SecProbe.io

CORRESP
1
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    Via
EDGAR

    August
12, 2009

    Mr. Hugh
West

    Branch
Chief

    United
States Securities and Exchange Commission

    Division
of Corporation Finance

    Washington,
D. C.  20549

    Mail Stop
4720

    RE:          Columbia Banking System, Inc.

    Form
10-K for the Fiscal Year Ended December 31, 2008

    Form
10-Q for the Period Ended March 31, 2009

    Form
8-K Filed June 15, 2009

    File
No. 000-20288

    Dear Mr.
West:

    This
letter sets forth the responses of Columbia to the comments of the staff of the
SEC contained in your letter dated July 22, 2009 regarding the Form 10-K filed
by the Company for the fiscal year ended December 31, 2008, Form 10-Q for the
period ended March 31, 2009, and the Form 8-K filed June 15,
2009.  For convenience and ease of review, we have reprinted below the
text of the comment in your correspondence, followed by the Company’s
response.

    Comment No. 1

    Form 10-K for the Fiscal
Year Ended December 31, 2008

    Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations

    Critical Accounting
Policies

    Valuation and Recoverability
of Goodwill, page 27

              1.

              We
      note your response to prior comment 2 in our letter dated April. 30,
      2009.  Considering the nature and complexity of this critical
      estimate we believe expanded disclosure would be beneficial to an
      investor.  Please revise your future filings (starting with your
      Form 10-Q for the period ended June 30, 2009) to include disclosure
      consistent with the information provided in your correspondence to us
      dated May 28, 2009.

    Response:

    We
included an expanded discussion on the valuation and recoverability of goodwill
in our Form 10-Q for the period ended June 30, 2009; filed on July 31,
2009.  The requested disclosure was included within the critical
accounting policies section of Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations.  We will include a
similar discussion in future periods for which the detailed testing of goodwill
for potential impairment is conducted.

          Mr.
Hugh West, Branch Chief

          United
States Securities and Exchange Commission

          Page 2 of
4

    Comment
No. 2

              2.

              Considering
      the severity of the information disclosed in your Form 8-K filed June 15,
      2009 (i.e. comparatively high provision), tell us how you considered
      paragraph 17 of SFAS 142 when determining if additional interim goodwill
      impairment testing was necessary and provide the results of such testing
      if applicable.  See also our comment
  above.

    Response:

    Management
believes a triggering event for assessing goodwill for potential impairment in
an interim period did not occur within the second quarter of 2009.  In
arriving at this conclusion, management considered the following:

              ·

              the
      Company’s stock price

              ·

              the
      FDIC special deposit insurance
assessment

              ·

              the
      economy

              ·

              the
      performance of the Retail Banking reporting
unit

              ·

              the
      level of provision expense for the allowance for loan and lease losses
      (“ALLL”)

              ·

              the
      value of our core deposit intangible asset (“CDI”)
  and;

              ·

              the
      value of our loan portfolio

    The
Company has three reporting units for which discrete financial information is
developed, retail banking, commercial banking, and private
banking.  All of the Company’s goodwill has been assigned to the
retail banking reporting unit for purposes of impairment testing.

    During
the second quarter the stock market continued to experience volatility,
specifically within the financial services sector, but generally trended
upward.  Management evaluated the Company’s stock price during the
second quarter.  The Company’s stock closed the quarter trending
upward at $10.23 and above the closing price of our most recent interim review
of goodwill for potential impairment.  On June 12th we
issued a press release offering insight into the Company’s performance
expectations for the second quarter and while the price of our stock declined,
relative to our peers our valuation was generally higher.  Subsequent
to the end of the second quarter and upon the July 31st filing
of our Form 10-Q for the second quarter, the price of our stock increased to
$12.14.  Management reviewed the change in stock prices from December
31, 2008 to June 30, 2009 for publicly traded Washington based financial
institutions with assets greater than $1 billion and noted
decreases  ranging from -3% for the Company to in excess of -73% for
several institutions included within this group.  The average decline
from December 31, 2008 among the seven institutions evaluated was
-65%.  Evaluating the Company’s stock price from November 30, 2008,
the date of our last interim goodwill impairment analysis, to June 30, 2009
produces an increase of 2%.

    Management
considered the impact of the FDIC’s special deposit assessment on the
Company.  This special assessment of $1.4 million could potentially
have a negative impact on the value of the Company’s Retail Banking unit due to
higher operating costs.  Management does not consider this a
triggering event under ASC 350-20-35-30 due to certain mitigating
factors.  The actual amount of the assessment is not material to the
operations of the Retail Banking unit and to a certain extent we have the
ability to pass this cost along to our customers through account analysis
charges and lower offering rates on interest bearing deposits.

    During
the second quarter the economy remained in a deep recession.  However,
it appears to have improved slightly from the fourth quarter of 2008 and the
first quarter of 2009.  The unemployment rate continues to rise but it
is often considered to lag current economic performance.  Indicators
such as building permits issued and orders for consumer goods and materials were
up during the quarter.  Management does not contend that it knows the
exact direction the local, regional, and national economies will head over the
coming months.  However, we have seen stabilization and signs of
improvement from the dramatic economic slide that occurred during the fourth
quarter 2008 that prompted us to conduct an interim assessment for the potential
impairment of goodwill.

          Mr.
Hugh West, Branch Chief

          United
States Securities and Exchange Commission

          Page 3
of 4

    The
actual performance of the Retail Banking unit during the second quarter of 2009
was substantially in line with management’s expectations.  Despite the
elevated provision expense for loan and lease losses, management’s outlook for
the performance of the Retail Banking unit remains
unchanged.  Management believes the Retail Banking unit is able to
obtain market rates for loans while continuing to leverage the strength of the
retail branch network by attracting deposits at levels below mid-market
rates.  Specific to the second quarter, core deposit growth exceeded
expectations.

    The
Company’s net loss for the second quarter of 2009 was driven largely by the
comparatively high provision for loan and lease loss expense of $21
million.  The comparatively high provision is due to the continued
decline in real estate values resulting from the current economic environment,
elevating net charge-offs for the quarter to $16.4
million.  Additionally, we have seen some continued deterioration in
the quality of the Commercial Banking unit’s loan portfolio.  The
Retail Banking unit’s net charge-offs for the quarter were approximately $4.2
million of which $2.8 million resulted from three construction and development
related loans.  The majority of the Company’s net charge-offs, $11.8
million, stem from our Commercial Banking unit.

    Management
was not aware of any factors within the Retail Banking unit’s second quarter
performance or expected cash flows that would lead the Company to believe the
value of this reporting unit has significantly declined from the fourth quarter
2008 interim test for potential impairment of goodwill.  We do not
believe the fair market value of our CDI calculated during the fourth quarter
2008 interim test has changed.  A significant assumption in our
assessment for the potential impairment of goodwill is the valuation of our loan
portfolio.  Because of the continued softness in real estate values,
as evidenced by the second quarter charge-offs, we do not believe the fair
market value of the Retail Banking unit’s loan portfolio has increased
significantly, which would indicate a decrease in the value of goodwill, since
the fourth quarter 2008 interim test.

    Comment
No. 3

              3.

              We
      note your response to prior comment 4 in our letter dated April 30,
      2009.  Additionally, we note your disclosure in the Form 8-K
      filed June 15, 2009 concerning the provision for loan losses related to
      previously disclosed nonperforming residential construction
      loans.  Please tell us, and address the following in future
      filings concerning impaired loans:

              ·

              in
      those instances where you determined that a loan was impaired, explain in
      detail how you determined the fair value of the underlying
      collateral.  Your response should discuss, but not be limited
      to, valuation models and techniques used, significant assumptions used,
      appraisals obtained (timing, third-party or in-house appraisals, etc.),
      etc; and

              ·

              in
      regards to the preceding point, tell us how frequently you update your
      valuations on your impaired loans and the dates of your last appraisals
      and/or internal valuation estimates for material impaired loans recorded,
      with added emphasis on the loans that required a specific allowance as
      disclosed in the June 15, 2009 8-K.

    Response:

    We
included an expanded discussion of impaired loans in our Form 10-Q for the
period ended June 30, 2009; filed on July 31, 2009.  The requested
disclosure was included within the nonperforming assets and allowance for loan
and lease losses section of Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations.

    A
paragraph was added explaining how the fair market value of the underlying
collateral of impaired real estate loans is determined inclusive of the timing
of such valuations.  Further, the Company noted the number of impaired
loans secured by real estate along with data indicating how much of the impaired
real estate loan balances were represented in the quarter end
losses.  We will include a similar discussion in future periods while
enhancing our disclosure in an effort to bridge any informational
gaps.

          Mr.
Hugh West, Branch Chief

          United
States Securities and Exchange Commission

          Page 4
of 4

    Comment
No. 4

    Form 8-K Filed June 15,
2009

              4.

              We
      note your presentation of adjusted pre-tax income excluding loan losses
      and certain items.  In our previously issued comment 1 in our
      letter dated April 30, 2009, we referenced the applicability of Item
      10(e)(1) of Regulation S-K and it’s applicability to Item 2.02 Form
      8-K.  We also note Item 10(e)(1)(ii)(B) of Regulation S-K
      prohibits using a non-GAAP performance measure to eliminate or smooth
      items identified as non-recurring, infrequent or unusual, when the nature
      of the charge is such that it is reasonably likely to recur within two
      years or there was a similar charge within the prior two
      years.  Accordingly, explain how your measure of adjusted
      pre-tax income (particularly the adjustments excluding the provision for
      loan losses, interest reversals, and impairments of investment securities)
      conforms to this presentation.  Please advise or revise to
      eliminate such adjustments from this and future filings.  For
      additional guidance, see Question #8 from the Frequently Asked Questions
      Regarding the Use of Non-GAAP Financial Measures, which can be found on
      the SEC website.

    Response:

    We
presented adjusted pre-tax income excluding items adversely affected by economic
circumstances and certain nonrecurring items in an attempt to provide better
analyses to investors.  We have reviewed Item 10(e)(1)(ii)(B) of
Regulation S-K and concluded that the presentation of adjusted pre-tax income in
our Form 8-K filed June 15, 2009 may be viewed as inconsistent with the spirit
of the regulation.  Accordingly, prior to August 31, 2009
we  intend to amend our June 15, 2009 Form 8-K filing to remove from
Exhibit 99.1 the table containing adjusted pre-tax earnings along with the
accompanying discussion.

    In
connection with this response, the Company acknowledges that: (1) it is
responsible for the adequacy and accuracy of the disclosure in the filing; (2)
SEC staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the filing; and
(3) the Company may not assert staff comments as a defense in any proceeding
initiated by the Commission or any person under the federal securities laws of
the United States.

    I trust
that the above is fully responsive to your comments.  However, if you
have any further questions or concerns, please do not hesitate to call me
directly at (253) 305-1966.

    Sincerely,

    /s/ Gary R.
Schminkey

    Gary R.
Schminkey

    Executive
Vice President and Chief Financial Officer

    cc:           Mr.
Dave Irving, Securities and Exchange Commission

    Stephen M. Klein, Graham &
Dunn

    David Gorretta, Deloitte & Touche
LLP