CBMD Columbia Bancorp (MM)

COLUMBIA, Md., Jan. 26 /PRNewswire-FirstCall/ -- Columbia Bancorp (NASDAQ:CBMD), parent company of The Columbia Bank (the "Bank"), today announced net income for the year ended December 31, 2005 of $16.17 million compared to $13.29 million for the same period during 2004, an increase of 21.7%. Fully diluted earnings per share increased 24.4%, from $1.80 in 2004 to $2.24 in 2005. Returns on average equity were 17.48% and 14.88% for the years ended December 31, 2005 and 2004, respectively. Return on average assets was 1.28% for the year ended December 31, 2005 compared to 1.21% for the same period in 2004. Exclusive of one-time charges related to the Company's pending merger with Fulton Financial Corporation and to employment restructuring initiatives, net income, diluted earnings per share, return on average equity and return on average assets for the year ended December 31, 2005 were $16.98 million, $2.35 per diluted share, 18.36% and 1.35%, respectively. Compared to 2004, net income and diluted earnings per share, exclusive of one-time charges, increased 27.8% and 30.6%, respectively. Net income for the fourth quarter 2005 totaled $4.33 million compared to $3.67 million for the fourth quarter 2004, a 17.9% increase. Fully diluted earnings per share for the quarter increased 20.0% to $.60 for 2005 from $.50 for 2004. Returns on average equity for the fourth quarter 2005 and 2004 were 17.93% and 15.99%, respectively. Returns on average assets for the fourth quarter 2005 and 2004 were 1.32% and 1.25%, respectively. Exclusive of one-time charges previously noted, net income for the fourth quarter 2005 totaled $4.99 million, or $.69 per diluted share, representing an increase of 35.9% compared to the same period in 2004. Return on average equity and return on average assets for the fourth quarter 2005 exclusive of one-time charges were 20.68% and 1.52%. FOURTH QUARTER FINANCIAL HIGHLIGHTS -- Net interest income (FTE) increased $2.91 million, or 22.6%, over the fourth quarter of 2004. -- Return on average equity and return on average assets, exclusive of one-time charges, increased to 20.68% and 1.52%, respectively, for the fourth quarter of 2005 compared to 15.99% and 1.25%, reported for the fourth quarter of 2004. -- The net interest margin (FTE) improved to 5.02% during the fourth quarter of 2005 as compared to 4.57% during fourth quarter 2004 and 4.75% during the third quarter of 2005. -- The efficiency ratio (FTE), exclusive of one-time charges, improved to 50.76% for the fourth quarter of 2005 compared to 58.12% for the same period of 2004. -- Total assets ($1.32 billion), loans, net of unearned income ($1.05 billion) and customer funding sources ($1.16 billion) reached record levels at December 31, 2005 and represented growth on a year-to-year basis of 11.7%, 10.7% and 12.9%, respectively. -- Non-performing assets decreased to .02% of total assets at December 31, 2005 compared to .05% at December 31, 2004. DETAILED REVIEW OF FINANCIAL PERFORMANCE Total assets at December 31, 2005 were $1.32 billion, representing growth of $137.76 million, or 11.7%, since December 31, 2004. Loans, net of unearned income, totaled $1.05 billion compared to $950.17 million at December 31, 2004, representing growth of $102.11 million, or 10.7%. Growth in the loan portfolio during 2005 was 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 $65.08 million (18.8%) and $51.29 million (22.6%). Growth in the consumer loan portfolio, mainly consisting of second mortgage and real estate equity lines of credit, contributed an additional $2.42 million (1.2%). The commercial real estate portfolio declined by $19.08 million (11.6%), primarily due to aggressive market competition relative to pricing terms and deal structuring. Customer funding sources, representing deposits plus other short-term borrowings from core customers, increased 12.9% to $1.16 billion at December 31, 2005. Shareholders' equity rose to $97.32 million, or 5.4%, at December 31, 2005. Operating performance during 2005 was primarily driven by an increase in net interest income (FTE) of 22.6% during the fourth quarter 2005 and 22.8% during the year ended December 31, 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 December 31, 2005 and 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 .45% during the fourth quarter 2005 as compared to the fourth quarter 2004 and .31% during the year ended December 31, 2005 as compared to 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 $121,000, or 8.2%, for the fourth quarter and $36,000, or .5%, for the year 2005 as compared to the same periods in 2004. The modest performance was influenced by a decline in deposit service charges, including lower fees charged on overdraft deposit accounts and commercial account analysis charges. Gains on sales of mortgage loans, net of costs increased $89,000 during the fourth quarter 2005 and $108,000 during the year 2005 compared to the same periods in 2004. Commission revenue on financial services sales declined $37,000 compared to the fourth quarter 2004, but was up $60,000, or 10.2%, for the year compared to 2004. Other non- interest income increased $78,000 and $430,000 for the fourth quarter and year 2005, respectively, compared to 2004, principally due to fees generated from the prepayment of several large commercial loan relationships. Non-interest expense rose 19.0% and 15.4% for the fourth quarter and year ended December 31, 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 $271,000 for the quarter and $517,000 for the year also contributed to the overall non-interest expense increase. In addition, the Company recorded $828,000 in compensation costs during the fourth quarter 2005 as a result of employment restructuring. Despite the overall increase in operating expenses, the efficiency ratio (FTE) improved to 55.80% (53.70% exclusive of one-time charges) for the year ended December 31, 2005 compared to 58.01% for the same period in 2004. Asset quality remained strong at December 31, 2005, with non-performing assets and past-due loans totaling $292,000. As of December 31, 2005, non- performing assets and past-due loans represented only .02% of total assets. The ratio of non-performing loans and past-due loans to total loans improved from .07% at December 31, 2004 to .03% at December 31, 2005. Net charge-offs totaled $323,000 during the fourth quarter of 2005. Net charge-offs for the year ended December 31, 2005 totaled $792,000 compared to net recoveries of $27,000 for the year ended December 31, 2004. At December 31, 2005, the allowance for credit losses totaled $12.73 million, or 1.21% of loans, net of unearned income, compared to $11.58 million, or 1.22% of net loans at December 31, 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-five 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. 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 remaining conditions are satisfied without unexpected delay, it is anticipated that the Merger will be consummated on February 1, 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"). In addition, net income, diluted earnings per share, the efficiency ratio, return on average assets and return on average equity are presented exclusive of one-time charges. 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 Twelve Months Ended December 31, -------------------------------- 2005 2004 % Change -------------------------------- SUMMARY OF OPERATING RESULTS: Tax equivalent interest income $79,185 $58,683 34.9% Interest expense 21,835 11,963 82.5% Tax equivalent net interest income 57,350 46,720 22.8% Tax equivalent adjustment 1,358 1,137 19.4% Net interest income 55,992 45,583 22.8% Provision for credit losses 1,941 728 166.6% Noninterest income 6,834 6,798 0.5% Noninterest expense 35,813 31,045 15.4% Noninterest expense before one-time charges (a) 34,468 31,045 11.0% Income before taxes 25,072 20,608 21.7% Income tax provision 8,906 7,323 21.6% Net income 16,166 13,285 21.7% Net income before one-time charges (a) 16,980 13,285 27.8% PER SHARE DATA: Net income: Basic $2.33 $1.86 25.3% Diluted 2.24 1.80 24.4% Net income before one-time charges (a): Basic $2.44 $1.86 31.2% Diluted 2.35 1.80 30.6% Average number of shares outstanding: Basic 6,945,118 7,148,420 (2.8%) Diluted 7,225,638 7,391,371 (2.2%) Book value, at period end $14.02 $12.98 8.0% Tangible book value, at period end 14.02 12.98 8.0% Cash dividends declared $0.70 $0.62 12.9% PERIOD END DATA: Loans, net of unearned income $1,052,276 $950,170 10.7% Investment securities held-to- maturity and securities available-for-sale 188,854 164,150 15.0% Assets 1,316,763 1,179,006 11.7% Noninterest-bearing deposits 270,073 256,132 5.4% Interest-bearing deposits 715,756 656,446 9.0% Total deposits 985,829 912,578 8.0% Customer funding sources (b) 1,157,357 1,025,403 12.9% Stockholders' equity 97,318 92,348 5.4% PERFORMANCE RATIOS: Return on average assets 1.28% 1.21% Return on average assets before one-time charges (a) 1.35% 1.21% Return on average stockholders' equity 17.48% 14.88% Return on average stockholders' equity before one-time charges (a) 18.36% 14.88% Net interest margin 4.64% 4.33% Net interest margin (FTE) 4.75% 4.44% Efficiency ratio (FTE)(c) 55.80% 58.01% Efficiency ratio (FTE), before one-time charges (a)(c) 53.70% 58.01% CAPITAL RATIOS: Period-end capital to risk- weighted assets: Tier 1 10.05% 9.74% Total 11.19% 10.85% Period-end tier 1 leverage ratio 8.68% 8.75% ASSET QUALITY: Allowance for credit losses to loans, net of unearned income, at period-end 1.21% 1.22% Net recoveries (charge-offs) $(792) $27 (100.0%) Annualized net recoveries (charge-offs) to average loans, net of unearned income (0.08%) 0.00% Nonperforming assets: Nonaccrual loans $137 $614 (77.7%) Loans 90+ days past due and accruing 155 31 400.0% Other real estate owned - - na ----------------- Total nonperforming assets $292 $645 (54.7%) ----------------- Nonperforming and past due loans to total loans, net of unearned income, at period-end 0.03% 0.07% Nonperforming assets and past due loans to total assets, at period- end 0.02% 0.05% NONINTEREST INCOME AND EXPENSE BREAKDOWN: Noninterest income: Fees charged for services $3,215 $3,718 (13.5%) Gains on sales of mortgage loans, net of costs 1,545 1,437 7.5% Net gain on other real estate owned - 59 (100.0%) Commissions earned on financial services sales 649 589 10.2% Other noninterest income 1,425 995 43.2% -------------------- $6,834 $6,798 0.5% -------------------- Noninterest expenses: Salaries and employee benefits $20,790 $16,931 22.8% Occupancy 3,893 3,829 1.7% Equipment 1,729 1,912 (9.6%) Data processing 1,774 1,969 (9.9%) Marketing 1,275 929 37.2% Professional fees 1,283 945 35.8% Postage 408 379 7.7% Stationery and supplies 439 491 (10.6%) Cash management services 469 548 (14.4%) Other noninterest expenses 3,753 3,112 20.6% --------------------- $35,813 $31,045 15.4% --------------------- AVERAGE BALANCES: Federal funds sold and interest-bearing deposits (d) $13,522 $20,635 (34.5%) Investment securities held-to- maturity and securities available-for-sale 176,094 130,865 34.6% Loans, net of unearned income 1,010,537 894,961 12.9% Loans originated for sale (d) 7,857 6,328 24.2% Total earning assets 1,208,010 1,052,789 14.7% Total assets 1,261,426 1,100,098 14.7% Interest-bearing deposits: NOW accounts 85,808 88,127 (2.6%) Savings / money market 181,572 199,618 (9.0%) Time deposits 440,998 347,351 27.0% Noninterest-bearing deposits 249,896 221,810 12.7% Total deposits 958,274 856,906 11.8% Short-term borrowings (d) 168,057 123,092 36.5% Long-term borrowings 35,106 23,236 51.1% Total interest-bearing liabilities 911,541 781,424 16.7% Stockholders' equity 92,472 89,262 3.6% YIELD ANALYSIS: Federal funds sold and interest-bearing deposits (d) 2.94% 1.16% Investment securities held-to- maturity and securities available-for-sale (FTE) 3.86% 4.16% Loans, net of unearned income (FTE) 7.07% 5.88% Total yield on earning assets (FTE) 6.55% 5.57% Interest-bearing deposits NOW accounts 0.17% 0.15% Savings and money market accounts 0.86% 0.40% Time deposits 3.00% 2.42% Short-term borrowings 2.95% 1.14% Long-term borrowings 5.46% 5.24% Total cost of interest-bearing liabilities 2.40% 1.53% ------------------------------------------------------------------------- (a) One-time charges include year-to-date merger-related expenses of $313,000, net of tax, related to the pending merger of Columbia Bancorp with and into Fulton Financial Corporation, and $501,000, net of tax, related to employment restructuring costs incurred in the fourth quarter of 2005. Merger-related expenses totaled $164,000 in the fourth quarter of 2005, net of tax. (b) Deposits plus customer-related short-term borrowings in the form of commercial paper and repurchase agreements. (c) 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. (d) 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 Financial Highlights (dollars in thousands, except per share data) (unaudited) As of and Three Months Ended December 31, -------------------------------- 2005 2004 % Change -------------------------------- SUMMARY OF OPERATING RESULTS: Tax equivalent interest income $22,275 $16,376 36.0% Interest expense 6,486 3,497 85.5% Tax equivalent net interest income 15,789 12,879 22.6% Tax equivalent adjustment 372 326 14.1% Net interest income 15,417 12,553 22.8% Provision for credit losses 500 36 1288.9% Noninterest income 1,596 1,475 8.2% Noninterest expense 9,924 8,343 19.0% Noninterest expense before one-time charges (a) 8,825 8,343 5.8% Income before taxes 6,589 5,649 16.6% Income tax provision 2,260 1,976 14.4% Net income 4,329 3,673 17.9% Net income before one-time charges (a) 4,993 3,673 35.9% PER SHARE DATA: Net income: Basic $0.62 $0.52 19.2% Diluted 0.60 0.50 20.0% Net income before one-time charges (a): Basic $0.72 $0.52 38.5% Diluted 0.69 0.50 38.0% Average number of shares outstanding: Basic 6,938,097 7,113,768 (2.5%) Diluted 7,244,939 7,371,541 (1.7%) Book value, at period end Tangible book value, at period end Cash dividends declared $0.19 $0.17 11.8% 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 (b) Stockholders' equity PERFORMANCE RATIOS: Return on average assets 1.32% 1.25% Return on average assets before one-time charges (a) 1.52% 1.25% Return on average stockholders' equity 17.93% 15.99% Return on average stockholders' equity before one-time charges (a) 20.68% 15.99% Net interest margin 4.90% 4.46% Net interest margin (FTE) 5.02% 4.57% Efficiency ratio (FTE)(c) 57.08% 58.12% Efficiency ratio (FTE), before one-time charges (a)(c) 50.76% 58.12% 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) $(323) $33 (100.0%) Annualized net recoveries (charge-offs) to average loans, net of unearned income (0.12%) 0.01% 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 $765 $774 (1.2%) Gains on sales of mortgage loans, net of costs 376 287 31.0% Net gain on other real estate owned - - na Commissions earned on financial services sales 129 166 (22.3%) Other noninterest income 326 248 31.5% --------------------- $1,596 $1,475 8.2% --------------------- Noninterest expenses: Salaries and employee benefits $6,060 $4,865 24.6% Occupancy 1,002 1,082 (7.4%) Equipment 421 426 (1.2%) Data processing 479 394 21.6% Marketing 269 193 39.4% Professional fees 386 344 12.2% Postage 84 99 (15.2%) Stationery and supplies 95 157 (39.5%) Cash management services 121 137 (11.7%) Other noninterest expenses 1,007 646 55.9% --------------------- $9,924 $8,343 19.0% --------------------- AVERAGE BALANCES: Federal funds sold and interest-bearing deposits (d) $10,854 $15,512 (30.0%) Investment securities held-to- maturity and securities available-for-sale 188,742 157,348 20.0% Loans, net of unearned income 1,040,649 940,368 10.7% Loans originated for sale (d) 8,303 7,068 17.5% Total earning assets 1,248,548 1,120,296 11.4% Total assets 1,304,728 1,167,536 11.8% Interest-bearing deposits: NOW accounts 83,363 87,742 (5.0%) Savings / money market 174,987 201,479 (13.1%) Time deposits 463,582 364,888 27.0% Noninterest-bearing deposits 258,528 245,886 5.1% Total deposits 980,460 899,995 8.9% Short-term borrowings (d) 183,328 139,635 31.3% Long-term borrowings 36,496 26,231 39.1% Total interest-bearing liabilities 941,756 819,975 14.9% Stockholders' equity 95,797 91,367 4.8% YIELD ANALYSIS: Federal funds sold and interest-bearing deposits (d) 3.80% 1.59% Investment securities held-to- maturity and securities available-for-sale (FTE) 3.92% 3.92% Loans, net of unearned income (FTE) 7.68% 6.20% Total yield on earning assets (FTE) 7.08% 5.81% Interest-bearing deposits NOW accounts 0.17% 0.16% Savings and money market accounts 1.19% 0.47% Time deposits 3.20% 2.48% Short-term borrowings 3.58% 1.74% Long-term borrowings 5.75% 5.22% Total cost of interest-bearing liabilities 2.73% 1.70% ------------------------------------------------------------------------- (a) One-time charges include year-to-date merger-related expenses of $313,000, net of tax, related to the pending merger of Columbia Bancorp with and into Fulton Financial Corporation, and $501,000, net of tax, related to employment restructuring costs incurred in the fourth quarter of 2005. Merger-related expenses totaled $164,000 in the fourth quarter of 2005, net of tax. (b) Deposits plus customer-related short-term borrowings in the form of commercial paper and repurchase agreements. (c) 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. (d) 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) December 31, December 31, 2005 2004 -------------------------------- (unaudited) (audited) Assets Cash and due from banks $42,223 $30,012 Interest-bearing deposits with banks 206 208 Federal funds sold 6,867 9,904 Investment securities held-to- maturity 107,826 116,170 Securities available-for-sale 81,028 47,980 Residential mortgage loans originated for sale 7,760 8,698 Loan receivables: Real estate - development and construction 410,457 345,375 Commercial 278,053 226,763 Real estate - mortgage: Residential 20,088 17,272 Commercial 144,908 163,985 Consumer, principally second mortgage loans and residential equity lines of credit 198,622 196,198 Other 578 668 ------------------------------ Total loans 1,052,706 950,261 Less: Unearned income, net of origination costs (430) (91) Allowance for credit losses (12,732) (11,583) ------------------------------- Loans, net 1,039,544 938,587 Property and equipment, net 6,914 6,647 Prepaid expenses and other assets 24,395 20,800 ------------------------------- Total assets $1,316,763 $1,179,006 =============================== Liabilities Deposits: Noninterest-bearing demand deposits $270,073 $256,132 Interest-bearing deposits 715,756 656,446 ------------------------------- Total deposits 985,829 912,578 Short-term borrowings 189,083 135,825 Subordinated debentures 16,496 10,310 Long-term borrowings 20,000 20,000 Accrued expenses and other liabilities 8,037 7,945 ------------------------------- Total liabilities 1,219,445 1,086,658 ------------------------------- Stockholders' equity Common stock, $.01 par value per share; authorized 10,000,000 shares; outstanding 6,940,705 and 7,114,267 shares, respectively 69 71 Additional paid-in capital 39,449 45,739 Retained earnings 57,735 46,419 Accumulated other comprehensive income 65 119 ------------------------------- Total stockholders' equity 97,318 92,348 ------------------------------- Total liabilities and stockholders' equity $1,316,763 $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) Twelve Months Ended Three Months Ended December 31, December 31, ------------------------------------------- 2005 2004 2005 2004 ------------------------------------------- (unaudited) (audited)(unaudited)(unaudited) Interest income: Loans $70,983 $52,245 $20,024 $14,528 Investment securities 6,446 5,062 1,775 1,459 Federal funds sold and interest-bearing deposits with banks 398 239 104 63 ------------------------------------------- Total interest income 77,827 57,546 21,903 16,050 ------------------------------------------- Interest expense: Deposits 14,954 9,340 4,304 2,544 Borrowings 6,881 2,623 2,182 953 ------------------------------------------- Total interest expense 21,835 11,963 6,486 3,497 ------------------------------------------- Net interest income 55,992 45,583 15,417 12,553 Provision for credit losses 1,941 728 500 36 ------------------------------------------- Net interest income after provision for credit losses 54,051 44,855 14,917 12,517 ------------------------------------------- Noninterest income: Fees charged for services 3,215 3,718 765 774 Gains on sales of mortgage loans, net of costs 1,545 1,437 376 287 Net gain on other real estate owned - 59 - - Commissions earned on financial services sales 649 589 129 166 Other 1,425 995 326 248 Total noninterest income 6,834 6,798 1,596 1,475 Noninterest expense: Salaries and employee benefits 20,790 16,931 6,060 4,865 Occupancy 3,893 3,829 1,002 1,082 Equipment 1,729 1,912 421 426 Data processing 1,774 1,969 479 394 Marketing 1,275 929 269 193 Professional fees 1,283 945 386 344 Postage 408 379 84 99 Stationery and supplies 439 491 95 157 Cash management services 469 548 121 137 Other 3,753 3,112 1,007 646 ------------------------------------------- Total noninterest expense 35,813 31,045 9,924 8,343 ------------------------------------------- Income before income taxes 25,072 20,608 6,589 5,649 Income tax provision 8,906 7,323 2,260 1,976 ------------------------------------------- Net income $16,166 $13,285 $4,329 $3,673 =========================================== Per common share data: Net income: Basic $2.33 $1.86 $0.62 $0.52 Diluted 2.24 1.80 0.60 0.50 Cash dividends declared $0.70 $0.62 $0.19 $0.17 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) Twelve Months Ended Three Months Ended December 31, December 31, ------------------------------------------- 2005 2004 2005 2004 ------------------------------------------- (unaudited) (unaudited) GAAP-based Operating Performance Measures: Net interest income $55,992 $45,583 $15,417 $12,553 Provision for credit losses 1,941 728 500 36 Noninterest income 6,834 6,798 1,596 1,475 Noninterest expense 35,813 31,045 9,924 8,343 Income before taxes 25,072 20,608 6,589 5,649 Income tax provision 8,906 7,323 2,260 1,976 Net income 16,166 13,285 4,329 3,673 Return on average assets 1.28% 1.21% 1.32% 1.25% Return on average equity 17.48% 14.88% 17.93% 15.99% Net interest margin 4.64% 4.33% 4.90% 4.46% Efficiency ratio 57.00% 59.27% 58.33% 59.47% Net income per share - diluted $2.24 $1.80 $0.60 $0.50 -------------------------------------------------------------------------- Non-GAAP adjustments Interest income on tax-exempt loans $1,001 $759 $283 $234 Interest income on tax-exempt securities 357 378 89 92 ------------------- ------------------- Total tax equivalent adjustment - net interest income $1,358 $1,137 $372 $326 =================== =================== Merger-related expenses $517 $ - $271 $ - Less related taxes 204 - 107 - ------------------- ------------------- Merger-related expenses, net of tax 313 - 164 - ------------------- ------------------- Employment restructuring costs 828 - 828 - Less related taxes 327 - 327 - ------------------- ------------------- Employment restructuring costs 501 - 501 - ------------------- ------------------- One-time charges, net of tax $814 $ - $665 $ - =================== =================== -------------------------------------------------------------------------- Core Operating Performance Measures:(a)(b) Net interest income - tax equivalent $57,350 $46,720 $15,789 $12,879 Tax equivalent adjustment (1,358) (1,137) (372) (326) ------------------ -------------------- Net interest income 55,992 45,583 15,417 12,553 Provision for credit losses 1,941 728 500 36 Noninterest income 6,834 6,798 1,596 1,475 Noninterest expense, before one-time charges 34,468 31,045 8,825 8,343 Income before taxes 26,417 20,608 7,688 5,649 Income tax provision, before tax effect of one-time charges 9,437 7,323 2,695 1,976 Net income, before one-time charges 16,980 13,285 4,993 3,673 Return on average assets, before merger-related expenses 1.35% 1.21% 1.52% 1.25% Return on average equity, before merger-related expenses 18.36% 14.88% 20.68% 15.99% Net interest margin (FTE) 4.75% 4.44% 5.02% 4.57% Efficiency ratio (FTE) 55.80% 58.01% 57.08% 58.12% Efficiency ratio (FTE), before one- time charges 53.70% 58.01% 50.76% 58.12% Net income per share, before merger- related expenses - diluted $2.35 $1.80 $0.69 $0.50 -------------------------------------------------------------------------- (a) Core operating performance reflects GAAP-based performance presented on a fully tax-equivalent basis, exclusive of non-recurring items, where applicable. Non-recurring items in 2005 represent merger- related expenses associated with the pending merger of Columbia Bancorp with and into Fulton Financial Corporation, as well as expenses related to employment restructuring that took place in the fourth quarter of 2005. (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. DATASOURCE: Columbia Bancorp CONTACT: John A. Scaldara, Jr., President and COO of Columbia Bancorp, +1-410-423-8012 Web site: http://www.columbank.com/ Company News On-Call: http://www.prnewswire.com/comp/127921.html

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