##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended: December 31, 2008
 or
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 0-27938
 COLUMBIA BANCORP
  Oregon
(State of incorporation)
    
    93-1193156
(I.R.S. Employer
Identification No.)
 
   Title of each class
    
    Name of each exchange on which registeredCommon stock, no par value
    
    Nasdaq Global Select Market
   o þ
 o þ
 þ o
 þ
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ
   DOCUMENTS INCORPORATED BY REFERENCE
    1 Columbia Bancorp




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TABLE OF CONTENTS
 DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
    
    
    3PART I
    
    
    
    
    3ITEM 1
    
    BUSINESS
    
    
    3ITEM 1A
    
    RISK FACTORS
    
    
    17ITEM 1B
    
    UNRESOLVED STAFF COMMENTS
    
    
    25ITEM 2
    
    PROPERTIES
    
    
    26ITEM 3
    
    LEGAL PROCEEDINGS
    
    
    27ITEM 4
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    28PART II
    
    
    
    
    28ITEM 5
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    28ITEM 6
    
    SELECTED FINANCIAL DATA
    
    
    30ITEM 7
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    31ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    64ITEM 8
    
    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    65ITEM 9
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    102ITEM 9A.
    
    CONTROLS AND PROCEDURES
    
    
    102ITEM 9B
    
    OTHER INFORMATION
    
    
    103PART III
    
    
    
    
    103ITEM 10
    
    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
    
    
    103ITEM 11
    
    EXECUTIVE COMPENSATION
    
    
    104ITEM 12
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
    
    
    104ITEM 13
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
    
    104ITEM 14
    
    PRINCIPAL ACCOUNTING FEES AND SERVICES
    
    
    104PART IV
    
    
    
    
    104ITEM 15
    
    EXHIBITS, FINANCIAL STATEMENT SCHEDULES
    
    
    104SIGNATURES
    
    
    106EX-10.13EX-10.14EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2
  2   Columbia Bancorp




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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
 This Annual Report on Form 10-K contains various forward-looking statements that are intended to be
covered by the safe harbor provided by Section 21D of the Securities Exchange Act of 1933, as
amended. These statements include statements about our present plans and intentions, about our
strategy, growth, and deployment of resources, and about our expectations for future financial
performance. Forward-looking statements use prospective language, including words like may,
will, should, expect, anticipate, estimate, continue, plans, intends, or other
similar terminology.
 Because forward-looking statements are, in part, an attempt to project future events and explain
current plans, they are subject to various risks and uncertainties that could cause our actions and
our financial and operational results to differ materially from those projected in forward-looking
statements. These risks and uncertainties include, without limitation, the risks described in Part
I  Item 1A Risk Factors.
 Information presented in this report is accurate as of the date the report is filed with the SEC.
We do not undertake any duty to update our forward-looking statements or the factors that may cause
us to deviate from them, except as required by law.
 
 PART I
 
 ITEM 1 BUSINESS
 General
    Columbia Bancorp




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Oregon
    
    WashingtonCentral Oregon
    
    Bend (3)
    
    Redmond (2)(High Desert Region)
    
    MadrasColumbia Basin
    
    Hermiston
    
    
    
    Yakima
    
    SunnysidePendleton
    
    
    
    Pasco
    
    Meadow SpringsColumbia River Gorge
    
    Hood River
    
    
    
    GoldendaleThe Dalles(2)
    
    
    
    White SalmonWillamette Valley
    
    Canby
    
    McMinnville
    
    VancouverNewberg
   2008 Business Developments
    4 Columbia Bancorp




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
    
    For the near term, the Bank intends to remain adequately capitalized by regulatory
definition, and we plan to prudently manage our capital so that we return to
well-capitalized as soon as possible. All capital management options are being analyzed.
Initial steps to preserve capital included the reduction of the quarterly dividend from
$0.10 per share as of March 31, 2008, to $0.01 per share as of June 30, 2008, and the
suspension of dividends for the second half of 2008 and future near-term quarters.
    
    We opened 1,100 net new deposit accounts in the fourth quarter and increased retail
deposits by $62.20 million while reducing our level of wholesale (brokered) deposits by
$72.76 million. We voluntarily enrolled in the Treasury Liability Guarantee Program
(TLGP) to provide unlimited coverage to all non-interest and nominally interest bearing
demand deposit accounts and to provide coverage up to $250,000 per depositor on interest
bearing relationships.
    
    To help reduce our reliance on higher-cost wholesale deposits, we reduced our loan
balances through normal attrition, loan participations with other financial institutions,
the charge off of non-performing loans and more stringent loan approval policies and
procedures for new and renewed credit relationships. Under this initiative we have
reduced our loan balances by $86.52 million, or 9% from our peak of $950.52 million in
July 2008. We anticipate continued moderate reductions in gross loans in the coming
quarters. In addition to reducing our dependence on higher-cost wholesale deposits, a
reduction in loan totals will also improve our relative capital ratios.
    
    In September 2008, we announced the closure of our CRB Mortgage Team and the
elimination of those and other positions throughout the organization. These actions are
expected to reduce our salary and benefit expense by approximately $4.20 million annually.
We believe this is a strategic re-alignment of our business and staffing model that will
help to ensure continued customer satisfaction in the coming quarters.
    
    In August 2008, we successfully sold our credit card portfolio, which was considered by
management to be a great opportunity not only to improve our liquidity position, but to
provide substantially enhanced benefits and services to our existing and potential credit
card customers.
    
    Since July 2008 the Board of Directors eliminated their fees and will do so for the
foreseeable quarters in 2009.
    
    Over the course of the year, we made a continued investment in our technology and
delivery systems to improve our electronic banking products, including remote capture
deposit and improved internet banking products. These are in addition to the improvements
to the credit card product line discussed above.
 Columbia Bancorp




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
    
    In October 2008, we announced the closure of the Lake Oswego Branch, which specialized
in residential construction lending.
  Business Strategy
   Stock
    
    Return on
    
    NetTicker
    
    Average
    
    Interest
    
    NPA /
    
    Allowance /
    
    NCO /Company Name
    
    Symbol
    
    Equity
    
    Margin(1)
    
    Assets(2)
    
    Loans(3)
    
    Loans(4)American West Bancorporation
    
    AWBC
    
    
    -69.07
    %
    
    
    4.23
    %
    
    
    4.46
    %
    
    
    2.11
    %
    
    
    3.41
    %Banner Corporation
    
    BANR
    
    
    -29.90
    %
    
    
    3.45
    %
    
    
    4.95
    %
    
    
    1.90
    %
    
    
    0.84
    %Cascade Bancorp
    
    CACB
    
    
    -7.54
    %
    
    
    4.44
    %
    
    
    8.18
    %
    
    
    2.79
    %
    
    
    3.09
    %Cashmere Valley Financial Corp
    
    CVYF
    
    
    16.68
    %
    
    
    3.81
    %
    
    
    9.00
    %
    
    
    1.60
    %
    
    
    0.12
    %Columbia Banking System, Inc.
    
    COLB
    
    
    1.68
    %
    
    
    4.19
    %
    
    
    3.54
    %
    
    
    1.91
    %
    
    
    1.11
    %Intermountain Community Bancorp
    
    IMCB
    
    
    6.09
    %
    
    
    4.74
    %
    
    
    2.16
    %
    
    
    1.67
    %
    
    
    0.62
    %Pacific Continental Corporation
    
    PCBK
    
    
    11.57
    %
    
    
    5.16
    %
    
    
    0.71
    %
    
    
    1.15
    %
    
    
    0.15
    %PremierWest Bancorp
    
    PRWT
    
    
    0.35
    %
    
    
    4.69
    %
    
    
    4.71
    %
    
    
    1.81
    %
    
    
    1.66
    %Riverview Community Bank
    
    RVSB
    
    
    -0.83
    %
    
    
    4.20
    %
    
    
    3.38
    %
    
    
    1.97
    %
    
    
    0.80
    %West Coast Bancorp
    
    WCBO
    
    
    -2.82
    %
    
    
    3.90
    %
    
    
    7.86
    %
    
    
    1.40
    %
    
    
    3.04
    %Columbia Bancorp
    
    CBBO
    
    
    -27.35
    %
    
    
    4.01
    %
    
    
    9.09
    %
    
    
    2.84
    %
    
    
    3.23
    %Top 25% of Bank Holding Companies
    
    
    
    
    
    
    11.76
    %
    
    
    3.83
    %
    
    
    0.66
    %
    
    
    1.24
    %
    
    
    0.28
    %
 
 (1)
    
    Tax equivalent net interest margin(2)
    
    Non-performing assets as a percentage of total assets(3)
    
    Allowance for loan losses as a percentage of total loans(4)
    
    Net loan charge-offs as a percentage of average gross loansSource: SNL Data Source  Carefully managing our other real estate owned, or OREO portfolio, so as to maximize our recoveries
on sales of distressed properties.
 6 Columbia Bancorp




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Optimizing our lending and deposit-gathering practices in the communities where we operate
 Continue to carefully monitor and manage our asset quality
 Carefully rebalance our loan portfolio to promote the distribution of risk across our various
markets and industry sectors
 Operate successfully in the communities we serve.
 Products and Services
 Consumer Distribution Channels
 Retail Bank Products and Services
 CRB Financial Services Team Products and Services
 Technology-Based Products and Services
  Columbia Bancorp




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Commercial Distribution Channels
   Commercial Loans
 Agricultural Loans
 Real Estate Loans
  8  Columbia Bancorp




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Government-Assisted Loan Programs
 Services to Non-Profits and Public Entities
 Deposit and Related Products
 Treasury Management Services
 Investment Products
 Principal Markets of Operation
    Columbia Bancorp




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Competition
   SUPERVISION AND REGULATION
 General
  Transaction Account Guarantee Program
  10  Columbia Bancorp




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Temporary Liquidity Guarantee Program
  Emergency Economic Stabilization Act of 2008
   Regulatory Order
   Columbia Bancorp




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Federal and State Bank Regulation
     12  Columbia Bancorp




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Gramm-Leach-Bliley Financial Services Modernization Act
   Holding Company Bank Ownership
 Holding Company Control of Nonbanks
 Transactions with Affiliates
 Tying Arrangements
  Columbia Bancorp




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Interstate Banking and Branching
    Deposit Insurance
   Dividends
  Capital Adequacy
  14  Columbia Bancorp




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 Columbia Bancorp




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Effects of Government Monetary Policy
  Sarbanes-Oxley Act of 2002
  Changes in Banking Laws and Regulations
  Employees
  Directors and Executive Officers
  16  Columbia Bancorp




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Website Access to Reports
  
 ITEM 1A RISK FACTORS
  Risks Relating to our Company
 The Bank was recently issued a cease and desist order from the FDIC and the State of Oregon
which limits the Banks ability to pay dividends to Columbia and places other limitations and
obligations on the bank.
    Columbia Bancorp




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We are operating under certain regulatory restrictions that may further impair our revenues,
operating income and financial condition.
   Failure to meet capital requirements imposed by certain regulatory restrictions will have a
negative impact on our financial conditions, liquidity and results of operations.
  18  Columbia Bancorp




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We may elect or be compelled to seek additional capital in the future to augment capital ratios or
levels or improve liquidity, but capital may not be available when it is needed
  Liquidity risk could impair our ability to fund operations and jeopardize our financial
condition.
  Our liquidity may be impaired due to sharp declines in retail deposit balances or inability to
access wholesale liability sources.
   Columbia Bancorp




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Recent and continuing adverse developments in the financial industry and the domestic and
international credit markets may further affect our operations and results and the value of our
common stock.
  Our allowance for loan losses is based on significant estimates and may be inadequate to cover
actual losses.
  Banking industry regulators may require us to recognize additional loan losses based on their
examination and review of our business.
  20  Columbia Bancorp




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Our loan portfolio is heavily concentrated in real estate lending and much of that portfolio is
collateralized only by real estate. As a result of this concentration and an overall decline in
real estate markets generally, and particularly in our geographic markets, we may face greater than
average exposure to loan losses.
   Our earnings may be impacted negatively by changes in market interest rates.
   If conditions in non-real estate sectors of the economy worsen, we may experience an increase
in loan delinquencies and losses in other parts of our portfolio.
   Columbia Bancorp




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We may be adversely affected by the FDICs recently announced temporary liquidity guarantee
program.
   We are subject to federal and state regulations which undergo frequent and often significant
changes.
   The weakened housing market may result in a decline in fair value of Other Real Estate Owned
(OREO).
  22  Columbia Bancorp




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We are a holding company and depend on our subsidiary for dividends, distributions and other
payments.
  There are regulatory and contractual limitations that may limit or prevent us from paying
dividends on the common stock and we may limit or eliminate our dividends to shareholders.
   Our business operations are geographically concentrated in Oregon and Washington and our
business is sensitive to the economic conditions of those areas.
   Columbia Bancorp




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The financial services business is intensely competitive and our success will depend on our ability
to compete effectively.
  We rely heavily on our management team and the unexpected loss of any of those personnel could
adversely affect our operations; we depend on our ability to attract and retain key personnel.
   Our ability to operate profitably may depend on our ability to implement various technologies
into our operations.
  FDIC closure of local banks and related publicity could create a liquidity risk.
  24  Columbia Bancorp




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The failure of the Federal Home Loan Bank (FHLB) of Seattle or the national Federal Home Loan
Bank System may have a material negative impact on our earnings and liquidity.
     
 ITEM 1B UNRESOLVED STAFF COMMENTS
   Columbia Bancorp




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ITEM 2 PROPERTIES
   YearSquare
    
    Opened or
    
    OccupancyCity and County
    
    Address
    
    Feet
    
    Acquired
    
    StatusOregon BranchesThe Dalles (Main) 
Wasco County
    
    316 East Third Street
    
    
    11,441
    
    
    
    1977
    
    
    OwnedThe Dalles (Cherry Heights) 
Wasco County
    
    500 Cherry Heights Rd
    
    
    1,800
    
    
    
    2006
    
    
    OwnedHood River Branch 
Hood River County
    
    2650 Cascade Avenue
    
    
    6,875
    
    
    
    1993
    
    
    OwnedMadras Branch 
Jefferson County
    
    624 SW Fourth Street
    
    
    7,660
    
    
    
    1995
    
    
    OwnedRedmond Branch 
Deschutes County
    
    434 North Fifth Street
    
    
    5,900
    
    
    
    1995
    
    
    OwnedSouth Redmond Branch 
Deschutes County
    
    1502 SW Odem Medo Rd
    
    
    5,078
    
    
    
    2004
    
    
    LeasedBend Branch 
Deschutes County
    
    1701 NE Third Street
    
    
    8,306
    
    
    
    1996
    
    
    OwnedShevlin Center Branch(1)
Deschutes County
    
    925 SW Emkay Drive
    
    
    15,000
    
    
    
    1999
    
    
    OwnedWall Street Branch 
Deschutes County
    
    1133 Wall Street
    
    
    12,421
    
    
    
    2004
    
    
    LeasedHermiston Branch 
Umatilla County
    
    1033 South Highway 395
    
    
    4,700
    
    
    
    1998
    
    
    OwnedPendleton Branch 
Umatilla County
    
    2101 SW Court Place
    
    
    4,700
    
    
    
    1999
    
    
    OwnedMcMinnville Branch(1)
Yamhill County
    
    723 N Baker
    
    
    9,893
    
    
    
    1998
    
    
    OwnedCanby Branch 
Clackamas County
    
    223 NE 2nd Street
    
    
    3,615
    
    
    
    2001
    
    
    LeasedNewberg Branch 
Yamhill County
    
    901 N Brutscher St, Ste A
    
    
    3,900
    
    
    
    1999
    
    
    Leased
 26  Columbia Bancorp




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YearSquare
    
    Opened or
    
    OccupancyCity and County
    
    Address
    
    Feet
    
    Acquired
    
    StatusWashington BranchesWhite Salmon Branch 
Klickitat County
    
    390 NE Tohomish Street
    
    
    5,500
    
    
    
    1996
    
    
    OwnedGoldendale BranchKlickitat County
    
    202 West Main Street
    
    
    6,105
    
    
    
    1996
    
    
    OwnedMeadow Springs Branch 
Benton County
    
    139 Gage
    
    
    10,000
    
    
    
    2006
    
    
    LeasedPasco Branch 
Franklin County
    
    4725 Road 68
    
    
    3,700
    
    
    
    2006
    
    
    OwnedYakima Branch 
Yakima County
    
    10 N. Fifth Avenue
    
    
    10,000
    
    
    
    2008
    
    
    OwnedSunnyside Branch 
Yakima County
    
    2690 E. Lincoln Ave
    
    
    4,825
    
    
    
    2008
    
    
    OwnedVancouver Branch (2)
Clark County
    
    17800 SE Mill Plain
Blvd.,Ste 100
    
    
    408
    
    
    
    2007
    
    
    LeasedOther FacilitiesThe Dalles Administration 
Wasco County, OR
    
    401 E Third St, Suite 200
    
    
    22,199
    
    
    
    2002
    
    
    LeasedColumbia Operation Support
Center (COSC)
Clark County, WA
    
    805 Broadway, Suite 600
    
    
    20,193
    
    
    
    2008
    
    
    LeasedVancouver Administration (2)
Clark County, WA
    
    17800 SE Mill Plain
Blvd.,
Suite 100
    
    
    6,237
    
    
    
    2007
    
    
    Leased
 
 (1)
    
    Branch operations are located on the first floor. The second floor is leased to
other parties.(2)
    
    Vancouver, WA facility houses both temporary branch and administrative operations. 
 ITEM 3 LEGAL PROCEEDINGS
    Columbia Bancorp




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ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 ITEM 5
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
    2008
    
    2007Stock Trading Range
    
    Cash Dividend
    
    Stock Trading Range
    
    Cash DividendTable 1
    
    High
    
    Low
    
    Declared
    
    High
    
    Low
    
    DeclaredFirst Quarter
    
    $
    16.92
    
    
    $
    11.35
    
    
    $
    0.10
    
    
    $
    25.29
    
    
    $
    22.86
    
    
    $
    0.10Second Quarter
    
    
    16.90
    
    
    
    7.02
    
    
    
    0.01
    
    
    
    24.21
    
    
    
    19.28
    
    
    
    0.10Third Quarter
    
    
    7.10
    
    
    
    3.17
    
    
    
    
    
    
    
    21.99
    
    
    
    17.62
    
    
    
    0.10Fourth Quarter
    
    
    6.17
    
    
    
    1.67
    
    
    
    
    
    
    
    19.72
    
    
    
    16.31
    
    
    
    0.10
 28  Columbia Bancorp




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Securities authorized for issuance under equity compensation plans
  Number of securitiesWeighted-average
    
    remaining available forNumber of securities to be
    
    exercise price of
    
    future issuance under equityissued upon exercise of
    
    outstanding
    
    compensation plans (excludingoutstanding options, warrants
    
    options, warrants
    
    securities reflected inand rights
    
    and rights
    
    column (a))Table 2
    
    (a)
    
    (b)
    
    (c)Equity compensation
plans approved by
security holders
    
    
    417,893
    
    
    $
    11.94
    
    
    
    228,643
 Performance Graph
  
 Sales of Unregistered Securities
  Columbia Bancorp




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Purchases of Equity Securities
  
 ITEM 6 SELECTED FINANCIAL DATA
  Table 3
    
    As of and for the Years Ended December 31,(dollars in thousands except per share data)
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Income Statement DataInterest income
    
    $
    64,961
    
    
    $
    79,524
    
    
    $
    70,674
    
    
    $
    53,589
    
    
    $
    42,708Interest expense
    
    
    23,347
    
    
    
    26,508
    
    
    
    18,002
    
    
    
    11,302
    
    
    
    7,328Net interest income
    
    
    40,614
    
    
    
    53,016
    
    
    
    52,672
    
    
    
    42,287
    
    
    
    35,380Loan loss provision
    
    
    43,110
    
    
    
    4,740
    
    
    
    2,900
    
    
    
    3,115
    
    
    
    2,760Net income (loss)
    
    
    (26,358
    )
    
    
    14,482
    
    
    
    15,775
    
    
    
    13,670
    
    
    
    10,735Balance Sheet DataInvestment securities
    
    $
    32,076
    
    
    $
    34,182
    
    
    $
    37,704
    
    
    $
    36,780
    
    
    $
    45,398Total loans, net
    
    
    838,950
    
    
    
    866,830
    
    
    
    801,871
    
    
    
    677,686
    
    
    
    574,125Total assets
    
    
    1,122,294
    
    
    
    1,042,708
    
    
    
    1,033,188
    
    
    
    841,239
    
    
    
    715,373Total deposits
    
    
    1,004,196
    
    
    
    922,893
    
    
    
    859,065
    
    
    
    707,822
    
    
    
    606,944Federal Home Loan Bank advances
    
    
    36,613
    
    
    
    6,278
    
    
    
    70,014
    
    
    
    45,691
    
    
    
    34,889Shareholders equity
    
    
    75,049
    
    
    
    102,238
    
    
    
    91,018
    
    
    
    77,492
    
    
    
    65,877Per Share DataEarnings per common shareBasic earnings (loss) per common share (1)
    
    $
    (2.63
    )
    
    $
    1.45
    
    
    $
    1.60
    
    
    $
    1.39
    
    
    $
    1.11Diluted earnings (loss) per common share(1)
    
    
    (2.63
    )
    
    
    1.42
    
    
    
    1.55
    
    
    
    1.36
    
    
    
    1.08Cash dividends declared per common share (1)
    
    
    0.11
    
    
    
    0.40
    
    
    
    0.39
    
    
    
    0.33
    
    
    
    0.32Book value per common share(1)
    
    
    7.45
    
    
    
    10.18
    
    
    
    9.12
    
    
    
    7.86
    
    
    
    6.78Capital RatiosTier I leverage ratio(2)
    
    
    6.41
    %
    
    
    9.75
    %
    
    
    8.54
    %
    
    
    9.77
    %
    
    
    8.74
    %Tier I capital ratio (3)
    
    
    7.64
    
    
    
    10.51
    
    
    
    10.11
    
    
    
    9.70
    
    
    
    9.80Total risk-based capital ratio (4)
    
    
    8.90
    
    
    
    11.76
    
    
    
    11.36
    
    
    
    10.95
    
    
    
    11.05Financial RatiosReturn on average assets
    
    
    -2.42
    %
    
    
    1.43
    %
    
    
    1.79
    %
    
    
    1.77
    %
    
    
    1.64
    %Return on average equity
    
    
    -27.35
    
    
    
    14.96
    
    
    
    18.72
    
    
    
    19.01
    
    
    
    17.50
 
 (1)
    
    Prior periods have been adjusted to reflect 10% stock dividend effective December 29, 2005.(2)
    
    Tier I capital divided by average total assets.(3)
    
    Tier I capital divided by risk-weighted assets.(4)
    
    Total regulatory capital divided by risk-weighted assets. 30  Columbia Bancorp




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##### Table of Contents



ITEM 7 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 This section contains forward-looking statements and should be read after considering Disclosure
Regarding Forward-Looking Statements at the beginning of this document, as well as the Risk
Factors in Item 1A of this document. The following discussion should also be read in conjunction
with our audited consolidated financial statements and accompanying notes as of December 31, 2008
and 2007 and for each of the three years ended December 31, 2008, 2007 and 2006, included elsewhere
in this report.
 Critical Accounting Estimates
   Columbia Bancorp




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##### Table of Contents



Overview
    Table 4(dollars in thousands except per share data)
    
    2008
    
    2007
    
    2006Total assets
    
    $
    1,122,294
    
    
    $
    1,042,708
    
    
    $
    1,033,188Total loans, gross (1)
    
    
    864,004
    
    
    
    879,064
    
    
    
    813,443Total deposits
    
    
    1,004,196
    
    
    
    922,893
    
    
    
    859,065Net income (loss)
    
    
    (26,358
    )
    
    
    14,482
    
    
    
    15,775Earnings (loss) per diluted common share
    
    
    (2.63
    )
    
    
    1.42
    
    
    
    1.55Return on average assets
    
    
    -2.42
    %
    
    
    1.43
    %
    
    
    1.79
    %Return on average equity
    
    
    -27.35
    %
    
    
    14.96
    %
    
    
    18.72
    %Average equity to average assets ratio
    
    
    8.86
    %
    
    
    9.55
    %
    
    
    9.56
    %Net interest margin, tax equivalent basis
    
    
    4.01
    %
    
    
    5.61
    %
    
    
    6.44
    %Efficiency ratio
    
    
    77.99
    %
    
    
    56.49
    %
    
    
    55.00
    %Cash dividend payout ratio
    
    NM
    
    
    
    27.71
    %
    
    
    24.56
    %
 
 (1)
    
    Loans include portfolio and loans held-for-sale and exclude allowance for loan
losses and unearned loan fees.NM
    
    Not meaningful 32 Columbia Bancorp




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##### Table of Contents



Financial Highlights
 2008 compared to 2007
 
    
    Gross loans, including loans held for sale, decreased by $15.06 million from December
31, 2007. As part of a fourth quarter 2008 strategy to rebalance our loan and deposit
portfolios, we reduced gross loans by $58.43 million to $864.00 million as of December 31,
2008, compared to $922.43 million as of September 30, 2008.
    
    As of December 31, 2008, non-performing assets (NPAs) totaled $102.03 million, or 9%
of total assets. Of this amount, $9.62 million, or 9%, was comprised of properties held in
other real estate owned. $92.35 million, or 91%, of the NPAs were loans on non-accrual
status. $63.12 million, or 68%, of the non-accrual loans are secured by residential real
estate construction properties.
    
    Deposits increased approximately 9% from December 31, 2007, or $81.30 million. This
increase is partially attributable to increases in retail deposits, representing 50% of the
increase during the year. The remaining portion of the increase is a result of the growth
in wholesale deposits.
    
    Our net interest margin decreased from 5.61% as of December 31, 2007 to 4.01% as of
December 31, 2008. This decrease is primarily attributable to the decrease in our interest
earning assets as a result of transfers of loans to non-accrual status, as accrued interest
is reversed for loans when they are placed on non-accrual status. Another contributing
factor is the Fed Funds rate cuts since December 2007 and the resulting decrease in our
loan yields. During the year, $7.20 million of interest income was foregone as a result of
the reclassification of loans to non-accrual status. This resulted in a 71 basis point
reduction in our net interest margin.
    
    Our provision for loan losses increased $38.37 million compared to 2007. This increase
is primarily attributable to the general deterioration of credit quality indicators in our
residential construction portfolio.
 2007 compared to 2006
 
    
    Demand for real estate construction and development loans during the first half of 2007
contributed to gross loan growth of 8%.
    
    Deposits grew 7% primarily due to promotionally priced certificate of deposit offerings
and higher wholesale deposit borrowings.
    
    Net interest income increased 1% primarily due to the net effect of volume increases in
loans and time deposits. Net interest margin decreased from 6.44% to 5.61% as a result of
Fed Funds rate cuts, promotionally priced deposit products and an increase in wholesale
borrowings.
    
    Provision for loan losses increased 63% to provide for the effect of an agricultural loan
charge-off during the first half of 2007 and for the real estate downturn that began during
the second half of 2007.
    
    Occupancy expense increased 21% due to the opening of a joint branch and administration
facility in Vancouver, Washington and due to a full year of expenses associated with
branches opened during 2006.
    
    Other non-interest expense increased 13% due to legal and other costs associated with a
charged-off agricultural loan, as well as higher software licensing expense and consulting
fees.
 Columbia Bancorp




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##### Table of Contents




    
    New branches in Richland, Pasco, Yakima and Sunnyside, Washington contributed $45.95
million in loan growth and $43.17 million in deposit growth, as well as increases in net
interest income and non-interest expenses.
    
    Loan growth of 18% from our new and existing branches, combined with Federal Reserve
interest rate increases, increased loan interest income 33%.
    
    Net interest margin increased from 5.95% to 6.44% due to the effect of rising interest
rates. The positive effect of rising interest rates on our variable rate loan portfolio
outpaced the negative effect from our borrowings and deposit accounts.
    
    Salaries and benefits increased 24% primarily due to employees hired to staff new branch
and administrative positions, annual merit increases and market salary adjustments.
 Operational Highlights
       34  Columbia Bancorp




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##### Table of Contents



Results of Operations
 Net Interest Income
  Columbia Bancorp




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##### Table of Contents



Average Balances and Average Rates Earned and Paid
 Year Ended December 31, 2008
    
    
    Year Ended December 31, 2007
    
    
    Year Ended December 31, 2006Interest
    
    
    Average
   
    
    
    
    
    
    Interest
    
    
    Average
    
    
    
    
    
    
    Interest
    
    
    AverageTable 5
    
    Average
    
    
    Income or
    
    
    Yields or
    
    
    Average
    
    
    Income or
    
    
    Yields or
    
    
    Average
    
    
    Income or
    
    
    Yields or(dollars in thousands)
    
    Balance
    
    
    Expense
    
    
    Rates
    
    
    Balance
    
    
    Expense
    
    
    Rates
    
    
    Balance
    
    
    Expense
    
    
    RatesInterest earning assets:Loans (1) (4)
    
    $
    914,846
    
    
    $
    62,553
    
    
    
    6.84
    %
    
    $
    859,483
    
    
    $
    75,104
    
    
    
    8.74
    %
    
    $
    744,067
    
    
    $
    67,027
    
    
    
    9.01
    %Investment securitiesTaxable securities
    
    
    19,571
    
    
    
    821
    
    
    
    4.19
    
    
    
    22,839
    
    
    
    1,103
    
    
    
    4.83
    
    
    
    23,463
    
    
    
    993
    
    
    
    4.23Nontaxable securities (2)
    
    
    8,537
    
    
    
    595
    
    
    
    6.96
    
    
    
    10,530
    
    
    
    742
    
    
    
    7.05
    
    
    
    11,849
    
    
    
    844
    
    
    
    7.12Total investment securities
    
    
    28,108
    
    
    
    1,416
    
    
    
    5.03
    
    
    
    33,369
    
    
    
    1,845
    
    
    
    5.53
    
    
    
    35,312
    
    
    
    1,837
    
    
    
    5.20Interest earning balances due from banks
    
    
    23,432
    
    
    
    460
    
    
    
    1.96
    
    
    
    17,390
    
    
    
    849
    
    
    
    4.88
    
    
    
    14,563
    
    
    
    689
    
    
    
    4.73Federal funds sold
    
    
    51,302
    
    
    
    737
    
    
    
    1.44
    
    
    
    39,772
    
    
    
    1,985
    
    
    
    4.99
    
    
    
    28,394
    
    
    
    1,416
    
    
    
    4.99Total interest earning assets
    
    
    1,017,688
    
    
    
    65,166
    
    
    
    6.40
    
    
    
    950,014
    
    
    
    79,783
    
    
    
    8.40
    
    
    
    822,336
    
    
    
    70,969
    
    
    
    8.63Nonearning assets
    
    
    70,599
    
    
    
    
    
    
    
    
    
    
    
    63,424
    
    
    
    
    
    
    
    
    
    
    
    58,745Total assets
    
    $
    1,088,287
    
    
    
    
    
    
    
    
    
    
    $
    1,013,438
    
    
    
    
    
    
    
    
    
    
    $
    881,081Interest bearing liabilities:Interest bearing demand and
savings accounts
    
    $
    345,074
    
    
    $
    6,595
    
    
    
    1.91
    %
    
    $
    335,262
    
    
    $
    8,842
    
    
    
    2.64
    %
    
    $
    320,481
    
    
    $
    6,931
    
    
    
    2.16
    %Time deposits and IRAs
    
    
    391,763
    
    
    
    16,628
    
    
    
    4.24
    
    
    
    338,524
    
    
    
    16,616
    
    
    
    4.91
    
    
    
    219,084
    
    
    
    9,407
    
    
    
    4.29Borrowed funds
    
    
    39,579
    
    
    
    1,124
    
    
    
    2.84
    
    
    
    19,717
    
    
    
    1,050
    
    
    
    5.33
    
    
    
    33,746
    
    
    
    1,664
    
    
    
    4.93Total interest bearing liabilities
    
    
    776,416
    
    
    
    24,347
    
    
    
    3.14
    
    
    
    693,503
    
    
    
    26,508
    
    
    
    3.82
    
    
    
    573,311
    
    
    
    18,002
    
    
    
    3.14Non-interest bearing deposits
    
    
    208,398
    
    
    
    
    
    
    
    
    
    
    
    220,325
    
    
    
    
    
    
    
    
    
    
    
    219,526Total deposits and borrowed funds
    
    
    984,814
    
    
    
    
    
    
    
    
    
    
    
    913,828
    
    
    
    
    
    
    
    
    
    
    
    792,837Other liabilities
    
    
    7,092
    
    
    
    
    
    
    
    
    
    
    
    2,820
    
    
    
    
    
    
    
    
    
    
    
    3,986Total liabilities
    
    
    991,906
    
    
    
    
    
    
    
    
    
    
    
    916,648
    
    
    
    
    
    
    
    
    
    
    
    796,823Shareholders equity
    
    
    96,381
    
    
    
    
    
    
    
    
    
    
    
    96,790
    
    
    
    
    
    
    
    
    
    
    
    84,258Total liabilities and
shareholders equity
    
    $
    1,088,287
    
    
    
    
    
    
    
    
    
    
    $
    1,013,438
    
    
    
    
    
    
    
    
    
    
    $
    881,081Net interest income (tax equivalent)
    
    
    
    
    
    $
    40,819
    
    
    
    
    
    
    
    
    
    
    $
    53,275
    
    
    
    
    
    
    
    
    
    
    $
    52,967Net interest income (as reported)
    
    
    
    
    
    $
    40,615
    
    
    
    
    
    
    
    
    
    
    $
    53,015
    
    
    
    
    
    
    
    
    
    
    $
    52,671Average yield on average earning assets
    
    
    
    
    
    
    
    
    
    
    6.40
    %
    
    
    
    
    
    
    
    
    
    
    8.40
    %
    
    
    
    
    
    
    
    
    
    
    8.63
    %Interest expense to average earning assets
    
    
    
    
    
    
    
    
    
    
    2.39
    %
    
    
    
    
    
    
    
    
    
    
    2.79
    %
    
    
    
    
    
    
    
    
    
    
    2.19
    %Net interest margin (3)
    
    
    
    
    
    
    
    
    
    
    4.01
    %
    
    
    
    
    
    
    
    
    
    
    5.61
    %
    
    
    
    
    
    
    
    
    
    
    6.44
    %Net interest spread
    
    
    
    
    
    
    
    
    
    
    3.27
    %
    
    
    
    
    
    
    
    
    
    
    4.58
    %
    
    
    
    
    
    
    
    
    
    
    5.49
    %
 
 (1)
    
    Non-accrual loans and loans held for sale are included in the average balance.(2)
    
    Tax-exempt income has been adjusted to a tax-equivalent basis at a rate of 35%.(3)
    
    Net interest margin is computed by dividing net interest income (taxable equivalent basis) by total average interest earning assets.(4)
    
    Loan fee income is included in interest income in calcualtion of average yield, year ended December 31; 2008, $1,197;
2007, $1,573; 2006, $3,883.  36  Columbia Bancorp




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##### Table of Contents



Analysis of Changes in Interest Differential
 2008 over 2007
    
    
    2007 over 2006
    
    
    2006 over 2005Increase (Decrease) due to
    
    
    Increase (Decrease) due to
    
    
    Increase (Decrease) due toTable 6
    
    
    
    
    
    
    
    
    
    Net
    
    
    
    
    
    
    
    
    
    
    Net
    
    
    
    
    
    
    
    
    
    
    Net(dollars in thousands)
    
    Volume
    
    
    Rate
    
    
    Change
    
    
    Volume
    
    
    Rate
    
    
    Change
    
    
    Volume
    
    
    Rate
    
    
    ChangeInterest earning assets:Loans
    
    $
    4,854
    
    
    $
    (17,404
    )
    
    $
    (12,550
    )
    
    $
    10,412
    
    
    $
    (2,335
    )
    
    $
    8,077
    
    
    $
    9,772
    
    
    $
    6,683
    
    
    $
    16,455Investment securitiesTaxable securities
    
    
    (158
    )
    
    
    (124
    )
    
    
    (282
    )
    
    
    (27
    )
    
    
    137
    
    
    
    110
    
    
    
    (14
    )
    
    
    261
    
    
    
    247Nontaxable securities
    
    
    43
    
    
    
    (140
    )
    
    
    (97
    )
    
    
    (60
    )
    
    
    (6
    )
    
    
    (66
    )
    
    
    (59
    )
    
    
    10
    
    
    
    (49
    )Balances due from banks
    
    
    294
    
    
    
    (679
    )
    
    
    (385
    )
    
    
    134
    
    
    
    26
    
    
    
    160
    
    
    
    (88
    )
    
    
    281
    
    
    
    193Federal funds sold
    
    
    575
    
    
    
    (1,823
    )
    
    
    (1,248
    )
    
    
    569
    
    
    
    
    
    
    
    569
    
    
    
    (288
    )
    
    
    527
    
    
    
    239Total
    
    
    5,608
    
    
    
    (20,170
    )
    
    
    (14,562
    )
    
    
    11,028
    
    
    
    (2,178
    )
    
    
    8,850
    
    
    
    9,323
    
    
    
    7,762
    
    
    
    17,085Interest bearing liabilities:Interest bearing demand
and savings accounts
    
    
    271
    
    
    
    (2,518
    )
    
    
    (2,247
    )
    
    
    311
    
    
    
    1,600
    
    
    
    1,911
    
    
    
    468
    
    
    
    2,412
    
    
    
    2,880Time deposits
    
    
    2,620
    
    
    
    (2,608
    )
    
    
    12
    
    
    
    5,116
    
    
    
    2,093
    
    
    
    7,209
    
    
    
    1,512
    
    
    
    2,002
    
    
    
    3,514Borrowed funds
    
    
    1,061
    
    
    
    (987
    )
    
    
    74
    
    
    
    (692
    )
    
    
    78
    
    
    
    (614
    )
    
    
    5
    
    
    
    301
    
    
    
    306Total
    
    
    3,952
    
    
    
    (6,113
    )
    
    
    (2,161
    )
    
    
    4,735
    
    
    
    3,771
    
    
    
    8,506
    
    
    
    1,985
    
    
    
    4,715
    
    
    
    6,700Net increase (decrease) in
net interest income
    
    $
    1,656
    
    
    $
    (14,057
    )
    
    $
    (12,401
    )
    
    $
    6,293
    
    
    $
    (5,949
    )
    
    $
    344
    
    
    $
    7,338
    
    
    $
    3,047
    
    
    $
    10,385
    Provision for Loan Losses
  Columbia Bancorp




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##### Table of Contents



Non-interest Income
     Non-interest Expense
   
    
    Goodwill totaling $7.39 million was eliminated as an impairment charge at December 31,
2008, representing 69% of the increase in non-interest expense.
    
    Other real estate owned impairment charges, net of gains from sold properties, totaling
$2.30 million. Impairment charges are attributable to two real estate development projects
held as other real estate owned, and are the result of a re-value of the asset to the lower
of cost basis or net realizable value of the property. The net realizable value was
considered impaired based on new or updated appraisals.
    
    The reduction in staffing following our closure of the CRB Mortgage Team and a reduction
in the incentive compensation expense, salary and employee benefits only increased
nominally, 2%.
    
    Occupancy expense increased 16% due to our newer locations in Vancouver, Washington,
which were not open and operational for all of 2008.
    
    Other non-interest expense increased 26%, or $2.26 million, which is attributable to
increases noted in: other real estate owned and collection expense, which has increased
approximately, $456,000 from 2007; and professional services expense, which has increased
approximately $573,000.
 38  Columbia Bancorp




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##### Table of Contents




    
    Occupancy expense increased 21% due to the opening of a joint branch and administration
facility in Vancouver, Washington and due to a full year of expenses associated branches
opened during 2006.
    
    Other non-interest expense increased 13% primarily due to legal fees and other costs
associated with a charged-off agricultural loan, as well as higher software licensing
expense and consulting fees.
  
    
    Higher salary and benefits expenses than 2005: We hired employees to staff new branches
and new administrative positions. As of December 31, 2006, full-time equivalent employees
(FTE) totaled 362 compared to 312 as of December 31, 2005, a 16% increase. In addition,
salaries for existing FTE increased due to annual merit increases and market salary
adjustments.
    
    Higher occupancy costs and other non-interest expenses related to the incremental costs
of new branches opened during 2006.
  Income Taxes
  Columbia Bancorp




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##### Table of Contents



Financial Condition
 Summary Balance SheetsTable 7
    
    December 31,
    
    
    Increase (Decrease)(dollars in thousands)
    
    2008
    
    
    2007
    
    
    2006
    
    

12/31/07 
    12/31/08
    
    

12/31/06

    12/31/07ASSETSFederal funds sold
    
    $
    117,492
    
    
    $
    49,100
    
    
    $
    58,930
    
    
    $
    68,392
    
    
    
    139
    %
    
    $
    (9,830
    )
    
    
    -17
    %Investments
    
    
    32,076
    
    
    
    34,182
    
    
    
    37,704
    
    
    
    (2,106
    )
    
    
    -6
    
    
    
    (3,522
    )
    
    
    -9Total loans, net
    
    
    838,950
    
    
    
    866,830
    
    
    
    801,871
    
    
    
    (27,880
    )
    
    
    -3
    
    
    
    64,959
    
    
    
    8Other assets(1)
    
    
    133,776
    
    
    
    92,596
    
    
    
    134,683
    
    
    
    41,180
    
    
    
    44
    
    
    
    (42,087
    )
    
    
    -31Total assets
    
    $
    1,122,294
    
    
    $
    1,042,708
    
    
    $
    1,033,188
    
    
    $
    79,586
    
    
    
    8
    %
    
    $
    9,520
    
    
    
    1
    %LIABILITIESNon-interest bearing
deposits
    
    $
    215,922
    
    
    $
    224,092
    
    
    $
    235,037
    
    
    $
    (8,170
    )
    
    
    -4
    %
    
    $
    (10,945
    )
    
    
    -5
    %Interest bearing deposits
    
    
    788,274
    
    
    
    698,801
    
    
    
    624,028
    
    
    
    89,473
    
    
    
    13
    
    
    
    74,773
    
    
    
    12Total deposits
    
    
    1,004,196
    
    
    
    922,893
    
    
    
    859,065
    
    
    
    81,303
    
    
    
    9
    
    
    
    63,828
    
    
    
    7Other liabilities(2)
    
    
    43,049
    
    
    
    17,577
    
    
    
    83,105
    
    
    
    25,472
    
    
    
    145
    
    
    
    (65,528
    )
    
    
    -79Total liabilities
    
    
    1,047,245
    
    
    
    940,470
    
    
    
    942,170
    
    
    
    106,775
    
    
    
    11
    
    
    
    (1,700
    )
    
    
    SHAREHOLDERS EQUITY
    
    
    75,049
    
    
    
    102,238
    
    
    
    91,018
    
    
    
    (27,189
    )
    
    
    -27
    
    
    
    11,220
    
    
    
    12Total
liabilities and
shareholders equity
    
    $
    1,122,294
    
    
    $
    1,042,708
    
    
    $
    1,033,188
    
    
    $
    79,586
    
    
    
    8
    %
    
    $
    9,520
    
    
    
    1
    %
 
 (1)
    
    Includes cash and due from banks, property and equipment, accrued interest receivable and
intangible goodwill.(2)
    
    Includes notes payable, accrued interest payable and other liabilities. Cash and Cash Equivalents
  40  Columbia Bancorp




---



##### Table of Contents



Investments
  Table 8
    
    2008
    
    
    2007
    
    
    2006(dollars in thousands)
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentInvestments available-for-sale:U,S. Treasuries
    
    $
    8,995
    
    
    
    28
    %
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %Obligations of U.S. governement agencies
    
    
    10,223
    
    
    
    32
    
    
    
    19,419
    
    
    
    57
    
    
    
    19,827
    
    
    
    53Municipal
    
    
    
    
    
    
    
    
    
    
    208
    
    
    
    1
    
    
    
    361
    
    
    
    1Equity securities
    
    
    1,673
    
    
    
    5
    
    
    
    1,147
    
    
    
    3
    
    
    
    638
    
    
    
    220,891
    
    
    
    65
    
    
    
    20,774
    
    
    
    61
    
    
    
    20,826
    
    
    
    56Investments held-to-maturity:Obligations of states and political
subdivisions
    
    
    6,574
    
    
    
    20
    
    
    
    8,798
    
    
    
    26
    
    
    
    11,230
    
    
    
    30Mortgage-backed securities
    
    
    1,556
    
    
    
    5
    
    
    
    2,171
    
    
    
    6
    
    
    
    3,129
    
    
    
    8Obligations of U.S. government agencies
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80
    
    
    
    8,130
    
    
    
    25
    
    
    
    10,969
    
    
    
    32
    
    
    
    14,439
    
    
    
    38Restricted equity securities
    
    
    3,055
    
    
    
    10
    
    
    
    2,439
    
    
    
    7
    
    
    
    2,439
    
    
    
    6Total investment securities
    
    $
    32,076
    
    
    
    100
    %
    
    $
    34,182
    
    
    
    100
    %
    
    $
    37,704
    
    
    
    100
    %
   41  Columbia Bancorp




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##### Table of Contents



Table 9
    
    December 31, 2008
    
    
    December 31, 2007
    
    
    December 31, 2006Amortized
    
    
    Estimated
    
    
    %
    
    
    Amortized
    
    
    Estimated
    
    
    %
    
    
    Amortized
    
    
    Estimated
    
    
    %(dollars in thousands)
    
    Cost
    
    
    Fair Value
    
    
    Yield(1)
    
    
    Cost
    
    
    Fair Value
    
    
    Yield(1)
    
    
    Cost
    
    
    Fair Value
    
    
    Yield(1)Obligations of U.S.
government agenciesOne year or less
    
    $
    9,995
    
    
    $
    10,017
    
    
    
    0.08
    %
    
    $
    8,996
    
    
    $
    8,990
    
    
    
    4.49
    %
    
    $
    5,861
    
    
    $
    5,795
    
    
    
    5.15
    %One to five years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,301
    
    
    
    6,347
    
    
    
    4.57
    
    
    
    14,225
    
    
    
    14,110
    
    
    
    5.15Five to ten years
    
    
    8,997
    
    
    
    9,201
    
    
    
    4.28
    
    
    
    4,000
    
    
    
    4,080
    
    
    
    4.77
    
    
    
    
    
    
    
    
    
    
    
    Mortgage-backed securities:One year or less
    
    
    416
    
    
    
    420
    
    
    
    4.28
    
    
    
    363
    
    
    
    361
    
    
    
    4.28
    
    
    
    1,312
    
    
    
    1,301
    
    
    
    5.50One to five years
    
    
    963
    
    
    
    977
    
    
    
    3.98
    
    
    
    1,261
    
    
    
    1,255
    
    
    
    4.25
    
    
    
    1,507
    
    
    
    1,480
    
    
    
    4.49Five to ten years
    
    
    160
    
    
    
    166
    
    
    
    4.85
    
    
    
    243
    
    
    
    242
    
    
    
    5.14
    
    
    
    203
    
    
    
    198
    
    
    
    5.02Over ten years
    
    
    17
    
    
    
    18
    
    
    
    6.34
    
    
    
    304
    
    
    
    306
    
    
    
    5.82
    
    
    
    107
    
    
    
    104
    
    
    
    4.87Obligations of states and
political subdivisions:One year or less
    
    
    733
    
    
    
    741
    
    
    
    5.23
    
    
    
    495
    
    
    
    501
    
    
    
    5.60
    
    
    
    281
    
    
    
    282
    
    
    
    5.78One to five years
    
    
    4,845
    
    
    
    4,968
    
    
    
    5.59
    
    
    
    5,639
    
    
    
    5,729
    
    
    
    6.31
    
    
    
    3,830
    
    
    
    3,857
    
    
    
    6.06Five to ten years
    
    
    996
    
    
    
    994
    
    
    
    6.62
    
    
    
    2,869
    
    
    
    2,896
    
    
    
    6.74
    
    
    
    7,474
    
    
    
    7,597
    
    
    
    6.06Total debt securities
    
    
    27,122
    
    
    
    27,502
    
    
    
    3.07
    %
    
    
    30,471
    
    
    
    30,707
    
    
    
    5.11
    %
    
    
    34,800
    
    
    
    34,724
    
    
    
    5.47
    %Equity securities
    
    
    1,724
    
    
    
    1,673
    
    
    
    
    
    
    
    1,161
    
    
    
    1,147
    
    
    
    
    
    
    
    619
    
    
    
    638Restricted equity securities
    
    
    3,055
    
    
    
    3,055
    
    
    
    
    
    
    
    2,439
    
    
    
    2,439
    
    
    
    
    
    
    
    2,439
    
    
    
    2,439Total securities
    
    $
    31,901
    
    
    $
    32,230
    
    
    
    
    
    
    $
    34,071
    
    
    $
    34,293
    
    
    
    
    
    
    $
    37,858
    
    
    $
    37,801
 
 (1)
    
    Weighted average yields are stated on a federal tax equivalent basis at a rate of
35% and have been annualized, where appropriate. Loans
     42  Columbia Bancorp




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##### Table of Contents



Table 10
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004(dollars in thousands)
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentageCommercial
    
    $
    127,598
    
    
    
    15
    %
    
    $
    129,018
    
    
    
    15
    %
    
    $
    136,582
    
    
    
    17
    %
    
    $
    101,261
    
    
    
    15
    %
    
    $
    93,618
    
    
    
    16
    %Agricultural
    
    
    74,630
    
    
    
    9
    
    
    
    70,095
    
    
    
    8
    
    
    
    86,218
    
    
    
    11
    
    
    
    84,271
    
    
    
    12
    
    
    
    79,224
    
    
    
    14Real estate secured loans:Commercial property
    
    
    250,888
    
    
    
    30
    
    
    
    241,544
    
    
    
    28
    
    
    
    243,391
    
    
    
    31
    
    
    
    199,065
    
    
    
    30
    
    
    
    156,175
    
    
    
    27Farmland
    
    
    65,474
    
    
    
    8
    
    
    
    48,739
    
    
    
    6
    
    
    
    44,178
    
    
    
    5
    
    
    
    46,518
    
    
    
    7
    
    
    
    50,585
    
    
    
    9Construction
    
    
    253,683
    
    
    
    30
    
    
    
    294,398
    
    
    
    34
    
    
    
    212,826
    
    
    
    27
    
    
    
    184,331
    
    
    
    27
    
    
    
    139,415
    
    
    
    25Residential
    
    
    44,208
    
    
    
    5
    
    
    
    41,149
    
    
    
    5
    
    
    
    46,547
    
    
    
    6
    
    
    
    30,955
    
    
    
    5
    
    
    
    29,584
    
    
    
    5Home equity lines
    
    
    29,231
    
    
    
    3
    
    
    
    23,144
    
    
    
    3
    
    
    
    13,410
    
    
    
    2
    
    
    
    14,747
    
    
    
    2
    
    
    
    10,701
    
    
    
    2Total real estate
    
    
    643,484
    
    
    
    76
    
    
    
    648,974
    
    
    
    76
    
    
    
    560,352
    
    
    
    71
    
    
    
    475,616
    
    
    
    71
    
    
    
    386,460
    
    
    
    68Consumer
    
    
    14,414
    
    
    
    3
    
    
    
    11,630
    
    
    
    1
    
    
    
    12,541
    
    
    
    1
    
    
    
    13,775
    
    
    
    2
    
    
    
    14,386
    
    
    
    2Other
    
    
    3,878
    
    
    
    
    
    
    
    11,208
    
    
    
    1
    
    
    
    10,211
    
    
    
    1
    
    
    
    7,923
    
    
    
    1
    
    
    
    7,660
    
    
    
    1Total gross loans
    
    
    864,004
    
    
    
    103
    
    
    
    870,925
    
    
    
    101
    
    
    
    805,904
    
    
    
    101
    
    
    
    682,846
    
    
    
    101
    
    
    
    581,348
    
    
    
    101Less unearned loan fees
    
    
    (562
    )
    
    
    
    
    
    
    (1,060
    )
    
    
    
    
    
    
    (1,428
    )
    
    
    
    
    
    
    (1,513
    )
    
    
    
    
    
    
    (1,556
    )
    
    
    Less allowance for loan losses
    
    
    (24,492
    )
    
    
    (3
    )
    
    
    (11,174
    )
    
    
    (1
    )
    
    
    (10,143
    )
    
    
    (1
    )
    
    
    (9,526
    )
    
    
    (1
    )
    
    
    (8,184
    )
    
    
    (1
    )Loans receivable, net
    
    $
    838,950
    
    
    
    100
    %
    
    $
    858,691
    
    
    
    100
    %
    
    $
    794,333
    
    
    
    100
    %
    
    $
    671,807
    
    
    
    100
    %
    
    $
    571,608
    
    
    
    100
    %Volume change from prior year
    
    
    
    
    
    
    -2
    %
    
    
    
    
    
    
    8
    %
    
    
    
    
    
    
    18
    %
    
    
    
    
    
    
    18
    %
    
    
    
    
    
    
    24
    %
    Columbia Bancorp




---



##### Table of Contents



Table 11(dollars in thousands)
    
    December 31, 2008CONSTRUCTION LOANS BY REGION
    
    Residential
    
    
    Commercial
    
    
    TotalColumbia River Gorge
    
    $
    16,416
    
    
    $
    2,372
    
    
    $
    18,788Columbia Basin  Eastern Washington
    
    
    11,404
    
    
    
    20,152
    
    
    
    31,556Columbia Basin  Northeastern Oregon
    
    
    6,872
    
    
    
    4,742
    
    
    
    11,614Central Oregon
    
    
    70,076
    
    
    
    37,479
    
    
    
    107,555Willamette Valley (1)
    
    
    71,885
    
    
    
    12,285
    
    
    
    84,170$
    176,653
    
    
    $
    77,030
    
    
    $
    253,683
 
 (1)
    
    Includes Portland, Oregon and Vancouver, Washington metropolitan area   44  Columbia Bancorp




---



##### Table of Contents



December 31, 2008Table 12
    
    Less than
    
    
    3 months-
    
    
    
    
    
    
    
    
    
    
    Over
    
    
    Total(dollars in thousands)
    
    3 months
    
    
    1 year
    
    
    1-5 years
    
    
    5-10 years
    
    
    10 years
    
    
    loansCommercial loans
    
    $
    36,696
    
    
    $
    32,828
    
    
    $
    41,058
    
    
    $
    15,961
    
    
    $
    1,055
    
    
    $
    127,598Agricultural loans
    
    
    40,496
    
    
    
    17,647
    
    
    
    15,780
    
    
    
    657
    
    
    
    50
    
    
    
    74,630Real estate secured loans:Commercial property
    
    
    13,799
    
    
    
    27,116
    
    
    
    118,028
    
    
    
    69,682
    
    
    
    22,263
    
    
    
    250,888Farmland
    
    
    16,287
    
    
    
    7,632
    
    
    
    28,308
    
    
    
    5,107
    
    
    
    8,140
    
    
    
    65,474Construction
    
    
    150,081
    
    
    
    62,509
    
    
    
    37,825
    
    
    
    2,195
    
    
    
    1,073
    
    
    
    253,683Residential
    
    
    10,847
    
    
    
    7,364
    
    
    
    16,550
    
    
    
    3,383
    
    
    
    6,064
    
    
    
    44,208Home equity lines
    
    
    8,290
    
    
    
    5,360
    
    
    
    1,124
    
    
    
    77
    
    
    
    14,379
    
    
    
    29,231Total real estate
loans
    
    
    199,304
    
    
    
    109,981
    
    
    
    201,835
    
    
    
    80,444
    
    
    
    51,919
    
    
    
    643,484Consumer
    
    
    1,382
    
    
    
    1,397
    
    
    
    8,854
    
    
    
    2,322
    
    
    
    460
    
    
    
    14,414Other
    
    
    
    
    
    
    19
    
    
    
    569
    
    
    
    1,052
    
    
    
    2,238
    
    
    
    3,878Total loans
    
    $
    277,878
    
    
    $
    161,872
    
    
    $
    268,096
    
    
    $
    100,436
    
    
    $
    55,722
    
    
    $
    864,004Loans with fixed interest rates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    144,706Loans with variable interest rates  daily reprice
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    442,253Loans with variable interest rates  other than daily reprice
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    277,045Total
loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    864,004Loans with rate floors
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    537,129Loans with variable interest rates  daily reprice  on or under rate floors
    
    
    
    
    
    
    
    
    
    
    379,106Loans with variable interest rates  other than daily reprice  on or under rate floors
    
    
    
    
    
    
    
    
    69,311
     Columbia Bancorp




---



##### Table of Contents



Allowance for Loan Losses
      46  Columbia Bancorp




---



##### Table of Contents



2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Table
13(dollars in thousands)
    
    Amount
    
    
    Percent of loans ineach category tototal loans
    
    
    Amount
    
    
    Percent of loans ineach category tototal loans
    
    
    Amount
    
    
    Percent of loans ineach category tototal loans
    
    
    Amount
    
    
    Percent of loans ineach category tototal loans
    
    
    Amount
    
    
    Percent of loans ineach category tototal loansCommercial
    
    $
    3,003
    
    
    
    15
    %
    
    $
    1,454
    
    
    
    15
    %
    
    $
    1,784
    
    
    
    17
    %
    
    $
    1,064
    
    
    
    15
    %
    
    $
    1,438
    
    
    
    16
    %Agricultural
    
    
    1,336
    
    
    
    8
    
    
    
    1,609
    
    
    
    8
    
    
    
    3,161
    
    
    
    11
    
    
    
    3,281
    
    
    
    12
    
    
    
    2,396
    
    
    
    14Real estate
    
    
    19,726
    
    
    
    74
    
    
    
    6,240
    
    
    
    75
    
    
    
    2,979
    
    
    
    70
    
    
    
    2,344
    
    
    
    70
    
    
    
    3,083
    
    
    
    67Consumer
    
    
    264
    
    
    
    2
    
    
    
    342
    
    
    
    1
    
    
    
    464
    
    
    
    1
    
    
    
    478
    
    
    
    2
    
    
    
    454
    
    
    
    2Other
    
    
    89
    
    
    
    1
    
    
    
    103
    
    
    
    1
    
    
    
    104
    
    
    
    1
    
    
    
    129
    
    
    
    1
    
    
    
    25
    
    
    
    1Off-balance-sheetfinancial instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    587
    
    
    
    
    
    
    
    443
    
    
    
    Unallocated
    
    
    74
    
    
    
    
    
    
    
    1,426
    
    
    
    
    
    
    
    1,651
    
    
    
    
    
    
    
    1,643
    
    
    
    
    
    
    
    345
    
    
    
    Total allowance forloan losses
    
    $
    24,492
    
    
    
    100
    %
    
    $
    11,174
    
    
    
    100
    %
    
    $
    10,143
    
    
    
    100
    %
    
    $
    9,526
    
    
    
    100
    %
    
    $
    8,184
    
    
    
    100
    %
  Columbia Bancorp




---



##### Table of Contents



Table 14(dollars in thousands)
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Gross loans outstanding at end of year (1)
    
    $
    864,004
    
    
    $
    879,064
    
    
    $
    813,443
    
    
    $
    688,725
    
    
    $
    583,865Average loans outstanding for the year (1)
    
    $
    915,732
    
    
    $
    860,783
    
    
    $
    745,578
    
    
    $
    625,038
    
    
    $
    546,600Allowance for loan losses balance, beginning of year
    
    $
    11,174
    
    
    $
    10,143
    
    
    $
    9,526
    
    
    $
    8,184
    
    
    $
    6,612Loans charged-off:Commercial
    
    
    (3,013
    )
    
    
    (205
    )
    
    
    (655
    )
    
    
    (1,261
    )
    
    
    (762
    )Real estate
    
    
    
    
    
    
    (85
    )
    
    
    (24
    )
    
    
    (168
    )
    
    
    (116
    )Real estate construction
    
    
    (23,708
    )
    
    
    (113
    )
    
    
    
    
    
    
    
    
    
    
    Agriculture
    
    
    (2,027
    )
    
    
    (3,253
    )
    
    
    (893
    )
    
    
    (156
    )
    
    
    (80
    )Consumer loans
    
    
    (666
    )
    
    
    (13
    )
    
    
    (6
    )
    
    
    (111
    )
    
    
    (198
    )Consumer overdrafts
    
    
    (343
    )
    
    
    (306
    )
    
    
    (274
    )
    
    
    (165
    )
    
    
    Credit card and related accounts
    
    
    (149
    )
    
    
    (43
    )
    
    
    (79
    )
    
    
    (101
    )
    
    
    (135
    )Total loans charged-off
    
    
    (29,906
    )
    
    
    (4,018
    )
    
    
    (1,931
    )
    
    
    (1,962
    )
    
    
    (1,291
    )Recoveries:Commercial
    
    
    27
    
    
    
    48
    
    
    
    112
    
    
    
    79
    
    
    
    67Real estate
    
    
    
    
    
    
    
    
    
    
    35
    
    
    
    9
    
    
    
    8Real estate construction
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Agriculture
    
    
    6
    
    
    
    
    
    
    
    162
    
    
    
    5
    
    
    
    4Consumer loans
    
    
    11
    
    
    
    28
    
    
    
    19
    
    
    
    32
    
    
    
    13Consumer overdrafts
    
    
    287
    
    
    
    223
    
    
    
    
    
    
    
    60
    
    
    
    Credit card and related accounts
    
    
    2
    
    
    
    9
    
    
    
    10
    
    
    
    4
    
    
    
    11Total recoveries
    
    
    333
    
    
    
    309
    
    
    
    338
    
    
    
    189
    
    
    
    103Net charge-offs
    
    
    (29,573
    )
    
    
    (3,709
    )
    
    
    (1,593
    )
    
    
    (1,773
    )
    
    
    (1,188
    )Provision for loan losses
    
    
    43,110
    
    
    
    4,740
    
    
    
    2,900
    
    
    
    3,115
    
    
    
    2,760Adjustment for credit card portfolio sales
    
    
    (219
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reclassify liability for off-balance-sheet
financial insturment credit losses
    
    
    
    
    
    
    
    
    
    
    (690
    )
    
    
    
    
    
    
    Allowance for loan losses balance, end of year
    
    $
    24,492
    
    
    $
    11,174
    
    
    $
    10,143
    
    
    $
    9,526
    
    
    $
    8,184Liability for off-balance-sheet financial instruments,
beginning of year
    
    $
    848
    
    
    $
    763
    
    
    $
    
    
    
    $
    
    
    
    $
    Reclassify from allowance for loan losses
    
    
    
    
    
    
    
    
    
    
    690
    
    
    
    
    
    
    
    (Decrease) increase charged to other
non-interest expense
    
    
    (167
    )
    
    
    85
    
    
    
    73
    
    
    
    
    
    
    
    Liability for off-balance-sheet financial instruments,
end of year
    
    $
    681
    
    
    $
    848
    
    
    $
    763
    
    
    $
    
    
    
    $
    Total allowance for credit losses (2)
    
    $
    25,173
    
    
    $
    12,022
    
    
    $
    10,906
    
    
    $
    9,526
    
    
    $
    8,184Ratio of net loans charged off to
average loans outstanding
    
    
    3.23
    %
    
    
    0.43
    %
    
    
    0.21
    %
    
    
    0.28
    %
    
    
    0.22
    %Ratio of allowance for credit losses to loans at
end of period
    
    
    2.91
    %
    
    
    1.37
    %
    
    
    1.34
    %
    
    
    1.38
    %
    
    
    1.40
    %
 
 (1)
    
    Includes loans held-for-sale and excludes allowance for loan losses and unearned fees.(2)
    
    Allowance for loan losses and liability for off-balance-sheet financial instruments. 48  Columbia Bancorp




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Columbia Bancorp




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50  Columbia Bancorp




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Non-performing Assets
   Table 15(dollars in thousands)
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Loans on non-accrual status
    
    $
    92,350
    
    
    $
    9,865
    
    
    $
    4,939
    
    
    $
    5,688
    
    
    $
    4,217Loans past due  greater than 90 days
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Restructured loans
    
    
    57
    
    
    
    84
    
    
    
    52
    
    
    
    40
    
    
    
    Total non-performing loans
    
    
    92,407
    
    
    
    9,949
    
    
    
    4,991
    
    
    
    5,728
    
    
    
    4,217Other real estate owned
    
    
    9,622
    
    
    
    516
    
    
    
    203
    
    
    
    
    
    
    
    100Repossessed other assets
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    
    
    
    
    Total non-performing
assets
    
    $
    102,029
    
    
    $
    10,470
    
    
    $
    5,194
    
    
    $
    5,728
    
    
    $
    4,317Allowance for loan losses
    
    $
    24,492
    
    
    $
    11,174
    
    
    $
    10,143
    
    
    $
    9,526
    
    
    $
    8,184Ratio of total non-performing assets to
total assets
    
    
    9.09
    %
    
    
    1.00
    %
    
    
    0.50
    %
    
    
    0.68
    %
    
    
    0.60
    %Ratio of total non-performing loans to
total gross loans
    
    
    10.70
    %
    
    
    1.13
    %
    
    
    0.61
    %
    
    
    0.83
    %
    
    
    0.72
    %Ratio of total allowance for loan losses
to non-performing loans
    
    
    26.50
    %
    
    
    112.31
    %
    
    
    203.23
    %
    
    
    166.31
    %
    
    
    194.07
    %
  Columbia Bancorp




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##### Table of Contents



Non-Accrual Loans
  December 31, 2008
    
    
    September 30, 2008
    
    
    June 30, 2008
    
    
    March 31, 2008
    
    
    December 31, 2007Table 16
    
    Number
    
    
    Dollar
    
    
    Number
    
    
    Dollar
    
    
    Number
    
    
    Dollar
    
    
    Number
    
    
    Dollar
    
    
    Number
    
    
    Dollar(dollars in thousands)


    
    of Loans
    
    
    Amount
    
    
    of Loans
    
    
    Amount
    
    
    of Loans
    
    
    Amount
    
    
    of Loans
    
    
    Amount
    
    
    of Loans
    
    
    AmountReal estate secured loans:Residential lots, sub-divisions,
home construction
    
    
    54
    
    
    $
    63,119
    
    
    
    49
    
    
    $
    49,959
    
    
    
    12
    
    
    $
    26,542
    
    
    
    2
    
    
    $
    576
    
    
    
    3
    
    
    $
    7,824Residential
    
    
    9
    
    
    
    3,454
    
    
    
    6
    
    
    
    2,353
    
    
    
    11
    
    
    
    5,122
    
    
    
    7
    
    
    
    2,605
    
    
    
    1
    
    
    
    810Commercial real estate
    
    
    6
    
    
    
    5,290
    
    
    
    3
    
    
    
    2,434
    
    
    
    3
    
    
    
    2,436
    
    
    
    2
    
    
    
    1,165
    
    
    
    2
    
    
    
    1,173Agricultural farmland (1)
    
    
    6
    
    
    
    15,094
    
    
    
    4
    
    
    
    3,116
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial and Industrial
    
    
    12
    
    
    
    3,072
    
    
    
    11
    
    
    
    3,335
    
    
    
    5
    
    
    
    717
    
    
    
    2
    
    
    
    45
    
    
    
    1
    
    
    
    41Agricultural production
    
    
    7
    
    
    
    2,173
    
    
    
    2
    
    
    
    1,994
    
    
    
    2
    
    
    
    59
    
    
    
    2
    
    
    
    59
    
    
    
    1
    
    
    
    17Consumer
    
    
    7
    
    
    
    148
    
    
    
    3
    
    
    
    39
    
    
    
    1
    
    
    
    9
    
    
    
    2
    
    
    
    9
    
    
    
    
    
    
    
    101
    
    
    $
    92,350
    
    
    
    78
    
    
    $
    63,230
    
    
    
    34
    
    
    $
    34,885
    
    
    
    17
    
    
    $
    4,459
    
    
    
    8
    
    
    $
    9,865
 
 (1)
    
    Real estate-secured agricultural loans may be used for agricultural production purposes.    52  Columbia Bancorp




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Other Real Estate Owned (OREO):
     Deposits
   Table 17
    
    2008
    
    
    2007
    
    
    2006(dollars in thousands)
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    Percentage
    
    
    Amount
    
    
    PercentageInterest bearing demand deposits
    
    $
    271,244
    
    
    
    27
    %
    
    $
    303,235
    
    
    
    33
    %
    
    $
    313,433
    
    
    
    37
    %Savings deposits
    
    
    30,873
    
    
    
    3
    
    
    
    35,784
    
    
    
    4
    
    
    
    35,456
    
    
    
    4Time certificates less than $100,000
    
    
    371,231
    
    
    
    37
    
    
    
    264,042
    
    
    
    29
    
    
    
    196,648
    
    
    
    23Time certificates greater than $100,000
    
    
    114,926
    
    
    
    11
    
    
    
    95,740
    
    
    
    10
    
    
    
    78,491
    
    
    
    9Total interest bearing deposits
    
    
    788,274
    
    
    
    78
    
    
    
    698,801
    
    
    
    76
    
    
    
    624,028
    
    
    
    73Non-interest bearing deposits
    
    
    215,922
    
    
    
    22
    
    
    
    224,092
    
    
    
    24
    
    
    
    235,037
    
    
    
    27Total deposits
    
    $
    1,004,196
    
    
    
    100
    %
    
    $
    922,893
    
    
    
    100
    %
    
    $
    859,065
    
    
    
    100
    %
  Columbia Bancorp




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##### Table of Contents




    
    Wholesale deposits increased $59.11 million to support loan growth during the first half
of 2008 and for general liquidity management.
    
    Retail time certificates increased $44.48 million primarily due to competitively priced
certificate of deposit offerings.
    
    Increases noted above were offset by decreases in non-interest bearing demand deposits,
$8.17 million, interest bearing demand deposits, $31.99 million (includes $27.63 million of
wholesale deposit reduction), and savings accounts, $4.91 million. We believe the
decreases in these accounts is a result of the economic down-turn the nation experienced in
2008, as there was actually a net increase of 773 deposit accounts within the bank
(excluding certificates of deposit), in 2008.
  
    
    Retail time certificates increased $30.67 million primarily due to promotionally priced
certificate of deposit offerings.
    
    Wholesale deposits increased $54.80 million to support loan growth during the first half
of 2007.
    
    Deposit growth was offset by a $37.00 million overnight deposit from year-end 2006
withdrawn at the beginning of 2007.
  Table 18
    
    2008 Averages
    
    
    2007 Averages
    
    
    2006 Averages(dollars in thousands)
    
    Amount
    
    
    Rate Paid
    
    
    Amount
    
    
    Rate Paid
    
    
    Amount
    
    
    Rate PaidNon-interest bearing deposits
    
    $
    208,398
    
    
    
    N/A
    
    
    $
    220,325
    
    
    
    N/A
    
    
    $
    219,526
    
    
    
    N/AInterest bearing demand deposits
    
    
    310,775
    
    
    
    2.06
    %
    
    
    299,257
    
    
    
    2.83
    %
    
    
    280,691
    
    
    
    2.31
    %Savings deposits
    
    
    34,298
    
    
    
    0.56
    
    
    
    36,005
    
    
    
    1.06
    
    
    
    39,790
    
    
    
    1.10Time certificates
    
    
    391,762
    
    
    
    4.06
    
    
    
    338,524
    
    
    
    4.91
    
    
    
    219,084
    
    
    
    4.29Total deposits
    
    $
    945,233
    
    
    
    
    
    
    $
    894,111
    
    
    
    
    
    
    $
    759,091
   54  Columbia Bancorp




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##### Table of Contents



Table 19(dollars in thousands)
    
    2008
    
    
    2007
    
    
    2006Brokered certificates of deposit
    
    $
    213,455
    
    
    $
    144,467
    
    
    $
    89,325Direct certificates of deposit
    
    
    198
    
    
    
    4,339
    
    
    
    5,508Mutual fund money market deposits
    
    
    
    
    
    
    23,547
    
    
    
    18,423Out-of-market public funds
    
    
    
    
    
    
    4,081
    
    
    
    8,382Certificate of deposit account registry deposits
    
    
    21,894
    
    
    
    4,849
    
    
    
    1,583$
    235,547
    
    
    $
    181,283
    
    
    $
    123,221
    Columbia Bancorp




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##### Table of Contents



Table 20
    
    Time Certificates
    
    
    Time Certificates(dollars in thousands)
    
    less than $100,000
    
    
    greater than $100,000
    
    
    TotalThree months or less
    
    $
    83,116
    
    
    $
    24,825
    
    
    $
    107,941Over three through six months
    
    
    58,323
    
    
    
    31,488
    
    
    
    89,811Over six months through twelve months
    
    
    127,239
    
    
    
    53,577
    
    
    
    180,816Over twelve months through five years
    
    
    102,337
    
    
    
    5,036
    
    
    
    107,373Over five years
    
    
    216
    
    
    
    
    
    
    
    216$
    371,231
    
    
    $
    114,926
    
    
    $
    486,157
 Federal Home Loan Bank Advances and Federal Funds Purchased
    Table 21(dollars in thousands)
    
    2008
    
    2007
    
    2006Amount outstanding at end of period
    
    $
    36,613
    
    
    $
    5,428
    
    
    $
    69,387Weighted-average interest rate at end of
period
    
    
    2.91
    %
    
    
    3.36
    %
    
    
    5.21
    %Maximum amount outstanding at any
month-end during the year
    
    $
    51,978
    
    
    $
    46,658
    
    
    $
    70,001Average amount outstanding during the
period
    
    $
    33,237
    
    
    $
    15,246
    
    
    $
    27,603Weighted-average interest rate during
the period
    
    
    2.89
    %
    
    
    4.29
    %
    
    
    4.33
    %
 56  Columbia Bancorp




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##### Table of Contents



Trust Preferred Securities
  Capital Resources
    Columbia Bancorp




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##### Table of Contents



Total Number of
    
    
    Maximum DollarShares Purchased
    
    
    Value of SharesTotal Number of
    
    
    Average Price
    
    
    as Part of Publicly
    
    
    Remaining to be PurchasedTable 22
    
    Shares Purchased
    
    
    Paid per Share
    
    
    Announced Plans(1)
    
    
    Under the Plans(1)July 2007
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    1,500,000August 2007(2)
    
    
    696
    
    
    
    18.79
    
    
    
    
    
    
    
    1,500,000September 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,500,000Three months ended
September 30, 2007
    
    
    696
    
    
    
    18.79
    
    
    
    
    
    
    
    1,500,000October 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,500,000November 2007(2)
    
    
    24,393
    
    
    
    17.60
    
    
    
    23,442
    
    
    
    1,000,370December 2007
    
    
    4,889
    
    
    
    17.64
    
    
    
    4,889
    
    
    
    1,000,370Three months ended
December 31, 2007
    
    
    29,282
    
    
    
    17.61
    
    
    
    28,331
    
    
    
    1,000,370Twelve months ended
December 31, 2007
    
    
    29,978
    
    
    $
    17.64
    
    
    
    28,331
    
    
    $
    1,000,370April 2008(3)
    
    
    2,941
    
    
    $
    10.97
    
    
    
    
    
    
    $
    1,000,370May 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,000,370June 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Three months ended June
30, 2008
    
    
    2,941
    
    
    $
    10.37
    
    
    
    
    
    
    $
    July 2008
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    August 2008(3)
    
    
    547
    
    
    
    4.34
    
    
    
    
    
    
    
    September 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Three months ended
September 30, 2008
    
    
    547
    
    
    $
    4.34
    
    
    
    
    
    
    $
    October 2008
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    November 2008(3)
    
    
    722
    
    
    
    4.00
    
    
    
    
    
    
    
    December 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Three months ended
December 31, 2008
    
    
    722
    
    
    $
    4.00
    
    
    
    
    
    
    $
    Twelve months ended
December 31, 2008
    
    
    4,210
    
    
    $
    8.91
    
    
    
    
    
    
    $
    
 
 (1)
    
    Plan announced in June 2006 to repurchase up to $1.50 million of common stock
through June 30, 2007. In June 2007, the plan was renewed to allow purchases of up to $1.50 million
of common stock through June 30, 2008. The plan was not subsequently renewed.(2)
    
    Includes 951 shares purchased pursuant to vesting of stock awards.(3)
    
    Shares purchased pursuant to vesting of stock awards.  58  Columbia Bancorp




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##### Table of Contents



Table 23
 Well-Minimum
    
    Capitalized
    
    December 31, 2008
    
    December 31, 2007Total risk-based capitalColumbia Bancorp
    
    
    8.00
    %
    
    
    N/A
    
    
    
    8.90
    %
    
    
    11.76
    %Columbia River Bank
    
    
    8.00
    %
    
    
    10.00
    %
    
    
    8.75
    %
    
    
    11.23
    %Tier 1 risk-based capitalColumbia Bancorp
    
    
    4.00
    %
    
    
    N/A
    
    
    
    7.64
    %
    
    
    10.51
    %Columbia River Bank
    
    
    4.00
    %
    
    
    6.00
    %
    
    
    7.49
    %
    
    
    9.98
    %Teir 1 leverage ratioColumbia Bancorp
    
    
    4.00
    %
    
    
    N/A
    
    
    
    6.41
    %
    
    
    9.75
    %Columbia River Bank
    
    
    4.00
    %*
    
    
    5.00
    %*
    
    
    6.29
    %
    
    
    9.26
    %
 
 *
    
    Pursuant to the regulatory order issued by the FDIC and DFCS, the Bank must maintain Tier 1 leverage ratio of at least 10.00%.  
    
    Suspension of board of director fees beginning in July 2008.
    
    Suspension of stockholder dividends beginning in the third quarter of 2008.
    
    Closure of mortgage banking business in September 2008, eliminating 39 positions.
    
    Reduction in workforce eliminating 20 other positions in September 2008.
    
    Sale of credit card portfolio at a gain of $1.23 million in September 2008.
    
    Closure of Lake Oswego branch in October 2008.
    
    
    Annual cost savings of $522,000 due to elimination of six staff positions, including two
executive officer positions.
    
    Additional annual cost savings of $322,000 due to other restructuring of staff positions
and salary reductions.
    
    Reduction in occupancy and overhead expenses related to facilities in downtown
Vancouver, Washington.
 59  Columbia Bancorp




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##### Table of Contents




    
    Continued reductions in other overhead expenses
    
    Sale leaseback of branch facilities
    
    Sale and/or participation of loans
    
    Raise capital from third party investor(s)
    
    Future participation in Government relief programs if such future programs benefit a
community bank such as Columbia River Bank
  Liquidity
     60  Columbia Bancorp




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Inflation
  61  Columbia Bancorp




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##### Table of Contents



Off-Balance Sheet Arrangements
     Table 24(dollars in thousands)
    
    2008
    
    
    2007
    
    
    2006Commitments to extend credit
    
    $
    145,814
    
    
    $
    229,716
    
    
    $
    236,582Commitments to originate loans held-for-sale
    
    
    
    
    
    
    7,170
    
    
    
    8,723Undisbursed credit card lines of credit
    
    
    
    
    
    
    24,618
    
    
    
    21,265Commercial and standby letters of credit
    
    
    2,045
    
    
    
    3,200
    
    
    
    3,504Total
    
    $
    147,859
    
    
    $
    264,704
    
    
    $
    270,074
  62  Columbia Bancorp




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Contractual Obligations
   Payment due by PeriodTable 25
    
    
    
    
    
    Less than
    
    
    
    
    
    
    
    
    
    
    More than
    
    
    Unspecified(dollars in thousands)
    
    Total
    
    
    1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 years
    
    
    maturityLong-term debt obligations
Federal Home Loan Bank notes
    
    $
    36,613
    
    
    $
    18,152
    
    
    $
    18,000
    
    
    $
    461
    
    
    $
    
    
    
    $
    Operating lease obligations
    
    
    14,469
    
    
    
    1,711
    
    
    
    3,396
    
    
    
    2,554
    
    
    
    6,808
    
    
    
    Other long term liabilities(1)
    
    
    1,833
    
    
    
    574
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,259Total
    
    $
    52,915
    
    
    $
    20,437
    
    
    $
    21,396
    
    
    $
    3,015
    
    
    $
    6,808
    
    
    $
    1,259
 
 (1)
    
    Amount includes deferred compensation and salary continuation plan benefit obligations. Recently Issued Accounting Standards
 , .
  63  Columbia Bancorp




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk Management
     Percent Change
    
    Percent ChangeTable 26
    
    in Net Interest
    
    in Present ValueChange in Interest Rates
    
    Income
    
    of Equity-200 Basis points
    
    
    -1.15
    %
    
    
    -2.65
    %-100 Basis points
    
    
    -0.59
    %
    
    
    -2.04
    %+100 Basis points
    
    
    1.02
    %
    
    
    0.60
    %+200 Basis points
    
    
    2.68
    %
    
    
    1.35
    %+300 Basis points
    
    
    8.38
    %
    
    
    2.87
    %
   64  Columbia Bancorp




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##### Table of Contents



ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 Selected Quarterly Financial Data (unaudited)
 2008 Quarterly Financial DataTable 27
    
    First
    
    
    Second
    
    
    Third
    
    
    Fourth(In thousands except per share data)
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    TotalIncome Statement DataInterest income
    
    $
    18,465
    
    
    $
    16,690
    
    
    $
    16,180
    
    
    $
    13,626
    
    
    $
    64,961Interest expense
    
    
    6,103
    
    
    
    5,479
    
    
    
    5,989
    
    
    
    6,776
    
    
    
    24,347Net interest income
    
    
    12,362
    
    
    
    11,211
    
    
    
    10,191
    
    
    
    6,850
    
    
    
    40,614Loan loss provision
    
    
    3,050
    
    
    
    5,650
    
    
    
    25,400
    
    
    
    9,010
    
    
    
    43,110Net interest income (loss) after
loan loss provision
    
    
    9,312
    
    
    
    5,561
    
    
    
    (15,209
    )
    
    
    (2,160
    )
    
    
    (2,496
    )Non-interest income
    
    
    2,959
    
    
    
    3,181
    
    
    
    2,085
    
    
    
    4,069
    
    
    
    12,294Non-interest expense
    
    
    10,344
    
    
    
    9,476
    
    
    
    10,241
    
    
    
    19,096
    
    
    
    49,157Income (loss) before provision for
income taxes
    
    
    1,927
    
    
    
    (734
    )
    
    
    (23,365
    )
    
    
    (17,187
    )
    
    
    (39,359
    )Provision for (benefit from) income taxes
    
    
    708
    
    
    
    (528
    )
    
    
    (9,274
    )
    
    
    (3,907
    )
    
    
    (13,001
    )Net income (loss)
    
    $
    1,219
    
    
    $
    (206
    )
    
    $
    (14,091
    )
    
    $
    (13,280
    )
    
    $
    (26,358
    )Earnings (Loss) Per ShareBasic earnings (loss) per common share
    
    $
    0.12
    
    
    $
    (0.02
    )
    
    $
    (1.41
    )
    
    $
    (1.32
    )
    
    $
    (2.63
    )Diluted earnings (loss) per common share
    
    $
    0.12
    
    
    $
    (0.02
    )
    
    $
    (1.41
    )
    
    $
    (1.32
    )
    
    $
    (2.63
    )
 2007 Quarterly Financial DataFirst
    
    
    Second
    
    
    Third
    
    
    Fourth(In thousands except per share data)
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    TotalIncome Statement DataInterest income
    
    $
    18,923
    
    
    $
    20,495
    
    
    $
    20,412
    
    
    $
    19,694
    
    
    $
    79,524Interest expense
    
    
    6,010
    
    
    
    7,101
    
    
    
    6,872
    
    
    
    6,525
    
    
    
    26,508Net interest income
    
    
    12,913
    
    
    
    13,394
    
    
    
    13,540
    
    
    
    13,169
    
    
    
    53,016Loan loss provision
    
    
    1,025
    
    
    
    2,325
    
    
    
    800
    
    
    
    590
    
    
    
    4,740Net interest income after
loan loss provision
    
    
    11,888
    
    
    
    11,069
    
    
    
    12,740
    
    
    
    12,579
    
    
    
    48,276Non-interest income
    
    
    2,646
    
    
    
    2,778
    
    
    
    2,555
    
    
    
    2,861
    
    
    
    10,840Non-interest expense
    
    
    9,014
    
    
    
    9,024
    
    
    
    9,166
    
    
    
    8,870
    
    
    
    36,074Income before provision for
income taxes
    
    
    5,520
    
    
    
    4,823
    
    
    
    6,129
    
    
    
    6,570
    
    
    
    23,042Provision for income taxes
    
    
    2,067
    
    
    
    1,817
    
    
    
    2,252
    
    
    
    2,424
    
    
    
    8,560Net income
    
    $
    3,453
    
    
    $
    3,006
    
    
    $
    3,877
    
    
    $
    4,146
    
    
    $
    14,482Earnings Per ShareBasic earnings per common share
    
    $
    0.35
    
    
    $
    0.30
    
    
    $
    0.39
    
    
    $
    0.41
    
    
    $
    1.45Diluted earnings per common share
    
    $
    0.34
    
    
    $
    0.30
    
    
    $
    0.38
    
    
    $
    0.41
    
    
    $
    1.42
 65  Columbia Bancorp




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Report of Independent Registered Public Accounting Firm
 
 
     66  Columbia Bancorp




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Page 2: Report of Independent Registered Public Accounting Firm
  -s- Moss Adams LLPPortland, OregonMarch 25, 2009
 67  Columbia Bancorp




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##### Table of Contents



COLUMBIA BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
 December 31,2008
    
    
    2007ASSETSCASH AND CASH EQUIVALENTSCash and due from banks
    
    $
    39,245,220
    
    
    $
    30,667,066Interest bearing deposits with banks
    
    
    25,742,260
    
    
    
    12,457,082Federal funds sold
    
    
    117,491,560
    
    
    
    49,099,652Total cash and cash equivalents
    
    
    182,479,040
    
    
    
    92,223,800INVESTMENT SECURITIESDebt securities available-for-sale, at fair value
    
    
    19,218,096
    
    
    
    19,626,384Equity securities available-for-sale, at fair value
    
    
    1,673,409
    
    
    
    1,147,488Debt securities held-to-maturity, at amortized cost,
estimated fair value $8,284,350, and $11,081,097 at
December 31, 2008 and 2007, respectively
    
    
    8,130,397
    
    
    
    10,969,311Restricted equity securities
    
    
    3,054,500
    
    
    
    2,439,100Total investment securities
    
    
    32,076,402
    
    
    
    34,182,283LOANSLoans held-for-sale
    
    
    
    
    
    
    8,138,971Loans, net of allowance for loan losses and unearned loan fees
    
    
    838,949,514
    
    
    
    858,691,380Total loans
    
    
    838,949,514
    
    
    
    866,830,351OTHER ASSETSProperty and equipment, net of accumulated depreciation
    
    
    23,627,864
    
    
    
    21,500,300Accrued interest receivable
    
    
    4,843,767
    
    
    
    6,786,048Other real estate owned
    
    
    9,622,472
    
    
    
    515,701Goodwill
    
    
    
    
    
    
    7,389,094Other assets
    
    
    30,694,506
    
    
    
    13,280,052Total other assets
    
    
    68,788,609
    
    
    
    49,471,195TOTAL ASSETS
    
    $
    1,122,293,565
    
    
    $
    1,042,707,629LIABILITIES AND SHAREHOLDERS EQUITYDEPOSITSNon-interest bearing demand deposits
    
    $
    215,922,354
    
    
    $
    224,091,709Interest bearing demand deposits
    
    
    271,244,206
    
    
    
    303,234,920Savings accounts
    
    
    30,873,113
    
    
    
    35,783,821Time certificates
    
    
    486,156,648
    
    
    
    359,782,460Total deposits
    
    
    1,004,196,321
    
    
    
    922,892,910OTHER LIABILITIESFederal Home Loan Bank advances and other short-term borrowings
    
    
    36,612,730
    
    
    
    6,277,959Accrued interest payable and other liabilities
    
    
    6,435,889
    
    
    
    7,174,928Junior subordinated debentures
    
    
    
    
    
    
    4,124,000Total other liabilities
    
    
    43,048,619
    
    
    
    17,576,887Total liabilities
    
    
    1,047,244,940
    
    
    
    940,469,797COMMITMENTS AND CONTINGENCIES (Note 17)SHAREHOLDERS EQUITYCommon stock, no par value, 20,000,000 shares authorized;
10,067,347 and 10,043,572 shares issued and outstanding
at December 31, 2008 and 2007, respectively
    
    
    55,698,975
    
    
    
    55,393,110Retained earnings
    
    
    19,242,169
    
    
    
    46,764,304Accumulated other comprehensive income, net of taxes
    
    
    107,481
    
    
    
    80,418Total shareholders equity
    
    
    75,048,625
    
    
    
    102,237,832TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    1,122,293,565
    
    
    $
    1,042,707,629
  68  Columbia Bancorp




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##### Table of Contents



COLUMBIA BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
 Years Ended December 31,2008
    
    
    2007
    
    
    2006INTEREST INCOMEInterest and fees on loans
    
    $
    62,553,495
    
    
    $
    75,104,128
    
    
    $
    67,027,115Interest on investments:Taxable investment securities
    
    
    820,633
    
    
    
    1,102,856
    
    
    
    993,258Nontaxable investment securities
    
    
    386,470
    
    
    
    482,592
    
    
    
    548,389Interest on federal funds sold
    
    
    736,882
    
    
    
    1,984,829
    
    
    
    1,416,362Other interest and dividend income
    
    
    463,645
    
    
    
    849,197
    
    
    
    688,660Total interest income
    
    
    64,961,125
    
    
    
    79,523,602
    
    
    
    70,673,784INTEREST EXPENSEInterest on interest bearing demand deposit
and savings accounts
    
    
    6,595,226
    
    
    
    8,841,941
    
    
    
    6,931,301Interest on time certificates
    
    
    16,627,900
    
    
    
    16,616,063
    
    
    
    9,406,782Other borrowed funds
    
    
    1,123,493
    
    
    
    1,050,046
    
    
    
    1,664,267Total interest expense
    
    
    24,346,619
    
    
    
    26,508,050
    
    
    
    18,002,350NET INTEREST INCOME BEFORE PROVISION
FOR LOAN LOSSES
    
    
    40,614,506
    
    
    
    53,015,552
    
    
    
    52,671,434PROVISION FOR LOAN LOSSES
    
    
    43,110,000
    
    
    
    4,740,000
    
    
    
    2,900,000NET INTEREST INCOME (LOSS) AFTER PROVISION
FOR LOAN LOSSES
    
    
    (2,495,494
    )
    
    
    48,275,552
    
    
    
    49,771,434NON-INTEREST INCOMEService charges and fees
    
    
    4,989,125
    
    
    
    4,404,498
    
    
    
    4,316,134Mortgage banking revenue
    
    
    3,003,703
    
    
    
    3,802,743
    
    
    
    3,175,893Financial services revenue
    
    
    1,072,827
    
    
    
    1,055,863
    
    
    
    870,787Credit card discounts and fees
    
    
    623,729
    
    
    
    561,496
    
    
    
    493,122Gain on sale of credit card portfolio
    
    
    1,233,844
    
    
    
    
    
    
    
    Net gain (loss) on sale or call of investment securities
    
    
    16,211
    
    
    
    (6,236
    )
    
    
    (46
    )Other non-interest income
    
    
    1,354,492
    
    
    
    1,021,800
    
    
    
    965,345Total non-interest income
    
    
    12,293,931
    
    
    
    10,840,164
    
    
    
    9,821,235NON-INTEREST EXPENSESalaries and employee benefits
    
    
    20,791,956
    
    
    
    20,426,717
    
    
    
    20,503,987Occupancy expense
    
    
    5,453,002
    
    
    
    4,697,444
    
    
    
    3,897,303Advertising
    
    
    891,058
    
    
    
    846,350
    
    
    
    805,381Item and statement processing
    
    
    720,142
    
    
    
    812,731
    
    
    
    904,713Data processing expense
    
    
    642,029
    
    
    
    576,968
    
    
    
    577,067Goodwill impairment
    
    
    7,389,094
    
    
    
    
    
    
    
    Other real estate owned impairment
    
    
    2,295,930
    
    
    
    
    
    
    
    Other non-interest expense
    
    
    10,973,979
    
    
    
    8,713,566
    
    
    
    7,684,201Total non-interest expense
    
    
    49,157,190
    
    
    
    36,073,776
    
    
    
    34,372,652INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES
    
    
    (39,358,753
    )
    
    
    23,041,940
    
    
    
    25,220,017PROVISION FOR (BENEFIT FROM) INCOME TAXES
    
    
    (13,000,804
    )
    
    
    8,560,080
    
    
    
    9,444,897NET INCOME (LOSS)
    
    
    (26,357,949
    )
    
    
    14,481,860
    
    
    
    15,775,120OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXESUnrealized gains (losses) on securities:Unrealized holding gains (losses) arising during the period
    
    
    49,707
    
    
    
    158,575
    
    
    
    100,383Reclassification adjustment for (gains) losses included in
net income
    
    
    (9,905
    )
    
    
    3,919
    
    
    
    (Decrease) in fair value of interest rate swap
    
    
    (12,739
    )
    
    
    (36,948
    )
    
    
    (23,217
    )Other comprehensive income, net of taxes
    
    
    27,063
    
    
    
    125,546
    
    
    
    77,166COMPREHENSIVE INCOME (LOSS)
    
    $
    (26,330,886
    )
    
    $
    14,607,406
    
    
    $
    15,852,286BASIC EARNINGS (LOSS) PER SHARE OF COMMON
STOCK
    
    $
    (2.63
    )
    
    $
    1.45
    
    
    $
    1.60DILUTED EARNINGS (LOSS) PER SHARE OF
COMMON STOCK
    
    $
    (2.63
    )
    
    $
    1.42
    
    
    $
    1.55
  Columbia Bancorp




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##### Table of Contents



COLUMBIA BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
 AccumulatedOther
    
    
    TotalCommon Stock
    
    
    Retained
    
    
    Comprehensive
    
    
    ShareholdersShares
    
    
    Amount
    
    
    Earnings
    
    
    Income/(Loss)
    
    
    EquityBALANCE, December 31, 2005
    
    
    8,965,408
    
    
    $
    33,425,084
    
    
    $
    44,189,700
    
    
    $
    (122,294
    )
    
    $
    77,492,490Stock-based compensation expense
    
    
    
    
    
    
    294,216
    
    
    
    
    
    
    
    
    
    
    
    294,216Stock options exercised and
stock awards granted
    
    
    119,119
    
    
    
    807,878
    
    
    
    
    
    
    
    
    
    
    
    807,878Income tax benefit from stock-based compensation
    
    
    
    
    
    
    484,336
    
    
    
    
    
    
    
    
    
    
    
    484,336Repurchase of common stock
    
    
    (1,136
    )
    
    
    (31,070
    )
    
    
    
    
    
    
    
    
    
    
    (31,070
    )10% stock dividend and cash paid
for fractional shares
    
    
    896,146
    
    
    
    19,786,904
    
    
    
    (19,795,632
    )
    
    
    
    
    
    
    (8,728
    )Cash dividends, $0.39 per common share
    
    
    
    
    
    
    
    
    
    
    (3,873,747
    )
    
    
    
    
    
    
    (3,873,747
    )Net income and other comprehensive
income
    
    
    
    
    
    
    
    
    
    
    15,775,120
    
    
    
    77,166
    
    
    
    15,852,286BALANCE, December 31, 2006
    
    
    9,979,537
    
    
    
    54,767,348
    
    
    
    36,295,441
    
    
    
    (45,128
    )
    
    
    91,017,661Stock-based compensation expense
    
    
    
    
    
    
    358,624
    
    
    
    
    
    
    
    
    
    
    
    358,624Stock options exercised and
stock awards granted
    
    
    94,013
    
    
    
    610,519
    
    
    
    
    
    
    
    
    
    
    
    610,519Income tax benefit from stock-based compensation
    
    
    
    
    
    
    185,342
    
    
    
    
    
    
    
    
    
    
    
    185,342Repurchase of common stock
    
    
    (29,978
    )
    
    
    (528,723
    )
    
    
    
    
    
    
    
    
    
    
    (528,723
    )Cash dividends, $0.40 per common share
    
    
    
    
    
    
    
    
    
    
    (4,012,997
    )
    
    
    
    
    
    
    (4,012,997
    )Net income and other comprehensive
income
    
    
    
    
    
    
    
    
    
    
    14,481,860
    
    
    
    125,546
    
    
    
    14,607,406BALANCE, December 31, 2007
    
    
    10,043,572
    
    
    
    55,393,110
    
    
    
    46,764,304
    
    
    
    80,418
    
    
    
    102,237,832Cumulative effect of change in accounting
principle  split-dollar life insurance
benefit
    
    
    
    
    
    
    
    
    
    
    (59,094
    )
    
    
    
    
    
    
    (59,094
    )Stock-based compensation expense
    
    
    
    
    
    
    344,801
    
    
    
    
    
    
    
    
    
    
    
    344,801Stock options exercised and
stock awards granted
    
    
    27,985
    
    
    
    63,676
    
    
    
    
    
    
    
    
    
    
    
    63,676Income tax benefit from stock
options exercised
    
    
    
    
    
    
    1,563
    
    
    
    
    
    
    
    
    
    
    
    1,563Income tax adjustment for stock awards
    
    
    
    
    
    
    (67,180
    )
    
    
    
    
    
    
    
    
    
    
    (67,180
    )Repurchase of common stock
    
    
    (4,210
    )
    
    
    (36,995
    )
    
    
    
    
    
    
    
    
    
    
    (36,995
    )Cash dividends, $0.11 per common share
    
    
    
    
    
    
    
    
    
    
    (1,105,092
    )
    
    
    
    
    
    
    (1,105,092
    )Net loss and other comprehensive
income
    
    
    
    
    
    
    
    
    
    
    (26,357,949
    )
    
    
    27,063
    
    
    
    (26,330,886
    )BALANCE, December 31, 2008
    
    
    10,067,347
    
    
    $
    55,698,975
    
    
    $
    19,242,169
    
    
    $
    107,481
    
    
    $
    75,048,625
  70  Columbia Bancorp




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COLUMBIA BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,2008
    
    
    2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)
    
    $
    (26,357,949
    )
    
    $
    14,481,860
    
    
    $
    15,775,120Adjustments to reconcile net income (loss) to net cash from
operating activities:Net accretion of premiums and discounts on investment securities
    
    
    (22,107
    )
    
    
    (57,923
    )
    
    
    (44,477
    )Net (gain)/loss on sale or call of investment securities
    
    
    (16,211
    )
    
    
    6,236
    
    
    
    46Gain on sale of credit card portfolio
    
    
    (1,233,844
    )
    
    
    
    
    
    
    Loss (gain) on sale of mortgage loans
    
    
    798,184
    
    
    
    704,823
    
    
    
    (133,640
    )Net loss on sale or write-down of property, equipment
and other real estate owned
    
    
    2,279,180
    
    
    
    49,485
    
    
    
    189,797Depreciation and amortization of property and equipment
    
    
    2,858,103
    
    
    
    2,531,659
    
    
    
    2,028,782Loss from limited partnerships
    
    
    225,378
    
    
    
    119,216
    
    
    
    29,550Stock-based compensation expense
    
    
    344,801
    
    
    
    358,624
    
    
    
    344,849Income tax benefit from stock-based compensation expense
    
    
    (1,563
    )
    
    
    (185,342
    )
    
    
    (484,336
    )Deferred income tax benefit
    
    
    (8,301,329
    )
    
    
    (598,021
    )
    
    
    (429,130
    )Provision for loan losses
    
    
    43,110,000
    
    
    
    4,740,000
    
    
    
    2,900,000(Reduction in)/provision for losses from off-balance sheet
financial instruments
    
    
    (167,000
    )
    
    
    85,000
    
    
    
    73,000Goodwill impairment
    
    
    7,389,094
    
    
    
    
    
    
    
    Increase (decrease) in cash due to changes in certain assets
and liabilities:Proceeds from the sale of mortgage loans held-for-sale
    
    
    119,673,766
    
    
    
    141,375,688
    
    
    
    100,016,040Production of mortgage loans held-for-sale
    
    
    (112,332,979
    )
    
    
    (142,681,650
    )
    
    
    (101,674,552
    )Accrued interest receivable
    
    
    1,942,281
    
    
    
    (268,145
    )
    
    
    (902,805
    )Other assets
    
    
    (526,323
    )
    
    
    (510,245
    )
    
    
    1,642,377Accrued interest payable and other liabilities
    
    
    (6,928,925
    )
    
    
    (1,439,778
    )
    
    
    62,575Net cash provided by operating activities
    
    
    22,732,557
    
    
    
    18,711,487
    
    
    
    19,393,196CASH FLOWS FROM INVESTING ACTIVITIESProceeds from the sale of available-for-sale securities
    
    
    3,015,587
    
    
    
    
    
    
    
    Proceeds from the maturity and call of available-for-sale securities
    
    
    11,527,512
    
    
    
    8,935,000
    
    
    
    6,185,000Purchases of available-for-sale securities
    
    
    (14,555,034
    )
    
    
    (8,554,397
    )
    
    
    (8,953,633
    )Proceeds from the maturity or call of held-to-maturity securities
    
    
    2,836,676
    
    
    
    3,660,637
    
    
    
    2,248,847Purchases of held-to-maturity securities
    
    
    
    
    
    
    (202,623
    )
    
    
    (205,907
    )Purchases of restricted equity securities
    
    
    (615,400
    )
    
    
    
    
    
    
    Net change in loans made to customers
    
    
    (41,566,120
    )
    
    
    (69,645,746
    )
    
    
    (131,429,100
    )Proceeds from sale of loans
    
    
    7,772,738
    
    
    
    
    
    
    
    6,623,242Investment in low-income housing tax credits
    
    
    (189,502
    )
    
    
    (225,379
    )
    
    
    (143,000
    )Investment in state tax credits
    
    
    (1,431,069
    )
    
    
    (124,683
    )
    
    
    (261,197
    )Proceeds from the sale of property and equipment
    
    
    517,103
    
    
    
    36,680
    
    
    
    Proceeds from the sale of other real estate owned
    
    
    645,125
    
    
    
    200,127
    
    
    
    Proceeds from the sale of repossessed assets
    
    
    
    
    
    
    27,179
    
    
    
    Purchase of employee residence under relocation benefit
    
    
    
    
    
    
    
    
    
    
    (613,211
    )Proceeds from sale of employee residence under relocation benefit
    
    
    
    
    
    
    513,649
    
    
    
    Payments made for purchase of property and equipment
    
    
    (5,497,750
    )
    
    
    (5,975,929
    )
    
    
    (4,473,695
    )Net cash used in investing activities
    
    
    (37,540,134
    )
    
    
    (71,355,485
    )
    
    
    (131,022,654
    )CASH FLOWS FROM FINANCING ACTIVITIESNet change in demand deposit and savings accounts
    
    
    (45,070,777
    )
    
    
    (20,815,368
    )
    
    
    44,277,719Net change in time certificates
    
    
    126,374,188
    
    
    
    84,642,790
    
    
    
    106,965,609Net borrowings from (repayments of) short-term notes payable
    
    
    (850,000
    )
    
    
    (49,777,093
    )
    
    
    29,777,093Proceeds from long-term borrowings
    
    
    40,000,000
    
    
    
    
    
    
    
    Repayments of long-term borrowings
    
    
    (9,187,462
    )
    
    
    (13,959,261
    )
    
    
    (5,453,731
    )Repayment of junior subordinated debentures
    
    
    (4,124,000
    )
    
    
    
    
    
    
    Dividends paid and cash paid for fractional shares
    
    
    (2,110,880
    )
    
    
    (4,005,163
    )
    
    
    (3,772,096
    )Proceeds from stock options exercised
    
    
    67,180
    
    
    
    610,519
    
    
    
    807,878Income tax benefit from stock-based compensation expense
    
    
    1,563
    
    
    
    185,342
    
    
    
    484,336Repurchase of common stock
    
    
    (36,995
    )
    
    
    (528,723
    )
    
    
    (31,070
    )Net cash provided by (used in) financing activities
    
    
    105,062,817
    
    
    
    (3,646,957
    )
    
    
    173,055,738NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    90,255,240
    
    
    
    (56,290,955
    )
    
    
    61,426,280CASH AND CASH EQUIVALENTS, beginning of year
    
    
    92,223,800
    
    
    
    148,514,755
    
    
    
    87,088,475CASH AND CASH EQUIVALENTS, end of year
    
    $
    182,479,040
    
    
    $
    92,223,800
    
    
    $
    148,514,755
 Columbia Bancorp




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COLUMBIA BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,2008
    
    
    2007
    
    
    2006SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONInterest paid in cash
    
    $
    24,621,124
    
    
    $
    26,015,584
    
    
    $
    17,933,603Taxes paid in cash
    
    $
    2,200,000
    
    
    $
    8,800,000
    
    
    $
    9,125,000SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIESChange in unrealized gain or loss on available-for-sale
securities, net of tax
    
    $
    39,802
    
    
    $
    162,494
    
    
    $
    100,383Change in fair value of interest-rate swap, net of tax
    
    $
    (12,739
    )
    
    $
    (36,948
    )
    
    $
    (23,217
    )Cash dividend declared and payable after year-end
    
    $
    
    
    
    $
    1,005,788
    
    
    $
    997,954Transfers of loans to other real estate owned
    
    $
    11,659,092
    
    
    $
    547,651
    
    
    $
    202,850Reclassify liability for off-balance-sheet financial instrument
credit losses
    
    $
    
    
    
    $
    
    
    
    $
    690,000
  72  Columbia Bancorp




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##### Table of Contents



NOTE 1 ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Organization and nature of operations
    Managements estimates and assumptions
 Cash and cash equivalents
 Investment securities
 Securities held-to-maturity
 Securities available-for-sale
 Columbia Bancorp




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##### Table of Contents



Restricted equity securities
 Loans held-for-sale
 Loans, net of allowance for loan losses and unearned loan fees
     Property and equipment 1 2
 74  Columbia Bancorp




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Goodwill
 Investment in limited partnerships
 Other real estate owned
 Income taxes
 Columbia Bancorp




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##### Table of Contents



Advertising
 Earnings (loss) per share
 Share-based payment
 76  Columbia Bancorp




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##### Table of Contents



Off-balance-sheet financial instruments
 Derivative financial instruments
    Fair value of financial instruments
 Held-to-maturity, available-for-sale, equity securities and restricted equity securities
 Loans receivable
 Deposit liabilities
 Short-term borrowings
 Columbia Bancorp




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##### Table of Contents



Long-term debt
 Off-balance-sheet instruments
 Recently issued accounting standards , .
  Reclassifications
 NOTE 2 REGULATORY ORDER AND MANAGEMENTS PLAN
   78  Columbia Bancorp




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
    
    Raised $62.16 million of retail deposits and added approximately 1,100 (net) new deposit
relationships during the fourth quarter of 2008.
    
    Repaid $111.26 million of wholesale (brokered) deposits maturing from September 30, 2008
through March 10, 2009, thereby reducing the ratio of wholesale liabilities to total
liabilities from 33.05% to 23.12%.
    
    Participated in FDIC Temporary Liquidity Guarantee Program (TGLP) to extend unlimited
FDIC coverage to qualifying transaction accounts. In addition, the Bank benefitted from
increases in the FDIC insurance limits from $100,000 to $250,000.
    
    Reduced loan balances by $78.61 million from September 30, 2008 through March 10, 2009,
through normal attrition, exiting certain customer relationships, participations with other
financial institutions and charge-off of certain loans.
    
    Increased collateral pledged to Federal Home Loan Bank (FHLB) and Federal Reserve Bank
(FRB); this provides us with available borrowing capacity at FHLB and FRB, which totaled
$69.11 million as of March 10, 2009.
    
    Updated the Banks liquidity policy in light of the economy and the Banks financial
performance and developed a written liquidity plan for 2009 and beyond which is focused on
maintaining and increasing liquidity balances using a combination of asset reductions and
deposit increases.
  
    
    Suspended board of director fees beginning in July 2008.
    
    Stockholder dividends were reduced in the second quarter of 2008 and then suspended in
the third quarter of 2008.
    
    Closed the mortgage banking business in September 2008, eliminating 39 positions.
    
    Reduced work force, eliminating 20 additional positions in September 2008.
    
    Sold its credit card portfolio at a gain of $1.20 million in September 2008.
    
    Closed its Lake Oswego, Oregon branch in October 2008.
    
    Since October 1, 2008, restructured or eliminated through attrition certain staff
positions resulting in an estimated annual cost savings of $2.31 million.
 Columbia Bancorp




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##### Table of Contents




    
    Annual cost savings of $522,000 due to elimination of six staff positions, including two
executive officer positions.
    
    Additional annual cost savings of $322,000 due to other restructuring of staff positions
and salary reductions.
    
    Reduction in occupancy and overhead expenses related to facilities in downtown
Vancouver, Washington.
   
    
    Continued reductions in other overhead expenses
    
    Sale leaseback of branch facilities
    
    Sale and/or participation of loans
    
    Raise capital from third party investor(s)
    
    Future participation in Government relief programs if such future programs benefit a
community bank such as Columbia River Bank
   80  Columbia Bancorp




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NOTE 3 SHARE-BASED COMPENSATION
  Stock Options
        Weighted Average
    
    
    AggregateNumber
    
    
    Weighted Average
    
    
    Remaining
    
    
    Intrinsic Valueof Shares
    
    
    Exercise Price
    
    
    Contractual Term
    
    
    (in thousands)Stock options outstanding, December 31, 2007
    
    
    444,594
    
    
    $
    11.96Granted
    
    
    
    
    
    
    Exercised
    
    
    (11,249
    )
    
    
    7.17Forfeited or expired
    
    
    (15,452
    )
    
    
    15.98Stock options outstanding, December 31, 2008
    
    
    417,893
    
    
    $
    11.94
    
    
    
    2.82
    
    
    $
    Stock options exercisable, December 31, 2008
    
    
    417,893
    
    
    $
    11.94
    
    
    
    2.82
    
    
    $
    
 Columbia Bancorp




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##### Table of Contents



Stock Awards
   Weighted AverageNumber
    
    Grant Dateof Shares
    
    Fair ValueUnvested stock awards, December 31, 2007
    
    
    33,052
    
    
    $
    21.24Granted
    
    
    37,675
    
    
    
    11.09Vested
    
    
    (20,769
    )
    
    
    16.19Forfeited
    
    
    (14,538
    )
    
    
    16.62Unvested stock awards, December 31, 2008
    
    
    35,420
    
    
    $
    15.30
  Phantom Stock
   2008
    
    
    2007
    
    
    2006Share-Based
    
    
    Recognized
    
    
    Share-Based
    
    
    Recognized
    
    
    Share-Based
    
    
    RecognizedCompensation
    
    
    Tax Benefits
    
    
    Compensation
    
    
    Tax Benefits
    
    
    Compensation
    
    
    Tax BenefitsStock awards
    
    $
    343,591
    
    
    $
    133,451
    
    
    $
    348,706
    
    
    $
    129,544
    
    
    $
    273,089
    
    
    $
    102,272Stock options
    
    
    1,210
    
    
    
    470
    
    
    
    9,918
    
    
    
    3,685
    
    
    
    21,126
    
    
    
    7,912Phantom stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,634
    
    
    
    18,962$
    344,801
    
    
    $
    133,921
    
    
    $
    358,624
    
    
    $
    133,229
    
    
    $
    344,849
    
    
    $
    129,146
 82  Columbia Bancorp




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##### Table of Contents



NOTE 4 INVESTMENT SECURITIES
  Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueDecember 31, 2008:Debt securities available-for-sale:U.S. Treasuries
    
    $
    8,995,450
    
    
    $
    
    
    
    $
    
    
    
    $
    8,995,450Obligations of U.S.
    
    
    
    
    
    
    
    
    
    
    .government agencies
    
    
    9,996,379
    
    
    
    226,267
    
    
    
    
    
    
    
    10,222,646$
    18,991,829
    
    
    $
    226,267
    
    
    $
    
    
    
    $
    19,218,096Equity securities available-for-sale
    
    $
    1,723,766
    
    
    $
    
    
    
    $
    (50,357
    )
    
    $
    1,673,409Debt securities held-to-maturity:Mortgage-backed
securities
    
    $
    1,556,394
    
    
    $
    24,959
    
    
    $
    
    
    
    $
    1,581,353Municipal securities
    
    
    6,574,003
    
    
    
    141,921
    
    
    
    (12,927
    )
    
    
    6,702,997$
    8,130,397
    
    
    $
    166,880
    
    
    $
    (12,927
    )
    
    $
    8,284,350
 Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueDecember 31, 2007:Debt securities available-for-sale:Obligations of U.S.
government agencies
    
    $
    19,296,799
    
    
    $
    135,263
    
    
    $
    (13,833
    )
    
    $
    19,418,229Municipal securities
    
    
    205,123
    
    
    
    3,032
    
    
    
    
    
    
    
    208,155$
    19,501,922
    
    
    $
    138,295
    
    
    $
    (13,833
    )
    
    $
    19,626,384Equity securities available-for-sale
    
    $
    1,161,182
    
    
    $
    
    
    
    $
    (13,694
    )
    
    $
    1,147,488Debt securities held-to-maturity:Mortgage-backed
securities
    
    $
    2,170,764
    
    
    $
    14,738
    
    
    $
    (21,879
    )
    
    $
    2,163,623Municipal securities
    
    
    8,798,547
    
    
    
    147,372
    
    
    
    (28,445
    )
    
    
    8,917,474$
    10,969,311
    
    
    $
    162,110
    
    
    $
    (50,324
    )
    
    $
    11,081,097
  2008
    
    
    2007Federal Home Loan Bank of Seattle stock
    
    $
    3,045,100
    
    
    $
    2,429,700Federal Agriculture Mortgage Corporation stock
    
    
    9,400
    
    
    
    9,400$
    3,054,500
    
    
    $
    2,439,100
 Columbia Bancorp




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##### Table of Contents



Less than 12 months
    
    
    12 months or more
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedFair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    LossesMunicipal securities
    
    $
    
    
    
    $
    
    
    
    $
    907,727
    
    
    $
    (12,927
    )
    
    $
    907,727
    
    
    $
    (12,927
    )Equity securities
    
    
    1,643,034
    
    
    
    (5,732
    )
    
    
    30,375
    
    
    
    (44,625
    )
    
    
    1,673,409
    
    
    
    (50,357
    )$
    1,643,034
    
    
    $
    (5,732
    )
    
    $
    938,102
    
    
    $
    (57,552
    )
    
    $
    2,581,136
    
    
    $
    (63,284
    )
      Available-for-Sale
    
    
    Held-to-MaturityEstimated
    
    
    
    
    
    
    EstimatedAmortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    ValueDue in one year or less
    
    $
    9,994,655
    
    
    $
    10,017,336
    
    
    $
    1,149,184
    
    
    $
    1,161,560Due in one year through
five years
    
    
    
    
    
    
    
    
    
    
    5,807,763
    
    
    
    5,945,389Due in five years through
ten years
    
    
    8,997,174
    
    
    
    9,200,760
    
    
    
    1,156,659
    
    
    
    1,159,684Due after ten years
    
    
    
    
    
    
    
    
    
    
    16,791
    
    
    
    17,717Debt securities
    
    
    18,991,829
    
    
    
    19,218,096
    
    
    
    8,130,397
    
    
    
    8,284,350Equity securities
    
    
    1,723,766
    
    
    
    1,673,409
    
    
    
    
    
    
    
    $
    20,715,595
    
    
    $
    20,891,505
    
    
    $
    8,130,397
    
    
    $
    8,284,350
 84  Columbia Bancorp




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##### Table of Contents



NOTE 5 LOANS AND ALLOWANCE FOR LOAN LOSSES
  2008
    
    
    2007Commercial
    
    $
    127,597,505
    
    
    $
    129,018,049Agriculture
    
    
    74,630,411
    
    
    
    70,095,363Real estate
    
    
    389,800,877
    
    
    
    354,576,120Real estate  construction
    
    
    253,682,700
    
    
    
    294,397,845Consumer
    
    
    14,414,445
    
    
    
    11,630,205Credit card and other loans
    
    
    3,878,101
    
    
    
    11,207,851864,004,039
    
    
    
    870,925,433Less allowance for loan losses
    
    
    (24,492,350
    )
    
    
    (11,174,199
    )Less unearned loan fees
    
    
    (562,175
    )
    
    
    (1,059,854
    )Loans, net of allowance for loan losses
and unearned loan fees
    
    $
    838,949,514
    
    
    $
    858,691,380
     Columbia Bancorp




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##### Table of Contents



2008
    
    
    2007
    
    
    2006BALANCE, beginning of year
    
    $
    11,174,199
    
    
    $
    10,143,338
    
    
    $
    9,525,524Provision for loan losses
    
    
    43,110,000
    
    
    
    4,740,000
    
    
    
    2,900,000Loans charged-off
    
    
    (29,906,130
    )
    
    
    (4,018,226
    )
    
    
    (1,930,859
    )Loan recoveries
    
    
    333,697
    
    
    
    309,087
    
    
    
    338,673Adjustment for sale of credit card portfolio
    
    
    (219,416
    )
    
    
    
    
    
    
    Reclassify liability for off-balance-sheet
financial instrument credit losses
    
    
    
    
    
    
    
    
    
    
    (690,000
    )BALANCE, end of year
    
    $
    24,492,350
    
    
    $
    11,174,199
    
    
    $
    10,143,338
 NOTE 6 PROPERTY AND EQUIPMENT
  2008
    
    
    2007Land
    
    $
    5,409,889
    
    
    $
    5,660,500Construction in progress
    
    
    94,316
    
    
    
    1,777,450Buildings and improvements
    
    
    18,153,459
    
    
    
    13,768,208Furniture and equipment
    
    
    15,241,927
    
    
    
    13,005,984Total property and equipment
    
    
    38,899,591
    
    
    
    34,212,142Less accumulated depreciation
    
    
    (15,271,727
    )
    
    
    (12,711,842
    )Property and equipment, net of
accumulated depreciation
    
    $
    23,627,864
    
    
    $
    21,500,300
   2009
    
    $
    109,6592010
    
    
    7,938Total
    
    $
    117,597
  86  Columbia Bancorp




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##### Table of Contents



NOTE 7 TIME CERTIFICATES
   Years ending December 31,
    
    
    2009
    
    
    $
    378,566,9602010
    
    
    
    55,547,3022011
    
    
    
    13,904,8522012
    
    
    
    19,789,3262013
    
    
    
    18,131,820Thereafter
    
    
    216,388$
    486,156,648
 NOTE 8 FEDERAL FUNDS PURCHASED AND FEDERAL HOME LOAN BANK ADVANCES
     December 31, 2008
    
    
    December 31, 2007Weighted-
    
    
    
    
    
    
    
    
    
    
    Weighted-Maturity
    
    
    Average
    
    
    
    
    
    
    Maturity
    
    
    AverageAmount
    
    
    Year
    
    
    Interest Rate
    
    
    Amount
    
    
    Year
    
    
    Interest Rate$
    18,151,613
    
    
    
    2009
    
    
    
    2.94
    %
    
    $
    4,989,958
    
    
    
    2008
    
    
    
    3.93
    %18,000,000
    
    
    
    2010
    
    
    
    2.80
    %
    
    
    751,613
    
    
    
    2009
    
    
    
    2.81
    %461,117
    
    
    
    2013
    
    
    
    5.47
    %
    
    
    536,388
    
    
    
    2013
    
    
    
    5.47
    %$
    36,612,730
    
    
    
    
    
    
    
    2.91
    %
    
    $
    6,277,959
    
    
    
    
    
    
    
    3.36
    %
 Columbia Bancorp




---



##### Table of Contents



NOTE 9 JUNIOR SUBORDINATED DEBENTURES
      88  Columbia Bancorp




---



##### Table of Contents



NOTE 10 INTEREST-RATE SWAP
   NOTE 11 INCOME TAXES
  2008
    
    
    2007
    
    
    2006Current tax expense (benefit):Federal
    
    $
    (4,699,475
    )
    
    $
    8,062,483
    
    
    $
    8,682,850State
    
    
    
    
    
    
    1,095,618
    
    
    
    1,191,177(4,699,475
    )
    
    
    9,158,101
    
    
    
    9,874,027Deferred tax expense (benefit):Federal
    
    
    (6,990,593
    )
    
    
    (503,597
    )
    
    
    (361,373
    )State
    
    
    (1,310,736
    )
    
    
    (94,424
    )
    
    
    (67,757
    )(8,301,329
    )
    
    
    (598,021
    )
    
    
    (429,130
    )Provision for (benefit from) income taxes
    
    $
    (13,000,804
    )
    
    $
    8,560,080
    
    
    $
    9,444,897
 Columbia Bancorp




---



##### Table of Contents



2008
    
    
    2007Deferred tax assets:Allowance for credit losses
    
    $
    9,777,382
    
    
    $
    4,676,635Deferred compensation
    
    
    711,989
    
    
    
    754,954Purchased state tax credits
    
    
    2,484,888
    
    
    
    348,964Accrued bankcard rewards
    
    
    158,296
    
    
    
    110,931Stock-based compensation
    
    
    56,446
    
    
    
    45,871Other real estate owned
    
    
    906,268
    
    
    
    Accrued interest
    
    
    1,794,757
    
    
    
    Accrued expenses
    
    
    91,128
    
    
    
    Net operating losses (State of Oregon)
    
    
    486,631
    
    
    
    16,467,785
    
    
    
    5,937,355Deferred tax liabilities:Accumulated depreciation
    
    
    (1,244,198
    )
    
    
    (897,436
    )Federal Home Loan Bank stock dividends
    
    
    (356,303
    )
    
    
    (356,851
    )Prepaid expenses
    
    
    (177,867
    )
    
    
    (348,320
    )Unrealized gains on investment securities
    
    
    (68,429
    )
    
    
    (43,089
    )Unrealized gains on interest rate swap
    
    
    
    
    
    
    (8,111
    )Other
    
    
    
    
    
    
    (82,584
    )(1,846,797
    )
    
    
    (1,736,391
    )Net deferred tax asset
    
    $
    14,620,988
    
    
    $
    4,200,964
    90  Columbia Bancorp




---



##### Table of Contents



2008
    
    
    2007
    
    
    2006Federal income taxes (benefit) at statutory rate
    
    $
    (13,775,564
    )
    
    $
    8,064,679
    
    
    $
    8,827,006State income tax expense (benefit), net of
federal income tax benefit
    
    
    (1,232,917
    )
    
    
    864,127
    
    
    
    857,884Tax-exempt interest income
    
    
    (135,265
    )
    
    
    (149,872
    )
    
    
    (175,077
    )Purchased state tax credits
    
    
    (109,445
    )
    
    
    (100,243
    )
    
    
    (94,718
    )Goodwill impairment
    
    
    2,416,510
    
    
    
    
    
    
    
    Increase in cash surrender value of
life insurance policies
    
    
    (94,406
    )
    
    
    (91,552
    )
    
    
    (87,855
    )Other
    
    
    (69,717
    )
    
    
    (27,059
    )
    
    
    117,657Provision for
(benefit from)
income taxes
    
    $
    (13,000,804
    )
    
    $
    8,560,080
    
    
    $
    9,444,897Effective tax rate
    
    
    33.03
    %
    
    
    37.15
    %
    
    
    37.45
    %
 NOTE 12 EARNINGS (LOSS) PER SHARE
  2008
    
    
    2007
    
    
    2006Income (loss) available to common shareholders
    
    $
    (26,357,949
    )
    
    $
    14,481,860
    
    
    $
    15,775,120Basic earnings (loss) per share:Weighted-average common shares
outstanding
    
    
    10,021,197
    
    
    
    9,982,386
    
    
    
    9,889,978Basic earnings (loss) per share
    
    $
    (2.63
    )
    
    $
    1.45
    
    
    $
    1.60Diluted earnings (loss) per share:Weighted-average common shares
outstanding
    
    
    10,021,197
    
    
    
    9,982,386
    
    
    
    9,889,978Net effect of dilutive stock options and
awards  based on the treasury stock
method using average market price
    
    
    
    
    
    
    191,469
    
    
    
    261,229Weighted-average common shares
outstanding and common stock
equivalents
    
    
    10,021,197
    
    
    
    10,173,855
    
    
    
    10,151,207Diluted earnings (loss) per share
    
    $
    (2.63
    )
    
    $
    1.42
    
    
    $
    1.55
  Columbia Bancorp




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##### Table of Contents



NOTE 13 EMPLOYEE BENEFIT PLANS AND AGREEMENTS
 Employee stock ownership plan (ESOP)
  2008
    
    
    2007Allocated shares, retroactively adjusted
for stock dividends and splits
    
    
    245,063
    
    
    
    250,892Cash on hand
    
    $
    16,301
    
    
    $
    142,461
 4 01(k) Savings Investment Plan
 Incentive Compensation Program
 Executive Officer Salary Continuation, Deferred Compensation and Split-Dollar Life Insurance Plans
 92  Columbia Bancorp




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##### Table of Contents



NOTE 14 TRANSACTIONS WITH RELATED PARTIES
   2008
    
    
    2007BALANCE, beginning of year
    
    $
    6,963,919
    
    
    $
    6,774,706New loans and advances
    
    
    2,768,850
    
    
    
    3,169,626Loans repaid
    
    
    (3,515,275
    )
    
    
    (2,974,311
    )Reclassification (1)(2)
    
    
    (48,565
    )
    
    
    (6,102
    )BALANCE, end of year
    
    $
    6,168,929
    
    
    $
    6,963,919
 
 (1)
    
    A former executive officer who was previously considered a related party and was no longer so classified
as of December 31, 2007.(2)
    
    2008 adjustment due to sale of credit card portfolio.  NOTE 15 CONCENTRATIONS OF CREDIT RISK
  Columbia Bancorp




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##### Table of Contents



December 31, 2008
    
    % of Gross LoansConstruction
    
    $
    251,291,741
    
    
    
    29
    %Land Subdivision
    
    
    89,098,318
    
    
    
    10New Single-Family Housing Construction
    
    
    82,348,261
    
    
    
    9Real Estate, including Rental and Leasing
    
    
    200,161,645
    
    
    
    23Lessors of Non-Residential Buildings
    
    
    73,329,496
    
    
    
    8Other Activities Related to Real Estate
    
    
    63,661,590
    
    
    
    7Agriculture, Forestry, Fishing and Hunting
    
    
    126,263,316
    
    
    
    15Crop Production
    
    
    81,067,957
    
    
    
    9
  December 31, 2008CONSTRUCTION LOANS BY REGION
    
    Residential
    
    
    Commercial
    
    
    TotalColumbia River Gorge
    
    $
    16,415,503
    
    
    $
    2,372,811
    
    
    $
    18,788,314Columbia Basin  Eastern Washington
    
    
    11,403,463
    
    
    
    20,151,897
    
    
    
    31,555,360Columbia Basin  Northeastern Oregon
    
    
    6,871,905
    
    
    
    4,742,355
    
    
    
    11,614,260Central Oregon
    
    
    70,076,707
    
    
    
    37,478,590
    
    
    
    107,555,297Willamette Valley (1)
    
    
    71,884,790
    
    
    
    12,284,679
    
    
    
    84,169,469$
    176,652,368
    
    
    $
    77,030,332
    
    
    $
    253,682,700
 
 (1)
    
    Includes Portland, Oregon and Vancouver, Washington metropolitan area  NOTE 16 FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
   94  Columbia Bancorp




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##### Table of Contents



Contract AmountsDecember 31,2008
    
    
    2007Financial instruments whose contract amounts contain credit risk:Commitments to extend credit
    
    $
    145,813,688
    
    
    $
    229,716,385Commitments to originate loans held-for-sale (1)
    
    
    
    
    
    
    7,170,020Undisbursed credit card lines of credit (2)
    
    
    
    
    
    
    24,617,572Commercial and standby letters of credit
    
    
    2,045,023
    
    
    
    3,200,412$
    147,858,711
    
    
    $
    264,704,389
 
 (1)
    
    Elimination of the mortgage business during 2008(2)
    
    Sale of the credit card portfolio during 2008    Columbia Bancorp




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##### Table of Contents



NOTE 17 COMMITMENTS AND CONTINGENCIES
 Operating lease commitments
 Years ending December 31,2009
    
    $
    1,711,1452010
    
    
    1,694,4362011
    
    
    1,701,5112012
    
    
    1,451,2532013
    
    
    1,102,665Thereafter
    
    
    6,808,085$
    14,469,095
  Legal contingencies
    96  Columbia Bancorp




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##### Table of Contents



NOTE 18 PARENT COMPANY FINANCIAL INFORMATION
  December 31,2008
    
    
    2007ASSETSCash and cash equivelents
    
    $
    891,739
    
    
    $
    5,769,302Investment security available-for-sale
    
    
    30,375
    
    
    
    61,875Investment in subsidiary Bank
    
    
    73,702,169
    
    
    
    101,225,749Interest rate swap
    
    
    
    
    
    
    20,850Property and equipment, net of accumulated depreciation
    
    
    123,471
    
    
    
    179,894Other assets
    
    
    300,871
    
    
    
    350,699TOTAL ASSETS
    
    $
    75,048,625
    
    
    $
    107,608,369LIABILITIESJunior subordinated debentures
    
    $
    
    
    
    $
    4,124,000Dividend payable
    
    
    
    
    
    
    1,005,788Employee benefits
    
    
    
    
    
    
    147,714Interest and other payables
    
    
    
    
    
    
    93,035Total liabilities
    
    
    
    
    
    
    5,370,537SHAREHOLDERS EQUITYCommon stock
    
    
    55,698,975
    
    
    
    55,393,110Retained earnings
    
    
    19,242,169
    
    
    
    46,764,304Accumulated other comprehensive income, net of tax
    
    
    107,481
    
    
    
    80,418Total shareholders equity
    
    
    75,048,625
    
    
    
    102,237,832TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    75,048,625
    
    
    $
    107,608,369
 Years Ended December 31,2008
    
    
    2007
    
    
    2006INCOMEEquity in undistributed earnings (loss) of subsidiary
    
    $
    (27,761,672
    )
    
    $
    9,633,406
    
    
    $
    11,513,148Dividends
    
    
    2,200,000
    
    
    
    6,300,000
    
    
    
    5,732,000Other
    
    
    214,122
    
    
    
    108,583
    
    
    
    97,045Total income (loss)
    
    
    (25,347,550
    )
    
    
    16,041,989
    
    
    
    17,342,193EXPENSESAdministrative and other expenses
    
    
    (1,513,056
    )
    
    
    (2,418,124
    )
    
    
    (2,447,209
    )Income (loss) before income tax benefit
    
    
    (26,860,606
    )
    
    
    13,623,865
    
    
    
    14,894,984Income tax benefit
    
    
    502,657
    
    
    
    857,995
    
    
    
    880,136Net income (loss)
    
    $
    (26,357,949
    )
    
    $
    14,481,860
    
    
    $
    15,775,120
  Columbia Bancorp




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##### Table of Contents



Years Ended December 31,2008
    
    
    2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)
    
    $
    (26,357,949
    )
    
    $
    14,481,860
    
    
    $
    15,775,120Adjustments to reconcile net income to net cash from
operating activities:Equity in undistributed (earnings) loss of subsidiary
    
    
    27,761,672
    
    
    
    (9,633,406
    )
    
    
    (11,513,148
    )Depreciation of property and equipment
    
    
    38,364
    
    
    
    38,729
    
    
    
    23,265Stock-based compensation
    
    
    41,047
    
    
    
    87,059
    
    
    
    113,196Income tax benefit from stock-based
compensation expense
    
    
    
    
    
    
    
    
    
    
    (33,078
    )Changes in other assets and liabilities
    
    
    (280,740
    )
    
    
    (285,609
    )
    
    
    2,294,364Net cash provided by operating activities
    
    
    1,202,394
    
    
    
    4,688,633
    
    
    
    6,659,719CASH FLOWS FROM INVESTING ACTIVITIESProceeds from sale of property and equipment
    
    
    
    
    
    
    28,500
    
    
    
    Proceeds from maturity of held-to-maturity security
    
    
    
    
    
    
    80,000
    
    
    
    Proceeds from dissolution of Columbia Bancorp Trust I
    
    
    124,000
    
    
    
    
    
    
    
    Payments made for purchase of property and equipment
    
    
    4,242
    
    
    
    (85,344
    )
    
    
    (150,606
    )Net cash provided by (used in) investing activities
    
    
    128,242
    
    
    
    23,156
    
    
    
    (150,606
    )CASH FLOWS FROM FINANCING ACTIVITIESRepayment of junior suborrdinated debentures
    
    
    (4,124,000
    )
    
    
    
    
    
    
    Dividends paid and cash paid for fractional shares
    
    
    (2,110,880
    )
    
    
    (4,005,163
    )
    
    
    (3,772,096
    )Repurchase of common stock
    
    
    (36,995
    )
    
    
    (528,723
    )
    
    
    (31,070
    )Income tax benefit from stock-based
compensation expense
    
    
    
    
    
    
    
    
    
    
    33,078Proceeds from the exercise of stock options
    
    
    63,676
    
    
    
    610,519
    
    
    
    807,878Net cash (used in) financing activities
    
    
    (6,208,199
    )
    
    
    (3,923,367
    )
    
    
    (2,962,210
    )NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS
    
    
    (4,877,563
    )
    
    
    788,422
    
    
    
    3,546,903CASH AND CASH EQUIVALENTS, beginning of year
    
    
    5,769,302
    
    
    
    4,980,880
    
    
    
    1,433,977CASH AND CASH EQUIVALENTS, end of year
    
    $
    891,739
    
    
    $
    5,769,302
    
    
    $
    4,980,880SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIESChange in unrealized gain or (loss) on available-for-sale
securities, net of tax
    
    $
    39,802
    
    
    $
    (162,494
    )
    
    $
    100,383Change in fair value of interest-rate swap, net of tax
    
    $
    (12,739
    )
    
    $
    (36,948
    )
    
    $
    (23,217
    )Cash dividend declared and payable after year-end
    
    $
    
    
    
    $
    1,005,788
    
    
    $
    997,954
 NOTE 19 REGULATORY MATTERS
   98  Columbia Bancorp




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##### Table of Contents



To Be Well-Capitalized UnderFor Capital
    
    Prompt CorrectiveAs of December 31, 2008
    
    Actual
    
    Adequacy Purposes
    
    Action Provisions(dollars in thousands)
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioTotal capital to risk-weighted assets:Columbia Bancorp
    
    $
    84,928
    
    
    
    8.90
    %
    
    $
    76,321
    
    
    
    38
    %
    
    
    N/A
    
    
    
    N/AColumbia River Bank
    
    $
    83,491
    
    
    
    8.75
    %
    
    $
    76,298
    
    
    
    38
    %
    
    $
    95,372
    
    
    
    310
    %Tier 1 capital to risk-weighted assets:Columbia Bancorp
    
    $
    72,843
    
    
    
    7.64
    %
    
    $
    38,161
    
    
    
    34
    %
    
    
    N/A
    
    
    
    N/AColumbia River Bank
    
    $
    71,406
    
    
    
    7.49
    %
    
    $
    38,149
    
    
    
    34
    %
    
    $
    57,223
    
    
    
    36
    %Tier 1 capital to average assets:Columbia Bancorp
    
    $
    72,843
    
    
    
    6.41
    %
    
    $
    48,901
    
    
    
    34
    %
    
    
    N/A
    
    
    
    N/AColumbia River Bank
    
    $
    71,406
    
    
    
    6.29
    %
    
    $
    45,398
    
    
    
    34
    %
    
    $
    56,747
    
    
    
    35
    %
 To Be Well-Capitalized UnderFor Capital
    
    Prompt CorrectiveAs of December 31, 2007
    
    Actual
    
    Adequacy Purposes
    
    Action Provisions(dollars in thousands)
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    RatioTotal capital to risk-weighted assets:Columbia Bancorp
    
    $
    110,508
    
    
    
    11.76
    %
    
    $
    75,202
    
    
    
    38
    %
    
    
    N/A
    
    
    
    N/AColumbia River Bank
    
    $
    105,496
    
    
    
    11.23
    %
    
    $
    75,127
    
    
    
    38
    %
    
    $
    93,909
    
    
    
    310
    %Tier 1 capital to risk-weighted assets:Columbia Bancorp
    
    $
    98,772
    
    
    
    10.51
    %
    
    $
    37,601
    
    
    
    34
    %
    
    
    N/A
    
    
    
    N/AColumbia River Bank
    
    $
    93,760
    
    
    
    9.98
    %
    
    $
    37,563
    
    
    
    34
    %
    
    $
    56,345
    
    
    
    36
    %Tier 1 capital to average assets:Columbia Bancorp
    
    $
    98,772
    
    
    
    9.75
    %
    
    $
    40,521
    
    
    
    34
    %
    
    
    N/A
    
    
    
    N/AColumbia River Bank
    
    $
    93,760
    
    
    
    9.26
    %
    
    $
    40,495
    
    
    
    34
    %
    
    $
    40,495
    
    
    
    35
    %
  Columbia Bancorp




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##### Table of Contents



NOTE 20 FAIR VALUES OF FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
  2008
    
    2007Estimated
    
    
    
    
    
    EstimatedCarrying
    
    Fair
    
    Carrying
    
    Fair(dollars in thousands)
    
    Amount
    
    Value
    
    Amount
    
    ValueFinancial assets:Cash and cash equivalents
    
    $
    182,479
    
    
    $
    182,479
    
    
    $
    92,224
    
    
    $
    92,224Investment securities available-for-sale
    
    
    20,892
    
    
    
    20,892
    
    
    
    20,774
    
    
    
    20,774Investment securities held-to-maturity
    
    
    8,130
    
    
    
    8,284
    
    
    
    10,969
    
    
    
    11,081Restricted equity securities
    
    
    3,055
    
    
    
    3,055
    
    
    
    2,439
    
    
    
    2,439Loans held-for-sale
    
    
    
    
    
    
    
    
    
    
    8,139
    
    
    
    8,139Loans, net of allowance for loan losses
and unearned loan
fees
    
    
    838,950
    
    
    
    790,467
    
    
    
    858,691
    
    
    
    878,956Interest rate swap
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    21Financial liabilities:Demand and savings deposits
    
    $
    518,040
    
    
    $
    518,040
    
    
    $
    563,110
    
    
    $
    563,110Time certificates
    
    
    486,157
    
    
    
    495,880
    
    
    
    359,782
    
    
    
    361,653Notes payable
    
    
    36,613
    
    
    
    37,037
    
    
    
    6,278
    
    
    
    6,278Junior subordinated debentures
    
    
    
    
    
    
    
    
    
    
    4,124
    
    
    
    4,124
     
    
    Level 1
    
    
    
    Quoted unadjusted prices in active markets for identical assets or liabilities
    
    Level 2
    
    
    
    Significant observable inputs other than quoted prices in Level 1, such as
quoted prices in active markets for similar assets or liabilities, or quoted prices for
identical assets or liabilities in markets that are not active
    
    Level 3
    
    
    
    Significant unobservable inputs based on the companys own assumptions about
the assumptions that market participants would use in pricing the asset or liability
 100  Columbia Bancorp




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##### Table of Contents



Fair Value
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3December 31, 2008
    
    
    Inputs
    
    
    Inputs
    
    
    InputsDebt securities, available-for-sale
    
    $
    19,218,096
    
    
    $
    
    
    
    $
    19,218,096
    
    
    $
    Equity securities, available-for-sale
    
    
    1,673,409
    
    
    
    1,673,409
    
    
    
    
    
    
    
    Total assets measured at fair
value on recurring basis
    
    $
    20,891,505
    
    
    $
    1,673,409
    
    
    $
    19,218,096
    
    
    $
    
   Fair Value
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3December 31, 2008
    
    
    Inputs
    
    
    Inputs
    
    
    InputsCollateral-dependent impaired loans
    
    $
    70,466,186
    
    
    $
    
    
    
    $
    
    
    
    $
    70,466,186Total assets measured at fair
value on non-recurring basis
    
    $
    70,466,186
    
    
    $
    
    
    
    $
    
    
    
    $
    70,466,186
  Columbia Bancorp




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##### Table of Contents



ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
  Managements Report on the Internal Control Over Financial Reporting
   
    
    Address the maintenance of reasonably detailed records and data that accurately and
fairly reflect the transactions and dispositions of Columbias assets;
    
    Provide reasonable assurance that transactions are recorded as necessary to allow the
preparation of financial statements in accordance with GAAP and that our receipts and
expenditures are being made with proper authorizations of Columbias management and
directors; and
    
    Provide reasonable assurance regarding the timely prevention or detection of
unauthorized transactions, acquisitions, expenditures or the use or disposition of
Columbias assets that could have a material effect on the consolidated financial
statements.
    102  Columbia Bancorp




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##### Table of Contents



ITEM 9B OTHER INFORMATION
  
 PART III
 
 ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
   Directors:
 Name
    
    Employer/Principal OccupationRichard E. Betz
    
    Chairman and Owner, Royale Columbia Farms, Inc., Bud-Rich Potato, Inc.Charles F. Beardsley
    
    Owner, Hershner & Bell, Inc.William A. Booth
    
    Real Estate, RetiredDennis L. Carver
    
    Chiropractor and Owner, Goldendale Chiropractic ClinicTerry L. Cochran
    
    President and Chief Executive Officer, Columbia River Bank and
Columbia BancorpJames J. Doran
    
    Owner, Jim Doran Chevrolet Oldsmobile, Jim Doran Dodge ChryslerJean S. McKinney
    
    President, Business Manager and Owner, McKinney Ranches, Inc.,Donald T. Mitchell
    
    Lumber Broker, RetiredDr. Frank K. Toda
    
    President, Columbia Gorge Community College
 Executive Officers:
  Name
    
    Age
    
    TitleRobert V. Card
    
    
    58
    
    
    Columbia River Bank, Executive Vice President &
Director of Risk ManagementTerry L. Cochran
    
    
    64
    
    
    Columbia Bancorp & Columbia River Bank, President & Chief Executive OfficerStaci L. Coburn
    
    
    39
    
    
    Columbia Bancorp & Columbia River Bank, Executive Vice President & Chief Financial OfficerR. Shane Correa
    
    
    43
    
    
    Columbia River Bank, Executive Vice President & Chief Banking OfficerChristine M. Herb
    
    
    45
    
    
    Columbia River Bank, Executive Vice President & Chief Information OfficerCraig B. Hummel
    
    
    52
    
    
    Columbia River Bank, Executive Vice President & Chief Credit OfficerCraig J. Ortega
    
    
    56
    
    
    Columbia River Bank, Executive Vice President
 Columbia Bancorp




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##### Table of Contents



Code of Ethics
  
 Audit Committee
  
 ITEM 11 EXECUTIVE COMPENSATION
  
 ITEM 12
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER
MATTERS
  
 ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  
 ITEM 14 PRINCIPAL ACCOUNTING FEES AND SERVICES
  
 PART IV
 
 ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES
    3.1.1
    
    Articles of Incorporation of Columbia Bancorp (Incorporated herein by reference to
Exhibit 3(i) of Columbias Quarterly Report on Form 10-Q for the period ended June
30, 1999.)
 104  Columbia Bancorp




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##### Table of Contents



3.1.2
    
    Bylaws of Columbia Bancorp (Incorporated herein by reference to Exhibit 3.1.2 of
Columbias Annual Report on Form 10-K for the period ended December 31, 2007).10.1+
    
    Columbia Bancorp 1999 Stock Incentive Plan (Amended 2008) (Incorporated herein by
reference to Exhibit 4.2 of Columbias Form S-8 Registration Statement filed August
7, 2008.)10.2+
    
    Columbia Bancorp Restated Employee Stock Ownership Plan and Trust Agreement (1999
Restatement) (Incorporated herein by reference to Exhibit 10.2 of Columbias Annual
Report on Form 10-K for the period ended December 31, 1999.)10.3+
    
    Employment Agreement between R. Shane Correa and Columbia River Bank dated April 16,
2008 (Incorporated herein by reference to Exhibit 10.26 of Columbias Current Report
on Form 8-K/A filed September 9, 2008.)10.4+
    
    Executive Bonus Deferral Agreement between Columbia River Bank and R. Shane Correa
(Incorporated herein by reference to Exhibit 10.01 of Columbias Current Report on
Form 8-K filed February 21, 2007.)10.5+
    
    Executive Salary Continuation Agreement between Columbia River Bank and R. Shane
Correa (Incorporated herein by reference to Exhibit 10.02 of Columbias Current
Report on Form 8-K filed February 21, 2007.)10.6+
    
    Amendment No. 1 to Executive Salary Continuation Agreement between Columbia River
Bank and R. Shane Correa (Incorporated herein by reference to Exhibit 10.1 of
Columbias Current Report on Form 8-K filed December 26, 2007.)10.7+
    
    Employment Agreement between Craig J. Ortega and Columbia River Bank dated April 16,
2008 (Incorporated herein by reference to Exhibit 10.26 of Columbias Current Report
on Form 8-K/A filed September 9, 2008.)10.8+
    
    Executive Bonus Deferral Agreement between Columbia River Bank and Craig J. Ortega
(Incorporated herein by reference to Exhibit 10.01 of Columbias Current Report on
Form 8-K filed February 21, 2007.)10.9+
    
    Executive Salary Continuation Agreement between Columbia River Bank and Craig J.
Ortega (Incorporated herein by reference to Exhibit 10.02 of Columbias Current
Report on Form 8-K filed February 21, 2007.)10.10+
    
    Amendment No. 1 to Executive Salary Continuation Agreement between Columbia River
Bank and Craig J. Ortega (Incorporated herein by reference to Exhibit 10.1 of
Columbias Current Report on Form 8-K filed December 26, 2007.)10.11+
    
    Employment Agreement between Robert V. Card and Columbia River Bank dated April 16,
2008 (Incorporated herein by reference to Exhibit 10.26 of Columbias Current Report
on Form 8-K/A filed September 9, 2008.)10.12+
    
    Executive Salary Continuation Agreement between Columbia River Bank and Robert V.
Card (Incorporated herein by reference to Exhibit 99.1 of Columbias Current Report
on Form 8-K filed April 9, 2007.)10.13+
    
    Employment Agreement between Staci L. Coburn and Columbia River Bank and Columbia
Bancorp dated December 16, 200810.14+
    
    Severance and Release Agreement between Roger L. Christensen and Columbia River Bank
and Columbia Bancorp dated October 7, 2008.21.1
    
    List of Subsidiary.23.1
    
    Consent of Moss Adams LLP.31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-4(a).31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a).32.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b)
and Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350.32.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b)
and Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350.
 
 +
    
    Management contract, compensation plan or arrangement. Columbia Bancorp




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##### Table of Contents



SIGNATURES
  COLUMBIA BANCORPBy:
    /s/ Terry L. CochranTerry L. CochranPresident and Chief Executive Officer  Signatures
    
    Titles/s/ Terry L. Cochran

Terry L. Cochran
    
    President and Chief Executive Officer and
Director 
(Principal Executive Officer)/s/ Staci L. Coburn

Staci L. Coburn
    
    Executive Vice President and Chief Financial
Officer 
(Principal Financial Officer)/s/ Richard E. Betz

Richard E. Betz
    
    Director and Chairman/s/ Charles F. Beardsley

Charles F. Beardsley
    
    Director/s/ William A. Booth

William A. Booth
    
    Director/s/ Lori R. Boyd

Lori R. Boyd
    
    Director/s/ Dennis L. Carver

Dennis L. Carver
    
    Director/s/ Terry L Cochran

Terry L Cochran
    
    Director/s/ James J. Doran

James J. Doran
    
    Director/s/ Jean S. McKinney

Jean S. McKinney
    
    Director/s/ Donald T. Mitchell

Donald T. Mitchell
    
    Director
 106  Columbia Bancorp