Attached files
| file | filename |
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| 8-K - 8-K - COLUMBIA BANKING SYSTEM, INC. | colb-20200430.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
April 30, 2020
Columbia Banking System Announces First Quarter 2020 Results
and Quarterly Cash Dividend
TACOMA, Washington, April 30, 2020 -- Clint Stein, President and Chief Executive Officer of Columbia Banking System, Inc. and Columbia Bank (NASDAQ: COLB) (“Columbia”), said today upon the release of Columbia’s first quarter 2020 earnings, “COVID-19 had a profound impact on the final weeks of the first quarter and drove a material increase in our allowance for credit losses. We focused on initiatives intended to improve our operating leverage and their positive impact is reflected in our financial results.” Mr. Stein continued, “We experienced strong loan and deposit growth during the quarter with several lines of business experiencing record first quarter performance. In addition, we focused on efficiency initiatives that significantly lowered our expense ratios.”
Balance Sheet
Total assets at March 31, 2020 were $14.04 billion, a decrease of $41.0 million from the linked quarter. Loans were $8.93 billion, up $189.9 million from December 31, 2019 as a result of loan originations of $330.7 million and increased line utilization partially offset by payments. Securities available for sale were $3.55 billion at March 31, 2020, a decrease of $193.0 million from $3.75 billion at December 31, 2019. Total deposits at March 31, 2020 were $10.81 billion, an increase of $128.0 million from December 31, 2019 principally due to an increase of $104.6 million in public funds, excluding certificates of deposit. Deposit mix remained fairly consistent from December 31, 2019 with 49% noninterest-bearing and 51% interest-bearing. The average cost of total deposits for the quarter was 14 basis points, a decrease of 7 basis points from the fourth quarter of 2019. For additional information regarding this calculation, see the “Net Interest Margin” section.
Chris Merrywell, Columbia’s Executive Vice President and Chief Operating Officer, stated, “The first quarter proved to be a positive quarter for loan growth driven by production and seasonal line utilization. Our bankers were on track for record first quarter loan production through the first two months, even though the first quarter is historically the weakest quarter of the year. Our teams did an excellent job of pivoting and adapting to our clients’ needs as our new reality set in during the last month of the quarter. The decrease in interest rates helped to drive down the cost of deposits to levels close to historic lows.”
Income Statement
Net Interest Income
Net interest income for the first quarter of 2020 was $122.4 million, a decrease of $2.4 million and an increase of $1.4 million from the linked quarter and the prior year period, respectively. The decrease from the linked quarter was primarily due to lower interest income on loans as a result of the lower rate environment and higher interest expense on FHLB advances due to higher average advance balances. The decrease to net interest income from the linked quarter was partially offset by an increase in interest income on securities primarily due to $1.9 million of interest income and discount accretion related to the early payoff of three securities and a decrease in interest expense on money market deposits principally due to lower rates. Net interest income compared to the prior year period increased as a result of interest income and discount accretion from the early payoff on securities mentioned previously and higher average balances of securities partially offset by higher interest expense due to higher average balances of FHLB advances. For additional information regarding net interest income, see the “Net Interest Margin” section and the “Average Balances and Rates” tables.
Provision for Credit Losses
Effective January 1, 2020, Columbia adopted Accounting Standards Update 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) and all related amendments. The allowance for credit losses under ASU 2016-13 utilizes a Current Expected Credit Losses (“CECL”) methodology which estimates the expected loan losses over the contractual life of the loans in the loan portfolio of Columbia Bank (the “Bank”). Prior to January 1, 2020, the Allowance for Loan and Lease Losses (“ALLL”) methodology was used which estimated the amount of loan losses that had been incurred at the balance sheet date. The day 1 adoption of ASU 2016-13 and related amendments resulted in an increase of $1.6 million to the Bank’s allowance for credit losses, an increase of $1.6 million to the Bank’s allowance for unfunded commitments and letters of credit and a net-of-tax cumulative-effect adjustment of $2.5 million to decrease the beginning balance of retained earnings.
2
The Bank’s provision for credit losses for the first quarter of 2020, under the new CECL methodology, was $41.5 million compared to $1.6 million and $1.4 million for the linked quarter and comparable quarter in 2019, respectively, which were calculated under the old ALLL methodology. The significant increase in the provision for the first quarter of 2020 was principally the result of the recent novel coronavirus (“COVID-19”) pandemic outbreak that has created significant volatility in the local, national and world economies. With the national guidance regarding social distancing and state and county mandates to shelter or stay at home, many large and small businesses have had to close and there has been a dramatic increase in new unemployment claims. As a result, we have increased our reserves for lifetime credit losses as a result of the economic impact of COVID-19. For more information, please see Note 1 to the Consolidated Financial Statements in “Item 8. Financial Statements and Supplementary Data” of our annual report on Form 10-K for the 2019 fiscal year and the “COVID-19 Update” section of this earnings release.
Andy McDonald, Columbia’s Executive Vice President and Chief Credit Officer, commented, “The increase in the provision was driven by our economic forecast reflecting the changes in the outlook for the economy driven by measures to mitigate health concerns surrounding COVID-19. Also contributing to the rise in the provision for the quarter was the negative migration in the portfolio which came about, not from customer past dues for example, but from our deep dive into the industries we believe that will be most impacted.”
Noninterest Income
Noninterest income was $21.2 million for the first quarter of 2020, a decrease of $600 thousand from the linked quarter and a decrease of $489 thousand from the first quarter of 2019. The linked quarter decrease was principally due to decreases in deposit and other fees partially offset by an increase in loan fees. The decrease from the prior year period was primarily due to lower deposit fees and lower net securities gains partially offset by higher loan revenue.
Noninterest Expense
Total noninterest expense for the first quarter of 2020 was $84.3 million, a decrease of $2.7 million from the fourth quarter of 2019 due to lower legal and professional fees. The decrease in legal and professional fees was principally due to lower fees on reciprocal money market accounts in 2020 as well as lower expenses related to corporate initiatives during the first quarter of 2020.
3
Compared to the first quarter of 2019, noninterest expense decreased $429 thousand. Although total noninterest expense was relatively unchanged, legal and professional fees and Business and Occupation (“B&O”) taxes decreased $2.5 million and $1.3 million, respectively, these decreases were partially offset by an increase of $2.8 million in compensation and employee benefits expense. The decrease in professional fees was due to lower fees on reciprocal money market account fees as well as lower expenses related to corporate initiatives. B&O tax expense benefited from a refund for a prior year.
Net Interest Margin
Columbia’s net interest margin (tax equivalent) for the first quarter of 2020 was 4.00%, a decrease of 11 basis points and 32 basis points from the linked quarter and prior year period, respectively. The decrease in the net interest margin (tax equivalent) compared to the linked quarter was driven by lower rates on the loan portfolio and higher premium amortization on taxable securities. Compared to the prior year period, the decreased net interest margin (tax equivalent) was driven by lower rates on loans and higher average balances of FHLB advances.
Columbia’s operating net interest margin (tax equivalent)(1) was 4.02% for the first quarter of 2020, which decreased 7 and 31 basis points compared to the linked quarter and the prior year period, respectively. The decreases in the operating net interest margin for the first quarter of 2020 compared to the linked quarter and the prior year quarter were due to the items noted in the preceding paragraph.
Asset Quality
At March 31, 2020, nonperforming assets to total assets were 0.34% compared to 0.24% at December 31, 2019. Total nonperforming assets increased $14.5 million from the linked quarter due to an increase in agriculture and commercial business nonaccrual loans.
(1) Operating net interest margin (tax equivalent) is a non-GAAP financial measure. See the section titled “Non-GAAP Financial Measures” in this earnings release for the reconciliation of operating net interest margin (tax equivalent) to net interest margin.
4
The following table sets forth information regarding nonaccrual loans and total nonperforming assets:
| March 31, 2020 | December 31, 2019 | |||||||||||||
| (in thousands) | ||||||||||||||
| Nonaccrual loans: | ||||||||||||||
| Commercial loans: | ||||||||||||||
| Commercial real estate | $ | 5,518 | $ | 3,799 | ||||||||||
| Commercial business | 24,395 | 20,937 | ||||||||||||
| Agriculture | 15,083 | 5,023 | ||||||||||||
| Consumer loans: | ||||||||||||||
| One-to-four family residential real estate | 2,643 | 3,292 | ||||||||||||
| Other consumer | 8 | 9 | ||||||||||||
| Total nonaccrual loans | 47,647 | 33,060 | ||||||||||||
| OREO and other personal property owned | 510 | 552 | ||||||||||||
| Total nonperforming assets | $ | 48,157 | $ | 33,612 | ||||||||||
5
The following table provides an analysis of the Company’s allowance for credit losses:
| Three Months Ended | ||||||||||||||||||||
| March 31, 2020 | December 31, 2019 | March 31, 2019 | ||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| Prior year ending balance | $ | 83,968 | $ | 82,660 | $ | 83,369 | ||||||||||||||
| CECL day 1 adjustment | 1,632 | — | — | |||||||||||||||||
| Beginning balance | 85,600 | 82,660 | 83,369 | |||||||||||||||||
| Charge-offs: | ||||||||||||||||||||
| Commercial loans: | ||||||||||||||||||||
| Commercial real estate | (101) | (452) | (678) | |||||||||||||||||
| Commercial business | (1,684) | (2,845) | (1,506) | |||||||||||||||||
| Agriculture | (4,726) | (51) | (78) | |||||||||||||||||
| Construction | — | (10) | (195) | |||||||||||||||||
| Consumer loans: | ||||||||||||||||||||
| One-to-four family residential real estate | (10) | (192) | (481) | |||||||||||||||||
| Other consumer | (268) | (18) | (50) | |||||||||||||||||
| Total charge-offs | (6,789) | (3,568) | (2,988) | |||||||||||||||||
| Recoveries: | ||||||||||||||||||||
| Commercial loans: | ||||||||||||||||||||
| Commercial real estate | 14 | 576 | 514 | |||||||||||||||||
| Commercial business | 860 | 1,698 | 527 | |||||||||||||||||
| Agriculture | 41 | 110 | 58 | |||||||||||||||||
| Construction | 442 | 312 | 83 | |||||||||||||||||
| Consumer loans: | ||||||||||||||||||||
| One-to-four family residential real estate | 282 | 549 | 334 | |||||||||||||||||
| Other consumer | 124 | 17 | 15 | |||||||||||||||||
| Total recoveries | 1,763 | 3,262 | 1,531 | |||||||||||||||||
| Net charge-offs | (5,026) | (306) | (1,457) | |||||||||||||||||
| Provision for credit losses | 41,500 | 1,614 | 1,362 | |||||||||||||||||
| Ending balance | $ | 122,074 | $ | 83,968 | $ | 83,274 | ||||||||||||||
The allowance for credit losses to period end loans was 1.37% at March 31, 2020 compared to an ALLL to period end loans of 0.96% at December 31, 2019.
6
Organizational Update
COVID-19 Update
Columbia began closely monitoring the COVID-19 outbreak early and enacted its pandemic plan in January to provide support for team members and clients. Advanced preparation and early action enabled the Bank to continue all operations as COVID-19 spread in the Northwest. Columbia continues to monitor the pandemic and adjust its response in concert with local government and healthcare officials. Clients have received support through payment deferral programs as well as a variety of options from the SBA including the Paycheck Protection Program, the Economic Injury Disaster Loan and other deferral and automatic debt relief programs. Columbia has assisted its non-profit community partners by lifting restrictions on sponsorships and contributions to allow these organizations to rededicate the funds to COVID-19 response and recovery efforts.
Aaron Deer Named Executive Vice President, Chief Financial Officer
Columbia recently announced the appointment of Aaron Deer to Executive Vice President and Chief Financial Officer following an extensive national search. Mr. Deer was most recently a Managing Director and Senior Research Analyst at Piper Sandler. As an equity analyst, he covered West Coast financial institutions for nearly 20 years with a focus on commercial banks and thrifts, financing of venture capital and private equity-backed enterprises as well as innovation among financial intermediaries. Mr. Deer has a detailed understanding of Columbia’s business and broad industry expertise that will prove valuable as the Company continues to sharpen its strategy and explore opportunities for growth and improved operating leverage.
7
Cash Dividend Announcement
Columbia will pay a regular cash dividend of $0.28 per common share on May 28, 2020 to shareholders of record as of the close of business on May 14, 2020.
Conference Call Information
Columbia’s management will discuss the first quarter 2020 financial results on a conference call scheduled for Thursday, April 30, 2020 at 10:00 a.m. Pacific Time (1:00 p.m. ET). Interested parties may join the live-streamed event by using the site:
https://engage.vevent.com/rt/columbiabankingsysteminc/index.jsp?seid=140
The conference call can also be accessed on Thursday, April 30, 2020 at 10:00 a.m. Pacific Time (1:00 p.m. ET) by calling 888-286-8956; Conference ID: 6697578.
A replay of the call can be accessed beginning Friday, May 1, 2020 using the site:
https://engage.vevent.com/rt/columbiabankingsysteminc/index.jsp?seid=140
About Columbia
Headquartered in Tacoma, Washington, Columbia Banking System, Inc. is the holding company of Columbia Bank, a Washington state-chartered full-service commercial bank with locations throughout Washington, Oregon and Idaho. For the 13th consecutive year, the bank was named in 2019 as one of Puget Sound Business Journal's “Washington’s Best Workplaces.” For the 8th consecutive year, Columbia was included in the 2019 Forbes America’s Best Banks list.
More information about Columbia can be found on its website at www.columbiabank.com.
8
Note Regarding Forward-Looking Statements
This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, descriptions of Columbia’s management’s expectations regarding future events and developments such as future operating results, growth in loans and deposits, continued success of Columbia’s style of banking and the strength of the local economy as well as the potential effects of the COVID-19 pandemic on Columbia’s business, operations, financial performance and prospects. The words “will,” “believe,” “expect,” “intend,” “should,” and “anticipate” or the negative of these words or words of similar construction are intended in part to help identify forward-looking statements. Future events are difficult to predict, and the expectations described above are necessarily subject to risks and uncertainties, many of which are outside our control, that may cause actual results to differ materially and adversely. In addition to discussions about risks and uncertainties set forth from time to time in Columbia’s filings with the Securities and Exchange Commission, available at the U.S. Securities and Exchange Commission’s (the “SEC”) website at www.sec.gov and the Company’s website at www.columbiabank.com, include the “Risk Factors,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our annual reports on Form 10-K and quarterly reports on Form 10-Q (as applicable), factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following: (1) local, national and international economic conditions may be less favorable than expected or have a more direct and pronounced effect on Columbia than expected and adversely affect Columbia’s ability to continue its internal growth at historical rates and maintain the quality of its earning assets; (2) the effect of COVID-19 and other infectious illness outbreaks that may arise in the future, which has created significant uncertainties in U.S. and global markets, is expected to continue to adversely affect the businesses in which Columbia is engaged; (3) changes in interest rates could significantly reduce net interest income and negatively affect funding sources; (4) projected business increases following strategic expansion or opening or acquiring new branches may be lower than expected; (5) costs or difficulties related to the integration of acquisitions may be greater than expected; (6) competitive pressure among financial institutions may increase significantly; (7) failure to maintain effective internal control over financial reporting or disclosure controls and procedures may adversely affect our business; (8) reliance on and cost of technology may increase; and (9) changes in governmental policy and regulation, including measures taken in response to economic, business, political and social conditions, including with regard to COVID-19, have adversely affected and may continue to adversely affect the businesses in which Columbia is engaged. We believe the expectations reflected in our forward-looking statements are reasonable, based on information available to us on the date hereof. However, given the described uncertainties and risks, we cannot guarantee our future performance or results of operations and you should not place undue reliance on these forward-looking statements which speak only as of the date hereof. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by the federal securities laws. The factors noted above and the risks and uncertainties described in our SEC filings should be considered when reading any forward-looking statements in this release.
| Contacts: | Clint Stein, | ||||
| President and | |||||
| Chief Executive Officer | |||||
| Investor Relations | |||||
| InvestorRelations@columbiabank.com | |||||
| 253-305-1921 | |||||
9
| CONSOLIDATED BALANCE SHEETS | |||||||||||||||||||||||
| Columbia Banking System, Inc. | |||||||||||||||||||||||
| Unaudited | March 31, | December 31, | |||||||||||||||||||||
| 2020 | 2019 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| ASSETS | |||||||||||||||||||||||
| Cash and due from banks | $ | 190,399 | $ | 223,541 | |||||||||||||||||||
| Interest-earning deposits with banks | 25,357 | 24,132 | |||||||||||||||||||||
| Total cash and cash equivalents | 215,756 | 247,673 | |||||||||||||||||||||
| Debt securities available for sale at fair value (amortized cost of $3,406,492 and $3,703,096, respectively) | 3,553,128 | 3,746,142 | |||||||||||||||||||||
| Federal Home Loan Bank (“FHLB”) stock at cost | 38,280 | 48,120 | |||||||||||||||||||||
| Loans held for sale | 9,701 | 17,718 | |||||||||||||||||||||
| Loans, net of unearned income | 8,933,321 | 8,743,465 | |||||||||||||||||||||
| Less: Allowance for credit losses | 122,074 | 83,968 | |||||||||||||||||||||
| Loans, net | 8,811,247 | 8,659,497 | |||||||||||||||||||||
| Interest receivable | 44,577 | 46,839 | |||||||||||||||||||||
| Premises and equipment, net | 164,626 | 165,408 | |||||||||||||||||||||
| Other real estate owned | 510 | 552 | |||||||||||||||||||||
| Goodwill | 765,842 | 765,842 | |||||||||||||||||||||
| Other intangible assets, net | 33,148 | 35,458 | |||||||||||||||||||||
| Other assets | 401,688 | 346,275 | |||||||||||||||||||||
| Total assets | $ | 14,038,503 | $ | 14,079,524 | |||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||
| Noninterest-bearing | $ | 5,323,908 | $ | 5,328,146 | |||||||||||||||||||
| Interest-bearing | 5,488,848 | 5,356,562 | |||||||||||||||||||||
| Total deposits | 10,812,756 | 10,684,708 | |||||||||||||||||||||
| FHLB advances and Federal Reserve Bank ("FRB") borrowings | 712,455 | 953,469 | |||||||||||||||||||||
| Securities sold under agreements to repurchase | 29,252 | 64,437 | |||||||||||||||||||||
| Subordinated debentures | 35,231 | 35,277 | |||||||||||||||||||||
| Revolving line of credit | 5,000 | — | |||||||||||||||||||||
| Other liabilities | 230,207 | 181,671 | |||||||||||||||||||||
| Total liabilities | 11,824,901 | 11,919,562 | |||||||||||||||||||||
| Commitments and contingent liabilities | |||||||||||||||||||||||
| Shareholders’ equity: | |||||||||||||||||||||||
| March 31, | December 31, | ||||||||||||||||||||||
| 2020 | 2019 | ||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Preferred stock (no par value) | |||||||||||||||||||||||
| Authorized shares | 2,000 | 2,000 | |||||||||||||||||||||
| Common stock (no par value) | |||||||||||||||||||||||
| Authorized shares | 115,000 | 115,000 | |||||||||||||||||||||
| Issued | 73,759 | 73,577 | 1,651,399 | 1,650,753 | |||||||||||||||||||
| Outstanding | 71,575 | 72,124 | |||||||||||||||||||||
| Retained earnings | 495,830 | 519,676 | |||||||||||||||||||||
| Accumulated other comprehensive income | 137,207 | 40,367 | |||||||||||||||||||||
| Treasury stock at cost | 2,184 | 1,453 | (70,834) | (50,834) | |||||||||||||||||||
| Total shareholders’ equity | 2,213,602 | 2,159,962 | |||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 14,038,503 | $ | 14,079,524 | |||||||||||||||||||
10
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||
| Columbia Banking System, Inc. | Three Months Ended | |||||||||||||||||||
| Unaudited | March 31, | December 31, | March 31, | |||||||||||||||||
| 2020 | 2019 | 2019 | ||||||||||||||||||
| Interest Income | (in thousands except per share amounts) | |||||||||||||||||||
| Loans | $ | 107,366 | $ | 110,384 | $ | 108,416 | ||||||||||||||
| Taxable securities | 21,088 | 20,074 | 17,415 | |||||||||||||||||
| Tax-exempt securities | 2,302 | 2,498 | 2,969 | |||||||||||||||||
| Deposits in banks | 141 | 153 | 88 | |||||||||||||||||
| Total interest income | 130,897 | 133,109 | 128,888 | |||||||||||||||||
| Interest Expense | ||||||||||||||||||||
| Deposits | 3,642 | 5,809 | 4,498 | |||||||||||||||||
| FHLB advances and FRB borrowings | 4,229 | 1,899 | 2,685 | |||||||||||||||||
| Subordinated debentures | 468 | 467 | 468 | |||||||||||||||||
| Other borrowings | 136 | 117 | 215 | |||||||||||||||||
| Total interest expense | 8,475 | 8,292 | 7,866 | |||||||||||||||||
| Net Interest Income | 122,422 | 124,817 | 121,022 | |||||||||||||||||
| Provision for credit losses | 41,500 | 1,614 | 1,362 | |||||||||||||||||
| Net interest income after provision for credit losses | 80,922 | 123,203 | 119,660 | |||||||||||||||||
| Noninterest Income | ||||||||||||||||||||
| Deposit account and treasury management fees | 7,788 | 8,665 | 8,980 | |||||||||||||||||
| Card revenue | 3,518 | 3,767 | 3,662 | |||||||||||||||||
| Financial services and trust revenue | 3,065 | 3,191 | 2,957 | |||||||||||||||||
| Loan revenue | 4,590 | 3,625 | 2,389 | |||||||||||||||||
| Bank owned life insurance | 1,596 | 1,650 | 1,519 | |||||||||||||||||
| Investment securities gains, net | 249 | — | 1,847 | |||||||||||||||||
| Other | 401 | 909 | 342 | |||||||||||||||||
| Total noninterest income | 21,207 | 21,807 | 21,696 | |||||||||||||||||
| Noninterest Expense | ||||||||||||||||||||
| Compensation and employee benefits | 54,842 | 54,308 | 52,085 | |||||||||||||||||
| Occupancy | 9,197 | 9,010 | 8,809 | |||||||||||||||||
| Data processing | 4,840 | 4,792 | 4,669 | |||||||||||||||||
| Legal and professional fees | 2,102 | 4,835 | 4,573 | |||||||||||||||||
| Amortization of intangibles | 2,310 | 2,450 | 2,748 | |||||||||||||||||
| Business and Occupation ("B&O") taxes | 624 | 1,234 | 1,876 | |||||||||||||||||
| Advertising and promotion | 1,305 | 1,329 | 974 | |||||||||||||||||
| Regulatory premiums | 34 | 18 | 984 | |||||||||||||||||
| Net cost (benefit) of operation of other real estate owned | 12 | (10) | 113 | |||||||||||||||||
| Other | 9,005 | 9,012 | 7,869 | |||||||||||||||||
| Total noninterest expense | 84,271 | 86,978 | 84,700 | |||||||||||||||||
| Income before income taxes | 17,858 | 58,032 | 56,656 | |||||||||||||||||
| Provision for income taxes | 3,230 | 11,903 | 10,785 | |||||||||||||||||
| Net Income | $ | 14,628 | $ | 46,129 | $ | 45,871 | ||||||||||||||
| Earnings per common share | ||||||||||||||||||||
| Basic | $ | 0.20 | $ | 0.64 | $ | 0.63 | ||||||||||||||
| Diluted | $ | 0.20 | $ | 0.64 | $ | 0.63 | ||||||||||||||
| Dividends declared per common share - regular | $ | 0.28 | $ | 0.28 | $ | 0.28 | ||||||||||||||
| Dividends declared per common share - special | $ | 0.22 | $ | — | $ | 0.14 | ||||||||||||||
| Dividends declared per common share - total | $ | 0.50 | $ | 0.28 | $ | 0.42 | ||||||||||||||
| Weighted average number of common shares outstanding | 71,206 | 71,238 | 72,521 | |||||||||||||||||
| Weighted average number of diluted common shares outstanding | 71,264 | 71,310 | 72,524 | |||||||||||||||||
11
| FINANCIAL STATISTICS | ||||||||||||||||||||
| Columbia Banking System, Inc. | Three Months Ended | |||||||||||||||||||
| Unaudited | March 31, | December 31, | March 31, | |||||||||||||||||
| 2020 | 2019 | 2019 | ||||||||||||||||||
| Earnings | (dollars in thousands except per share amounts) | |||||||||||||||||||
| Net interest income | $ | 122,422 | $ | 124,817 | $ | 121,022 | ||||||||||||||
| Provision for credit losses | $ | 41,500 | $ | 1,614 | $ | 1,362 | ||||||||||||||
| Noninterest income | $ | 21,207 | $ | 21,807 | $ | 21,696 | ||||||||||||||
| Noninterest expense | $ | 84,271 | $ | 86,978 | $ | 84,700 | ||||||||||||||
| Net income | $ | 14,628 | $ | 46,129 | $ | 45,871 | ||||||||||||||
| Per Common Share | ||||||||||||||||||||
| Earnings (basic) | $ | 0.20 | $ | 0.64 | $ | 0.63 | ||||||||||||||
| Earnings (diluted) | $ | 0.20 | $ | 0.64 | $ | 0.63 | ||||||||||||||
| Book value | $ | 30.93 | $ | 29.95 | $ | 28.39 | ||||||||||||||
| Tangible book value per common share (1) | $ | 19.76 | $ | 18.84 | $ | 17.39 | ||||||||||||||
| Averages | ||||||||||||||||||||
| Total assets | $ | 13,995,632 | $ | 13,750,840 | $ | 13,048,041 | ||||||||||||||
| Interest-earning assets | $ | 12,487,550 | $ | 12,231,779 | $ | 11,561,627 | ||||||||||||||
| Loans | $ | 8,815,755 | $ | 8,742,246 | $ | 8,406,664 | ||||||||||||||
| Securities and FHLB stock | $ | 3,618,567 | $ | 3,453,554 | $ | 3,140,201 | ||||||||||||||
| Deposits | $ | 10,622,379 | $ | 10,959,434 | $ | 10,271,016 | ||||||||||||||
| Interest-bearing deposits | $ | 5,383,203 | $ | 5,610,850 | $ | 5,226,396 | ||||||||||||||
| Interest-bearing liabilities | $ | 6,375,931 | $ | 6,058,319 | $ | 5,802,965 | ||||||||||||||
| Noninterest-bearing deposits | $ | 5,239,176 | $ | 5,348,584 | $ | 5,044,620 | ||||||||||||||
| Shareholders’ equity | $ | 2,193,051 | $ | 2,170,879 | $ | 2,044,832 | ||||||||||||||
| Financial Ratios | ||||||||||||||||||||
| Return on average assets | 0.42 | % | 1.34 | % | 1.41 | % | ||||||||||||||
| Return on average common equity | 2.67 | % | 8.50 | % | 8.97 | % | ||||||||||||||
| Return on average tangible common equity (1) | 4.72 | % | 14.05 | % | 15.57 | % | ||||||||||||||
| Average equity to average assets | 15.67 | % | 15.79 | % | 15.67 | % | ||||||||||||||
| Shareholders' equity to total assets | 15.77 | % | 15.34 | % | 15.99 | % | ||||||||||||||
| Tangible common shareholders’ equity to tangible assets (1) | 10.68 | % | 10.23 | % | 10.44 | % | ||||||||||||||
| Net interest margin (tax equivalent) | 4.00 | % | 4.11 | % | 4.32 | % | ||||||||||||||
| Efficiency ratio (tax equivalent) (2) | 57.73 | % | 58.34 | % | 58.33 | % | ||||||||||||||
| Operating efficiency ratio (tax equivalent) (1) | 57.24 | % | 58.07 | % | 57.54 | % | ||||||||||||||
| Noninterest expense ratio | 2.41 | % | 2.53 | % | 2.60 | % | ||||||||||||||
| March 31, | December 31, | |||||||||||||||||||
| Period end | 2020 | 2019 | ||||||||||||||||||
| Total assets | $ | 14,038,503 | $ | 14,079,524 | ||||||||||||||||
| Loans, net of unearned income | $ | 8,933,321 | $ | 8,743,465 | ||||||||||||||||
| Allowance for credit losses | $ | 122,074 | $ | 83,968 | ||||||||||||||||
| Securities and FHLB stock | $ | 3,591,408 | $ | 3,794,262 | ||||||||||||||||
| Deposits | $ | 10,812,756 | $ | 10,684,708 | ||||||||||||||||
| Shareholders’ equity | $ | 2,213,602 | $ | 2,159,962 | ||||||||||||||||
| Nonperforming assets | ||||||||||||||||||||
| Nonaccrual loans | $ | 47,647 | $ | 33,060 | ||||||||||||||||
| Other real estate owned (“OREO”) and other personal property owned (“OPPO”) | 510 | 552 | ||||||||||||||||||
| Total nonperforming assets | $ | 48,157 | $ | 33,612 | ||||||||||||||||
| Nonperforming loans to period-end loans | 0.53 | % | 0.38 | % | ||||||||||||||||
| Nonperforming assets to period-end assets | 0.34 | % | 0.24 | % | ||||||||||||||||
| Allowance for credit losses to period-end loans | 1.37 | % | 0.96 | % | ||||||||||||||||
| Net loan charge-offs (recoveries) (for the three months ended) | $ | 5,026 | $ | 306 | ||||||||||||||||
__________
(1) This is a non-GAAP measure. See section titled "Non-GAAP Financial Measures" on the last three pages of this earnings release for a reconciliation to the most comparable GAAP measure.
(2) Noninterest expense divided by the sum of net interest income on a tax equivalent basis and noninterest income on a tax equivalent basis.
12
| QUARTERLY FINANCIAL STATISTICS | ||||||||||||||||||||||||||||||||
| Columbia Banking System, Inc. | Three Months Ended | |||||||||||||||||||||||||||||||
| Unaudited | March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||||||||||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | ||||||||||||||||||||||||||||
| Earnings | (dollars in thousands except per share amounts) | |||||||||||||||||||||||||||||||
| Net interest income | $ | 122,422 | $ | 124,817 | $ | 122,450 | $ | 125,116 | $ | 121,022 | ||||||||||||||||||||||
| Provision for credit losses | $ | 41,500 | $ | 1,614 | $ | 299 | $ | 218 | $ | 1,362 | ||||||||||||||||||||||
| Noninterest income | $ | 21,207 | $ | 21,807 | $ | 28,030 | $ | 25,648 | $ | 21,696 | ||||||||||||||||||||||
| Noninterest expense | $ | 84,271 | $ | 86,978 | $ | 87,076 | $ | 86,728 | $ | 84,700 | ||||||||||||||||||||||
| Net income | $ | 14,628 | $ | 46,129 | $ | 50,727 | $ | 51,724 | $ | 45,871 | ||||||||||||||||||||||
| Per Common Share | ||||||||||||||||||||||||||||||||
| Earnings (basic) | $ | 0.20 | $ | 0.64 | $ | 0.70 | $ | 0.71 | $ | 0.63 | ||||||||||||||||||||||
| Earnings (diluted) | $ | 0.20 | $ | 0.64 | $ | 0.70 | $ | 0.71 | $ | 0.63 | ||||||||||||||||||||||
| Book value | $ | 30.93 | $ | 29.95 | $ | 29.90 | $ | 29.26 | $ | 28.39 | ||||||||||||||||||||||
| Averages | ||||||||||||||||||||||||||||||||
| Total assets | $ | 13,995,632 | $ | 13,750,840 | $ | 13,459,774 | $ | 13,096,413 | $ | 13,048,041 | ||||||||||||||||||||||
| Interest-earning assets | $ | 12,487,550 | $ | 12,231,779 | $ | 11,941,578 | $ | 11,606,727 | $ | 11,561,627 | ||||||||||||||||||||||
| Loans | $ | 8,815,755 | $ | 8,742,246 | $ | 8,694,592 | $ | 8,601,819 | $ | 8,406,664 | ||||||||||||||||||||||
| Securities and FHLB stock | $ | 3,618,567 | $ | 3,453,554 | $ | 3,102,213 | $ | 2,969,749 | $ | 3,140,201 | ||||||||||||||||||||||
| Deposits | $ | 10,622,379 | $ | 10,959,434 | $ | 10,668,767 | $ | 10,186,371 | $ | 10,271,016 | ||||||||||||||||||||||
| Interest-bearing deposits | $ | 5,383,203 | $ | 5,610,850 | $ | 5,517,171 | $ | 5,174,875 | $ | 5,226,396 | ||||||||||||||||||||||
| Interest-bearing liabilities | $ | 6,375,931 | $ | 6,058,319 | $ | 5,989,042 | $ | 5,841,425 | $ | 5,802,965 | ||||||||||||||||||||||
| Noninterest-bearing deposits | $ | 5,239,176 | $ | 5,348,584 | $ | 5,151,596 | $ | 5,011,496 | $ | 5,044,620 | ||||||||||||||||||||||
| Shareholders’ equity | $ | 2,193,051 | $ | 2,170,879 | $ | 2,152,916 | $ | 2,096,157 | $ | 2,044,832 | ||||||||||||||||||||||
| Financial Ratios | ||||||||||||||||||||||||||||||||
| Return on average assets | 0.42 | % | 1.34 | % | 1.51 | % | 1.58 | % | 1.41 | % | ||||||||||||||||||||||
| Return on average common equity | 2.67 | % | 8.50 | % | 9.42 | % | 9.87 | % | 8.97 | % | ||||||||||||||||||||||
| Average equity to average assets | 15.67 | % | 15.79 | % | 16.00 | % | 16.01 | % | 15.67 | % | ||||||||||||||||||||||
| Shareholders’ equity to total assets | 15.77 | % | 15.34 | % | 15.71 | % | 16.30 | % | 15.99 | % | ||||||||||||||||||||||
| Net interest margin (tax equivalent) | 4.00 | % | 4.11 | % | 4.14 | % | 4.40 | % | 4.32 | % | ||||||||||||||||||||||
| Period-end | ||||||||||||||||||||||||||||||||
| Total assets | $ | 14,038,503 | $ | 14,079,524 | $ | 13,757,760 | $ | 13,090,808 | $ | 13,064,436 | ||||||||||||||||||||||
| Loans, net of unearned income | $ | 8,933,321 | $ | 8,743,465 | $ | 8,756,355 | $ | 8,646,990 | $ | 8,520,798 | ||||||||||||||||||||||
| Allowance for credit losses | $ | 122,074 | $ | 83,968 | $ | 82,660 | $ | 80,517 | $ | 83,274 | ||||||||||||||||||||||
| Securities and FHLB stock | $ | 3,591,408 | $ | 3,794,262 | $ | 3,397,252 | $ | 2,894,218 | $ | 3,052,870 | ||||||||||||||||||||||
| Deposits | $ | 10,812,756 | $ | 10,684,708 | $ | 10,855,716 | $ | 10,211,599 | $ | 10,369,009 | ||||||||||||||||||||||
| Shareholders’ equity | $ | 2,213,602 | $ | 2,159,962 | $ | 2,161,577 | $ | 2,133,638 | $ | 2,088,620 | ||||||||||||||||||||||
| Goodwill | $ | 765,842 | $ | 765,842 | $ | 765,842 | $ | 765,842 | $ | 765,842 | ||||||||||||||||||||||
| Other intangible assets, net | $ | 33,148 | $ | 35,458 | $ | 37,908 | $ | 40,540 | $ | 43,189 | ||||||||||||||||||||||
| Nonperforming assets | ||||||||||||||||||||||||||||||||
| Nonaccrual loans | $ | 47,647 | $ | 33,060 | $ | 37,021 | $ | 39,038 | $ | 52,615 | ||||||||||||||||||||||
| OREO and OPPO | 510 | 552 | 625 | 1,118 | 6,075 | |||||||||||||||||||||||||||
| Total nonperforming assets | $ | 48,157 | $ | 33,612 | $ | 37,646 | $ | 40,156 | $ | 58,690 | ||||||||||||||||||||||
| Nonperforming loans to period-end loans | 0.53 | % | 0.38 | % | 0.42 | % | 0.45 | % | 0.62 | % | ||||||||||||||||||||||
| Nonperforming assets to period-end assets | 0.34 | % | 0.24 | % | 0.27 | % | 0.31 | % | 0.45 | % | ||||||||||||||||||||||
| Allowance for credit losses to period-end loans | 1.37 | % | 0.96 | % | 0.94 | % | 0.93 | % | 0.98 | % | ||||||||||||||||||||||
| Net loan charge-offs (recoveries) | $ | 5,026 | $ | 306 | $ | (1,844) | $ | 2,975 | $ | 1,457 | ||||||||||||||||||||||
13
| LOAN PORTFOLIO COMPOSITION | ||||||||||||||||||||||||||||||||
| Columbia Banking System, Inc. | ||||||||||||||||||||||||||||||||
| Unaudited | March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||||||||||||||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | ||||||||||||||||||||||||||||
| Loan Portfolio Composition - Dollars | (dollars in thousands) | |||||||||||||||||||||||||||||||
| Commercial loans: | ||||||||||||||||||||||||||||||||
| Commercial real estate | $ | 3,969,974 | $ | 3,945,853 | $ | 3,746,365 | $ | 3,689,282 | $ | 3,676,921 | ||||||||||||||||||||||
| Commercial business | 3,169,668 | 2,989,613 | 3,057,669 | 3,059,066 | 2,996,412 | |||||||||||||||||||||||||||
| Agriculture | 754,491 | 765,371 | 777,619 | 744,481 | 663,394 | |||||||||||||||||||||||||||
| Construction | 308,186 | 361,533 | 479,171 | 446,101 | 458,946 | |||||||||||||||||||||||||||
| Consumer loans: | ||||||||||||||||||||||||||||||||
| One-to-four family residential real estate | 690,506 | 637,325 | 654,077 | 667,037 | 683,227 | |||||||||||||||||||||||||||
| Other consumer | 40,496 | 43,770 | 41,454 | 41,023 | 41,898 | |||||||||||||||||||||||||||
| Total loans | 8,933,321 | 8,743,465 | 8,756,355 | 8,646,990 | 8,520,798 | |||||||||||||||||||||||||||
| Less: Allowance for credit losses | (122,074) | (83,968) | (82,660) | (80,517) | (83,274) | |||||||||||||||||||||||||||
| Total loans, net | $ | 8,811,247 | $ | 8,659,497 | $ | 8,673,695 | $ | 8,566,473 | $ | 8,437,524 | ||||||||||||||||||||||
| Loans held for sale | $ | 9,701 | $ | 17,718 | $ | 15,036 | $ | 12,189 | $ | 4,017 | ||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||||||||||||
| Loan Portfolio Composition - Percentages | 2020 | 2019 | 2019 | 2019 | 2019 | |||||||||||||||||||||||||||
| Commercial loans: | ||||||||||||||||||||||||||||||||
| Commercial real estate | 44.5 | % | 45.1 | % | 42.7 | % | 42.6 | % | 43.1 | % | ||||||||||||||||||||||
| Commercial business | 35.5 | % | 34.2 | % | 34.9 | % | 35.4 | % | 35.2 | % | ||||||||||||||||||||||
| Agriculture | 8.4 | % | 8.8 | % | 8.9 | % | 8.6 | % | 7.8 | % | ||||||||||||||||||||||
| Construction | 3.4 | % | 4.1 | % | 5.5 | % | 5.2 | % | 5.4 | % | ||||||||||||||||||||||
| Consumer loans: | ||||||||||||||||||||||||||||||||
| One-to-four family residential real estate | 7.7 | % | 7.3 | % | 7.5 | % | 7.7 | % | 8.0 | % | ||||||||||||||||||||||
| Other consumer | 0.5 | % | 0.5 | % | 0.5 | % | 0.5 | % | 0.5 | % | ||||||||||||||||||||||
| Total loans | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||||
14
| DEPOSIT COMPOSITION | ||||||||||||||||||||||||||||||||
| Columbia Banking System, Inc. | ||||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||||||||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | ||||||||||||||||||||||||||||
| Deposit Composition - Dollars | (dollars in thousands) | |||||||||||||||||||||||||||||||
| Demand and other noninterest-bearing | $ | 5,323,908 | $ | 5,328,146 | $ | 5,320,435 | $ | 5,082,219 | $ | 5,106,568 | ||||||||||||||||||||||
| Money market | 2,313,717 | 2,322,644 | 2,295,229 | 2,240,522 | 2,311,937 | |||||||||||||||||||||||||||
| Interest-bearing demand | 1,131,874 | 1,150,437 | 1,059,502 | 1,058,545 | 1,078,849 | |||||||||||||||||||||||||||
| Savings | 905,931 | 882,050 | 892,438 | 887,172 | 896,458 | |||||||||||||||||||||||||||
Interest-bearing public funds, other than certificates of deposit | 405,810 | 301,203 | 629,797 | 270,398 | 269,156 | |||||||||||||||||||||||||||
| Certificates of deposit, less than $250,000 | 214,449 | 218,764 | 223,249 | 228,920 | 236,014 | |||||||||||||||||||||||||||
| Certificates of deposit, $250,000 or more | 109,659 | 151,995 | 107,506 | 105,782 | 101,965 | |||||||||||||||||||||||||||
| Certificates of deposit insured by CDARS® | 17,171 | 17,065 | 17,252 | 16,559 | 22,890 | |||||||||||||||||||||||||||
| Brokered certificates of deposit | 12,259 | 12,259 | 18,852 | 40,502 | 51,375 | |||||||||||||||||||||||||||
| Reciprocal money market accounts | 377,980 | 300,158 | 291,542 | 281,247 | 294,096 | |||||||||||||||||||||||||||
| Subtotal | 10,812,758 | 10,684,721 | 10,855,802 | 10,211,866 | 10,369,308 | |||||||||||||||||||||||||||
Valuation adjustment resulting from acquisition accounting | (2) | (13) | (86) | (267) | (299) | |||||||||||||||||||||||||||
| Total deposits | $ | 10,812,756 | $ | 10,684,708 | $ | 10,855,716 | $ | 10,211,599 | $ | 10,369,009 | ||||||||||||||||||||||
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||||||||||||||||||||
| Deposit Composition - Percentages | 2020 | 2019 | 2019 | 2019 | 2019 | |||||||||||||||||||||||||||
| Demand and other noninterest-bearing | 49.2 | % | 49.9 | % | 49.0 | % | 49.8 | % | 49.2 | % | ||||||||||||||||||||||
| Money market | 21.4 | % | 21.7 | % | 21.1 | % | 21.9 | % | 22.3 | % | ||||||||||||||||||||||
| Interest-bearing demand | 10.5 | % | 10.8 | % | 9.8 | % | 10.4 | % | 10.4 | % | ||||||||||||||||||||||
| Savings | 8.4 | % | 8.3 | % | 8.2 | % | 8.7 | % | 8.6 | % | ||||||||||||||||||||||
Interest-bearing public funds, other than certificates of deposit | 3.8 | % | 2.8 | % | 5.8 | % | 2.7 | % | 2.6 | % | ||||||||||||||||||||||
| Certificates of deposit, less than $250,000 | 2.0 | % | 2.0 | % | 2.1 | % | 2.2 | % | 2.3 | % | ||||||||||||||||||||||
| Certificates of deposit, $250,000 or more | 1.0 | % | 1.4 | % | 1.0 | % | 1.0 | % | 1.0 | % | ||||||||||||||||||||||
| Certificates of deposit insured by CDARS® | 0.2 | % | 0.2 | % | 0.2 | % | 0.2 | % | 0.2 | % | ||||||||||||||||||||||
| Brokered certificates of deposit | 0.1 | % | 0.1 | % | 0.2 | % | 0.4 | % | 0.5 | % | ||||||||||||||||||||||
| Reciprocal money market accounts | 3.4 | % | 2.8 | % | 2.6 | % | 2.7 | % | 2.9 | % | ||||||||||||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||||||||
15
| AVERAGE BALANCES AND RATES | ||||||||||||||||||||||||||||||||||||||
| Columbia Banking System, Inc. | ||||||||||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||||||||
| March 31, 2020 | March 31, 2019 | |||||||||||||||||||||||||||||||||||||
| Average Balances | Interest Earned / Paid | Average Rate | Average Balances | Interest Earned / Paid | Average Rate | |||||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||||||||||||||||
| Loans, net (1)(2) | $ | 8,815,755 | $ | 108,665 | 4.96 | % | $ | 8,406,664 | $ | 109,715 | 5.29 | % | ||||||||||||||||||||||||||
| Taxable securities | 3,209,110 | 21,088 | 2.64 | % | 2,637,436 | 17,415 | 2.68 | % | ||||||||||||||||||||||||||||||
| Tax exempt securities (2) | 409,457 | 2,914 | 2.86 | % | 502,765 | 3,758 | 3.03 | % | ||||||||||||||||||||||||||||||
| Interest-earning deposits with banks | 53,228 | 141 | 1.07 | % | 14,762 | 88 | 2.42 | % | ||||||||||||||||||||||||||||||
| Total interest-earning assets | 12,487,550 | 132,808 | 4.28 | % | 11,561,627 | 130,976 | 4.59 | % | ||||||||||||||||||||||||||||||
| Other earning assets | 232,361 | 232,077 | ||||||||||||||||||||||||||||||||||||
| Noninterest-earning assets | 1,275,721 | 1,254,337 | ||||||||||||||||||||||||||||||||||||
| Total assets | $ | 13,995,632 | $ | 13,048,041 | ||||||||||||||||||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||||||||||||||||
| Money market accounts (3) | $ | 2,633,931 | $ | 1,728 | 0.26 | % | $ | 2,585,983 | $ | 2,585 | 0.41 | % | ||||||||||||||||||||||||||
| Interest-bearing demand (3) | 1,125,691 | 484 | 0.17 | % | 1,074,595 | 364 | 0.14 | % | ||||||||||||||||||||||||||||||
| Savings accounts (3) | 897,276 | 43 | 0.02 | % | 896,514 | 43 | 0.02 | % | ||||||||||||||||||||||||||||||
Interest-bearing public funds, other than certificates of deposit (3) | 355,401 | 903 | 1.02 | % | 262,765 | 930 | 1.44 | % | ||||||||||||||||||||||||||||||
| Certificates of deposit | 370,904 | 484 | 0.52 | % | 406,539 | 576 | 0.57 | % | ||||||||||||||||||||||||||||||
| Total interest-bearing deposits | 5,383,203 | 3,642 | 0.27 | % | 5,226,396 | 4,498 | 0.35 | % | ||||||||||||||||||||||||||||||
| FHLB advances and FRB borrowings | 909,110 | 4,229 | 1.87 | % | 499,428 | 2,685 | 2.18 | % | ||||||||||||||||||||||||||||||
| Subordinated debentures | 35,253 | 468 | 5.34 | % | 35,438 | 468 | 5.36 | % | ||||||||||||||||||||||||||||||
Other borrowings and interest-bearing liabilities | 48,365 | 136 | 1.13 | % | 41,703 | 215 | 2.09 | % | ||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 6,375,931 | 8,475 | 0.53 | % | 5,802,965 | 7,866 | 0.55 | % | ||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | 5,239,176 | 5,044,620 | ||||||||||||||||||||||||||||||||||||
| Other noninterest-bearing liabilities | 187,474 | 155,624 | ||||||||||||||||||||||||||||||||||||
| Shareholders’ equity | 2,193,051 | 2,044,832 | ||||||||||||||||||||||||||||||||||||
| Total liabilities & shareholders’ equity | $ | 13,995,632 | $ | 13,048,041 | ||||||||||||||||||||||||||||||||||
| Net interest income (tax equivalent) | $ | 124,333 | $ | 123,110 | ||||||||||||||||||||||||||||||||||
| Net interest margin (tax equivalent) | 4.00 | % | 4.32 | % | ||||||||||||||||||||||||||||||||||
__________
(1)Nonaccrual loans have been included in the tables as loans carrying a zero yield. Amortized net deferred loan fees and net unearned discounts on acquired loans were included in the interest income calculations. The amortization of net deferred loan fees was $2.4 million and $2.2 million for the three months ended March 31, 2020 and 2019, respectively. The incremental accretion income on acquired loans was $1.5 million and $2.0 million for the three months ended March 31, 2020 and 2019, respectively.
(2)Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $1.3 million for both the three months ended March 31, 2020 and 2019. The tax equivalent yield adjustment to interest earned on tax exempt securities was $612 thousand and $789 thousand for the three months ended March 31, 2020 and 2019, respectively.
(3)Beginning July 2019, interest-bearing public funds, other than certificates of deposit, are presented separately in this table. Prior period amounts have been reclassified to conform to current period presentation.
| AVERAGE BALANCES AND RATES | ||||||||||||||||||||||||||||||||||||||
| Columbia Banking System, Inc. | ||||||||||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||||||||
| March 31, 2020 | December 31, 2019 | |||||||||||||||||||||||||||||||||||||
| Average Balances | Interest Earned / Paid | Average Rate | Average Balances | Interest Earned / Paid | Average Rate | |||||||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||||||||||||||||
| Loans, net (1)(2) | $ | 8,815,755 | $ | 108,665 | 4.96 | % | $ | 8,742,246 | $ | 111,754 | 5.07 | % | ||||||||||||||||||||||||||
| Taxable securities | 3,209,110 | 21,088 | 2.64 | % | 3,011,521 | 20,074 | 2.64 | % | ||||||||||||||||||||||||||||||
| Tax exempt securities (2) | 409,457 | 2,914 | 2.86 | % | 442,033 | 3,163 | 2.84 | % | ||||||||||||||||||||||||||||||
| Interest-earning deposits with banks | 53,228 | 141 | 1.07 | % | 35,979 | 153 | 1.69 | % | ||||||||||||||||||||||||||||||
| Total interest-earning assets | 12,487,550 | 132,808 | 4.28 | % | 12,231,779 | 135,144 | 4.38 | % | ||||||||||||||||||||||||||||||
| Other earning assets | 232,361 | 231,456 | ||||||||||||||||||||||||||||||||||||
| Noninterest-earning assets | 1,275,721 | 1,287,605 | ||||||||||||||||||||||||||||||||||||
| Total assets | $ | 13,995,632 | $ | 13,750,840 | ||||||||||||||||||||||||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||||||||||||||||
| Money market accounts | $ | 2,633,931 | $ | 1,728 | 0.26 | % | $ | 2,649,404 | $ | 2,277 | 0.34 | % | ||||||||||||||||||||||||||
| Interest-bearing demand | 1,125,691 | 484 | 0.17 | % | 1,065,531 | 446 | 0.17 | % | ||||||||||||||||||||||||||||||
| Savings accounts | 897,276 | 43 | 0.02 | % | 888,895 | 47 | 0.02 | % | ||||||||||||||||||||||||||||||
Interest-bearing public funds, other than certificates of deposit | 355,401 | 903 | 1.02 | % | 616,938 | 2,413 | 1.55 | % | ||||||||||||||||||||||||||||||
| Certificates of deposit | 370,904 | 484 | 0.52 | % | 390,082 | 626 | 0.64 | % | ||||||||||||||||||||||||||||||
| Total interest-bearing deposits | 5,383,203 | 3,642 | 0.27 | % | 5,610,850 | 5,809 | 0.41 | % | ||||||||||||||||||||||||||||||
| FHLB advances and FRB borrowings | 909,110 | 4,229 | 1.87 | % | 379,975 | 1,899 | 1.98 | % | ||||||||||||||||||||||||||||||
| Subordinated debentures | 35,253 | 468 | 5.34 | % | 35,299 | 467 | 5.25 | % | ||||||||||||||||||||||||||||||
Other borrowings and interest-bearing liabilities | 48,365 | 136 | 1.13 | % | 32,195 | 117 | 1.44 | % | ||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 6,375,931 | 8,475 | 0.53 | % | 6,058,319 | 8,292 | 0.54 | % | ||||||||||||||||||||||||||||||
| Noninterest-bearing deposits | 5,239,176 | 5,348,584 | ||||||||||||||||||||||||||||||||||||
| Other noninterest-bearing liabilities | 187,474 | 173,058 | ||||||||||||||||||||||||||||||||||||
| Shareholders’ equity | 2,193,051 | 2,170,879 | ||||||||||||||||||||||||||||||||||||
| Total liabilities & shareholders’ equity | $ | 13,995,632 | $ | 13,750,840 | ||||||||||||||||||||||||||||||||||
| Net interest income (tax equivalent) | $ | 124,333 | $ | 126,852 | ||||||||||||||||||||||||||||||||||
| Net interest margin (tax equivalent) | 4.00 | % | 4.11 | % | ||||||||||||||||||||||||||||||||||
__________
(1)Nonaccrual loans have been included in the tables as loans carrying a zero yield. Amortized net deferred loan fees and net unearned discounts on acquired loans were included in the interest income calculations. The amortization of net deferred loan fees was $2.4 million and $2.1 million for the three months ended March 31, 2020 and December 31, 2019, respectively. The incremental accretion on acquired loans was $1.5 million and $2.3 million for the three months ended March 31, 2020 and December 31, 2019, respectively.
(2)Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $1.3 million and $1.4 million for the three months ended March 31, 2020 and December 31, 2019, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $612 thousand and $665 thousand for the three months ended March 31, 2020 and December 31, 2019, respectively.
17
Non-GAAP Financial Measures
The Company considers its operating net interest margin and operating efficiency ratios to be useful measurements as they more closely reflect the ongoing operating performance of the Company. Despite the usefulness of the operating net interest margin and operating efficiency ratio to the Company, there are no standardized definitions for them. As a result, the Company’s calculations may not be comparable with other organizations. The Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.
The following tables reconcile the Company’s calculation of the operating net interest margin and operating efficiency ratio:
| Three Months Ended | ||||||||||||||||||||
| March 31, | December 31, | March 31, | ||||||||||||||||||
| 2020 | 2019 | 2019 | ||||||||||||||||||
| Operating net interest margin non-GAAP reconciliation: | (dollars in thousands) | |||||||||||||||||||
| Net interest income (tax equivalent) (1) | $ | 124,333 | $ | 126,852 | $ | 123,110 | ||||||||||||||
| Adjustments to arrive at operating net interest income (tax equivalent): | ||||||||||||||||||||
| Incremental accretion income on acquired loans (2) | (1,491) | (2,316) | (2,035) | |||||||||||||||||
| Premium amortization on acquired securities | 1,127 | 1,204 | 1,779 | |||||||||||||||||
| Interest reversals on nonaccrual loans | 788 | 209 | 626 | |||||||||||||||||
| Operating net interest income (tax equivalent) (1) | $ | 124,757 | $ | 125,949 | $ | 123,480 | ||||||||||||||
| Average interest earning assets | $ | 12,487,550 | $ | 12,231,779 | $ | 11,561,627 | ||||||||||||||
| Net interest margin (tax equivalent) (1) | 4.00 | % | 4.11 | % | 4.32 | % | ||||||||||||||
| Operating net interest margin (tax equivalent) (1) | 4.02 | % | 4.09 | % | 4.33 | % | ||||||||||||||
| Three Months Ended | ||||||||||||||||||||
| March 31, | December 31, | March 31, | ||||||||||||||||||
| 2020 | 2019 | 2019 | ||||||||||||||||||
| Operating efficiency ratio non-GAAP reconciliation: | (dollars in thousands) | |||||||||||||||||||
| Noninterest expense (numerator A) | $ | 84,271 | $ | 86,978 | $ | 84,700 | ||||||||||||||
| Adjustments to arrive at operating noninterest expense: | ||||||||||||||||||||
| Net benefit (cost) of operation of OREO and OPPO | (4) | 10 | (114) | |||||||||||||||||
| Loss on asset disposals | (4) | — | — | |||||||||||||||||
| Business and Occupation (“B&O”) taxes | (624) | (1,234) | (1,876) | |||||||||||||||||
| Operating noninterest expense (numerator B) | $ | 83,639 | $ | 85,754 | $ | 82,710 | ||||||||||||||
| Net interest income (tax equivalent) (1) | $ | 124,333 | $ | 126,852 | $ | 123,110 | ||||||||||||||
| Noninterest income | 21,207 | 21,807 | 21,696 | |||||||||||||||||
| Bank owned life insurance tax equivalent adjustment | 424 | 439 | 404 | |||||||||||||||||
| Total revenue (tax equivalent) (denominator A) | $ | 145,964 | $ | 149,098 | $ | 145,210 | ||||||||||||||
| Operating net interest income (tax equivalent) (1) | $ | 124,757 | $ | 125,949 | $ | 123,480 | ||||||||||||||
| Adjustments to arrive at operating noninterest income (tax equivalent): | ||||||||||||||||||||
| Investment securities loss (gain), net | (249) | — | (1,847) | |||||||||||||||||
| Gain on asset disposals | (21) | (530) | — | |||||||||||||||||
| Operating noninterest income (tax equivalent) | 21,361 | 21,716 | 20,253 | |||||||||||||||||
| Total operating revenue (tax equivalent) (denominator B) | $ | 146,118 | $ | 147,665 | $ | 143,733 | ||||||||||||||
| Efficiency ratio (tax equivalent) (numerator A/denominator A) | 57.73 | % | 58.34 | % | 58.33 | % | ||||||||||||||
| Operating efficiency ratio (tax equivalent) (numerator B/denominator B) | 57.24 | % | 58.07 | % | 57.54 | % | ||||||||||||||
__________
(1) Tax-exempt interest income has been adjusted to a tax equivalent basis. The amount of such adjustment was an addition to net interest income of $1.9 million, $2.0 million, and $2.1 million for the three months ended March 31, 2020, December 31, 2019, and March 31, 2019, respectively.
(2) Beginning January 2020, incremental accretion income on purchased credit impaired loans is no longer presented separate from incremental accretion income on other acquired loans. Prior period amounts have been reclassified to conform with current period presentation.
18
Non-GAAP Financial Measures - Continued
The Company considers its pre-tax, pre-provision income to be a useful measurement in evaluating the earnings of the Company as it provides a method to assess income. Despite the usefulness of this measure to the Company, there is not a standardized definition for it. As a result, the Company’s calculation may not always be comparable with other organizations. The Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.
The following table reconciles the Company’s calculation of the pre-tax, pre-provision income:
| Three Months Ended | ||||||||||||||||||||
| March 31, | December 31, | March 31, | ||||||||||||||||||
| 2020 | 2019 | 2019 | ||||||||||||||||||
| Pre-tax, pre-provision income: | (in thousands) | |||||||||||||||||||
| Income before income taxes | $ | 17,858 | $ | 58,032 | $ | 56,656 | ||||||||||||||
| Provision for credit losses | 41,500 | 1,614 | 1,362 | |||||||||||||||||
| Pre-tax, pre-provision income | $ | 59,358 | $ | 59,646 | $ | 58,018 | ||||||||||||||
The Company considers its tangible common equity ratio and tangible book value per share ratio to be useful measurements in evaluating the capital adequacy of the Company as they provide a method to assess management’s success in utilizing our tangible capital. Despite the usefulness of these ratios to the Company, there is not a standardized definition for them. As a result, the Company’s calculation may not always be comparable with other organizations. The Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.
The following tables reconcile the Company’s calculation of the tangible common equity ratio:
| March 31, | December 31, | March 31, | ||||||||||||||||||
| 2020 | 2019 | 2019 | ||||||||||||||||||
Tangible common equity ratio and tangible book value per common share non-GAAP reconciliation: | (dollars in thousands except per share amounts) | |||||||||||||||||||
| Shareholders’ equity (numerator A) | $ | 2,213,602 | $ | 2,159,962 | $ | 2,088,620 | ||||||||||||||
| Adjustments to arrive at tangible common equity: | ||||||||||||||||||||
| Goodwill | (765,842) | (765,842) | (765,842) | |||||||||||||||||
| Other intangible assets, net | (33,148) | (35,458) | (43,189) | |||||||||||||||||
| Tangible common equity (numerator B) | $ | 1,414,612 | $ | 1,358,662 | $ | 1,279,589 | ||||||||||||||
| Total assets (denominator A) | $ | 14,038,503 | $ | 14,079,524 | $ | 13,064,436 | ||||||||||||||
| Adjustments to arrive at tangible assets: | ||||||||||||||||||||
| Goodwill | (765,842) | (765,842) | (765,842) | |||||||||||||||||
| Other intangible assets, net | (33,148) | (35,458) | (43,189) | |||||||||||||||||
| Tangible assets (denominator B) | $ | 13,239,513 | $ | 13,278,224 | $ | 12,255,405 | ||||||||||||||
| Shareholders’ equity to total assets (numerator A/denominator A) | 15.77 | % | 15.34 | % | 15.99 | % | ||||||||||||||
| Tangible common shareholders’ equity to tangible assets (numerator B/denominator B) | 10.68 | % | 10.23 | % | 10.44 | % | ||||||||||||||
| Common shares outstanding (denominator C) | 71,575 | 72,124 | 73,565 | |||||||||||||||||
| Book value per common share (numerator A/denominator C) | $ | 30.93 | $ | 29.95 | $ | 28.39 | ||||||||||||||
| Tangible book value per common share (numerator B/denominator C) | $ | 19.76 | $ | 18.84 | $ | 17.39 | ||||||||||||||
19
Non-GAAP Financial Measures - Continued
The Company also considers its return on average tangible common equity ratio to be a useful measurement as it evaluates the Company’s ongoing ability to generate returns for its common shareholders. By removing the impact of intangible assets and their related amortization and tax effects, the performance of the business can be evaluated, whether acquired or developed internally. Despite the usefulness of this ratio to the Company, there is not a standardized definition for it. As a result, the Company’s calculation may not always be comparable with other organizations. The Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.
The following tables reconcile the Company’s calculation of the return on average tangible common shareholders' equity ratio:
| Three Months Ended | ||||||||||||||||||||
| March 31, | December 31, | March 31, | ||||||||||||||||||
| 2020 | 2019 | 2019 | ||||||||||||||||||
| Return on average tangible common equity non-GAAP reconciliation: | (dollars in thousands) | |||||||||||||||||||
| Net income (numerator A) | $ | 14,628 | $ | 46,129 | $ | 45,871 | ||||||||||||||
| Adjustments to arrive at tangible income applicable to common shareholders: | ||||||||||||||||||||
| Amortization of intangibles | 2,310 | 2,450 | 2,748 | |||||||||||||||||
| Tax effect on intangible amortization | (485) | (515) | (577) | |||||||||||||||||
| Tangible income applicable to common shareholders (numerator B) | $ | 16,453 | $ | 48,064 | $ | 48,042 | ||||||||||||||
| Average shareholders’ equity (denominator A) | $ | 2,193,051 | $ | 2,170,879 | $ | 2,044,832 | ||||||||||||||
| Adjustments to arrive at average tangible common equity: | ||||||||||||||||||||
| Average intangibles | (800,079) | (802,446) | (810,376) | |||||||||||||||||
| Average tangible common equity (denominator B) | $ | 1,392,972 | $ | 1,368,433 | $ | 1,234,456 | ||||||||||||||
| Return on average common equity (numerator A/denominator A) (1) | 2.67 | % | 8.50 | % | 8.97 | % | ||||||||||||||
| Return on average tangible common equity (numerator B/denominator B) (2) | 4.72 | % | 14.05 | % | 15.57 | % | ||||||||||||||
__________
(1) For the purpose of this ratio, interim net income has been annualized.
(2) For the purpose of this ratio, interim tangible income applicable to common shareholders has been annualized.
20