Columbia Banking System Announces Fourth Quarter and Full Year 2019 Results, and Quarterly and Special Cash Dividends

TACOMA, Wash., Jan. 23, 2020 /PRNewswire/ --

Columbia Banking System Logo. (PRNewsFoto/Columbia Banking System, Inc.)

Highlights

  • Record full year 2019 net income of $194.5 million and diluted earnings per share of $2.68
  • Fourth Quarter net income of $46.1 million; diluted earnings per share of $0.64
  • Record full year loan production of $1.58 billion and fourth quarter loan production of $427.0 million
  • Nonperforming assets to period end assets ratio improved for the eighth consecutive quarter to 0.24%
  • Exceeded our five-year fund-raising milestone, raising more than $1.0 million for local communities through our annual Warm Hearts fund-raiser
  • Successfully completed leadership transition as planned
  • Regular and special cash dividends declared of $0.28 and $0.22 per share, respectively

Clint Stein, President and Chief Executive Officer of Columbia Banking System, Inc. and Columbia Bank COLB ("Columbia"), said today upon the release of Columbia's fourth quarter 2019 earnings, "I want to thank the entire team for a remarkable year in which we had record net income, despite the three rate cuts that occurred during the year. We also had record loan production in addition to progressing on a number of strategic initiatives. It is a testament to our bench strength and our succession planning process that we were able to have these results while going through a leadership transition during the fourth quarter."

Balance Sheet

Total assets at December 31, 2019 were $14.08 billion, an increase of $321.8 million from the linked quarter. Loans were $8.74 billion, down $12.9 million from September 30, 2019 as a result of loan originations of $427.0 million offset by a decrease in seasonal line utilization and payments. Securities available for sale were $3.75 billion at December 31, 2019, an increase of $378.6 million from $3.37 billion at September 30, 2019. Total deposits at December 31, 2019 were $10.68 billion, a decrease of $171.0 million from September 30, 2019 principally due to a decrease of $328.6 million in public funds, excluding certificates of deposit. Deposit mix remained fairly consistent from September 30, 2019 with 50% noninterest-bearing and 50% interest-bearing. The average cost of total deposits for the quarter was 21 basis points, a decrease of 5 basis points from the third 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, "We were able to achieve record loan production for both the fourth quarter and the full year while maintaining our credit disciplines thanks to our talented bankers. Over the past year, we have relied on our strong performers as well as have invested in new teams that have hit the ground running and contributed to a very successful year."

Income Statement

Net Interest Income

Net interest income for the fourth quarter of 2019 was $124.8 million, an increase of $2.4 million and $929 thousand from the linked quarter and the prior year period, respectively. The increase from the linked quarter was primarily due to higher interest income on securities as a result of higher average balances combined with lower premium amortization on securities as well as lower interest expense on deposits and borrowings resulting from a lower rate environment. These benefits to net interest income were partially offset by lower interest income from loans principally due to the lower rate environment. Net interest income compared to the prior year period increased as a result of interest income from the higher average balances of securities partially offset by higher interest expense due to the higher average balances of interest-bearing public funds, excluding certificates of deposit, and FHLB advances. For additional information regarding net interest income, see the "Net Interest Margin" section and the "Average Balances and Rates" tables.

Noninterest Income

Noninterest income was $21.8 million for the fourth quarter of 2019, a decrease of $6.2 million from the linked quarter and an increase of $1.4 million from the fourth quarter of 2018. The linked quarter decrease was principally due to a $5.9 million gain from the sale-leaseback of owned real estate during the third quarter of 2019. The increase from the prior year period was primarily due to higher loan revenue.

Noninterest Expense

Total noninterest expense for the fourth quarter of 2019 was $87.0 million, relatively unchanged from the linked quarter and the prior year period.

Net Interest Margin

Beginning January 2019, our net interest margin was calculated using the actual number of days on an actual/actual basis. This change was done to provide more meaningful trend information for our net interest margin regardless of the number of days in the period. Prior periods, which were previously reported on a 30/360 basis, have been restated to conform to the current basis.

Columbia's net interest margin (tax equivalent) for the fourth quarter of 2019 was 4.11%, a decrease of 3 basis points and 25 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 partially offset by lower premium amortization on taxable securities. The decrease was also partially offset by lower rates on deposits and FHLB advances. Compared to the prior year period, the decreased net interest margin (tax equivalent) was driven by lower rates on loans and higher rates on deposits partially offset by lower rates on FHLB advances.

Columbia's operating net interest margin (tax equivalent)(2) was 4.09% for the fourth quarter of 2019, which decreased 3 and 25 basis points compared to the linked quarter and the prior year period, respectively. The decreases in the operating net interest margin for the fourth quarter of 2019 compared to the linked quarter and the prior year quarter were due to the items noted in the preceding paragraph.

The following table shows the impact to interest income resulting from income accretion on acquired loan portfolios as well as the net interest margin and operating net interest margin:



Three Months Ended



Twelve Months Ended



December 31,



September 30,



June 30,



March 31,



December 31,



December 31,



December 31,



2019



2019



2019



2019



2018



2019



2018



(dollars in thousands)

Incremental accretion income due to:



























Purchased credit impaired loans

$

304





$

113





$

579





$

288





$

395





$

1,284





$

1,635



Other acquired loans

2,012





1,959





2,084





1,747





2,218





7,802





10,921



Incremental accretion income

$

2,316





$

2,072





$

2,663





$

2,035





$

2,613





$

9,086





$

12,556































Net interest margin (tax equivalent) (1)

4.11

%



4.14

%



4.40

%



4.32

%



4.36

%



4.24

%



4.33

%

Operating net interest margin (tax equivalent) (1)(2)

4.09

%



4.12

%



4.38

%



4.33

%



4.34

%



4.23

%



4.30

%

_________

(1)

Beginning January 2019, net interest margin (tax equivalent) and operating net interest margin (tax equivalent) were calculated using the actual number of days on an actual/actual basis. This change was done to provide more meaningful trend information for our net interest margin regardless of the number of days in the period. Prior periods, which were previously reported on a 30/360 basis, have been restated to conform to the current basis.





(2)

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.

Asset Quality

At December 31, 2019, nonperforming assets to total assets were 0.24% compared to 0.27% at September 30, 2019. Total nonperforming assets decreased $4.0 million from the linked quarter due to a decrease in both nonaccrual loans and OREO.

Andy McDonald, Columbia's Executive Vice President and Chief Credit Officer, commented, "We continue to be pleased with our loan portfolio trends. Credit costs continue to be low and reflect the strong performance which we enjoyed in the fourth quarter and for the full year. Net charge-offs were approximately 1 basis point for the quarter and 3 basis points for the full year. These results, combined with stable credit metrics relative to problem loans and impaired assets, drove provisioning to very modest levels in 2019. From a credit perspective, it was a great year thanks to the diligent efforts of our bankers and work by our special asset teams."

The following table sets forth information regarding nonaccrual loans and total nonperforming assets:



December 31, 2019



September 30, 2019



December 31, 2018



(in thousands)

Nonaccrual loans:











Commercial business

$

26,974





$

24,408





$

35,513



Real estate:











One-to-four family residential

591





574





1,158



Commercial and multifamily residential

3,477





10,083





14,904



Total real estate

4,068





10,657





16,062



Real estate construction:











One-to-four family residential









318



Consumer

2,018





1,956





2,949



Total nonaccrual loans

33,060





37,021





54,842



OREO and other personal property owned

552





625





6,049



Total nonperforming assets

$

33,612





$

37,646





$

60,891



The following table provides an analysis of the Company's allowance for loan and lease losses:



Three Months Ended



Twelve Months Ended



December 31, 2019



September 30, 2019



December 31, 2018



December 31, 2019



December 31, 2018



(in thousands)

Beginning balance, loans excluding PCI loans

$

79,602





$

77,248





$

79,770





$

79,758





$

68,739



Beginning balance, PCI loans

3,058





3,269





4,017





3,611





6,907



Beginning balance

82,660





80,517





83,787





83,369





75,646



Charge-offs:



















Commercial business

(2,592)





(2,365)





(2,861)





(10,324)





(11,719)



One-to-four family residential real estate













(2)







Commercial and multifamily residential real estate









(557)









(780)



One-to-four family residential real estate construction













(170)







Consumer

(283)





(285)





(421)





(1,400)





(1,194)



Purchased credit impaired

(693)





(722)





(1,076)





(3,319)





(4,862)



Total charge-offs

(3,568)





(3,372)





(4,915)





(15,215)





(18,555)



Recoveries:



















Commercial business

1,720





358





535





3,105





3,427



One-to-four family residential real estate

140





65





19





242





408



Commercial and multifamily residential real estate

362





184





19





610





1,031



One-to-four family residential real estate construction

262





2,471





1,000





3,454





1,616



Commercial and multifamily residential real estate construction













1







Consumer

188





326





384





930





1,180



Purchased credit impaired

590





1,812





751





3,979





3,847



Total recoveries

3,262





5,216





2,708





12,321





11,509



Net (charge-offs) recoveries

(306)





1,844





(2,207)





(2,894)





(7,046)



Provision for loan and lease losses, excluding PCI loans

1,725





1,600





1,870





4,920





17,050



Recapture of loan and lease losses, PCI loans

(111)





(1,301)





(81)





(1,427)





(2,281)



Provision for loan and lease losses

1,614





299





1,789





3,493





14,769



Ending balance, loans excluding PCI loans

81,124





79,602





79,758





81,124





79,758



Ending balance, PCI loans

2,844





3,058





3,611





2,844





3,611



Ending balance

$

83,968





$

82,660





$

83,369





$

83,968





$

83,369



The allowance for loan and lease losses to period end loans was 0.96% at December 31, 2019 compared to 0.94% at September 30, 2019. For the fourth quarter of 2019, Columbia recorded a net provision for loan and lease losses of $1.6 million compared to a net provision of $299 thousand for the linked quarter and a net provision of $1.8 million for the comparable quarter last year. The net provision for loan and lease losses recorded during the fourth quarter of 2019 consisted of $1.7 million of provision expense for loans, excluding PCI loans, and a provision recapture of $111 thousand for PCI loans.

Organizational Update

The close of 2019 also brought about a change to our leadership team as Clint Stein assumed the role of CEO and other leadership changes were announced. Mr. Stein stated, "The leadership transition went seamlessly as a result of our succession planning process that has been in the works for years. I look forward to working with this very talented group of professionals as we execute on our long-term strategic vision."

During the year ended December 31, 2019, the Bank received the following accolades:

  • Received the Community Commitment Award from the American Bankers Association Foundation;
  • Received the IDEA Award for Outstanding Leader of the Year from South Sound Business Magazine;
  • Our Portland Office was named Top SBA Lender by the Small Business Association;
  • Our Seattle Office was named as one of the Top Three SBA Lenders by the Small Business Association;
  • Columbia board members Michelle Lantow, Mae Fujita Numata, Elizabeth Seaton and Janine Terrano were added to the annual list of Most Influential Corporate Directors by WomenInc. Magazine;
  • Hadley Robbins was named to the inaugural Power 100 list of the most influential leaders in the region by the Puget Sound Business Journal;
  • Selected as one of the Top Corporate Philanthropists for 2019 by the Portland Business Journal;
  • Received an Extraordinary Banking Award for 2019 by the Institute of Extraordinary Banking;
  • Named to the list of Top Workplaces in 2018 by Portland's Oregonian;
  • Honored as one of Oregon's Most Admired Companies in 2018 by the Portland Business Journal;
  • For the 13th consecutive year, named as one of Washington's Best Workplaces by the Puget Sound Business Journal;
  • Winner of the 2018 Corporate Citizenship Award for midsize companies in Washington state from the Puget Sound Business Journal;
  • Selected as Best Bank and Best Large Business in The Best of South Sound reader's choice poll for 2019 by South Sound Magazine;
  • Received the Corporate Award of the Year for work with Small Business Association Loans to minority owned businesses from the Oregon Association of Minority Entrepreneurs;
  • Selected as one of the Best Banks in the Best of The Mid-Valley, in the annual reader's poll by the Salem Statesman Journal;
  • Columbia's Board of Directors awarded the Governance Award for their service to the Bank and the community by Seattle Business Magazine;
  • Recognized as one of the Best Places to Work in Idaho by Populus Marketing Research;
  • Awarded the 2018 National Association of Secretaries of State Medallion for outstanding work to improve lives in Washington communities from The State of Washington Secretary of State's Office; and
  • Selected as one of America's Best Banks of 2019 among the nation's 100 largest publicly traded banks and thrifts by Forbes.

Cash Dividend Announcement

Columbia will pay a regular cash dividend of $0.28 per common share and a special cash dividend of $0.22 per common share on February 19, 2020 to shareholders of record as of the close of business on February 5, 2020.

Conference Call Information

Columbia's management will discuss the fourth quarter 2019 financial results on a conference call scheduled for Thursday, January 23, 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~01232020

The conference call can also be accessed on Thursday, January 23, 2020 at 10:00 a.m. Pacific Time (1:00 p.m. ET) by calling 888-286-8956; Conference ID: 6169965.

A replay of the call can be accessed beginning Friday, January 24, 2020 using the site:

https://engage.vevent.com/rt/columbiabankingsysteminc~01232020

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.

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. 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 SEC's 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) changes in interest rates could significantly reduce net interest income and negatively affect funding sources; (3) projected business increases following strategic expansion or opening or acquiring new branches may be lower than expected; (4) costs or difficulties related to the integration of acquisitions may be greater than expected; (5) competitive pressure among financial institutions may increase significantly; (6) failure to maintain effective internal control over financial reporting or disclosure controls and procedures may adversely affect our business; (7) reliance on and cost of technology may increase; and (8) legislation or regulatory requirements or changes may 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







Greg Sigrist,



Executive Vice President and



Chief Financial Officer







Investor Relations



InvestorRelations@columbiabank.com



253-305-1921













































CONSOLIDATED BALANCE SHEETS

Columbia Banking System, Inc.

Unaudited













December 31,



September 30,



December 31,















2019



2019



2018















(in thousands)

ASSETS





Cash and due from banks













$

223,541





$

278,461





$

260,180



Interest-earning deposits with banks













24,132





20,144





17,407



Total cash and cash equivalents













247,673





298,605





277,587



Debt securities available for sale at fair value











3,746,142





3,367,572





3,167,448



Federal Home Loan Bank ("FHLB") stock at cost











48,120





29,680





25,960



Loans held for sale













17,718





15,036





3,849



Loans, net of unearned income













8,743,465





8,756,355





8,391,511



Less: allowance for loan and lease losses











83,968





82,660





83,369



Loans, net













8,659,497





8,673,695





8,308,142



Interest receivable













46,839





48,503





45,323



Premises and equipment, net













165,408





165,431





168,788



Other real estate owned













552





625





6,019



Goodwill













765,842





765,842





765,842



Other intangible assets, net













35,458





37,908





45,937



Other assets













346,275





354,863





280,250



Total assets













$

14,079,524





$

13,757,760





$

13,095,145



LIABILITIES AND SHAREHOLDERS' EQUITY













Deposits:























Noninterest-bearing













$

5,328,146





$

5,320,435





$

5,227,216



Interest-bearing













5,356,562





5,535,281





5,230,910



Total deposits













10,684,708





10,855,716





10,458,126



FHLB advances













953,469





492,482





399,523



Securities sold under agreements to repurchase











64,437





24,489





61,094



Subordinated debentures













35,277





35,323





35,462



Other liabilities













181,671





188,173





107,291



Total liabilities













11,919,562





11,596,183





11,061,496



Commitments and contingent liabilities

























December 31,



September 30,



December 31,















2019



2019



2018















(in thousands)













Preferred stock (no par value)























Authorized shares

2,000





2,000





2,000















Common stock (no par value)























Authorized shares

115,000





115,000





115,000















Issued

73,577





73,588





73,249





1,650,753





1,648,335





1,642,246



Outstanding

72,124





72,288





73,249















Retained earnings













519,676





493,738





426,708



Accumulated other comprehensive income (loss)











40,367





64,884





(35,305)



Treasury stock at cost

1,453





1,300









(50,834)





(45,380)







Total shareholders' equity













2,159,962





2,161,577





2,033,649



Total liabilities and shareholders' equity











$

14,079,524





$

13,757,760





$

13,095,145































































CONSOLIDATED STATEMENTS OF INCOME

Columbia Banking System, Inc.

Three Months Ended



Twelve Months Ended

Unaudited

December 31,



September 30,



December 31,



December 31,



December 31,



2019



2019



2018



2019



2018

Interest Income

(in thousands except per share amounts)

Loans

$

110,384





$

112,656





$

110,010





$

448,041





$

428,197



Taxable securities

20,074





16,457





16,684





69,864





55,969



Tax-exempt securities

2,498





2,556





3,005





10,735





12,201



Deposits in banks

153





864





102





1,312





702



Total interest income

133,109





132,533





129,801





529,952





497,069



Interest Expense



















Deposits

5,809





6,863





3,831





22,146





12,105



FHLB advances

1,899





2,569





1,399





11,861





3,750



Subordinated debentures

467





468





467





1,871





1,871



Other borrowings

117





183





216





669





504



Total interest expense

8,292





10,083





5,913





36,547





18,230



Net Interest Income

124,817





122,450





123,888





493,405





478,839



Provision for loan and lease losses

1,614





299





1,789





3,493





14,769



Net interest income after provision for loan and lease losses

123,203





122,151





122,099





489,912





464,070



Noninterest Income



















Deposit account and treasury management fees

8,665





9,015





9,383





35,695





36,072



Card revenue

3,767





4,006





3,576





15,198





19,719



Financial services and trust revenue

3,191





3,226





3,211





12,799





12,135



Loan revenue

3,625





3,855





2,344





13,465





11,866



Bank owned life insurance

1,650





1,528





1,467





6,294





6,007



Investment securities gains (losses), net









(16)





2,132





(89)



Other

909





6,400





437





11,598





2,546



Total noninterest income

21,807





28,030





20,402





97,181





88,256



Noninterest Expense



















Compensation and employee benefits

54,308





54,459





51,261





212,867





200,199



Occupancy

9,010





8,645





8,858





35,176





36,576



Data processing

4,792





5,102





5,278





19,164





20,235



Legal and professional fees

4,835





5,683





5,941





21,645





18,044



Amortization of intangibles

2,450





2,632





2,890





10,479





12,236



Business and Occupation ("B&O") taxes (1)

1,234





1,325





1,410





5,846





5,664



Advertising and promotion

1,329





1,752





1,061





4,925





5,584



Regulatory premiums

18





(38)





932





1,920





3,710



Net cost (benefit) of operation of other real estate owned

(10)





(90)





(26)





(692)





1,218



Other (1)

9,012





7,606





9,414





34,152





37,024



Total noninterest expense

86,978





87,076





87,019





345,482





340,490



Income before income taxes

58,032





63,105





55,482





241,611





211,836



Provision for income taxes

11,903





12,378





10,734





47,160





38,954



Net Income

$

46,129





$

50,727





$

44,748





$

194,451





$

172,882



Earnings per common share



















Basic

$

0.64





$

0.70





$

0.61





$

2.68





$

2.36



Diluted

$

0.64





$

0.70





$

0.61





$

2.68





$

2.36



Dividends declared per common share - regular

$

0.28





$

0.28





$

0.26





$

1.12





$

1.00



Dividends declared per common share - special









0.14





0.28





0.14



   Dividends declared per common share - total

$

0.28





$

0.28





$

0.40





$

1.40





$

1.14



Weighted average number of common shares outstanding

71,238





71,803





72,434





71,999





72,385



Weighted average number of diluted common shares outstanding

71,310





71,803





72,438





72,032





72,390



________

(1)

Beginning the first quarter of 2019, B&O taxes were reported separately from other taxes, licenses and fees, which are now reported under "other noninterest expense." Prior periods have been reclassified to conform to current period presentation.













FINANCIAL STATISTICS







Columbia Banking System, Inc.

Three Months Ended



Twelve Months Ended

Unaudited

December 31,



September 30,



December 31,



December 31,



December 31,



2019



2019



2018



2019



2018

Earnings

(dollars in thousands except per share amounts)

Net interest income

$

124,817





$

122,450





$

123,888





$

493,405





$

478,839



Provision for loan and lease losses

$

1,614





$

299





$

1,789





$

3,493





$

14,769



Noninterest income

$

21,807





$

28,030





$

20,402





$

97,181





$

88,256



Noninterest expense

$

86,978





$

87,076





$

87,019





$

345,482





$

340,490



Acquisition-related expense (included in noninterest expense)

$





$





$

493





$





$

8,661



Net income

$

46,129





$

50,727





$

44,748





$

194,451





$

172,882



Per Common Share



















Earnings (basic)

$

0.64





$

0.70





$

0.61





$

2.68





$

2.36



Earnings (diluted)

$

0.64





$

0.70





$

0.61





$

2.68





$

2.36



Book value

$

29.95





$

29.90





$

27.76





$

29.95





$

27.76



Tangible book value per common share (1)

$

18.84





$

18.78





$

16.68





$

18.84





$

16.68



Averages



















Total assets

$

13,750,840





$

13,459,774





$

12,957,754





$

13,341,024





$

12,725,086



Interest-earning assets

$

12,231,779





$

11,941,578





$

11,458,470





$

11,837,633





$

11,241,321



Loans

$

8,742,246





$

8,694,592





$

8,441,354





$

8,612,478





$

8,409,373



Securities, including equity securities and FHLB stock

$

3,453,554





$

3,102,213





$

2,998,638





$

3,167,112





$

2,790,700



Deposits

$

10,959,434





$

10,668,767





$

10,560,280





$

10,523,687





$

10,410,404



Interest-bearing deposits

$

5,610,850





$

5,517,171





$

5,298,590





$

5,383,746





$

5,367,602



Interest-bearing liabilities

$

6,058,319





$

5,989,042





$

5,599,646





$

5,923,818





$

5,614,827



Noninterest-bearing deposits

$

5,348,584





$

5,151,596





$

5,261,690





$

5,139,941





$

5,042,802



Shareholders' equity

$

2,170,879





$

2,152,916





$

1,988,981





$

2,116,642





$

1,969,179



Financial Ratios



















Return on average assets

1.34

%



1.51

%



1.38

%



1.46

%



1.36

%

Return on average common equity

8.50

%



9.42

%



9.00

%



9.19

%



8.78

%

Return on average tangible common equity (1)

14.05

%



15.67

%



16.00

%



15.47

%



15.85

%

Average equity to average assets

15.79

%



16.00

%



15.35

%



15.87

%



15.47

%

Shareholders equity to total assets

15.34

%



15.71

%



15.53

%



15.34

%



15.53

%

Tangible common shareholders' equity to tangible assets (1)

10.23

%



10.48

%



9.95

%



10.23

%



9.95

%

Net interest margin (tax equivalent) (2)

4.11

%



4.14

%



4.36

%



4.24

%



4.33

%

Efficiency ratio (tax equivalent) (3)

58.34

%



56.91

%



59.31

%



57.52

%



59.06

%

Operating efficiency ratio (tax equivalent) (1)

58.07

%



58.65

%



58.10

%



57.64

%



56.63

%

Noninterest expense ratio

2.53

%



2.59

%



2.69

%



2.59

%



2.68

%

Core noninterest expense ratio (1)

2.53

%



2.59

%



2.67

%



2.59

%



2.61

%



December 31,



September 30,



December 31,









Period end

2019



2019



2018









Total assets

$

14,079,524





$

13,757,760





$

13,095,145











Loans, net of unearned income

$

8,743,465





$

8,756,355





$

8,391,511











Allowance for loan and lease losses

$

83,968





$

82,660





$

83,369











Securities, including equity securities and FHLB stock

$

3,794,262





$

3,397,252





$

3,193,408











Deposits

$

10,684,708





$

10,855,716





$

10,458,126











Shareholders' equity

$

2,159,962





$

2,161,577





$

2,033,649











Nonperforming assets



















Nonaccrual loans

$

33,060





$

37,021





$

54,842











Other real estate owned ("OREO") and other personal property owned ("OPPO")

552





625





6,049











Total nonperforming assets

$

33,612





$

37,646





$

60,891











Nonperforming loans to period-end loans

0.38

%



0.42

%



0.65

%









Nonperforming assets to period-end assets

0.24

%



0.27

%



0.46

%









Allowance for loan and lease losses to period-end loans

0.96

%



0.94

%



0.99

%









Net loan charge-offs (recoveries) (for the three months ended)

$

306





$

(1,844)





$

2,207











________

(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)

Beginning January 2019, net interest margin was calculated using the actual number of days and on an actual/actual basis. This change was done to provide more meaningful trend information for our net interest margin regardless of the number of days in the period. Prior periods, which were previously reported on a 30/360 basis, have been restated to conform to the current basis.





(3)

Noninterest expense divided by the sum of net interest income on a tax equivalent basis and noninterest income on a tax equivalent basis.













QUARTERLY FINANCIAL STATISTICS





Columbia Banking System, Inc.

Three Months Ended

Unaudited

December 31,



September 30,



June 30,



March 31,



December 31,



2019



2019



2019



2019



2018

Earnings

(dollars in thousands except per share amounts)

Net interest income

$

124,817





$

122,450





$

125,116





$

121,022





$

123,888



Provision for loan and lease losses

$

1,614





$

299





$

218





$

1,362





$

1,789



Noninterest income

$

21,807





$

28,030





$

25,648





$

21,696





$

20,402



Noninterest expense

$

86,978





$

87,076





$

86,728





$

84,700





$

87,019



Acquisition-related expense (included in noninterest expense)

$





$





$





$





$

493



Net income

$

46,129





$

50,727





$

51,724





$

45,871





$

44,748



Per Common Share



















Earnings (basic)

$

0.64





$

0.70





$

0.71





$

0.63





$

0.61



Earnings (diluted)

$

0.64





$

0.70





$

0.71





$

0.63





$

0.61



Book value

$

29.95





$

29.90





$

29.26





$

28.39





$

27.76



Averages



















Total assets

$

13,750,840





$

13,459,774





$

13,096,413





$

13,048,041





$

12,957,754



Interest-earning assets

$

12,231,779





$

11,941,578





$

11,606,727





$

11,561,627





$

11,458,470



Loans

$

8,742,246





$

8,694,592





$

8,601,819





$

8,406,664





$

8,441,354



Securities, including equity securities and FHLB stock

$

3,453,554





$

3,102,213





$

2,969,749





$

3,140,201





$

2,998,638



Deposits

$

10,959,434





$

10,668,767





$

10,186,371





$

10,271,016





$

10,560,280



Interest-bearing deposits

$

5,610,850





$

5,517,171





$

5,174,875





$

5,226,396





$

5,298,590



Interest-bearing liabilities

$

6,058,319





$

5,989,042





$

5,841,425





$

5,802,965





$

5,599,646



Noninterest-bearing deposits

$

5,348,584





$

5,151,596





$

5,011,496





$

5,044,620





$

5,261,690



Shareholders' equity

$

2,170,879





$

2,152,916





$

2,096,157





$

2,044,832





$

1,988,981



Financial Ratios



















Return on average assets

1.34

%



1.51

%



1.58

%



1.41

%



1.38

%

Return on average common equity

8.50

%



9.42

%



9.87

%



8.97

%



9.00

%

Average equity to average assets

15.79

%



16.00

%



16.01

%



15.67

%



15.35

%

Shareholders' equity to total assets

15.34

%



15.71

%



16.30

%



15.99

%



15.53

%

Net interest margin (tax equivalent) (1)

4.11

%



4.14

%



4.40

%



4.32

%



4.36

%

Period end



















Total assets

$

14,079,524





$

13,757,760





$

13,090,808





$

13,064,436





$

13,095,145



Loans, net of unearned income

$

8,743,465





$

8,756,355





$

8,646,990





$

8,520,798





$

8,391,511



Allowance for loan and lease losses

$

83,968





$

82,660





$

80,517





$

83,274





$

83,369



Securities, including equity securities and FHLB stock

$

3,794,262





$

3,397,252





$

2,894,218





$

3,052,870





$

3,193,408



Deposits

$

10,684,708





$

10,855,716





$

10,211,599





$

10,369,009





$

10,458,126



Shareholders' equity

$

2,159,962





$

2,161,577





$

2,133,638





$

2,088,620





$

2,033,649



Goodwill

$

765,842





$

765,842





$

765,842





$

765,842





$

765,842



Other intangible assets, net

$

35,458





$

37,908





$

40,540





$

43,189





$

45,937



Nonperforming assets



















Nonaccrual loans

$

33,060





$

37,021





$

39,038





$

52,615





$

54,842



OREO and OPPO

552





625





1,118





6,075





6,049



Total nonperforming assets

$

33,612





$

37,646





$

40,156





$

58,690





$

60,891



Nonperforming loans to period-end loans

0.38

%



0.42

%



0.45

%



0.62

%



0.65

%

Nonperforming assets to period-end assets

0.24

%



0.27

%



0.31

%



0.45

%



0.46

%

Allowance for loan and lease losses to period-end loans

0.96

%



0.94

%



0.93

%



0.98

%



0.99

%

Net loan charge-offs (recoveries)

$

306





$

(1,844)





$

2,975





$

1,457





$

2,207



________

(1)

Beginning January 2019, net interest margin was calculated using the actual number of days and on an actual/actual basis. This change was done to provide more meaningful trend information for our net interest margin regardless of the number of days in the period. Prior periods, which were previously reported on a 30/360 basis, have been restated to conform to the current basis.













LOAN PORTFOLIO COMPOSITION



Columbia Banking System, Inc.



















Unaudited

December 31,



September 30,



June 30,



March 31,



December 31,



2019



2019



2019



2019



2018

Loan Portfolio Composition - Dollars

(dollars in thousands)

Commercial business

$

3,602,597





$

3,707,314





$

3,644,051





$

3,509,472





$

3,438,422



Real estate:



















One-to-four family residential

265,144





273,079





279,091





282,673





238,367



Commercial and multifamily residential

4,183,961





3,975,647





3,913,546





3,917,833





3,846,027



Total real estate

4,449,105





4,248,726





4,192,637





4,200,506





4,084,394



Real estate construction:



















One-to-four family residential

192,762





195,198





201,783





207,900





217,790



Commercial and multifamily residential

163,103





261,786





255,452





240,458





284,394



Total real estate construction

355,865





456,984





457,235





448,358





502,184



Consumer

292,697





297,009





305,752





312,886





318,945



Purchased credit impaired

77,516





81,777





84,730





88,257





89,760



Subtotal loans

8,777,780





8,791,810





8,684,405





8,559,479





8,433,705



Less:  Net unearned income

(34,315)





(35,455)





(37,415)





(38,681)





(42,194)



Loans, net of unearned income

8,743,465





8,756,355





8,646,990





8,520,798





8,391,511



Less:  Allowance for loan and lease losses

(83,968)





(82,660)





(80,517)





(83,274)





(83,369)



Total loans, net

8,659,497





8,673,695





8,566,473





8,437,524





8,308,142



Loans held for sale

$

17,718





$

15,036





$

12,189





$

4,017





$

3,849











































Loan Portfolio Composition - Percentages

December 31,

2019



September 30,

2019



June 30,

2019



March 31,

2019



December 31,

2018

Commercial business

41.2

%



42.3

%



42.1

%



41.2

%



41.0

%

Real estate:



















One-to-four family residential

3.0

%



3.1

%



3.2

%



3.3

%



2.8

%

Commercial and multifamily residential

47.9

%



45.5

%



45.3

%



46.1

%



45.8

%

Total real estate

50.9

%



48.6

%



48.5

%



49.4

%



48.6

%

Real estate construction:



















One-to-four family residential

2.2

%



2.2

%



2.3

%



2.4

%



2.6

%

Commercial and multifamily residential

1.9

%



3.0

%



3.0

%



2.8

%



3.4

%

Total real estate construction

4.1

%



5.2

%



5.3

%



5.2

%



6.0

%

Consumer

3.3

%



3.4

%



3.5

%



3.7

%



3.8

%

Purchased credit impaired

0.9

%



0.9

%



1.0

%



1.0

%



1.1

%

Subtotal loans

100.4

%



100.4

%



100.4

%



100.5

%



100.5

%

Less:  Net unearned income

(0.4)

%



(0.4)

%



(0.4)

%



(0.5)

%



(0.5)

%

Loans, net of unearned income

100.0

%



100.0

%



100.0

%



100.0

%



100.0

%





























































DEPOSIT COMPOSITION







Columbia Banking System, Inc.





Unaudited





















December 31,



September 30,



June 30,



March 31,



December 31,



2019



2019



2019



2019



2018

Deposit Composition - Dollars

(dollars in thousands)

Demand and other noninterest-bearing

$

5,328,146





$

5,320,435





$

5,082,219





$

5,106,568





$

5,227,216



Money market (1)

2,322,644





2,295,229





2,240,522





2,311,937





2,294,125



Interest-bearing demand (1)

1,150,437





1,059,502





1,058,545





1,078,849





1,084,863



Savings (1)

882,050





892,438





887,172





896,458





889,849



Interest-bearing public funds, other than certificates of deposit (1)

301,203





629,797





270,398





269,156





233,938



Certificates of deposit, less than $250,000

218,764





223,249





228,920





236,014





243,849



Certificates of deposit, $250,000 or more

151,995





107,506





105,782





101,965





89,473



Certificates of deposit insured by CDARS®

17,065





17,252





16,559





22,890





23,580



Brokered certificates of deposit

12,259





18,852





40,502





51,375





57,930



Reciprocal money market accounts

300,158





291,542





281,247





294,096





313,692



Subtotal

10,684,721





10,855,802





10,211,866





10,369,308





10,458,515



Valuation adjustment resulting from acquisition accounting

(13)





(86)





(267)





(299)





(389)



Total deposits

$

10,684,708





$

10,855,716





$

10,211,599





$

10,369,009





$

10,458,126











































Deposit Composition - Percentages

December 31,

2019



September 30,

2019



June 30,

2019



 

March 31,

2019



 

December 31,

2018

Demand and other noninterest-bearing

49.9

%



49.0

%



49.8

%



49.2

%



50.0

%

Money market (1)

21.7

%



21.1

%



21.9

%



22.3

%



21.9

%

Interest-bearing demand (1)

10.8

%



9.8

%



10.4

%



10.4

%



10.4

%

Savings (1)

8.3

%



8.2

%



8.7

%



8.6

%



8.5

%

Interest-bearing public funds, other than certificates of deposit (1)

2.8

%



5.8

%



2.7

%



2.6

%



2.2

%

Certificates of deposit, less than $250,000

2.0

%



2.1

%



2.2

%



2.3

%



2.3

%

Certificates of deposit, $250,000 or more

1.4

%



1.0

%



1.0

%



1.0

%



0.9

%

Certificates of deposit insured by CDARS®

0.2

%



0.2

%



0.2

%



0.2

%



0.2

%

Brokered certificates of deposit

0.1

%



0.2

%



0.4

%



0.5

%



0.6

%

Reciprocal money market accounts

2.8

%



2.6

%



2.7

%



2.9

%



3.0

%

Total

100.0

%



100.0

%



100.0

%



100.0

%



100.0

%

________

(1)

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





December 31, 2019



December 31, 2018





Average

Balances



Interest

Earned / Paid



Average

Rate (3)



Average

Balances



Interest

Earned / Paid



Average

Rate (3)





(dollars in thousands)

ASSETS

























Loans, net (1)(2)



$

8,742,246





$

111,754





5.07

%



$

8,441,354





$

111,239





5.23

%

Taxable securities



3,011,521





20,074





2.64

%



2,493,683





16,684





2.65

%

Tax exempt securities (2)



442,033





3,163





2.84

%



504,955





3,805





2.99

%

Interest-earning deposits with banks



35,979





153





1.69

%



18,478





102





2.19

%

Total interest-earning assets



12,231,779





135,144





4.38

%



11,458,470





131,830





4.56

%

Other earning assets



231,456













230,601











Noninterest-earning assets



1,287,605













1,268,683











Total assets



$

13,750,840













$

12,957,754











LIABILITIES AND SHAREHOLDERS' EQUITY

Money market accounts (4)



2,649,404





2,277





0.34

%



2,669,217





2,191





0.33

%

Interest-bearing demand (4)



1,065,531





446





0.17

%



1,065,883





383





0.14

%

Savings accounts (4)



888,895





47





0.02

%



897,260





36





0.02

%

Interest-bearing public funds, other than certificates of deposit (4)



616,938





2,413





1.55

%



238,638





634





1.05

%

Certificates of deposit



390,082





626





0.64

%



427,592





587





0.54

%

Total interest-bearing deposits



5,610,850





5,809





0.41

%



5,298,590





3,831





0.29

%

FHLB advances



379,975





1,899





1.98

%



215,606





1,399





2.57

%

Subordinated debentures



35,299





467





5.25

%



35,484





467





5.22

%

Other borrowings and interest-bearing liabilities



32,195





117





1.44

%



49,966





216





1.72

%

Total interest-bearing liabilities



6,058,319





8,292





0.54

%



5,599,646





5,913





0.42

%

Noninterest-bearing deposits



5,348,584













5,261,690











Other noninterest-bearing liabilities



173,058













107,437











Shareholders' equity



2,170,879













1,988,981











Total liabilities & shareholders' equity



$

13,750,840













$

12,957,754











Net interest income (tax equivalent)



$

126,852













$

125,917







Net interest margin (tax equivalent)



4.11

%











4.36

%

________

(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 $2.1 million and $2.5 million for the three months ended December 31, 2019 and 2018, respectively. The incremental accretion income on acquired loans was $2.3 million and $2.6 million for the three months ended December 31, 2019 and 2018, respectively.





(2)

Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $1.4 million and $1.2 million for the three months ended December 31, 2019 and 2018, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $665 thousand and $800 thousand for the three months ended December 31, 2019 and 2018, respectively.





(3)

Beginning January 2019, average rates were calculated using the actual number of days and on an actual/actual basis. This change was done to provide more meaningful trend information for our net interest margin regardless of the number of days in the period. Prior periods, which were previously reported on a 30/360 basis, have been restated to conform to the current basis.





(4)

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





December 31, 2019



September 30, 2019





Average

Balances



Interest

Earned / Paid



Average

Rate



Average

Balances



Interest

Earned / Paid



Average

Rate





(dollars in thousands)

ASSETS

























Loans, net (1)(2)



$

8,742,246





$

111,754





5.07

%



$

8,694,592





$

114,099





5.21

%

Taxable securities



3,011,521





20,074





2.64

%



2,654,490





16,457





2.46

%

Tax exempt securities (2)



442,033





3,163





2.84

%



447,723





3,235





2.87

%

Interest-earning deposits with banks



35,979





153





1.69

%



144,773





864





2.37

%

Total interest-earning assets



12,231,779





135,144





4.38

%



11,941,578





134,655





4.47

%

Other earning assets



231,456













230,140











Noninterest-earning assets



1,287,605













1,288,056











Total assets



$

13,750,840













$

13,459,774











LIABILITIES AND SHAREHOLDERS' EQUITY

Money market accounts (3)



$

2,649,404





$

2,277





0.34

%



$

2,589,390





$

2,840





0.44

%

Interest-bearing demand (3)



1,065,531





446





0.17

%



1,049,833





438





0.17

%

Savings accounts (3)



888,895





47





0.02

%



893,395





49





0.02

%

Interest-bearing public funds, other than certificates of deposit (3)



616,938





2,413





1.55

%



602,674





2,879





1.90

%

Certificates of deposit



390,082





626





0.64

%



381,879





657





0.68

%

Total interest-bearing deposits



5,610,850





5,809





0.41

%



5,517,171





6,863





0.49

%

FHLB advances



379,975





1,899





1.98

%



400,956





2,569





2.54

%

Subordinated debentures



35,299





467





5.25

%



35,346





468





5.25

%

Other borrowings and interest-bearing liabilities



32,195





117





1.44

%



35,569





183





2.04

%

Total interest-bearing liabilities



6,058,319





8,292





0.54

%



5,989,042





10,083





0.67

%

Noninterest-bearing deposits



5,348,584













5,151,596











Other noninterest-bearing liabilities



173,058













166,220











Shareholders' equity



2,170,879













2,152,916











Total liabilities & shareholders' equity



$

13,750,840













$

13,459,774











Net interest income (tax equivalent)



$

126,852













$

124,572







Net interest margin (tax equivalent)



4.11

%











4.14

%

_______

(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 $2.1 million and $2.0 million for the three months ended December 31, 2019 and September 30, 2019, respectively. The incremental accretion on acquired loans was $2.3 million and $2.1 million for the three months ended December 31, 2019 and September 30, 2019, respectively.





(2)

Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $1.4 million and $1.4 million for the three months ended December 31, 2019 and September 30, 2019, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $665 thousand and $679 thousand for the three months ended December 31, 2019 and September 30, 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





















Twelve Months Ended



Twelve Months Ended





December 31, 2019



December 31, 2018





Average

Balances



Interest

Earned / Paid



Average

Rate (3)



Average

Balances



Interest

Earned / Paid



Average

Rate (3)





(dollars in thousands)

ASSETS

























Loans, net (1)(2)



$

8,612,478





$

453,552





5.27

%



$

8,409,373





$

432,781





5.15

%

Taxable securities



2,703,423





69,864





2.58

%



2,275,892





55,969





2.46

%

Tax exempt securities (2)



463,689





13,589





2.93

%



514,808





15,445





3.00

%

Interest-earning deposits with banks



58,043





1,312





2.26

%



41,248





702





1.70

%

Total interest-earning assets



11,837,633





$

538,317





4.55

%



11,241,321





$

504,897





4.49

%

Other earning assets



231,731













224,595











Noninterest-earning assets



1,271,660













1,259,170











Total assets



$

13,341,024













$

12,725,086











LIABILITIES AND SHAREHOLDERS' EQUITY

Money market accounts (4)



$

2,591,303





$

10,598





0.41

%



$

2,695,585





$

6,216





0.23

%

Interest-bearing demand (4)



1,064,145





1,676





0.16

%



1,089,548





1,543





0.14

%

Savings accounts (4)



892,518





183





0.02

%



884,770





138





0.02

%

Interest-bearing public funds, other than certificates of deposit (4)



440,359





7,244





1.65

%



244,943





2,002





0.82

%

Certificates of deposit



395,421





2,445





0.62

%



452,756





2,206





0.49

%

Total interest-bearing deposits



5,383,746





22,146





0.41

%



5,367,602





12,105





0.23

%

FHLB advances



470,082





11,861





2.52

%



166,577





3,750





2.25

%

Subordinated debentures



35,368





1,871





5.29

%



35,553





1,871





5.26

%

Other borrowings and interest-bearing liabilities



34,622





669





1.93

%



45,095





504





1.12

%

Total interest-bearing liabilities



5,923,818





$

36,547





0.62

%



5,614,827





$

18,230





0.32

%

Noninterest-bearing deposits



5,139,941













5,042,802











Other noninterest-bearing liabilities



160,623













98,278











Shareholders' equity



2,116,642













1,969,179











Total liabilities & shareholders' equity



$

13,341,024













$

12,725,086











Net interest income (tax equivalent)



$

501,770













$

486,667







Net interest margin (tax equivalent)



4.24

%











4.33

%

________

(1)

Nonaccrual loans have been included in the table 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 $8.4 million and $9.3 million for the twelve months ended December 31, 2019 and 2018, respectively. The incremental accretion on acquired loans was $9.1 million and $12.6 million for the twelve months ended December 31, 2019 and 2018, respectively.





(2)

Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $5.5 million and $4.6 million for the twelve months ended December 31, 2019 and 2018, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $2.9 million and $3.2 million for the twelve months ended December 31, 2019 and 2018, respectively.





(3)

Beginning January 2019, average rate was calculated using the actual number of days to be on an actual/actual basis. This change was done to provide more meaningful trend information for our net interest margin regardless of the number of days in the period. Prior periods, which were previously reported on a 30/360 basis, have been restated to conform to the current basis.





(4)

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.





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 and, 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



Twelve Months Ended



December 31,



September 30,



December 31,



December 31,



December 31,



2019



2019



2018



2019



2018

Operating net interest margin non-GAAP reconciliation:

(dollars in thousands)

Net interest income (tax equivalent) (1)

$

126,852





$

124,572





$

125,917





$

501,770





$

486,667



Adjustments to arrive at operating net interest income (tax equivalent):



















Incremental accretion income on purchased credit impaired loans

(304)





(113)





(395)





(1,284)





(1,635)



Incremental accretion income on other acquired loans

(2,012)





(1,959)





(2,218)





(7,802)





(10,921)



Premium amortization on acquired securities

1,204





1,386





1,671





6,020





7,736



Interest reversals on nonaccrual loans

209





174





417





1,671





1,564



Operating net interest income (tax equivalent) (1)

$

125,949





$

124,060





$

125,392





$

500,375





$

483,411



Average interest earning assets

$

12,231,779





$

11,941,578





$

11,458,470





$

11,837,633





$

11,241,321



Net interest margin (tax equivalent) (1)(2)

4.11

%



4.14

%



4.36

%



4.24

%



4.33

%

Operating net interest margin (tax equivalent) (1)(2)

4.09

%



4.12

%



4.34

%



4.23

%



4.30

%











Three Months Ended



Twelve Months Ended



December 31,



September 30,



December 31,



December 31,



December 31,



2019



2019



2018



2019



2018

Operating efficiency ratio non-GAAP reconciliation:

(dollars in thousands)

Noninterest expense (numerator A)

$

86,978





$

87,076





$

87,019





$

345,482





$

340,490



Adjustments to arrive at operating noninterest expense:



















Acquisition-related expenses









(493)









(8,661)



Net benefit (cost) of operation of OREO and OPPO

10





113





(23)





714





(1,262)



Loss on asset disposals





(5)





(166)





(5)





(277)



Business and Occupation ("B&O") taxes

(1,234)





(1,325)





(1,410)





(5,846)





(5,664)



Operating noninterest expense (numerator B)

$

85,754





$

85,859





$

84,927





$

340,345





$

324,626























Net interest income (tax equivalent) (1)

$

126,852





$

124,572





$

125,917





$

501,770





$

486,667



Noninterest income

21,807





28,030





20,402





97,181





88,256



Bank owned life insurance tax equivalent adjustment

439





406





390





1,673





1,597



Total revenue (tax equivalent) (denominator A)

$

149,098





$

153,008





$

146,709





$

600,624





$

576,520























Operating net interest income (tax equivalent) (1)

$

125,949





$

124,060





$

125,392





$

500,375





$

483,411



Adjustments to arrive at operating noninterest income (tax equivalent):



















Investment securities loss (gain), net









16





(2,132)





89



Gain on asset disposals

(530)





(6,104)





(30)





(6,634)





(141)



Operating noninterest income (tax equivalent)

21,716





22,332





20,778





90,088





89,801



Total operating revenue (tax equivalent) (denominator B)

$

147,665





$

146,392





$

146,170





$

590,463





$

573,212



Efficiency ratio (tax equivalent) (numerator A/denominator A)

58.34

%



56.91

%



59.31

%



57.52

%



59.06

%

Operating efficiency ratio (tax equivalent) (numerator B/denominator B)

58.07

%



58.65

%



58.10

%



57.64

%



56.63

%

_________

(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 $2.0 million, $2.1 million, and $2.0 million for the three months ended December 31, 2019, September 30, 2019, and December 31, 2018, respectively; and $8.4 million and $7.8 million for the twelve month periods ended December 31, 2019 and 2018, respectively.





(2)

Beginning January 2019, net interest margin (tax equivalent) and operating net interest margin (tax equivalent) were calculated using the actual number of days and on an actual/actual basis. This change was done to provide more meaningful trend information for our net interest margin regardless of the number of days in the period. Prior periods, which were previously reported on a 30/360 basis, have been restated to conform to the current basis.





Non-GAAP Financial Measures - Continued

The Company also considers its core noninterest expense ratio to be a useful measurement as it more closely reflects the ongoing operating performance of the Company. Despite the usefulness of the core noninterest expense ratio to the Company, there is not a standardized definition for it, 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 table reconciles the Company's calculation of the core noninterest expense ratio:





Three Months Ended



Twelve Months Ended





December 31,



September 30,



December 31,



December 31,



December 31,





2019



2019



2018



2019



2018

Core noninterest expense ratio non-GAAP reconciliation:



(dollars in thousands)

Noninterest expense (numerator A)



$

86,978





$

87,076





$

87,019





$

345,482





$

340,490



Adjustments to arrive at core noninterest expense:





















Acquisition-related expenses











(493)









(8,661)



Core noninterest expense (numerator B)



$

86,978





$

87,076





$

86,526





$

345,482





$

331,829



Average assets (denominator)



$

13,750,840





$

13,459,774





$

12,957,754





$

13,341,024





$

12,725,086



Noninterest expense ratio (numerator A/denominator) (1)



2.53

%



2.59

%



2.69

%



2.59

%



2.68

%

Core noninterest expense ratio (numerator B/denominator) (2)



2.53

%



2.59

%



2.67

%



2.59

%



2.61

%

__________

(1)

For the purpose of this ratio, interim noninterest expense has been annualized.





(2)

For the purpose of this ratio, interim core noninterest expense has been annualized.





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:





December 31,



September 30,



December 31,





2019



2019



2018

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)



$

2,159,962





$

2,161,577





$

2,033,649



Adjustments to arrive at tangible common equity:













Goodwill



(765,842)





(765,842)





(765,842)



Other intangible assets, net



(35,458)





(37,908)





(45,937)



Tangible common equity (numerator B)



$

1,358,662





$

1,357,827





$

1,221,870



Total assets (denominator A)



$

14,079,524





$

13,757,760





$

13,095,145



Adjustments to arrive at tangible assets:













Goodwill



(765,842)





(765,842)





(765,842)



Other intangible assets, net



(35,458)





(37,908)





(45,937)



Tangible assets (denominator B)



$

13,278,224





$

12,954,010





$

12,283,366



Shareholders' equity to total assets (numerator A/denominator A)



15.34

%



15.71

%



15.53

%

Tangible common shareholders' equity to tangible assets (numerator B/denominator B)



10.23

%



10.48

%



9.95

%

Common shares outstanding (denominator C)



72,124





72,288





73,249



Book value per common share (numerator A/denominator C)



$

29.95





$

29.90





$

27.76



Tangible book value per common share (numerator B/denominator C)



$

18.84





$

18.78





$

16.68



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, and, 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



Twelve Months Ended





December 31,



September 30,



December 31,



December 31,



December 31,





2019



2019



2018



2019



2018

Return on average tangible common equity non-GAAP reconciliation:



(dollars in thousands)

Net income (numerator A)



$

46,129





$

50,727





$

44,748





$

194,451





$

172,882



Adjustments to arrive at tangible income applicable to common shareholders:





















Amortization of intangibles



2,450





2,632





2,890





10,479





12,236



Tax effect on intangible amortization



(515)





(553)





(607)





(2,201)





(2,570)



Tangible income applicable to common shareholders (numerator B)



$

48,064





$

52,806





$

47,031





202,729





$

182,548



Average shareholders' equity (denominator A)



$

2,170,879





$

2,152,916





$

1,988,981





2,116,642





$

1,969,179



Adjustments to arrive at average tangible common equity:





















Average intangibles



(802,446)





(805,033)





(813,145)





(806,358)





(817,685)



Average tangible common equity (denominator B)



$

1,368,433





$

1,347,883





$

1,175,836





$

1,310,284





$

1,151,494



Return on average common equity (numerator A/denominator A) (1)



8.50

%



9.42

%



9.00

%



9.19

%



8.78

%

Return on average tangible common equity (numerator B/denominator B) (2)



14.05

%



15.67

%



16.00

%



15.47

%



15.85

%

__________

(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.

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/columbia-banking-system-announces-fourth-quarter-and-full-year-2019-results-and-quarterly-and-special-cash-dividends-300991932.html

SOURCE Columbia Banking System, Inc.

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Date
ticker
name
Actual EPS
EPS Surprise
Actual Rev
Rev Surprise
Posted In: EarningsDividendsPress ReleasesBanking/Financial ServicesConference Call Announcements
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!