Columbia Banking System nets $1.9m from Visa IPO

Source: Columbia Banking System

Columbia Banking System (NASDAQ:COLB) ("Columbia") announced today that due to its membership in the Visa USA network, first quarter 2008 earnings will be increased by approximately $1.9 million on an after-tax basis, or $0.10 per diluted common share, as a result of Visa, Inc.'s recent initial public offering ("IPO").

Two components comprise the $1.9 million net increase in first quarter earnings. First, Visa funded a litigation escrow account on March 31, 2008 with $3.0 billion from the IPO proceeds. Based on Columbia's Visa USA membership percentage, the expected after-tax economic benefit from this escrow account is approximately $600,000, which will be recognized as a partial recapture of fourth quarter 2007 expenses incurred to establish a Visa litigation reserve liability.

Secondly, Columbia received 118,637 shares of Class B common stock from the Visa, Inc. IPO completed on March 18, 2008, of which 45,866 shares were redeemed for a gain of approximately $1.3 million after-tax, as part of Visa's mandatory redemption of Class B stock. The combination of the economic benefit of the escrow account of $600,000, and the $1.3 million gain from the redeemed shares results in an increase in after-tax income of approximately $1.9 million. Columbia will not recognize any gain on its remaining 72,771 shares of unredeemed Visa Class B stock until such time they are redeemed for cash.

For additional information regarding the effect of the Visa IPO on Columbia Banking System, please refer to the Company's Form 8-K, filed on April 2, 2008.

Comments: (0)