CBMD Columbia Bancorp (MM)

Columbia Bancorp Reports an Increase in Year-to-Date Net Income of 14.4% and Record Loan Growth to $900.3 Million COLUMBIA, Md., July 15 /PRNewswire-FirstCall/ -- Columbia Bancorp (NASDAQ:CBMD), parent company of The Columbia Bank (the "Bank"), today announced net income for the six months ended June 30, 2004 of $6.09 million ($.82 per diluted share) compared to $5.33 million ($.73 per diluted share) for the same period during 2003, an increase of 14.4%. Returns on average equity were 13.93% and 13.60% for the six months ended June 30, 2004 and 2003, respectively. Return on average assets was 1.16% for the six months ended June 30, 2004 compared to 1.14% for the same period in 2003. Net income for the second quarter 2004 totaled $3.11 million ($.42 per diluted share) compared to $2.84 million ($.39 per diluted share) for the second quarter 2003, a 9.7% increase. Returns on average equity for the second quarter 2004 and 2003 were 14.07% and 14.26%, respectively. Returns on average assets for the second quarter 2004 and 2003 were 1.16% and 1.18%, respectively. SECOND QUARTER FINANCIAL HIGHLIGHTS -- Loans reached a record level of $900.32 million, increasing $149.81 million, or 20.0%, since June 30, 2003. Since December 31, 2003, loans grew $64.84 million, representing an annualized rate of growth of 15.5%. -- Customer funding sources (deposits and other short-term borrowings from core customers) grew $63.77 million, or 6.8%, since June 30, 2003. -- Assets grew to a record level, totaling $1.13 billion at June 30, 2004. -- Credit quality remained strong with nonperforming assets and past due loans totaling only $1.44 million, or .13% of total assets. Net recoveries during the quarter totaled $10,000. -- As anticipated, because of increasing interest rates and a corresponding decrease in loan origination volume, income from mortgage-banking activities declined $326,000, or 39.1%, compared to the second quarter 2003. -- On June 24, 2004, the Company completed a private offering of $6.0 million of trust preferred securities. DETAILED REVIEW OF FINANCIAL PERFORMANCE Total assets at June 30, 2004 were $1.13 billion, representing growth of $66.59 million, or 6.3%, since June 30, 2003. Loans, net of unearned income, totaled $900.32 million compared to $750.51 million at June 30, 2003, representing growth of $149.81 million, or 20.0%. Growth in the loan portfolio since June 30, 2003 was supported by strength in all lending activities. Specifically, the real estate development and construction portfolio increased $77.67 million (32.8%), the commercial portfolio, inclusive of commercial mortgage loans, increased $38.41 million (11.1%) and the consumer portfolio increased $33.20 million (22.2%). Customer funding sources, representing deposits plus other short-term borrowings from core customers, increased 6.8% to $1.00 billion at June 30, 2004. Shareholders' equity climbed 9.3% to $88.04 million at June 30, 2004. Operating performance through June 30, 2004 was primarily driven by growth in net interest income and containment of noninterest expense. Net interest income increased 5.8% during the second quarter 2004 and 9.2% during the six months ended June 30, 2004 as compared to the corresponding periods of 2003, as a result of continued growth in earning assets, most specifically, the loan portfolio. Modest margin pressure mitigated the impact of growth in earning assets. The net interest margin (FTE) declined .16% during the second quarter 2004 as compared to the second quarter 2003 and .04% during the six months ended June 30, 2004 as compared to the same period in 2003. The pressure on the net interest margin resulted from the Federal Reserve's previous actions to lower short-term rates and, more recently, market driven increases in the cost of funding sources in anticipation of the Federal Reserve's increase in its fed funds target rate of .25% on June 30, 2004. The Company remained asset sensitive at June 30, 2004 and should benefit from the Federal Reserve's action to increase short-term rates. The potential benefit the Company might achieve as a result of a rising interest rate environment may be reduced depending upon the rate at which its cost of funds increases. Noninterest expense rose modestly, increasing 2.3% and 3.4% for the second quarter 2004 and six months ended June 30, 2004, respectively, as compared to the corresponding periods in 2003. The efficiency ratio (FTE) improved to 59.0% during the six months ended June 30, 2004 as the Company continued to effectively leverage its overhead infrastructure. As expected, noninterest income fell $571,000, or 23.4%, during the second quarter 2004 and $768,000, or 17.5%, during the six months ended June 30, 2004, compared to the corresponding periods of 2003 primarily, as a result of a decline in mortgage banking activity. Specifically, mortgage-banking revenue declined $326,000 and $606,000 during the second quarter 2004 and six months ended June 30, 2004, respectively. The Company sold first mortgage loans totaling $44.77 million during the second quarter 2004, compared to $75.22 million during the same period in 2003, and $74.34 million during the six months of 2004, compared to $139.51 million in 2003. Asset quality remained very strong at June 30, 2004, with nonperforming assets and past-due loans totaling $1.44 million. As of June 30, 2004, nonperforming assets and past-due loans represented only .13% of total assets. The ratio of nonperforming loans and past-due loans to total loans improved from .20% at June 30, 2003 to .13% at June 30, 2004. Net recoveries totaled $10,000 during the second quarter. Net charge-offs for the six months ended June 30, 2004 totaled $87,000, or .02% of average loans. Reflecting strong asset quality, the provision for loan losses decreased from $1.05 million in 2003 to $500,000 in 2004. At June 30, 2004, the allowance for credit losses totaled $11.24 million, or 1.25% of loans, compared to $9.86 million, or 1.31% of loans at June 30, 2003. On June 24, 2004 the Company completed a private offering of $6.0 million of trust preferred securities through a statutory trust formed for that purpose. The Company intends to use the proceeds of the offering for general corporate purposes, including the repurchase of the Company's common stock. During the second quarter 2004, the Company repurchased 55,596 shares of its common stock at a weighted average price per share of $28.64. 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". NON-GAAP PRESENTATION This press release includes disclosure and discussion of a net interest margin and an efficiency ratio reported on a fully tax-equivalent basis ("FTE"). These 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, noninterest income and noninterest 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 nonperforming 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 Six Months Ended June 30, 2004 2003 % Change SUMMARY OF OPERATING RESULTS: Tax equivalent interest income $27,211 $25,434 7.0% Interest expense 5,335 5,670 (5.9%) Tax equivalent net interest income 21,876 19,764 10.7% Tax equivalent adjustment 548 233 135.2% Net interest income 21,328 19,531 9.2% Provision for credit losses 500 1,050 (52.4%) Noninterest income 3,609 4,377 (17.5%) Noninterest expense 15,033 14,534 3.4% Income before taxes 9,404 8,324 13.0% Income tax provision 3,310 2,996 10.5% Net income 6,094 5,328 14.4% PER SHARE DATA: Net income: Basic $0.85 $0.75 13.2% Diluted $0.82 $0.73 12.5% Average number of shares outstanding: Basic 7,175,939 7,116,714 0.8% Diluted 7,421,715 7,337,212 1.2% Book value, at period end $12.33 $11.31 9.1% Tangible book value, at period end 12.33 11.31 9.1% Cash dividends declared $0.30 $0.25 20.0% PERIOD END DATA: Loans, net of unearned income $900,320 $750,509 20.0% Investment securities and securities available-for-sale 122,430 140,552 (12.9%) Assets 1,126,916 1,060,141 6.3% Noninterest-bearing deposits 240,117 197,490 21.6% Interest-bearing deposits 650,884 586,507 11.0% Total deposits 891,001 783,997 13.6% Customer funding sources (a) 1,001,524 937,758 6.8% Stockholders' equity 88,039 80,538 9.3% PERFORMANCE RATIOS: Return on average assets 1.16% 1.14% Return on average stockholders' equity 13.93% 13.60% Net interest margin 4.27% 4.37% Net interest margin (FTE) 4.38% 4.42% Efficiency ratio (FTE)(c) 58.99% 60.20% CAPITAL RATIOS: Period-end capital to risk- weighted assets: Tier 1 9.45% 9.20% Total 10.58% 10.33% Period-end tier 1 leverage ratio 8.79% 8.34% ASSET QUALITY: Allowance for credit losses to loans, net of unearned income, at period-end 1.25% 1.31% Net recoveries (charge-offs) $(87) $(24) (262.5%) Annualized net recoveries (charge-offs) to average loans, net of unearned income (0.02%) (0.01%) Nonperforming assets: Nonaccrual loans $1,095 $720 52.1% Restructured loans -- 643 (100.0%) Loans 90+ days past due and accruing 91 112 (18.8%) Other real estate owned 250 -- na Total nonperforming assets $1,436 $1,475 (2.6%) Nonperforming and past due loans to total loans, net of unearned income, at period-end 0.13% 0.20% Nonperforming assets and past due loans to total assets, at period-end 0.13% 0.14% COLUMBIA BANCORP Financial Highlights (Dollars in Thousands, Except Per-Share Data) (Unaudited) As of and Three Months Ended June 30, 2004 2003 % Change SUMMARY OF OPERATING RESULTS: Tax equivalent interest income $13,681 $12,941 5.7% Interest expense 2,755 2,758 (0.1%) Tax equivalent net interest income 10,926 10,183 7.3% Tax equivalent adjustment 273 113 141.6% Net interest income 10,653 10,070 5.8% Provision for credit losses 190 745 (74.5%) Noninterest income 1,872 2,443 (23.4%) Noninterest expense 7,504 7,335 2.3% Income before taxes 4,831 4,433 9.0% Income tax provision 1,718 1,596 7.6% Net income 3,113 2,837 9.7% PER SHARE DATA: Net income: Basic $0.43 $0.40 8.5% Diluted 0.42 0.39 7.8% Average number of shares outstanding: Basic 7,170,585 7,117,805 0.7% Diluted 7,404,762 7,346,462 0.8% Book value, at period end Tangible book value, at period end Cash dividends declared $0.15 $0.125 20.0% PERIOD END DATA: Loans, net of unearned income Investment securities 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 1.16% 1.18% Return on average stockholders' equity 14.07% 14.26% Net interest margin 4.18% 4.40% Net interest margin (FTE) 4.29% 4.45% Efficiency ratio (FTE) (c) 58.63% 58.09% 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) $10 $21 (52.4%) Annualized net recoveries (charge-offs) to average loans, net of unearned income 0.00% 0.01% Nonperforming assets: Nonaccrual loans Restructured 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 COLUMBIA BANCORP Financial Highlights (Dollars in Thousands, Except Per-Share Data) (Unaudited) As of and Six Months Ended June 30, 2004 2003 % Change NONINTEREST INCOME AND EXPENSE BREAKDOWN: Noninterest income: Fees charged for services $2,034 $1,932 5.3% Gains and fees on sales of mortgage loans, net of costs 859 1,465 (41.4%) Net income (loss) on other real estate owned (14) 41 (134.1%) Commission earned on financial services sales 277 248 11.7% Other noninterest income 453 691 (34.4%) 3,609 4,377 (17.5%) Noninterest expenses: Salaries and employee benefits 7,952 7,835 1.5% Occupancy, net 1,920 1,844 4.1% Equipment 1,018 944 7.8% Data processing 1,050 894 17.4% Marketing 596 567 5.1% Other noninterest expenses 2,497 2,450 1.9% 15,033 14,534 3.4% AVERAGE BALANCES: Federal funds sold and interest-bearing deposits (b) $23,517 $34,501 (31.8%) Investment securities and securities available-for-sale 112,788 151,530 (25.6%) Loans, net of unearned income 862,357 698,940 23.4% Loans originated for sale (b) 6,758 15,931 (57.6%) Total earning assets 1,005,420 900,902 11.6% Total assets 1,052,448 946,332 11.2% Interest-bearing deposits: NOW accounts 87,612 89,078 (1.6%) Savings and money market accounts 194,169 192,332 1.0% Time deposits 331,255 281,217 17.8% Noninterest-bearing deposits 206,292 164,501 25.4% Total deposits 795,257 727,128 9.4% Short-term borrowings (b) 117,267 111,364 5.3% Long-term borrowings 20,231 20,000 1.2% Total interest-bearing liabilities 750,534 693,991 8.1% Stockholders' equity 87,960 78,979 11.4% YIELD ANALYSIS: Federal funds sold and interest- bearing deposits 0.95% 1.19% Investment securities and securities available-for-sale (FTE) 4.38% 4.64% Loans, net of unearned income (FTE) 5.70% 6.13% Total yield on earning assets (FTE) 5.44% 5.69% Interest-bearing deposits NOW accounts 0.14% 0.15% Savings and money market accounts 0.37% 0.73% Time deposits 2.38% 2.84% Short-term borrowings 0.77% 0.75% Long-term borrowings 5.34% 5.42% Total cost of interest-bearing liabilities 1.43% 1.65% COLUMBIA BANCORP Financial Highlights (Dollars in Thousands, Except Per-Share Data) (Unaudited) As of and Three Months Ended June 30, 2004 2003 % Change NONINTEREST INCOME AND EXPENSE BREAKDOWN: Noninterest income: Fees charged for services $1,029 $994 3.5% Gains and fees on sales of mortgage loans, net of costs 508 834 (39.1%) Net income (loss) on other real estate owned (5) 30 (116.7%) Commission earned on financial services sales 137 125 9.6% Other noninterest income 203 460 (55.9%) 1,872 2,443 (23.4%) Noninterest expenses: Salaries and employee benefits 3,906 3,865 1.1% Occupancy, net 944 920 2.6% Equipment 505 495 2.0% Data processing 532 484 9.9% Marketing 296 335 (11.6%) Other noninterest expenses 1,321 1,236 6.9% 7,504 7,335 2.3% AVERAGE BALANCES: Federal funds sold and interest-bearing deposits (b) $37,521 $25,995 44.3% Investment securities and securities available-for-sale 103,384 151,508 (31.8%) Loans, net of unearned income 873,278 721,274 21.1% Loans originated for sale (b) 8,320 19,945 (58.3%) Total earning assets 1,022,503 918,722 11.3% Total assets 1,071,793 965,980 11.0% Interest-bearing deposits: NOW accounts 89,308 93,717 (4.7%) Savings and money market accounts 194,197 198,470 (2.2%) Time deposits 348,394 280,242 24.3% Noninterest-bearing deposits 221,033 168,554 31.1% Total deposits 852,932 740,983 15.1% Short-term borrowings (b) 105,985 115,939 (8.6%) Long-term borrowings 20,462 20,000 2.3% Total interest-bearing liabilities 758,346 708,368 7.1% Stockholders' equity 88,743 79,775 11.2% YIELD ANALYSIS: Federal funds sold and interest- bearing deposits 0.96% 1.18% Investment securities and securities available-for-sale (FTE) 4.45% 4.59% Loans, net of unearned income (FTE) 5.68% 6.02% Total yield on earning assets (FTE) 5.38% 5.65% Interest-bearing deposits NOW accounts 0.15% 0.10% Savings and money market accounts 0.37% 0.64% Time deposits 2.39% 2.78% Short-term borrowings 0.77% 0.69% Long-term borrowings 5.35% 5.50% Total cost of interest-bearing liabilities 1.46% 1.56% (a) Deposits plus customer-related short-term borrowings in the form of commercial paper and repurchase agreements. (b) Variances reflect significant fluctuations in account balances due to the nature of the accounts. (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. Certain reclassifications of information previously reported have been made to conform with current presentation. COLUMBIA BANCORP Consolidated Statements of Condition (Dollars in Thousands) June 30, June 30, December 31, 2004 2003 2003 (unaudited) (audited) Assets Cash and due from banks $38,014 $55,410 $35,846 Interest-bearing deposits with banks 207 217 205 Federal funds sold 43,547 72,128 3,292 Investment securities 69,803 92,302 77,344 Securities available-for-sale 52,627 48,250 56,583 Residential mortgage loans originated for sale 7,307 23,766 6,046 Loan receivables: Real estate - development and construction 314,480 236,813 283,599 Commercial 218,623 198,216 221,374 Real estate - mortgage: Residential 17,197 17,434 16,349 Commercial 166,963 148,965 143,723 Retail, principally second mortgage loans and residential equity lines of credit 182,560 149,360 169,298 Other 707 156 1,504 Total loans 900,530 750,944 835,847 Less: unearned income, net of origination costs (210) (435) (363) allowance for credit losses (11,241) (9,864) (10,828) Loans, net 889,079 740,645 824,656 Other real estate owned 250 -- -- Property and equipment, net 6,948 7,882 7,332 Prepaid expenses and other assets 19,134 19,541 17,951 Total assets $1,126,916 $1,060,141 $1,029,255 Liabilities Deposits: Noninterest-bearing $240,117 $197,490 $206,323 Interest-bearing 650,884 586,507 581,285 Total deposits 891,001 783,997 787,608 Short-term borrowings 115,523 169,990 128,844 Subordinated debentures 6,186 -- -- Long-term borrowings 20,000 20,000 20,000 Accrued expenses and other liabilities 6,167 5,616 7,354 Total liabilities 1,038,877 979,603 943,806 Stockholders' equity Common stock, $.01 par value per share; authorized 10,000,000 shares; outstanding 7,137,692, 7,118,529 and 7,170,882 shares, respectively 71 71 72 Additional paid-in capital 46,626 47,553 47,886 Retained earnings 41,506 32,957 37,561 Accumulated other comprehensive income (loss) (164) (43) (70) Total stockholders' equity 88,039 80,538 85,449 Total liabilities and stockholders' equity $1,126,916 $1,060,141 $1,029,255 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) Six Months Ended Three Months Ended June 30, June 30, 2004 2003 2004 2003 (unaudited) (unaudited) Interest income: Loans $24,289 $21,587 $12,267 $11,075 Investment securities 2,263 3,408 1,051 1,675 Federal funds sold and interest- bearing deposits with banks 111 206 90 78 Total interest income 26,663 25,201 13,408 12,828 Interest expense: Deposits 4,346 4,721 2,278 2,285 Borrowings 989 949 477 473 Total interest expense 5,335 5,670 2,755 2,758 Net interest income 21,328 19,531 10,653 10,070 Provision for credit losses 500 1,050 190 745 Net interest income after provision for credit losses 20,828 18,481 10,463 9,325 Noninterest income: Fees charged for services 2,034 1,932 1,029 994 Gains and fees on sales of mortgage loans, net of costs 859 1,465 508 834 Net income (loss) on other real estate owned (14) 41 (5) 30 Commissions earned on financial services sales 277 248 137 125 Other 453 691 203 460 Total noninterest income 3,609 4,377 1,872 2,443 Noninterest expense: Salaries and employee benefits 7,952 7,835 3,906 3,865 Occupancy, net 1,920 1,844 944 920 Equipment 1,018 944 505 495 Data processing 1,050 894 532 484 Marketing 596 567 296 335 Professional fees 338 394 174 136 Cash management services 280 290 158 149 Deposit insurance 99 98 50 49 Other 1,780 1,668 939 902 Total noninterest expense 15,033 14,534 7,504 7,335 Income before income taxes 9,404 8,324 4,831 4,433 Income tax provision 3,310 2,996 1,718 1,596 Net income $6,094 $5,328 $3,113 $2,837 Per common share data: Net income: Basic $0.85 $0.75 $0.43 $0.40 Diluted 0.82 0.73 0.42 0.39 Cash dividends declared $0.30 $0.25 $0.15 $0.125 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) Six Months Ended Three Months Ended June 30, June 30, 2004 2003 2004 2003 (unaudited) (unaudited) GAAP-based Operating Performance Measures: Net interest income $21,328 $19,531 $10,653 $10,070 Provision for credit losses 500 1,050 190 745 Noninterest income 3,609 4,377 1,872 2,443 Noninterest expense 15,033 14,534 7,504 7,335 Income before taxes 9,404 8,324 4,831 4,433 Income tax provision 3,310 2,996 1,718 1,596 Net income 6,094 5,328 3,113 2,837 Return on average assets 1.16% 1.14% 1.16% 1.18% Return on average equity 13.93% 13.60% 14.07% 14.26% Net interest margin 4.27% 4.37% 4.18% 4.40% Efficiency ratio 60.28% 60.79% 59.91% 58.62% Net income per share - diluted $0.82 $0.73 $0.42 $0.39 Non-GAAP adjustments Tax equivalent adjustment - net interest income $548 $233 $273 $113 Core Operating Performance Measures Net interest income - tax equivalent $21,876 $19,764 $10,926 $10,183 Tax equivalent adjustment (548) (233) (273) (113) Net interest income 21,328 19,531 10,653 10,070 Provision for credit losses 500 1,050 190 745 Noninterest income 3,609 4,377 1,872 2,443 Noninterest expense 15,033 14,534 7,504 7,335 Income before taxes 9,404 8,324 4,831 4,433 Income tax provision 3,310 2,996 1,718 1,596 Net income 6,094 5,328 3,113 2,837 Return on average assets 1.16% 1.14% 1.16% 1.18% Return on average equity 13.93% 13.60% 14.07% 14.26% Net interest margin (FTE) 4.38% 4.42% 4.29% 4.45% Efficiency ratio (FTE) 58.98% 60.20% 58.63% 58.09% Net income per share - diluted $0.82 $0.73 $0.42 $0.39 COLUMBIA BANCORP Quarterly Highlights (Dollars in Thousands, Except Per-Share Data) 2Q04 1Q04 (unaudited) SUMMARY OF OPERATING RESULTS: GAAP-based: Interest income $13,408 $13,255 Interest expense 2,755 2,580 Net interest income 10,653 10,675 Provision for credit losses 190 310 Noninterest income 1,872 1,737 Noninterest expense 7,504 7,529 Income before taxes 4,831 4,573 Income tax provision 1,718 1,592 Net income 3,113 2,981 Based on core operating performance (a): Tax-equivalent interest income $13,681 $13,529 Interest expense 2,755 2,580 Tax-equivalent net interest income 10,926 10,949 Tax-equivalent adjustment 273 274 Net interest income 10,653 10,675 Provision for credit losses 190 310 Noninterest income 1,872 1,737 Noninterest expense 7,504 7,529 Income before taxes 4,831 4,573 Income tax provision 1,718 1,592 Net income 3,113 2,981 PER SHARE DATA: Net income : GAAP-based: Basic $0.43 $0.42 Diluted 0.42 0.40 Based on core operating performance (a): Basic 0.43 0.42 Diluted 0.42 0.40 Average number of shares outstanding: Basic 7,170,585 7,178,797 Diluted 7,404,762 7,434,701 Book value, at period end $12.33 $12.23 Tangible book value, at period end 12.33 12.23 Cash dividends declared 0.15 0.15 PERIOD END DATA: Loans, net of unearned income $900,320 $864,753 Investment securities and securities available-for-sale 122,430 104,211 Assets 1,126,916 1,083,798 Noninterest-bearing deposits 240,117 220,700 Interest-bearing deposits 650,884 625,311 Total deposits 891,001 846,011 Customer funding sources (a) 1,001,524 963,051 Stockholders' equity 88,039 87,934 COLUMBIA BANCORP Quarterly Highlights (Dollars in Thousands, Except Per-Share Data) 2Q04 1Q04 (unaudited) PERFORMANCE RATIOS: GAAP-based: Return on average assets 1.16% 1.16% Return on average stockholders' equity 14.07% 13.75% Net interest margin 4.18% 4.34% Efficiency ratio 59.91% 60.66% Based on core operating performance (a): Return on average assets 1.16% 1.16% Return on average stockholders' equity 14.07% 13.75% Net interest margin (FTE) 4.29% 4.46% Efficiency ratio (FTE) 58.63% 59.35% CAPITAL RATIOS: Period-end capital to risk- weighted assets: Tier 1 9.45% 9.04% Total 10.58% 10.20% Period-end tier 1 leverage ratio 8.79% 8.34% ASSET QUALITY: Allowance for credit losses to loans, net of unearned income, at period-end 1.25% 1.28% Net recoveries (charge-offs) $10 $(97) Annualized net recoveries (charge-offs) to average loans, net of unearned income 0.00% (0.05%) Nonperforming assets: Nonaccrual loans $1,095 $1,168 Restructured loans -- -- Loans 90+ days past due and accruing 91 69 Other real estate owned 250 250 Total nonperforming assets $1,436 $1,487 Nonperforming and past due loans to total loans, net of unearned income, at period-end 0.13% 0.14% Nonperforming assets and past due loans to total assets, at period- end 0.13% 0.14% NONINTEREST INCOME AND EXPENSE BREAKDOWN: Noninterest income: Fees charged for deposit services $1,029 $1,005 Gains on sales of mortgage loans, net of costs 508 351 Net income (loss) on other real estate owned (5) (9) Commissions earned on financial services sales 137 140 Other noninterest income 203 250 Total noninterest income $1,872 $1,737 Noninterest expenses: Salaries and payroll taxes $3,618 $3,684 Employee benefits 288 362 Occupancy, net 944 976 Equipment 505 513 Data processing 532 518 Marketing 296 300 Other noninterest expenses 1,321 1,176 Total noninterest expenses $7,504 $7,529 COLUMBIA BANCORP Quarterly Highlights (Dollars in Thousands, Except Per-Share Data) 2Q04 1Q04 (unaudited) AVERAGE BALANCES: Federal funds sold and interest bearing deposits $37,521 $9,513 Investment securities and securities available-for-sale 103,384 122,192 Loans, net of unearned income 873,278 851,436 Loans originated for sale (b) 8,320 5,196 Total earning assets 1,022,503 988,337 Total assets 1,071,793 1,033,102 Interest-bearing deposits: NOW accounts 89,308 85,917 Savings and money market accounts 194,197 194,141 Time deposits 348,394 314,116 Noninterest-bearing deposits 221,033 191,551 Total deposits 852,932 785,725 Short-term borrowings (b) 105,985 128,547 Long-term borrowings 20,462 20,000 Total interest-bearing liabilities 758,346 742,721 Stockholders' equity 88,743 87,180 YIELD ANALYSIS: Federal funds sold and interest bearing deposits 0.96% 0.89% Investment securities and securities available-for-sale (FTE) 4.45% 4.30% Loans, net of unearned income (FTE) 5.68% 5.71% Total yield on earning assets (FTE) 5.38% 5.49% Interest-bearing deposits NOW accounts 0.15% 0.13% Savings and money market accounts 0.37% 0.36% Time deposits 2.39% 2.39% Short-term borrowings 0.77% 0.77% Long-term borrowings 5.35% 5.36% Total cost of interest-bearing liabilities 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. COLUMBIA BANCORP Quarterly Highlights (Dollars in Thousands, Except Per-Share Data) 4Q03 3Q03 2Q03 1Q03 SUMMARY OF OPERATING RESULTS: GAAP-based: Interest income $13,151 $13,051 $12,828 $12,373 Interest expense 2,507 2,559 2,758 2,912 Net interest income 10,644 10,492 10,070 9,461 Provision for credit losses 120 -- 745 305 Noninterest income 1,848 2,737 2,444 1,934 Noninterest expense 7,587 7,849 7,335 7,199 Income before taxes 4,785 5,380 4,434 3,891 Income tax provision 1,652 1,937 1,597 1,400 Net income 3,133 3,443 2,837 2,491 Based on core operating performance (a): Tax-equivalent interest income $13,339 $13,169 $12,941 $12,493 Interest expense 2,507 2,559 2,758 2,912 Tax-equivalent net interest income 10,832 10,610 10,183 9,581 Tax-equivalent adjustment 188 118 113 120 Net interest income 10,644 10,492 10,070 9,461 Provision for credit losses 120 -- 745 305 Noninterest income 1,848 2,737 2,444 1,934 Noninterest expense 7,587 7,849 7,335 7,199 Income before taxes 4,785 5,380 4,434 3,891 Income tax provision 1,652 1,937 1,597 1,400 Net income 3,133 3,443 2,837 2,491 PER SHARE DATA: Net income : GAAP-based: Basic $0.44 $0.48 $0.40 $0.35 Diluted 0.42 0.47 0.39 0.34 Based on core operating performance (a): Basic 0.44 0.48 0.40 0.35 Diluted 0.42 0.47 0.39 0.34 Average number of shares outstanding: Basic 7,164,091 7,137,668 7,117,805 7,115,612 Diluted 7,413,256 7,387,088 7,346,462 7,290,541 Book value, at period end $11.92 $11.65 $11.31 $11.02 Tangible book value, at period end 11.92 11.65 11.31 11.02 Cash dividends declared 0.150 0.125 0.125 0.125 PERIOD END DATA: Loans, net of unearned income $835,484 $797,108 $750,509 $696,322 Investment securities and securities available-for-sale 133,927 142,048 140,552 145,714 Assets 1,029,255 1,013,492 1,060,141 993,570 Noninterest-bearing deposits 206,323 190,576 197,490 182,421 Interest-bearing deposits 581,285 584,401 586,507 565,106 Total deposits 787,608 774,977 783,997 747,527 Customer funding sources (a) 887,930 897,860 937,758 877,955 Stockholders' equity 85,449 83,132 80,538 78,422 COLUMBIA BANCORP Quarterly Highlights (Dollars in Thousands, Except Per-Share Data) 4Q03 3Q03 2Q03 1Q03 PERFORMANCE RATIOS: GAAP-based: Return on average assets 1.23% 1.36% 1.18% 1.09% Return on average stockholders' equity 14.55% 16.56% 14.26% 12.92% Net interest margin 4.36% 4.34% 4.40% 4.35% Efficiency ratio 60.73% 59.33% 58.61% 63.18% Based on core operating performance (a): Return on average assets 1.23% 1.36% 1.18% 1.09% Return on average stockholders' equity 14.55% 16.56% 14.26% 12.92% Net interest margin (FTE) 4.43% 4.39% 4.45% 4.40% Efficiency ratio (FTE) 59.83% 58.81% 58.09% 62.52% CAPITAL RATIOS: Period-end capital to risk-weighted assets: Tier 1 9.28% 9.31% 9.20% 9.62% Total 10.45% 10.49% 10.33% 10.73% Period-end tier 1 leverage ratio 8.43% 8.30% 8.34% 8.49% ASSET QUALITY: Allowance for credit losses to loans, net of unearned income, at period-end 1.30% 1.32% 1.31% 1.31% Net recoveries (charge- offs) $148 $695 $21 $(45) Annualized net recoveries (charge-offs) to average loans, net of unearned income 0.07% 0.36% 0.01% (0.03%) Nonperforming assets: Nonaccrual loans $892 $974 $720 $806 Restructured loans -- -- 643 -- Loans 90+ days past due and accruing 72 127 112 164 Other real estate owned -- -- -- -- Total nonperforming assets $964 $1,101 $1,475 $970 Nonperforming and past due loans to total loans, net of unearned income, at period- end 0.12% 0.14% 0.20% 0.14% Nonperforming assets and past due loans to total assets, at period-end 0.09% 0.11% 0.14% 0.10% NONINTEREST INCOME AND EXPENSE BREAKDOWN: Noninterest income: Fees charged for deposit services $1,006 $1,056 $994 $938 Gains on sales of mortgage loans, net of costs 322 1,168 834 630 Net income (loss) on other real estate owned 2 (21) 30 11 Gain on sale of investment securities -- 28 -- -- Gain (loss) on sale of other assets, net (3) (6) -- (1) Commissions earned on financial services sales 150 208 125 123 Other noninterest income 371 304 461 233 Total noninterest income $1,848 $2,737 $2,444 $1,934 Noninterest expenses: Salaries and payroll taxes $3,583 $3,717 $3,610 $3,440 Employee benefits 718 598 255 530 Occupancy, net 1,000 974 920 924 Equipment 514 500 495 449 Data processing 498 563 484 410 Marketing 199 272 335 232 Other noninterest expenses 1,075 1,225 1,236 1,214 Total noninterest expenses $7,587 $7,849 $7,335 $7,199 COLUMBIA BANCORP Quarterly Highlights (Dollars in Thousands, Except Per-Share Data) 4Q03 3Q03 2Q03 1Q03 AVERAGE BALANCES: Federal funds sold and interest bearing deposits $8,584 $23,355 $25,995 $43,101 Investment securities and securities available -for-sale 135,749 139,201 151,508 151,552 Loans, net of unearned income 818,038 772,604 721,274 676,358 Loans originated for sale (b) 6,891 24,081 19,945 11,872 Total earning assets 969,262 959,241 918,722 882,883 Total assets 1,012,865 1,003,752 965,980 926,466 Interest-bearing deposits: NOW accounts 86,806 92,491 93,717 84,388 Savings and money market accounts 207,351 205,166 198,470 186,126 Time deposits 292,383 280,345 280,242 282,201 Noninterest-bearing deposits 192,030 182,221 168,554 160,133 Total deposits 778,570 760,223 740,983 712,848 Short-term borrowings (b) 124,563 137,021 115,939 106,739 Long-term borrowings 20,000 20,000 20,000 20,000 Total interest-bearing liabilities 731,103 735,023 708,368 679,454 Stockholders' equity 85,420 82,502 79,775 78,182 YIELD ANALYSIS: Federal funds sold and interest bearing deposits 0.88% 0.95% 1.18% 1.20% Investment securities and securities available-for-sale (FTE) 3.96% 4.34% 4.59% 4.69% Loans, net of unearned income (FTE) 5.75% 5.77% 6.02% 6.25% Total yield on earning assets (FTE) 5.46% 5.45% 5.65% 5.74% Interest-bearing deposits NOW accounts 0.10% 0.10% 0.10% 0.19% Savings and money market accounts 0.37% 0.37% 0.64% 0.82% Time deposits 2.46% 2.62% 2.78% 2.90% Short-term borrowings 0.68% 0.57% 0.69% 0.81% Long-term borrowings 5.34% 5.71% 5.50% 5.34% Total cost of interest- bearing liabilities 1.36% 1.38% 1.56% 1.74% (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, 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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