“The Bank’s residential construction and land development loans are at theroot of our challenges,” states President and CEO, Rick A. Roby.”Challenges in this loan portfolio surfaced in mid-2008 and have been moreprofound than ever anticipated due to the unprecedented decline in thelocal and regional real estate markets. Fortunately our loan portfolio isdiverse and the other segments continue to perform well, allowing theCompany to still report net income for 2008 of $1.3 million, its ninthconsecutive year of profitability in its ten years of operation,” continuedRoby.
The agreement formally outlines specific areas Bank management and itsBoard of Directors must address through the enhancement of variouspolicies, modification of existing practice, and attainment of certainfinancial benchmarks. These areas include developing long-term strategicand shorter-term action plans to reduce the level of problem loans,reducing exposure to commercial real estate loans (more specificallyresidential construction and land development loans), maintaining anadequate loan loss allowance that accounts for the recent adverse economicevents, and increasing capital and liquidity while reducing reliance onnon-core funding sources such as brokered deposits.
The Bank will be required to maintain capital levels above those normallyrequired under regulatory guidance. These requirements include maintaininga Tier 1 leverage ratio of at least 8.00% and Tier 1 risk-based capitalratio of at least 10%, both within 90 days of the order. With a Tier 1leverage ratio of 8.42% as of December 31, 2008, the Bank is alreadymeeting this criterion. The Bank’s Tier 1 risk-based capital ratio as ofDecember 31, 2008 was 9.38%. The Bank is also required to maintain totalrisk based capital of 12.0% within 120 days of the agreement, which as ofDecember 31, 2008 was 10.64%. “The Bank has already met one of theheightened standards and we are working hard to assure we meet the othercriteria within the established time frames which should be accomplishedthrough retained earnings, the reduction of construction and landdevelopment loans, and a small amount of capital raising through the Bank’sholding company. The Bank further agreed to immediately adopt a plan tomaintain a primary liquidity ratio of at least 15% through the life of theagreement and to also develop a long-term plan, subject to regulatoryapproval, to reduce its net non-core funding dependency. The Bank mustreport its compliance with these, capital, and other measurements to itsregulators on a quarterly basis,” Roby comments. “The conditions of ouragreement are all attainable and consistent with management’s objectivesfor the safe and sound operation of our Bank; we foresee the ability, andhave every intent, to comply with all aspects of this agreement.”
About Columbia Commercial Bancorp:
Columbia Commercial Bancorp was formed in 2002 as a holding company forColumbia Community Bank, which was opened in 1999 by local business peopleto provide business loans and deposit products for Oregon businesses.
With offices in Hillsboro, Forest Grove, Tanasbourne and Tigard/Durham,Columbia Community Bank is dedicated to providing a superior andpersonalized business banking experience for its clients in and aroundOregon. The Bank was named among the “100 Best Companies to Work for inOregon” by Oregon Business Magazine (2009 and 2007) and the Bank has alsobeen named by Portland Business Journal as one of the “100 Fastest-GrowingPrivate Companies in Oregon” consistently over the past several years. In2008, US Banker magazine ranked Columbia Commercial Bancorp number 15 among1,115 financial institutions in the nation with assets of $2 billion orless based upon a three-year average return on equity.
This press release contains forward-looking statements about management’splans and anticipated results of operations and financial condition. Thesestatements relate primarily, but are not limited, to statements aboutmanagement’s present plans and intentions to address the obligations wehave assumed by entering into the regulatory agreement, and ourexpectations of success in these endeavors. Additional forward-lookingstatements include plans and expectations about our strategy, deployment ofresources, and expectations for future financial and operationalperformance. Readers can sometimes identify forward-looking statements bythe use of prospective language and context, including words like “may,””will,” “should,” “expect,” “anticipate,” “estimate,” “continue,” “plans,””intends,” or other similar terminology. Because forward-looking statementsare, in part, an attempt to project future events and explain management’scurrent plans and expectations, they are subject to various risks anduncertainties that could cause our actions and our financial andoperational results to differ materially from those set forth in suchstatements. These risks and uncertainties include, without limitation, ourability to increase our regulatory capital to required levels and tomaintain those levels during the pendency of the regulatory agreement; ourability to estimate accurately the potential for losses inherent in ourloan portfolio; our sensitivity to local and regional economic and otherfactors that affect the collectability of our loans and the value ofcollateral underlying our secured loans; our ability to satisfy the termsand conditions of the regulatory agreement and to satisfy applicablebanking laws and regulations; our ability to maintain a satisfactory andeconomically viable net interest margin during times of rapidly andsignificantly fluctuating interest rates; and our ability to attract andretain qualified, effective management. Information presented in thisrelease is accurate as of the date issued, but we cannot undertake toupdate our forward looking statements or the factors that may cause us todeviate from them.