6.27% for the first quarter, but after the warning he said the margin more likely was about 5.85%. "We had assumed that their margins would be under some pressure, but not as much as it has turned out," he said.

Columbia announced early Friday that it expects to report net income of 33 to 35 cents a share, well below the average estimate of 41 cents of analysts polled by Thomson Financial.

The company said its yield on earning assets would remain "fairly flat" for the remainder of the year, assuming that the federal funds rate does not change, while competition for core deposits would increase.

Additionally, it said it would report a loan-loss provision of $950,000 to $1.05 million for the quarter, because of a $1 million chargeoff of a loan to a single borrower.

In the quarter Columbia reached a settlement with the borrower. The company did not disclose the settlement's size, but it did say it is sufficiently reserved for that settlement. In the first quarter of 2006, Columbia charged off $570,000 and earned $3.72 million, or 37 cents a share.

Roger Christensen, Columbia's president and chief executive, did not return telephone calls Monday. The company expects to release earnings April 25. …

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