PLAN AND AGREEMENT OF MERGER

Agreement and Plan of Merger

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This Agreement and Plan of Merger involves

COLUMBIA BANKING SYSTEM, INC | COLUMBIA STATE BANK | MOUNTAIN BANK HOLDING COMPANY | MT RAINIER NATIONAL BANK

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Title: PLAN AND AGREEMENT OF MERGER
Governing Law: Washington Date: 4/5/2007
Law Firm: Miller Nash; Graham & Dunn PC

Exhibit 2.1

PLAN AND AGREEMENT OF MERGER

AMONG

COLUMBIA BANKING SYSTEM, INC.

COLUMBIA STATE BANK

AND

MOUNTAIN BANK HOLDING COMPANY

MT. RAINIER NATIONAL BANK

Dated as of March 28, 2007

TABLE OF CONTENTS


				Page
DEFINITIONS				2

SECTION 1. MERGER				7

	1.1	Transaction		7
	1.2	Mergers		7
		1.2.1	Holding Company Merger	7
		1.2.2	Bank Merger	7
	1.3	Effect of Merger		7
		1.3.1	Board of Directors; Advisory Directors	7
		1.3.2	Subsidiary	7
	1.4	Effective Date and Closing		7
		1.4.1	Closing	7
		1.4.2	Events of Closing	8
		1.4.3	Place of Closing	8

SECTION 2. CONSIDERATION				8

	2.1	Merger Consideration		8
		2.1.1	Outstanding Columbia Common Stock	8
		2.1.2	Outstanding MBHC Common Stock	8
		2.1.3	Change in Equity Capital	9
	2.2	Outstanding MBHC Options		9
		2.2.1	Exercise After Execution Date	9
		2.2.2	Conversion on the Effective Date	9
		2.2.3	Form S-8	10
		2.2.4	Notice to Option Holders	10
	2.3	No Fractional Shares		10
	2.4	Payment to Dissenting Shareholders		10
	2.5	Deposit of Cash and Shares		10
	2.6	Certificates		11
		2.6.1	Surrender of Certificates	11
		2.6.2	Issuance of Certificates in Other Names	11
		2.6.3	Lost, Stolen, and Destroyed Certificates	11
		2.6.4	Rights to Dividends and Distributions	11
		2.6.5	Checks in Other Names	12
		2.6.6	Affiliates	12
		2.6.7	Undelivered Certificates	12
	2.7	Reservation of Right to Revise Transaction Structure		12

SECTION 3. REPRESENTATIONS AND WARRANTIES				12

	3.1	Representations and Warranties		12
		3.1.1	Corporate Organization and Qualification	12
		3.1.2	Subsidiaries	13
		3.1.3	Capital Stock	14
		3.1.4	Corporate Authority	15
		3.1.5	Reports and Financial Statements	15
		3.1.6	Absence of Certain Events and Changes	17


		3.1.7	Material Agreements	17
		3.1.8	Knowledge as to Conditions	18
		3.1.9	Brokers and Finders	18
		3.1.10	Loan and Lease Losses	18
		3.1.11	Governmental Filings; No Violations	18
		3.1.12	Compliance with Laws	19
	3.2	MBHC’s and the Bank’s Additional Representations		19
		3.2.1	Asset Classification	19
		3.2.2	Investments	20
		3.2.3	Properties	20
		3.2.4	Anti-takeover Provisions	20
		3.2.5	Litigation	20
		3.2.6	Taxes	21
		3.2.7	Insurance	22
		3.2.8	Labor Matters	22
		3.2.9	Employee Benefits	22
		3.2.10	Environmental Matters	24
	3.3	Columbia Additional Representation		25
	3.4	Exceptions to Representations		25
		3.4.1	Disclosure of Exceptions	25
		3.4.2	Nature of Exceptions	26

SECTION 4. CONDUCT AND TRANSACTIONS PRIOR TO CLOSING				26

	4.1	Conduct of Business Before Closing		26
		4.1.1	Availability of MBHC’s and the Bank’s Books, Records and Properties	26
		4.1.2	Ordinary and Usual Course	26
		4.1.3	Conduct Regarding Representations	28
		4.1.4	Maintenance of Properties	28
		4.1.5	Preservation of Business Organization	28
		4.1.6	Senior Management; Board of Directors	29
		4.1.7	Compensation and Employment Agreements	29
		4.1.8	Update of Financial Statements	29
		4.1.9	Title Reports	29
		4.1.10	Review of Loans	30
		4.1.11	Conduct of Columbia’s Business Before Closing	30
	4.2	Registration Statement		30
		4.2.1	Preparation of Registration Statement	30
		4.2.2	Submission to Shareholders and Regulatory Authorities	31
	4.3	Affiliate Letters		31
		4.3.1	Affiliate List	31
		4.3.2	Restrictive Legends	32
	4.4	Submission to Regulatory Authorities		32
	4.5	Announcements		32
	4.6	Consents		32
	4.7	Notice		32
	4.8	Confidentiality		32
	4.9	Update of Financial Statements		32
	4.10	Availability of Columbia’s Books, Records and Properties		33
	4.11	Blue Sky Filings		33
	4.12	Tax Treatment		33


	4.13	Best Efforts		33
	4.14	Acquisition Proposals and Superior Proposals		33
		4.14.1	No Solicitation	33
		4.14.2	Exceptions	33
		4.14.3	Termination of Existing Discussions	34
		4.14.4	Definitions	34

SECTION 5. APPROVALS AND CONDITIONS				34

	5.1	Required Approvals		34
	5.2	Conditions to Obligations of Columbia and CB		35
		5.2.1	Representations and Warranties	35
		5.2.2	Compliance	35
		5.2.3	Equity Capital Requirement	35
		5.2.4	Merger Fees	35
		5.2.5	Merger Fees Statements	36
		5.2.6	No Material Adverse Effect	36
		5.2.7	Financial Condition	36
		5.2.8	No Governmental Proceedings	36
		5.2.9	Real Property Matters	36
		5.2.10	Corporate and Shareholder Action	36
		5.2.11	Tax Opinion	36
		5.2.12	Opinion of Counsel	37
		5.2.13	NASDAQ Listing	37
		5.2.14	Affiliate Letters	37
		5.2.15	Registration Statement	37
		5.2.16	Consents	37
		5.2.17	Fairness Opinion	37
		5.2.18	Blue Sky Filings	38
	5.3	Conditions to MBHC’s Obligations		38
		5.3.1	Representations and Warranties	38
		5.3.2	Compliance	38
		5.3.3	No Material Adverse Effect	38
		5.3.4	No Governmental Proceedings	38
		5.3.5	Corporate and Shareholder Action	38
		5.3.6	Tax Opinion	38
		5.3.7	Opinion of Counsel	39
		5.3.8	Fairness Opinion	39
		5.3.9	NASDAQ Listing	39
		5.3.10	Registration Statement	39
		5.3.11	Blue Sky Filings	39

SECTION 6. DIRECTORS, OFFICERS AND EMPLOYEES				39

	6.1	Directors		39
	6.2	Officers’ Contracts		39
	6.3	Employee Benefit Issues		39
		6.3.1	Comparability of Benefits	39
		6.3.2	Treatment of Past Service	39
		6.3.3	No Contract Created	40

iii


	6.4	Indemnification; D&O Insurance		40
		6.4.1	Indemnification Under Washington Law and MBHC’s and the Bank’s Articles/Bylaws	40
		6.4.2	Indemnification by Columbia	40
		6.4.3	Procedural Matters	40
		6.4.4	Insurance	41
		6.4.5	Indemnification Agreements	41
		6.4.6	Effect of Provisions	41

SECTION 7. TERMINATION OF AGREEMENT AND ABANDONMENT OF TRANSACTION				41

	7.1	Termination by Reason of Lapse of Time		41
	7.2	Termination Due To Columbia Average Closing Price		42
		7.2.1	MBHC’s Right to Terminate	42
		7.2.2	Columbia’s Right to Adjust Consideration	42
	7.3	Other Grounds for Termination		42
		7.3.1	Mutual Consent	42
		7.3.2	No Regulatory Approvals	42
		7.3.3	Breach of Representation	43
		7.3.4	Breach of Covenant	43
		7.3.5	MBHC Fails to Recommend Shareholder Approval	43
		7.3.6	MBHC Shareholders Fail to Approve	43
		7.3.7	Impracticability	43
		7.3.8	Dissenting Shares	44
		7.3.9	Superior Proposal – Termination by MBHC.	44
	7.4	Termination-Related Fees Payable By MBHC		44
	7.5	Termination Fee Payable By Columbia		44
	7.6	Break-Up Fee		44
	7.7	Cost Allocation Upon Termination		45

SECTION 8. MISCELLANEOUS				45

	8.1	Notices		45
	8.2	Waivers and Extensions		46
	8.3	Construction and Execution in Counterparts		46
	8.4	Survival of Representations, Warranties, and Covenants		46
	8.5	Attorneys’ Fees and Costs		46
	8.6	Arbitration		46
	8.7	Governing Law		47
	8.8	Severability		47
	8.9	No Assignment		47

SECTION 9. AMENDMENTS				47

List of Schedules and Exhibits



SCHEDULES:

Schedule 3.1.3(i)(2)		Columbia Stock Option Plans

Schedule 3.1.3(ii)(2)		MBHC Stock Option Plans

Schedule 3.1.7		MBHC Material Contracts

Schedule 3.1.11(ii)		Third Party Consents

Schedule 3.1.12		Compliance with Laws

Schedule 3.2.1		Criticized/Classified Assets

Schedule 3.2.2		Investments

Schedule 3.2.3(a)		Real Property Owned in Fee

Schedule 3.2.3(b)		Other Real Property

Schedule 3.2.3(iii)		Branches and Offices

Schedule 3.2.5		Litigation

Schedule 3.2.7		Insurance Policies

Schedule 3.2.9(ii)		Employee Benefit Plans

Schedule 4.1.2		Ordinary and Usual Course

Schedule 4.1.7		Increases in Compensation

EXHIBITS:

Exhibit A:		Form of Affiliate Letter

Exhibit B:		Form of Legal Opinion of Counsel for MBHC and the Bank

Exhibit C:		Form of Legal Opinion of Counsel for Columbia and CB

All disclosure schedules and exhibits have been omitted. Copies will be furnished to the Commission supplementally upon request.

PLAN AND AGREEMENT OF MERGER

AMONG

COLUMBIA BANKING SYSTEM, INC., COLUMBIA STATE BANK,

MOUNTAIN BANK HOLDING COMPANY AND MT. RAINIER NATIONAL BANK

This Plan and Agreement of Merger (the “ Agreement ”), dated as of March 28, 2007, is made by and among COLUMBIA BANKING SYSTEM, INC. (“ Columbia ”), COLUMBIA STATE BANK (“ CB ”), MOUNTAIN BANK HOLDING COMPANY (“ MBHC ”) and MT. RAINIER NATIONAL BANK (the “ Bank ”).

PREAMBLE

The management and boards of directors of Columbia, CB, MBHC and the Bank, respectively, believe that the proposed Transaction, to be accomplished in the manner set forth in this Agreement, is in the best interests of the respective corporations and their shareholders.

RECITALS

A.	The Parties . The parties to the Transaction are as follows:

(1)

Columbia is a corporation duly organized and validly existing under Washington law and is a registered bank holding company under the Bank Holding Company Act of 1956, as amended (“ BHC Act ”). Columbia’s principal office is located in Tacoma, Washington. Columbia owns all of the outstanding common stock of CB.

(2)

CB is a state-chartered banking corporation duly organized and validly existing under Washington law with its principal office located in Tacoma, Washington.

(3)

MBHC is a corporation duly organized and validly existing under Washington law and is a registered bank holding company under the BHC Act. MBHC’s principal office is located in Enumclaw, Washington. MBHC owns all of the outstanding common stock of the Bank.

(4)

The Bank is a national banking association duly organized and validly existing under federal law with its principal office located in Enumclaw, Washington.

B .

The Mergers . On the Effective Date, (i) MBHC will merge with and into Columbia, with Columbia as the surviving entity; (ii) the Bank will merge with and into CB, with CB surviving as a wholly owned subsidiary of Columbia; and (iii) the Bank’s offices will operate as offices of CB. Columbia and CB intend to initially operate existing branches of the Bank as CB doing business as Mt. Rainier Bank.

C .	Board Approvals . The respective boards of directors of Columbia, CB, MBHC and the Bank have approved this Agreement and authorized its execution and delivery.

D.	Other Approvals . The Mergers are subject to:

(1)

Satisfaction of the conditions described in this Agreement;

(2)

Approval by MBHC’s shareholders; and

(3)

Approval or acquiescence, as appropriate, by (a) the Board of Governors of the Federal Reserve System (“ Federal Reserve ”), (b) the Federal Deposit Insurance Corporation (“ FDIC ”), (c) the Washington State Department of Financial Institutions (the “ Washington Department ”), (d) the Office of the Comptroller of the Currency (the “ OCC ”), and (e) any other agencies having jurisdiction over the Mergers (collectively, “ Regulatory Approvals ”).

Employment Agreements . CB has entered into employment agreements, each of which will take effect as of the Effective Date, subject to Closing, with Roy T. Brooks, MBHC’s Chairman, President and Chief Executive Officer, Steve Moergeli, the Bank’s President and Chief Executive Officer, and Sheila Brumley, MBHC’s and the Bank’s Chief Financial Officer.

Director Agreements . In connection with the parties’ execution of this Agreement, the directors of MBHC and the Bank, together with certain officers of the Bank, have entered into agreements, pursuant to which, among other things, each such individual has agreed to vote his or her shares of MBHC common stock in favor of the actions contemplated by this Agreement. In addition, all of the directors of MBHC and the Bank have entered into non-competition agreements.

G.	Fairness Opinion . MBHC has received from Sandler O’Neill & Partners, L.P. (“ Sandler O’Neill ”) an opinion to the effect that the Per Share Consideration is fair from a financial point of view to MBHC’s shareholders.

H.	Bank Merger Agreement . Concurrent with the parties’ execution of this Agreement, the Bank and CB have entered into a merger agreement, providing for the Bank Merger (the “ Bank Merger Agreement ”).

Intention of the Parties — Tax Treatment . The parties intend the Transaction to qualify, for federal income tax purposes, as a tax-free reorganization under IRC Section 368(a), and the parties hereto hereby adopt this Agreement as a plan of reorganization within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.

AGREEMENT

In consideration of the mutual agreements set forth in this Agreement, Columbia, CB, MBHC and the Bank agree as follows:

DEFINITIONS

The following capitalized terms used in this Agreement will have the following meanings, and all references to Recitals and Sections are to the Recitals and Sections of this Agreement:

“Acquisition Proposal” has the meaning assigned to such term in Section 4.14.4(i) .

“Agreement” means this Plan and Agreement of Merger.

“Appraisal Laws” has the meaning assigned to such term in Section 2.4 .

“Asset Classification” has the meaning assigned to such term in Section 3.2.1(i) .

“Bank” is Mt. Rainier National Bank, a national banking association, that has its head office in Enumclaw, Washington, and that is wholly owned by MBHC.

“Bank Merger” means the merger of the Bank with and into CB.

“Bank Merger Agreement” means the merger agreement described in Recital H.

“BHC Act” has the meaning assigned to such term in Recital A.

“Break-Up Fee” has the meaning assigned to such term in Section 7.6.1 .

“Business Day” means any day other than a Saturday, Sunday, legal holiday or a day on which banking institutions located in the State of Washington are required by law to remain closed.

“CB” means Columbia State Bank, a Washington state chartered bank that has its head office in Tacoma, Washington, and that is wholly owned by Columbia.

“Columbia” is Columbia Banking System, Inc., a Washington corporation that has its principal place of business in Tacoma, WA, and that is a bank holding company registered pursuant to the BHC Act.

“Columbia Average Closing Price” has the meaning assigned to such term in Section 2.1.2 .

“Columbia Common Stock” means the shares of Columbia common stock, no par value per share, issued and outstanding from time to time.

“Columbia Financial Statements” has the meaning assigned to such term in Section 3.1.5(iv)(2) .

“Columbia Option Plans” has the meaning assigned to such term in Section 3.1.3(i)(2) .

“Columbia Options” means the stock options issued and outstanding pursuant to the Columbia Option Plans.

“Columbia Preferred Stock” has the meaning assigned to such term in Section 3.1.3(i)(1) .

“Columbia Shares” means the shares of Columbia Common Stock to be issued to the holders of MBHC Common Stock in accordance with Section 2.1.2 of this Agreement.

“Certificate” means a stock certificate evidencing shares of MBHC Common Stock.

“Closing” means the closing of the Transaction contemplated by this Agreement, which will occur on the Effective Date, as more fully specified in Section 1.4 of this Agreement.

“ Confidentiality Agreement” has the meaning assigned to such term in Section 4.14.2 .

“Contracts” has the meaning assigned to such term in Section 3.1.11(ii) .

“Converted Option” has the meaning assigned to such term in Section 2.2.2 .

“Costs” has the meaning assigned to such term in Section 6.4.1 .

“Daily Sales Price” has the meaning assigned to such term in Section 2.1.2 .

“Davidson” has the meaning assigned to such term in Section 3.1.9 .

“Determination Date” has the meaning assigned to such term in Section 2.1.2

“Determination Period” has the meaning assigned to such term in Section 2.1.2 .

“Effective Date” means the date on which the Holding Company Merger becomes effective, as more fully specified in Section 1.4 of this Agreement.

“Employees” has the meaning assigned to such term in Section 3.2.9(ii) .

“Environmental Laws” has the meaning assigned to such term in Section 3.2.10(i)(2) .

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Exchange Act” has the meaning assigned to such term in Section 3.1.5(ii) .

“Exchange Agent” means an agent selected by Columbia and reasonably satisfactory to MBHC.

“Exchange Fund” has the meaning assigned to such term in Section 2.5 .

“Execution Date” means the date of this Agreement.

“Executive Officers” has the meaning assigned to such term in Section 3.1.8 .

“FDIC” means the Federal Deposit Insurance Corporation.

“Federal Reserve” means the Board of Governors of the Federal Reserve System.

“Financial Statements” has the meaning assigned to such term in Section 3.1.5(iv)(1) .

“GAAP” means U.S. generally accepted accounting principles.

“Governmental Entity” has the meaning assigned to such term in Section 3.1.11(i) .

“Hazardous Substances” has the meaning assigned to such term in Section 3.2.10(i)(3) .

“Holding Company Merger” means the merger of MBHC with and into Columbia .

“Indemnified Parties” has the meaning assigned to such term in Section 6.4.1 .

“IRC” means the U.S. Internal Revenue Code of 1986, as amended.

“Knowledge” has the meaning assigned to such term in Section 3.1.8 .

“Liens” has the meaning assigned to such term in Section 3.1.3(i)(5) .

“Material Adverse Effect” has the meaning assigned to such term in Section 3.1.6 .

“MBHC” is Mountain Bank Holding Company, a Washington corporation that has its principal place of business in Enumclaw, Washington, and that is a bank holding company registered pursuant to the BHC Act.

“MBHC Common Stock” means the shares of MBHC common stock, no par value per share, issued and outstanding from time to time.

“MBHC Financial Statements” has the meaning assigned to such term in Section 3.1.5(iv)(4) .

“MBHC Meeting” has the meaning assigned to such term in Section 4.2.2(ii) .

“MBHC Merger Fees” has the meaning assigned to such term in 5.2.4 .

“MBHC Option Plans” has the meaning assigned to such term in Section 3.1.3(ii)(2) .

“MBHC Options” means the stock options issued and outstanding on the date of this Agreement pursuant to the MBHC Option Plans.

“Merger Consideration” has the meaning assigned to such term in Section 2.1.2.

“Merger Fees” has the meaning assigned to such term in Section 5.2.4 .

“Mergers” means the Holding Company Merger and the Bank Merger.

“OCC” means the Office of the Comptroller of the Currency.

“Option Consideration” has the meaning assigned to such term in Section 2.2.1.

“Pension Plan” has the meaning assigned to such term in Section 3.2.9(iii) .

“Perfected Dissenting Shares” has the meaning assigned to such term in Section 2.4 .

“Per Share Cash Consideration” has the meaning assigned to such term in Section 2.1.2 .

“Per Share Consideration” has the meaning assigned to such term in Section 2.1.2 .

“Per Share Stock Consideration” has the meaning assigned to such term in Section 2.1.2 .

“Person” includes an individual, corporation, partnership, association, limited liability company, trust or unincorporated organization.

“Plan” has the meaning assigned to such term in Section 3.2.9(i) .

“Property” or “Properties” has the meaning assigned to such term in Section 3.2.3 .

“Proposed Dissenting Shares” means shares of MBHC Common Stock whose holders provide notice of intent to demand payment to MBHC prior to the MBHC Meeting and do not vote in favor of the Holding Company Merger in accordance with Section 23B.13.210 of the Revised Code of Washington.

“Prospectus/Proxy Statement” means the Prospectus/Proxy Statement referred to in Section 4.2.1(i) of this Agreement, to be provided to each shareholder of MBHC in connection with their consideration and approval of the Holding Company Merger.

“Registration Statement” has the meaning assigned to such term in Section 4.2.1(i) .

“Regulatory Approvals” has the meaning assigned to such term in Recital D.

“Reports” has the meaning assigned to such term in Section 3.1.5(ii).

“Representatives” has the meaning assigned to such term in Section 4.14.1 .

“Sandler O’Neill” has the meaning assigned to such term in Recital G.

“SEC” has the meaning assigned to such term in Section 3.1.5(i) .

“Securities Act” has the meaning assigned to such term in Section 3.1.5(ii) .

“Securities Laws” has the meaning assigned to such term in Section 3.1.5(ii) .

“Subject Property” has the meaning assigned to such term in Section 3.2.10(i)(1) .

“Subsequent Columbia Financial Statements” has the meaning assigned to such term in Section 3.1.5(iv)(3) .

“Subsequent MBHC Financial Statements” has the meaning assigned to such term in Section 3.1.5(iv)(5) .

“Subsidiary” has the meaning assigned to such term in Section 3.1.2 .

“Superior Proposal” has the meaning assigned to such term in Section 4.14.4(ii) .

“Tangible Equity Capital” has the meaning assigned to such term in Section 5.2.3 .

“Tax” has the meaning assigned to such term in Section 3.2.6 .

“Termination Date” means October 15, 2007.

“Termination Fee” has the meaning assigned to such term in Section 7.4 .

“Trading Day” has the meaning assigned to such term in Section 2.1.2 .

“Transaction” means the consummation of the Mergers in accordance with this Agreement.

“Washington Department” has the meaning assigned to such term in Recital D.

“Washington Director” means the Director of the Washington Department.

“Withdrawn Dissenting Shares” has the meaning assigned to such term in Section 2.4 .

SECTION 1.

MERGER

1.1

Transaction . Subject to the terms and conditions set forth in this Agreement and in the Schedules and Exhibits, MBHC will merge with and into Columbia in the Holding Company Merger pursuant to this Agreement, and the Bank will merge with and into CB in the Bank Merger pursuant to the Bank Merger Agreement.

1.2

Mergers .

1.2.1

Holding Company Merger . Upon Closing of the Holding Company Merger, pursuant to the provisions of this Agreement and applicable law, all shares of MBHC Common Stock issued and outstanding immediately prior to Closing, except for Proposed Dissenting Shares, will, by virtue of the Holding Company Merger and without any action on the part of any holder of shares of MBHC Common Stock, be converted into the right to receive the Per Share Consideration described in Section 2.1 of this Agreement.

1.2.2

Bank Merger . Immediately following the closing of the Holding Company Merger, pursuant to the terms and conditions of the Bank Merger Agreement, the Bank will be merged into CB, with CB as the resulting bank.

1.3

Effect of Merger .

1.3.1

Board of Directors; Advisory Directors .

(i)

The directors of MBHC will be invited by Columbia to serve as advisory directors of CB until December 31, 2008. Advisory directors will receive Indemnification Agreements as set forth in Section 6.4.5.

(ii)

All directors of MBHC and the Bank immediately prior to the Effective Date will be entitled to indemnification and director and officer liability insurance as set forth in Section 6.4.4 .

1.3.2

Subsidiary . CB intends to operate the branches of the Bank in operation immediately prior to the Effective Date as “Columbia Bank doing business as Mt. Rainier Bank.”

1.4

Effective Date and Closing .

1.4.1

Closing . The Closing will occur on the Effective Date. The Holding Company Merger shall be consummated by the filing with the Washington Secretary of State of Articles of Merger, in the form required by and executed in accordance with the relevant provisions of the Revised Code of Washington, and by the issuance of a Certificate of Merger by the Secretary of State of Washington. Unless Columbia and MBHC agree upon a different date, Closing will occur no later than the date ten (10) Business Days after the fulfillment or waiver of each condition precedent set forth in, and the granting of each approval (and expiration of any waiting period) required by, Section 5 of this Agreement. If Closing does not occur on or prior to the Termination Date and the parties do not mutually agree in writing to extend the Closing, either party may terminate this Agreement in accordance with Section 7.1 of this Agreement.

1.4.2

Events of Closing . On the Effective Date, all properly executed documents required by this Agreement will be delivered to the proper party, in form consistent with this Agreement. If any party fails to deliver a required document on the Effective Date or otherwise defaults under this Agreement on or prior to the Effective Date, then no Transaction will occur unless the adversely affected party waives the default.

1.4.3

Place of Closing . The Closing will take place at the office of Graham & Dunn PC, Pier 70, 2801 Alaskan Way, Suite 300, Seattle, Washington, or such other place as the parties agree, at 10:00 a.m. Pacific Time on the Effective Date.

SECTION 2.

CONSIDERATION

2.1

Merger Consideration . Subject to the provisions of this Agreement, on the Effective Date:

2.1.1

Outstanding Columbia Common Stock . The shares of Columbia Common Stock issued and outstanding immediately prior to the Effective Date will, on and after the Effective Date, remain as issued and outstanding shares of Columbia Common Stock.

2.1.2

Outstanding MBHC Common Stock . Each share of MBHC Common Stock (other than Proposed Dissenting Shares) issued and outstanding immediately prior to the Effective Date will automatically and without any action on the part of the holder of such share, be converted into and represent the right to receive from Columbia the Per Share Consideration.

For purposes of this Agreement:

“ Columbia Average Closing Price ” means the average Daily Sales Price of Columbia Common Stock for the Determination Period.

“ Daily Sales Price ” for any Trading Day means the daily closing price per share of Columbia Common Stock on the NASDAQ Stock Market reporting system, as reported on the website of www.nasdaq.com.

“ Determination Date ” means the fifth (5 ^th ) business day immediately prior to the Effective Date.

“ Determination Period ” means the fifteen (15) Trading Days prior to the Determination Date.

“ Merger Consideration ” means the aggregate value of the Per Share Stock Consideration and the Per Share Cash Consideration payable or issuable pursuant to this Agreement, together with payments made with respect to Perfected Dissenting Shares, if any.

“ Per Share Cash Consideration ” means cash in an amount equal to $11.25, subject to the provisions of Section 7.2.

“ Per Share Consideration ” means (x) the Per Share Stock Consideration and (y) the Per Share Cash Consideration.

“ Per Share Stock Consideration ” means the number of shares of Columbia Common Stock equal to the quotient, rounded to the nearest 10,000 ^th , obtained by dividing $13.75 by the Columbia Average Closing Price, provided , however , that if the Columbia Average Closing Price is greater than or equal to $37.50, the Per Share Stock Consideration will be 0.3667, and if the Columbia Average Closing Price is equal to or less than $32.50, the Per Share Stock Consideration will be 0.4231, subject in each case to the provisions of Section 7.2.

“ Trading Day ” means a day on which Columbia Common Stock is traded on NASDAQ.

2.1.3

Change in Equity Capital . If, after the date of this Agreement but before the Effective Date, the number of shares of Columbia Common Stock issued and outstanding increases or decreases in number or is changed into or exchanged for a different kind or number of securities, through a recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar change in capitalization (excluding increases in number due to issuances of shares upon granting of restricted stock awards or the exercise of any outstanding options), then a proportionate adjustment will be made to the Per Share Consideration.

2.2

Outstanding MBHC Options .

2.2.1

Exercise After Execution Date . If any holder of a stock option to acquire MBHC Common Stock (a “ MBHC Option ”) exercises such MBHC Option after the Execution Date and before the Effective Date, the shares of MBHC Common Stock issued upon such exercise will be converted at the Effective Date, into the right to receive the Per Share Consideration (the “ Option Consideration ”).

2.2.2

Conversion on the Effective Date . On the Effective Date, by virtue of the Transaction, and without any action on the part of any holder of a MBHC Option, each MBHC Option that is then outstanding and unexercised will be converted into and become an option (a “ Converted Option ”) to purchase Columbia Common Stock on the same terms and conditions as are in effect with respect to the MBHC Option immediately prior to the Effective Date, except that (A) each such Converted Option may be exercised solely for shares of Columbia Common Stock, (B) the number of shares of Columbia Common Stock subject to such Converted Option will be equal to the number of shares of MBHC Common Stock subject to such MBHC Option immediately prior to the Effective Date multiplied by the quotient, rounded to the nearest 10,000 ^th , obtained by dividing the value of the Per Share Consideration by the Columbia Average Closing Price, the product being rounded, if necessary, up or down to the nearest whole share, and (C) the per-share exercise price for each such Converted Option will be adjusted by dividing the per share exercise price of the MBHC Option by the quotient, rounded to the nearest 10,000 ^th , obtained by dividing the value of the Per Share Consideration by the Columbia Average Closing Price, the product being rounded, if necessary, up or down to the nearest cent.

2.2.3

Form S-8 . Within thirty (30) days following the Effective Date, Columbia will prepare and file with the SEC a Registration Statement on Form S-8 or other appropriate form covering shares of Columbia Common Stock to be issued upon the exercise of the Converted Options.

2.2.4

Notice to Option Holders . Within fifteen (15) days following the Effective Date, Columbia will deliver to each holder of a Converted Option a written statement setting forth the number of shares of Columbia Common Stock that are subject to such holder’s Converted Option, the per-share exercise price of such Converted Option, and the date on which such Converted Option will terminate.

2.3

No Fractional Shares . Notwithstanding any other provision of this Agreement, no fractional shares of Columbia Common Stock will be issued. In lieu of fractional shares, if any, each holder of MBHC Common Stock who is otherwise entitled to receive a fractional share of Columbia Common Stock will receive an amount of cash equal to the product of such fractional share multiplied by the Columbia Average Closing Price. Such fractional share interests will not include the right to vote or receive dividends or any interest on dividends.

2.4

Payment to Dissenting Shareholders . For purposes of this Agreement, “ Perfected Dissenting Shares ” means Proposed Dissenting Shares whose holders have demanded payment following the MBHC Meeting in accordance with Section 23B.13.230 of the Revised Code of Washington and have taken all other steps necessary to exercise their dissenters’ rights under Chapter 23B.13 of the Revised Code of Washington (“ Appraisal Laws ”). Each outstanding Perfected Dissenting Share will be converted into the rights provided under the Appraisal Laws in accordance with the Appraisal Laws, unless the holder thereof fails to make demand for payment in accordance with Section 23B.13.230 of the Revised Code of Washington, in which case each such share (a “ Withdrawn Dissenting Share ”) shall be deemed to have been converted at the Effective Date into the right to receive from Columbia the Per Share Consideration, without any interest. To the extent a holder of Proposed Dissenting Shares fails to perfect such holder’s dissenters’ rights under the Appraisal Laws, such Proposed Dissenting Shares shall be treated as Withdrawn Dissenting Shares under this Agreement. Each holder of Perfected Dissenting Shares who becomes entitled to payment for his or her MBHC Common Stock pursuant to the provisions of the Appraisal Laws shall receive payment for such Perfected Dissenting Shares from Columbia (but only after the amount thereof shall have been agreed upon or finally determined pursuant to the Appraisal Laws).

2.5

Deposit of Cash and Shares . On or before the Effective Date, Columbia will deposit, or will cause to be deposited, with the Exchange Agent, for the benefit of the holders of Certificates, for exchange in accordance with this Section 2.5 , (i) certificates representing the Columbia Shares to be issued in exchange for outstanding shares of MBHC Common Stock pursuant to Section 2.1.2; (ii) such cash as will be necessary to pay the Per Share Cash Consideration; and (iii) the cash in lieu of fractional shares to be paid in accordance with Section 2.3 . Such cash and certificates for Columbia Shares are referred to in this Agreement as the “ Exchange Fund .”

2.6

Certificates .

2.6.1

Surrender of Certificates . Subject to Section 2.4 , each Certificate (other than those evidencing Proposed Dissenting Shares) will, from and after the Effective Date, be deemed for all corporate purposes to represent and evidence only the right to receive the Per Share Consideration (or to receive the cash for fractional shares) to which the MBHC Common Stock is converted in accordance with the provisions of this Section 2.6.1. Following the Effective Date, holders of Certificates will exchange their Certificates in accordance with instructions provided by the Exchange Agent, together with a properly completed and executed form of transmittal letter, in order to effect their exchange for (i) certificates representing Columbia Common Stock; (ii) a check representing the Per Share Cash Consideration; and (iii) a check representing the amount of cash in lieu of fractional shares, if any. Until a

Certificate is so surrendered, the holder will not be entitled to receive any certificates evidencing Columbia Shares, the Per Share Cash Consideration, or cash in lieu of fractional shares.

2.6.2

Issuance of Certificates in Other Names . Any person requesting that any certificate evidencing Columbia Shares be issued in a name other than the name in which the surrendered Certificate is registered, must: (1) establish to the Exchange Agent’s satisfaction the right to receive the certificate evidencing Columbia Shares and (2) either pay to the Exchange Agent any applicable transfer or other taxes or establish to the Exchange Agent’s satisfaction that all applicable taxes have been paid or are not required.

2.6.3

Lost, Stolen, and Destroyed Certificates . With respect to a Certificate that has been lost, stolen or destroyed, the Exchange Agent will be authorized to issue a certificate representing Columbia Shares and pay the Per Share Consideration and cash in lieu of fractional shares in exchange therefor, if the holder provides the Exchange Agent with: (1) satisfactory evidence that the holder owns MBHC Common Stock and that the certificate representing this ownership is lost, stolen, or destroyed, (2) any appropriate affidavit the Exchange Agent may require, and (3) any reasonable assurances that the Exchange Agent or Columbia may require.

2.6.4

Rights to Dividends and Distributions . After the Effective Date, no holder of any Certificate will be entitled to receive any dividends or other distributions otherwise payable to holders of record of Columbia Common Stock on any date after the Effective Date, unless the holder (1) is entitled by this Agreement to receive a certificate representing Columbia Common Stock and (2) has surrendered in accordance with this Agreement his or her Certificates (or has met the requirements of Section 2.6.3 above) in exchange for certificates representing Columbia Shares. Surrender of Certificates will not deprive the holder of any dividends or distributions that the holder is entitled to receive as a record holder of MBHC Common Stock on a date before the Effective Date. When the holder surrenders his or her Certificates in exchange for Columbia Shares, the holder will receive the amount, without interest, of any cash dividends and any other distributions distributed after the Effective Date on the whole number of Columbia Shares into which the holder’s MBHC Common Stock was converted at the Effective Date.

2.6.5

Checks in Other Names . Any person requesting that a check for the aggregate Per Share Cash Consideration or cash in lieu of fractional shares be issued in a name other than the name in which the Certificate surrendered in exchange for the cash is registered, must establish to the Exchange Agent’s satisfaction the right to receive this cash.

2.6.6

Affiliates . Certificates that are surrendered for exchange by any person constituting an “affiliate” of MBHC for purposes of Rule 145 under the Securities Act will not be exchanged for certificates representing Columbia Shares until Columbia has received a written agreement from such person as specified in Section 4.3.1 .

2.6.7

Undelivered Certificates . Any portion of the Exchange Fund that remains unclaimed by shareholders of MBHC for 6 months after the Effective Date may be paid to Columbia. To the extent so paid, holders of MBHC Common Stock who have not, prior to such time, complied with the provisions of this Section 2.6 will,

from such time forward, look only to Columbia for payment of the Per Share Consideration, the cash in lieu of fractional shares, and/or unpaid dividends and distributions on the Columbia Shares deliverable with respect to each share of MBHC Common Stock held by such holder as determined pursuant to this Agreement, in each case, without any interest. Neither Columbia nor MBHC will be liable to any holder of MBHC Common Stock for any amount properly delivered to a public official pursuant to applicable abandoned property, escheat or similar laws.

2.7

Reservation of Right to Revise Transaction Structure . Notwithstanding any other provision in this Agreement to the contrary, Columbia may, with MBHC’s consent (which will not be unreasonably withheld), at any time change the method of effecting its acquisition of MBHC and the Bank; provided , however , that (A) no such change shall alter or change the amount, proportions or kind of consideration to be issued to holders of MBHC Common Stock as provided for in this Agreement, (B) no such change shall adversely affect the tax treatment to holders of MBHC Common Stock as a result of receiving such consideration, and (C) no delay caused by such a change shall be the basis upon which Columbia terminates this Agreement pursuant to Section 7.1 . If the parties elect to change the method of acquisition, they will cooperate with and assist one another with any necessary amendment to this Agreement, and with the preparation and filing of such applications, documents, instruments and notices as may be necessary or desirable, in the opinion of counsel for Columbia, to obtain all necessary shareholder approvals and approvals of any regulatory agency, administrative body or other governmental entity.

SECTION 3.

REPRESENTATIONS AND WARRANTIES

3.1

Representations and Warranties . Subject to Section 3.4, and except as expressly set forth in a schedule to this Agreement, MBHC and the Bank each represent and warrant to Columbia and CB, and Columbia and CB each represent and warrant to MBHC and the Bank, the following:

3.1.1

Corporate Organization and Qualification .

(i)

With respect to Columbia and MBHC only, it is a corporation organized and validly existing under the laws of the state of Washington, it is a registered bank holding company under the Bank Holding Company Act of 1956, as amended, and its activities do not require it to be qualified in any jurisdiction other than Washington or, with respect to Columbia, Washington and Oregon.

(ii)

With respect to CB only, it is a state-chartered bank organized and validly existing under the laws of the state of Washington, and its activities do not require it to be qualified in any jurisdiction other than Washington.

(iii)

With respect to the Bank only, it is a national bank organized and validly existing under federal law.

(iv)

It has the requisite corporate power and authority to own or lease its properties and assets and to carry on its businesses as they are now being conducted.

(v)

It has made available to the other party to this Agreement a complete and correct copy of its articles of incorporation or association, as applicable, and bylaws, each as amended to date and currently in full force and effect.

3.1.2

Subsidiaries . In this Agreement, the term “ Subsidiary ” with respect to a party means any corporation, partnership, financial institution, trust company, or other entity owned or controlled by that party or any of its subsidiaries or affiliates (or owned or controlled by that party together with one or more of its subsidiaries or affiliates). A Subsidiary is considered to be owned or controlled by a party if that party or any of its Subsidiaries (individually or together with the party) directly or indirectly owns, controls, or has the ability to exercise 50% or more of the voting power or capital stock of the Subsidiary.

(i)

With respect to Columbia, each of its Subsidiaries is a corporation or statutory trust organized and validly existing under Oregon or Washington law, as the case may be, and is qualified to do business in each jurisdiction where the property owned, leased, or operated, or the business conducted by the Subsidiary, requires this qualification.

(ii)

With respect to MBHC, each of its Subsidiaries is a national banking association or statutory trust organized and validly existing under federal or Washington law, and is qualified to do business in each jurisdiction where the property owned, leased, or operated, or the business conducted by the Subsidiary, requires this qualification.

(iii)

With respect to Columbia, each of its Subsidiaries has the requisite corporate or statutory trust power and authority to own or lease its properties and assets and to carry on its business as it is now being conducted.

(iv)

With respect to MBHC, each of its Subsidiaries has the requisite corporate or statutory trust power and authority to own or lease its properties and assets and to carry on its business as it is now being conducted.

3.1.3

Capital Stock .

(i)

Columbia . Columbia represents:

(1)

as of the Execution Date, Columbia’s authorized capital stock consists of 63,034,000 shares of common stock with no par value (“ Columbia Common Stock ”), of which 16,100,632 shares are issued and outstanding, and 2,000,000 shares of preferred stock with no par value, none of which is outstanding (“ Columbia Preferred Stock ”);

(2)

as of the Execution Date, options or rights to acquire not more than an aggregate of 285,780 shares of Columbia Common Stock (subject to adjustment on the terms set forth in the Columbia Option Plans) are outstanding under the stock option plans listed in Schedule 3.1.3(i)(2) (“ Columbia Option Plans ”);

(3)

no shares of Columbia Common Stock are reserved for issuance, other than the shares reserved for issuance under the Columbia Option Plans, and Columbia has no shares of Columbia Preferred Stock reserved for issuance;

(4)

all outstanding shares of Columbia Common Stock have been duly authorized and validly issued and are fully paid and nonassessable;

(5)

all outstanding shares of capital stock of each of Columbia’s Subsidiaries owned by Columbia or a Subsidiary of Columbia have been duly authorized and validly issued and are fully paid and nonassessable, except to the extent any assessment is required under federal law or Section 33.44.020 of the Revised Code of Washington, and are owned by Columbia or a Subsidiary of Columbia free and clear of all liens, pledges, security interests, claims, proxies, preemptive or subscriptive rights or other encumbrances or restrictions of any kind (collectively, “ Liens ”); and

(6)

except as set forth in this Agreement, in the Columbia Option Plans, or in any acquisition transaction which may occur from time to time, there are no preemptive rights or any outstanding subscriptions, options, warrants, rights, convertible securities, or other agreements or commitments of Columbia or any of its Subsidiaries of any character relating to the issued or unissued capital stock or other equity securities of Columbia (including those relating to the issuance, sale, purchase, redemption, conversion, exchange, registration, voting or transfer of such stock or securities).

(ii)

MBHC . MBHC represents:

(1)

as of the Execution Date, MBHC’s authorized capital stock consists of 10,500,000 shares of common stock with no par value (“ MBHC Common Stock ”), of which 2,322,939 shares are issued and outstanding;

(2)

as of the Execution Date, options or rights to acquire not more than an aggregate of 147,325 shares of MBHC Common Stock (subject to adjustment on the terms set forth in the MBHC Option Plans) are outstanding under the stock option plans listed in Schedule 3.1.3(ii)(2) (“ MBHC Option Plans ”);

(3)

no shares of MBHC Common Stock are reserved for issuance, other than the shares reserved for issuance under the MBHC Option Plans, and MBHC has no shares of MBHC Preferred Stock reserved for issuance;

(4)

all outstanding shares of MBHC Common Stock have been duly authorized and validly issued and are fully paid and nonassessable;

(5)

all outstanding shares of capital stock of each of MBHC’s Subsidiaries owned by MBHC or a Subsidiary of MBHC have been duly authorized and validly issued and are fully paid and nonassessable, except to the extent any assessment is required under federal law, and are owned by MBHC or a Subsidiary of MBHC free and clear of all Liens; and

(6)

except as set forth in this Agreement or in the MBHC Option Plans, there are no preemptive rights or any outstanding subscriptions, options, warrants, rights, convertible securities, or other agreements or commitments of MBHC or any of its Subsidiaries of any character relating to the issued or unissued capital stock or other equity securities of MBHC (including those relating to the issuance, sale, purchase, redemption, conversion, exchange, registration, voting or transfer of such stock or securities).

3.1.4

Corporate Authority .

(i)

It has the requisite corporate power and authority and has taken all corporate action necessary in order to execute and deliver this Agreement, subject (in MBHC’s case) only to the approval by MBHC’s shareholders of the Holding Company Merger.

(ii)

This Agreement is a valid and legally binding agreement of it, enforceable in accordance with the terms of this Agreement, subject to receipt of Regulatory Approval and, (in MBHC’s case) only to the approval by MBHC’s shareholders of the Holding Company Merger.

3.1.5

Reports and Financial Statements .

(i)

Filing of Reports . Since January 1, 2004, it and each of its Subsidiaries has filed and will file all reports and statements, together with any required amendments to these reports and statements, that it was or is required to file with (1) the Securities and Exchange Commission (“ SEC ”), (2) the Federal Reserve Board, (3) the FDIC, (4) the OCC, and (5) any other applicable federal or state banking, insurance, securities, or other regulatory authorities. Each of these reports and statements, including the related financial statements and exhibits, complied (or will comply, in the case of reports or statements filed after the Execution Date) as to form in all material respects with all applicable statutes, rules and regulations as of their respective dates (and, in the case of reports or statements filed before the Execution Date, without giving effect to any amendments or modifications filed after the Execution Date).

(ii)

Delivery to Other Party of Reports . It has delivered or otherwise made available to the other party a copy of each registration statement, offering circular, report, definitive proxy statement or information statement (collectively, its “ Reports ”) under the Securities Act of 1933, as amended, (“ Securities Act ”), the Securities Exchange Act of 1934, as amended, (“ Exchange Act ”), and state securities and Blue Sky laws (collectively, the “ Securities Laws ”) filed, used or circulated by it with respect to periods since January 1, 2001, through the Execution Date. It will promptly deliver to the other party each such Report filed, used or circulated after the Execution Date, each in the form (including related exhibits and amendments) filed with the SEC or the FDIC (or if not so filed, in the form used or circulated), other than Reports that are publicly available.

(iii)

Compliance with Securities Laws . As of their respective dates (and without giving effect to any amendments or modifications filed after the Execution Date),

each of the Reports, including the related financial statements, exhibits and schedules, filed, used or circulated before the Execution Date complied (and each of the Reports filed after the Execution Date, will comply) in all material respects with applicable Securities Laws, and did not (or in the case of reports, statements, or circulars filed after the Execution Date, will not) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading.

(iv)

Financial Statements . Each of its balance sheets included in the Financial Statements fairly presents (or, in the case of Financial Statements for periods ending on a date following the Execution Date, will fairly present) the financial position of it and its Subsidiaries as of the date of the balance sheet. Each of the statements of income, cash flows and shareholders’ equity included in the Financial Statements fairly presents (or, in the case of Financial Statements for periods ending on a date following the Execution Date, will fairly present) the results of operations, retained earnings and cash flows, as the case may be, of it and its Subsidiaries for the periods set forth in these statements (subject, in the case of unaudited statements, to normal year-end audit adjustments), in each case in accordance with GAAP , except as may be noted in these statements.

(1)

“ Financial Statements ” means: (i) in Columbia’s case, the Columbia Financial Statements (or for periods ending on a date following the Execution Date, the Subsequent Columbia Financial Statements); and (ii) in MBHC’s case, the MBHC Financial Statements (or for periods ending on a date following the Execution Date, the Subsequent MBHC Financial Statements).

(2)

“ Columbia Financial Statements ” means Columbia’s (i) audited consolidated balance sheet as of December 31, 2006 and 2005 and the related audited consolidated statements of income, cash flows and changes in shareholders’ equity for each of the years ended December 31, 2006, 2005 and 2004; and (ii) unaudited consolidated balance sheet as of the end of each fiscal quarter following December 31, 2006 but preceding the Execution Date, and the related unaudited consolidated statements of income, cash flows and changes in shareholders’ equity for each such quarter.

(3)

“ Subsequent Columbia Financial Statements ” means Columbia’s unaudited consolidated balance sheets and related consolidated statements of income, cash flows and shareholders’ equity for each of the fiscal quarters ending after the Execution Date and before Closing or the Termination Date , as the case may be.

(4)

“ MBHC Financial Statements ” means MBHC’s audited balance sheet as of December 31, 2006 and 2005, and the related audited statements of income, cash flows and changes in shareholders’ equity for each of the years ended December 31, 2006, 2005 and 2004; and (ii) unaudited balance sheet as of the end of each fiscal quarter following December 31, 2006 but preceding the Execution Date, and the related unaudited statements of income, cash flows and changes in shareholders’ equity for each such quarter.

(5)

“ Subsequent MBHC Financial Statements ” means MBHC’s unaudited balance sheets and related statements of income, cash flows and shareholders’ equity for each of the fiscal quarters ending after the Execution Date and before Closing or the Termination Date, as the case may be.

3.1.6

Absence of Certain Events and Changes . Except as disclosed in its Financial Statements and Reports, since January 1, 2004: (1) it and its Subsidiaries have conducted their respective businesses only in the ordinary and usual course of the businesses, and (2) no change or development or combination of changes or developments has occurred that, individually or in the aggregate, is reasonably likely to result in a Material Adverse Effect with respect to it or its Subsidiaries. For purposes of this Agreement, “ Material Adverse Effect ” with respect to any party means an effect that: (1) is materially adverse to the business, financial condition, results of operations or prospects of such party and its Subsidiaries taken as a whole; or (2) materially and adversely affects the ability of such party to consummate the transactions contemplated by this Agreement by the Termination Date or to perform its material obligations under this Agreement. No Material Adverse Effect will be deemed to have occurred on the basis of any effect resulting from actions or omissions of any party taken with the explicit prior consent of the other party to this Agreement.

3.1.7

Material Agreements .

(i)

Except for the Columbia and MBHC Option Plans, respectively, and arrangements made after the date of and in accordance with the terms of this Agreement, it and its Subsidiaries are not bound by any material contract (as defined in Item 601(b)(10) of Regulation S-K under the Securities Act) that: (1) is to be performed after the Execution Date and (2) has not been filed with or incorporated by reference in its Reports or set forth in Schedule 3.1.7 .

(ii)

Neither it nor any of its Subsidiaries is in default under any material contract, agreement, commitment, arrangement, lease, insurance policy, or other instrument.

3.1.8

Knowledge as to Conditions . Its President, Chief Executive Officer, Chief Credit Officer and Chief Financial Officer (collectively, “ Executive Officers ”) have no actual knowledge (“ Knowledge ”) of any reason why the Regulatory Approvals and, to the extent necessary, any other approvals, authorizations, filings, registrations, and notices should not be obtained without the imposition of any condition or restriction that is reasonably likely to have a Material Adverse Effect with respect to it, or its Subsidiaries, or the opinion referred to in Section 5.2.11 .

3.1.9

Brokers and Finders . Neither it, its Subsidiaries, nor any of their respective officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finder’s fees in connection with the transactions contemplated in this Agreement, except that MBHC has retained Sandler O’Neill, and Columbia has retained D.A. Davidson & Co. (“ Davidson ”) as their respective financial advisors pursuant to letter agreements that have been disclosed to the other party to this Agreement.

3.1.10

Loan and Lease Losses . Its Executive Officers have no Knowledge of any reason why the allowance for loan and lease losses shown in the balance sheets included in the Financial Statements, was not adequate as of those dates, respectively, to provide for estimable and probable losses, net of recoveries relating to loans not previously charged off, inherent in its loan portfolio.

3.1.11

Governmental Filings; No Violations .

(i)

Filings . Other than the Regulatory Approvals and other than as required under the Securities Laws, no notices, reports or other filings are required to be made by it with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by it from, any governmental or regulatory authority, agency, court, commission or other entity, domestic or foreign (“ Governmental Entity ”), in connection with the execution, delivery or performance of this Agreement by it and the consummation by it of the Mergers.

(ii)

Violations . The execution, delivery and performance of this Agreement does not and will not, and the consummation by it of the applicable Merger will not, constitute or result in: (1) a breach or violation of, or a default under, its articles of incorporation or association or its bylaws; (2) a breach or violation of, or a default under, or the acceleration of or the creation of a Lien (with or without the giving of notice, the lapse of time or both) under, any provision of any agreement, lease, contract, note, mortgage, indenture, arrangement or other obligation (“ Contracts ”) by which it is bound or to which it is a party; or (3) a violation of any law, rule, ordinance or regulation or judgment, decree, order, award, or governmental or non-governmental permit or license to which it is subject; or (4) any change in the rights or obligations of any party under any of the Contracts. Schedule 3.1.11(ii) contains a list of all consents it must obtain from third parties under any Contracts before consummation of the Merger.

3.1.12

Compliance with Laws . Except as disclosed in Schedule 3.1.12 , it:

(i)

is in compliance, in the conduct of its business, with all applica

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