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Kearny Financial Corp.Branch Locations KING COUNTY Auburn 25 16th St. NE Auburn, WA 98002 253.939.9600 Bellevue Way 10350 NE 10th St. Bellevue, WA 98004 425.452.7323 Federal Way 33370 Pacific Highway S Federal Way, WA 98003 253.925.9323 Forest Villa 2749 Auburn Way S Auburn, WA 98002 253.887.1186 Kent 504 West Meeker Kent, WA 98032 253.852.0475 Redmond 8201 164th Ave. NW Suite 105 Redmond, WA 98052 425.558.7500 South Auburn 4101 A St. SE Auburn, WA 98002 253.939.9800 2nd & Columbia 721 Second Ave. Seattle, WA 98104 206.223.1000 COWLITZ COUNTY Commerce 1338 Commerce Ave. Longview, WA 98632 360.636.9200 30th Avenue 2207 30th Ave. Longview, WA 98632 360.423.8760 Woodland 782 Goerig St. Woodland, WA 98674 360.225.9421 KITSAP COUNTY Port Orchard 228 Bravo Terrace Port Orchard, WA 98367 360.876.8384 THURSTON COUNTY West Olympia 2820 Harrison Ave. NW Olympia, WA 98502 360.357.5800 OREGON BANK OF ASTORIA CLATSOP COUNTY Astoria (Headquarters) 1122 Duane St. Astoria, OR 97103 503.325.2228 Warrenton 630 SE Marlin Ave. Warrenton, OR 97146 503.861.9750 Seaside 301 Ave. A Seaside, OR 97138 503.738.8445 Cannon Beach 107 Sunset Blvd. Cannon Beach, OR 97110 503.436.0727 TILLAMOOK COUNTY Manzanita 715 Laneda Ave. Manzanita, OR 97130 503.368.4284 WASHINGTON COLUMBIA BANK PIERCE COUNTY 13th & A 1301 A Street Suite 100 Tacoma, WA 98402 253.396.6900 Allenmore 1959 South Union Tacoma, WA 98405 253.627.6909 Bonney Lake 19925 State Rte. 410 E Bonney Lake, WA 98391 253.863.8500 Broadway Plaza 1102 Broadway Plaza Tacoma, WA 98402 253.305.1940 Edgewood/Milton 1250 Meridian E Milton, WA 98354 253.952.6646 Fife 1501 54th Ave. E Fife, WA 98424 253.922.7870 Fircrest 2401 Mildred St. W Fircrest, WA 98466 253.566.1172 Gig Harbor 5303 Point Fosdick Dr. NW Gig Harbor, WA 98335 253.858.5105 Downtown Gig Harbor 3006 Judson St. Suite 101 Gig Harbor, WA 98335 253.851.5551 Lakewood 6202 Mount Tacoma Dr. SW Lakewood, WA 98499 253.581.4232 Martin Luther King Jr. 1102 Martin Luther King Jr. Way Tacoma, WA 98405 253.597.8000 Old Town 2200 North 30th St. Tacoma, WA 98403 253.272.0412 104th & Canyon 10321 Canyon Road E Puyallup, WA 98373 253.539.7100 43rd & Meridian 4220 South Meridian Puyallup, WA 98373 253.770.0770 176th & Meridian 17208 Meridian E Puyallup, WA 98373 253.445.6748 Puyallup 618 S Meridian Puyallup, WA 98371 253.840.6000 Spanaway 17502 Pacific Ave. S Spanaway, WA 98387 253.539.3094 Stadium 601 North 1st Tacoma, WA 98403 253.597.8811 Summit 10409 Canyon Road E Puyallup, WA 98373 253.770.9323 84th & Pacific 201 South 84th St. Tacoma, WA 98444 253.471.7000 University Place 4221 Bridgeport Way West University Place, WA 98466 253.564.8333 Westgate 5727 North 21st St. Tacoma, WA 98406 253.761.8170 2005 ANNUAL REPORT Columbia Bank 1301 A Street Tacoma, Washington 98402 253.305.1900/1.800.305.1905 www.columbiabank.com 2005 Annual Report "Greatness lies not in being strong, but in the right use of strength." ~Henry Ward Beecher Strength In Community At Columbia Bank, we share your ideas about building a strong community. Our continued growth is based on a foundation of proactive leadership, financial expertise, and a keen sense of the neighborhoods we’re a part of. This ongoing commitment to communities has produced an increase in Columbia Bank’s market share and earnings. Assets are up, core deposits are strong, and more branches are meeting the needs of more customers than ever before. Our goal is to be a catalyst for investment and improvement in all the communities we serve. FOR THE YEAR Net interest income Provision for loan losses Noninterest income Noninterest expense Net income PER SHARE Net income (basic) Net income (diluted) Book value AVERAGES Total assets Interest-earning assets Loans Securities Deposits Core deposits Shareholders’ equity FINANCIAL RATIOS Net interest margin Return on average assets Return on average equity Return on average tangible equity Efficiency ratio Average equity to average assets AT YEAR-END Total assets Loans Allowance for loan losses Securities Deposits Core deposits Shareholders’ equity Total nonperforming assets Full-time equivalent employees Banking offices 2005 $ 90,912 1,520 24,786 72,855 29,631 $ 1.89 1.87 14.29 $ 2,290,746 2,102,513 1,494,567 605,395 1,923,778 1,423,862 214,612 4.44% 1.29% 13.81% 16.63% 61.20% 9.37% $ 2,377,322 1,564,704 20,829 585,332 2,005,489 1,478,090 226,242 $4,875 651 40 2004 $ 71,943 995 22,244 61,326 22,513 $ 1.55 1.52 13.03 $ 1,919,134 1,769,470 1,186,506 552,742 1,690,513 1,238,536 169,414 4.19% 1.17% 13.29% 14.02% 63.20% 8.83% $ 2,176,730 1,359,743 19,881 642,759 1,862,866 1,381,073 203,154 $9,129 625 39 CHANGE CONSOLIDATED FINANCIALS 2005 NET INCOME CORE DEPOSITS TOTAL REVENUE 26% 53% 11% 19% 32% 22% 23% 10% 19% 19% 26% 10% 14% 15% 27% 9% 15% 5% -9% 8% 7% 11% -47% 4% 3% All dollar figures above are in thousands. Strength In Numbers EXECUTIVE OFFICERS AAnnddrreeww MMccDDoonnaalldd,, EExxeeccuuttiivvee VViiccee PPrreessiiddeenntt aanndd CChhiieeff CCrreeddiitt OOffffiicceerr;; MMeellaanniiee JJ.. DDrreesssseell,, PPrreessiiddeenntt aanndd CChhiieeff EExxeeccuuttiivvee OOffffiicceerr,, CCoolluummbbiiaa BBaannkkiinngg SSyysstteemm,, IInncc.. aanndd CCoolluummbbiiaa BBaannkk;; EEvvaannss QQ ““TTeexx”” WWhhiittnneeyy,, EExxeeccuuttiivvee VViiccee PPrreessiiddeenntt,, HHuummaann RReessoouurrcceess;; MMaarrkk WW.. NNeellssoonn,, EExxeeccuuttiivvee VViiccee PPrreessiiddeenntt,, CChhiieeff BBaannkkiinngg OOffffiicceerr;; GGaarryy RR.. SScchhmmiinnkkeeyy,, EExxeeccuuttiivvee VViiccee PPrreessiiddeenntt,, CChhiieeff FFiinnaanncciiaall OOffffiicceerr.. BOARD OF DIRECTORS LLeefftt ttoo rriigghhtt:: FFrreeddeerriicckk MM.. GGoollddbbeerrgg,, MMaannaaggiinngg PPaarrttnneerr,, GGoollddbbeerrgg IInnvveessttmmeennttss;; DDaanniieell CC.. RReeggiiss,, MMaannaaggiinngg DDiirreeccttoorr,, DDiiggiittaall PPaarrttnneerrss;; TThhoommaass LL.. MMaattssoonn,, CChhaaiirrmmaann,, TToomm MMaattssoonn DDooddggee,, IInncc;; DDoonnaalldd RRooddmmaann,, OOwwnneerr aanndd VViiccee PPrreessiiddeenntt,, RRooddmmaann RReeaallttyy;; JJoohhnn PP.. FFoollssoomm,, PPrreessiiddeenntt,, BBrroowwnn && BBrroowwnn ooff WWaasshhiinnggttoonn,, IInncc..;; JJaammeess MM.. WWiillll,, PPrreessiiddeenntt,, TTiittuuss--WWiillll EEnntteerrpprriisseess;; MMeellaanniiee JJ.. DDrreesssseell,, PPrreessiiddeenntt aanndd CChhiieeff EExxeeccuuttiivvee OOffffiicceerr,, CCoolluummbbiiaa BBaannkkiinngg SSyysstteemm,, IInncc.. aanndd CCoolluummbbiiaa BBaannkk;; TThhoommaass MM.. HHuullbbeerrtt,, PPrreessiiddeenntt aanndd CChhiieeff EExxeeccuuttiivvee OOffffiicceerr,, HHuullccoo,, IInncc.. aanndd WWiinnssoorr CCoorrppoorraattiioonn;; WWiilllliiaamm TT.. WWeeyyeerrhhaaeeuusseerr,, CChhaaiirrmmaann ooff tthhee BBooaarrdd,, CCoolluummbbiiaa BBaannkkiinngg SSyysstteemm.. Strength In People CORPORATE HEADQUARTERS ANNUAL MEETING MAIL SShheerraattoonn TTaaccoommaa HHootteell 11332200 BBrrooaaddwwaayy PPllaazzaa TTaaccoommaa,, WWaasshhiinnggttoonn AAtt yyoouurr rreeqquueesstt,, wwee wwiillll mmaaiill yyoouu oouurr qquuaarrtteerrllyy eeaarrnniinnggss nneewwss rreelleeaassee,, qquuaarrtteerrllyy ffiinnaanncciiaall ddaattaa oonn FFoorrmm 1100--QQ aanndd aaddddiittiioonnaall aannnnuuaall rreeppoorrttss.. TToo bbee WWeeddnneessddaayy,, AApprriill 2266,, 22000066 aatt 11 pp..mm.. aaddddeedd ttoo CCoolluummbbiiaa BBaannkk’’ss mmaaiilliinngg lliisstt ffoorr qquuaarrtteerrllyy CCoolluummbbiiaa BBaannkkiinngg SSyysstteemm,, IInncc.. 11330011 AA SSttrreeeett,, SSuuiittee 880000 PP..OO.. BBooxx 22115566 TTaaccoommaa,, WWAA 9988440011--22115566 225533..330055..11990000 11..880000..330055..11990055 INDEPENDENT AUDITORS STOCK LISTING TThhee CCoommppaannyy’’ss ccoommmmoonn ssttoocckk ttrraaddeess oonn tthhee NNaassddaaqq NNaattiioonnaall MMaarrkkeett ttiieerr ooff TThhee NNaassddaaqq SSttoocckk DDeellooiittttee && TToouucchhee,, LLLLPP MMaarrkkeettss uunnddeerr tthhee ssyymmbbooll:: CCOOLLBB TRANSFER AGENT & REGISTRAR FINANCIAL INFORMATION AAmmeerriiccaann SSttoocckk TTrraannssffeerr && TTrruusstt CCoo.. CCoolluummbbiiaa nneewwss aanndd ffiinnaanncciiaall rreessuullttss aarree aavvaaiillaabbllee MARKET MAKERS BBrruutt,, LLLLCC tthhrroouugghh tthhee IInntteerrnneett aanndd mmaaiill.. INTERNET KKeeeeffee,, BBrruuyyeettttee && WWooooddss,, IInncc.. FFoorr iinnffoorrmmaattiioonn aabboouutt CCoolluummbbiiaa BBaannkk,, iinncclluuddiinngg LLiimmee BBrrookkeerraaggee LLLLCC CCrreeddiitt SSuuiissssee FFiirrsstt BBoossttoonn KKnniigghhtt EEqquuiittyy MMaarrkkeettss,, LL..PP.. RRBBCC CCaappiittaall MMaarrkkeettss DD..AA.. DDaavviiddssoonn && CCoo.. REGULATORY & SECURITIES COUNSEL GGrraahhaamm && DDuunnnn PPCC nneewwss aanndd ffiinnaanncciiaall rreessuullttss,, pprroodduucctt iinnffoorrmmaattiioonn aanndd sseerrvviiccee llooccaattiioonnss,, aacccceessss oouurr hhoommee ppaaggee oonn tthhee WWoorrlldd WWiiddee WWeebb,, aatt wwwwww..ccoolluummbbiiaabbaannkk..ccoomm.. YYoouu ccaann aallssoo vviieeww oorr rreettrriieevvee ccooppiieess ooff CCoolluummbbiiaa BBaannkk’’ss ffiinnaanncciiaall rreeppoorrttss oonn tthhee IInntteerrnneett bbyy ccoonnnneeccttiinngg ttoo wwwwww..sseecc..ggoovv.. IImmmmeeddiiaattee aacccceessss ttoo tthhee CCoommppaannyy’’ss qquuaarrtteerrllyy eeaarrnniinnggss nneewwss rreelleeaassee vviiaa tthhee IInntteerrnneett iiss pprroovviiddeedd bbyy CCoommppaannyy NNeewwss OOnn CCaallll aatt wwwwww..pprrnneewwsswwiirree..ccoomm eeaarrnniinnggss rreelleeaasseess,, oorr ttoo rreeqquueesstt ootthheerr iinnffoorrmmaattiioonn,, pplleeaassee ccoonnttaacctt:: JJoo AAnnnnee CCooyy VViiccee PPrreessiiddeenntt,, DDiirreeccttoorr ooff MMaarrkkeettiinngg PP..OO.. BBooxx 22115566,, MMSS 88330000 TTaaccoommaa,, WWAA 9988440011--22115566 TTeell 225533..330055..11996655 FFaaxx 225533..330055..00331177 EE--mmaaiill jjccooyy@@ccoolluummbbiiaabbaannkk..ccoomm Strength In Growth To Our Shareholders We are pleased to report another year of strong performance for Columbia, as we generated record earnings and stronger profitability. As always, our performance directly reflects the strength of our customer relationships and our commitment to helping build vital, strong communities. These loyal customers and our outstanding team of employees were the driving force behind a successful year. They are the foundation for our focus on earnings growth, increasing market share in every area we serve, and expanding our geographic footprint as we position ourselves as a Pacific Northwest regional community bank dedicated to meeting the diverse financial needs of all the communities we serve. Net income grew 32% to $29.6 million during 2005, up from $22.5 million during 2004. For the same periods diluted earnings per share grew 23% to $1.87, from $1.52. Return on average equity increased 52 basis points to 13.81% and return on average tangible equity grew 261 basis points to 16.63%. An important driver of our performance was the improvement in our net interest margin, which was 4.44% for the year, up from 4.19% in the prior year. Total revenue growth was very strong, growing 23% to $115.7 million from $94.2 million during 2004. Our loan growth, while moderating during the third quarter, continued to be an important highlight for the year, with loan production increasing throughout our market areas. Total loans ended the year at $1.56 billion, an increase of $205.0 million, or 15%, from one year ago. In addition to healthy loan growth, credit quality substantially improved during 2005, with nonperforming assets dropping 47% to $4.9 million, or 0.31% of total loans, compared to $9.1 million, or 0.62% of total loans, at the end of 2004. At December 31, 2005, nonperforming assets to year-end assets was 0.21% and our allowance for loan and lease losses to nonperforming loans was 429%. We have been very pleased with the positive response from the successful integration of Bank of Astoria, which was accretive to 2005 earnings as planned, and also serves as a base for potential expansion in Oregon. Led by Cheri Folk, President and Chief Executive Officer, the Bank of Astoria continues to be a high performing organization, with a 34% market share in Clatsop County. We are continuing to fill in our geographic footprint as planned. During the second quarter, we opened a branch in University Place, adjacent to Tacoma, which has been well received by the community. In August, we opened a long-awaited branch in the downtown area of Puyallup. With the opening of this additional full-service branch in Puyallup, we closed our small office in the South Hill Mall at the end of November. We currently have a total of 40 branches in the Columbia system—Columbia Bank has 35 branches in five counties, and Bank of Astoria totals five branches in two counties. In many ways, our website constitutes an additional branch location—it is certainly a wonderful channel for a wide range of banking services used by many of our customers. The response to our redesigned website, www.columbiabank.com, has been excellent. The site brings to mind the friendly, full-service feeling that customers enjoy at all of our community branches. It has been twelve full years since we moved Columbia's headquarters to downtown Tacoma and began our rapid expansion. We have certainly grown in both size and profitability. What hasn't changed is who we are. We have stayed true to our conviction that our real strength lies in providing exceptional service to our customers, and investing in our people and the communities we serve. It bears repeating that our goal is to be thecommunity bank in all the communities we serve. In closing, we wish to express our appreciation to all of the employees of Columbia Bank and Bank of Astoria. As always, they are our most important strength—an outstanding team committed to making a difference for our customers and our communities. We know that this commitment translates directly into value for you, our shareholders. Sincerely, WILLIAM T. WEYERHAEUSER MELANIE J. DRESSEL
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