Columbia Bank Gains New Headquarters, Market Share

When Columbia Bank officials consolidated their headquarters and back office operations in the Columbia Gateway office park last month, they had more to celebrate than just greater management efficiencies. The bank was on the verge of becoming the largest bank in Howard County, and may have already achieved that goal.

"We've come a long way in 15 years," bank President John M. Bond Jr. told shareholders at their annual meeting May 29. The bank, begun by local investors, now has 24 branches in four counties and Baltimore City, and plans on adding one or two more per year. It had it best financial year in 2002, with net earnings growing 27% to $10.4 million.

"If this organization were to stop growing, I'd certainly lose interest," Bond said. "It's really the growth that makes our lives interesting."

As of June 30 a year ago, Columbia Bank had 15.3% of the bank deposits in Howard County, only 0.2% behind market leader Allfirst, recently purchased by M&T, whose market share had fallen from 19.7% in 1996. The home-grown bank surpassed Bank of America's 14.8% share last year, which had slipped from 18.4% in 1996, a year when Columbia Bank had only an 11.4% share. "I think you can guess where some of our growth is coming from," Bond aid.

"It's a very, very competitive market," said Chairman Winfield M. Kelly Jr., who had been chairman and CEO of Suburban Bank when it merged with Columbia Bank in 2000. "It's a tough world out there right now."

According to a report by banking analyst Arnold Danielson of Rockville, of the 344 banks founded on the East Coast since 1988, 242 are left, and Columbia Bank is the second largest and the second most profitable. But despite its average annual growth rate of 29% over those years, fueled by three mergers, Columbia Bank is only the fifth largest independent banking company in Maryland, and is not yet in the top 10 banks in the Washington-Baltimore market, with deposits still below $1 billion.

"We don't much care about that," Bond said. "When we go over [$1 billion], it'll be in the normal course of business."

Kelly said the goal was to increase market penetration to fill in gaps where branches are needed. He said the bank would continue to look for acquisitions, but the pool of potential acquisitions is "shrinking" as larger banks gobble up smaller ones.

With interest rates so low, it is more difficult for the bank to make money, but "we again achieved some growth in the first quarter of this year," Bond said. "Historically we've done a lot better than our competitors" in the net interest margin, the difference between the cost of interest on deposits and the loan rates the bank charges. Its customers get "not necessarily the best rates, but the best service in town," Bond said.

In response to a question about customer banking decisions, Bond said, "It's difficult to say what's going through the consumer's mind. People are not moving money around, because it doesn't make a difference."

Columbia Bank was founded by a group of local investors in 1987, and a number of the founding directors are still on the board, several of them well-known names in Howard County real estate and homebuilding such as Garnett Y. Clark Jr. of Clark & Associates, Hugh Cole Jr. of Brantly Development, William Floyd of Venture Associates, Harry L. "Chip" Lundy Jr. of the Williamsburg Group, James R. Moxley Jr. and his son James R. Moxley III of Security Development, and publisher Theodore Venetoulis, the former Baltimore County executive. Insiders own 23% of Columbia Bancorp stock, which became listed on the Russell 2000 index of small capitalization stocks last year.