COLUMBIA BANKING SYSTEM, INC. REPORTS FIRST QUARTER 2023 RESULTS

Rhea-AI Summary

Columbia Banking System reports a net loss of $14 million for Q1 2023, translating to $(0.09) per share, while operating net income stands at $72 million, or $0.46 per share. A successful merger with Umpqua Holdings has concluded, leading to total consolidated assets of $54 billion, up by $22 billion. Net interest income rose by 23% to $375 million, driven by higher interest rates and combined operations. However, non-interest expenses surged by $148 million due to merger costs. The estimated total risk-based capital ratio is 11.0%, signaling adequate capital levels post-merger. Credit quality remains stable with a net charge-off rate of 0.23%, although provisions for credit losses increased to $106 million. While deposit growth is strong, organic loan growth was modest, indicating sector challenges.

Positive

• Net interest income grew by 23% to $375 million, boosted by higher interest rates.
• Successfully completed merger with Umpqua Holdings, enhancing market position.
• Total consolidated assets increased to $54 billion, reflecting growth from the merger.
• Estimated total risk-based capital ratio remains strong at 11.0%.

Negative

• Reported a net loss of $14 million, or $(0.09) per share.
• Non-interest expenses surged by $148 million, primarily due to merger-related costs.
• Modest organic loan growth despite a significant increase in total loans.

PORTLAND, Ore., April 26, 2023 First Quarter 2023 Results

• Net income of $(14) million, or $(0.09) per common share
• Operating net income of $72 million, or $0.46 per common share1
• Successfully closed merger with Umpqua Holdings Corporation and completed core systems conversion
• Consolidated asset balances increased $22 billion to $54 billion at quarter end
• Loan balances of $37 billion and deposit balances of $42 billion at quarter end

/PRNewswire/ --

COLUMBIA BANKING SYSTEM, INC. REPORTS FIRST QUARTER 2023 RESULTS
$(0.09)		$0.46		$23.44		$15.12
Net loss per diluted common share		Operating earnings per diluted common share 1		Book value per common share		Tangible book value per common share 1

 

CEO Commentary

"Today marks a historic moment for our franchise as we report results for Columbia Banking System and its subsidiary Umpqua Bank together as one company," said Clint Stein, President and CEO. "Our first quarter results highlight a flexible balance sheet characterized by solid liquidity, a diversified loan portfolio, and a granular core deposit base. While purchase accounting adjustments such as the initial provision for credit losses and merger-related expenses impacted our reported results, I am pleased to announce we successfully completed our core systems conversion in March, keeping us on target to realize our cost-savings expectations by the end of the third quarter. It was a transformative quarter for our company, and I want to thank our associates for their tireless efforts helping customers and each other through the merger close and systems conversion."

–Clint Stein, President and CEO of Columbia Banking System, Inc.

 

1Q23 HIGHLIGHTS (COMPARED TO 4Q22)
Net Interest Income and NIM	•  Net interest income increased by $69 million or 23% on a quarter-to-quarter basis due to one month as a combined organization and the net favorable impact of higher interest rates.
	•  Net interest margin was 4.08%, up 7 basis points from the prior quarter.  Net interest margin for the month of March was 4.31%, which includes a 76-basis point net benefit from purchase accounting accretion and amortization.
Non-Interest Income and Expense	•  Non-interest income increased by $20 million due primarily to a $16 million linked-quarter favorable change related to cumulative non-merger fair value accounting and hedges.
	•  Non-interest expense increased by $148 million due to higher merger-related expenses and a higher expense run rate in March as a combined organization.
Credit Quality	•  Net charge-offs were 0.23% of average loans and leases (annualized) and centered in the FinPac portfolio as activity was otherwise de minimis.
	•  Provision expense of $106 million includes an $88 million initial provision related to non-purchased credit deteriorated loan balances. The remaining expense relates to changes in the economic forecasts used in credit models.
	•  Non-performing assets to total assets was 0.14%.
Capital	•  Estimated total risk-based capital ratio of 11.0% and estimated common equity tier 1 risk-based capital ratio of 8.9%.
	•  We expect the accretion of purchase accounting fair value marks through income to meaningfully and consistently build capital and enhance flexibility in the coming quarters.
Notable items	•  Purchase accounting fair value adjustments related to credit of $130 million and interest rates of $1.6 billion at closing on historical Columbia loans and securities.
	•  $116 million in merger-related expenses, including a $20 million charitable contribution to the Umpqua Bank Charitable Foundation.

 

1Q23 KEY FINANCIAL DATA
PERFORMANCE METRICS	1Q23		4Q22		1Q22
Return on average assets	(0.14) %		1.04 %		1.21 %
Return on average tangible common equity1	(2.09) %		13.53 %		13.66 %
Operating return on average assets1	0.74 %		1.24 %		1.03 %
Operating return on average tangible common equity1	10.64 %		16.18 %		11.62 %
Net interest margin	4.08 %		4.01 %		3.14 %
Efficiency ratio - consolidated	79.71 %		57.24 %		59.02 %
Loan to deposit ratio	89.19 %		96.64 %		86.05 %
INCOME STATEMENT ($ in 000s, excl. per share data)	1Q23		4Q22		1Q22
Net interest income	$374,698		$305,479		$228,763
Provision for credit losses	$105,539		$32,948		$4,804
Non-interest income	$54,735		$34,879		$79,969
Non-interest expense	$342,818		$194,982		$182,430
Pre-provision net revenue 1	$86,615		$145,376		$126,302
Operating pre-provision net revenue1	$195,730		$167,094		$108,125
Earnings per common share - diluted 2	($0.09)		$0.64		$0.70
Operating earnings per common share - diluted 1,2	$0.46		$0.76		$0.60
Dividends paid per share 2	$0.35		$0.35		$0.35
BALANCE SHEET	1Q23		4Q22		1Q22
Total assets	$54.0B		$31.8B		$30.6B
Loans and leases	$37.1B		$26.2B		$23.0B
Total deposits	$41.6B		$27.1B		$26.7B
Book value per common share 2	$23.44		$19.18		$20.17
Tangible book value per share[1][2]	$15.12		$19.14		$20.11
Tangible book value per share, ex AOCI 1,2	$16.56		$22.44		$21.53

 

Organizational Update

On February 28, 2023, Columbia Banking System, Inc. ("Columbia", "we" or "our") completed its merger with Umpqua Holdings Corporation ("UHC"), combining the two premier banks in the Northwest to create one of the largest banks headquartered in the West ("the merger"). Columbia completed its core systems conversion on March 20, 2023, and branch consolidations are scheduled to occur through the second quarter of 2023.

Columbia's financial results for any periods ended prior to February 28, 2023 reflect UHC results only on a standalone basis. In addition, Columbia's reported financial results for the first quarter of 2023 reflect UHC financial results only until the closing of the merger after the close of business on February 28, 2023. As a result of these two factors, Columbia's financial results for the first quarter of 2023 may not be directly comparable to prior reported periods. The number of shares issued and outstanding, earnings per share, additional paid-in capital, and all references to share quantities or metrics of Columbia have been retrospectively restated to reflect the equivalent number of shares issued in the merger as the merger was treated as a reverse merger. Under the reverse acquisition method of accounting, the assets and liabilities of Columbia as of February 28, 2023 ("historical Columbia") were recorded at their respective fair values.

Net Interest Income

Net interest income was $375 million for the first quarter of 2023, up $69 million from the prior quarter. The increase, which includes $32 million of purchase accounting accretion and amortization, reflects one month of the combined company's larger balance sheet as well as the net favorable impact of higher interest rates.

Columbia's net interest margin was 4.08% for the first quarter of 2023, up 7 basis points from 4.01% for the fourth quarter of 2022. The net interest margin for the month of March was 4.31%, which includes a 76-basis point net benefit from purchase accounting accretion and amortization and an approximate 10-basis point adverse impact from holding higher cash balances funded by borrowings beginning March 13, 2023. The cost of interest-bearing deposits increased 55 basis points on a linked-quarter basis to 1.32% for the first quarter of 2023, which compares to 1.33% for the month of March and 1.43% on March 31, 2023. Please refer to the Q1 2023 Earnings Presentation for additional net interest margin change details and interest rate sensitivity information as well as our non-GAAP disclosures in this press release for the impact of purchase accounting accretion and amortization on individual line items.

Non-interest Income

Non-interest income was $55 million for the first quarter of 2023, up $20 million from the prior quarter. While results benefited from one month as a combined organization, the increase was primarily driven by a $16 million favorable change in cumulative fair value adjustments and mortgage servicing rights ("MSR") hedging activity. A net fair value gain of $8.1 million in the first quarter compares to a net fair value loss of $8.1 million in the fourth quarter, as detailed in our non-GAAP disclosures.

Non-interest Expense

Non-interest expense was $343 million for the first quarter of 2023, up $148 million from the prior quarter level. The increase reflects one month of the higher expense rate of the combined organization as well as a $104 million linked-quarter increase in merger-related expenses, which were $116 million in the first quarter, inclusive of a $20 million contribution to the Umpqua Bank Charitable Foundation that was outlined when the merger was announced in October 2021. Please refer to the Q1 2023 Earnings Presentation for additional expense details, including an update on realized merger-related cost-savings through March 31, 2023.

Balance Sheet

Total consolidated assets were $54.0 billion as of March 31, 2023, an increase of $22.2 billion compared to $31.8 billion as of December 31, 2022. The increase was driven by the addition of historical Columbia balances at fair value on February 28, 2023, related intangible assets, and higher cash balances added in March that were funded by borrowings. Cash and cash equivalents was $3.6 billion as of March 31, 2023, an increase of $2.3 billion relative to December 31, 2022.  Including secured off-balance sheet lines of credit, total available liquidity was $17.9 billion as of March 31, 2023, representing 33% of total assets, 43% of total deposits, and 121% of uninsured deposits. Please refer to the Q1 2023 Earnings Presentation for additional details related to our liquidity position.

Available for sale securities, which are held on balance sheet at fair value, were $9.2 billion as of March 31, 2023, an increase of $6.1 billion relative to December 31, 2022, primarily due to the addition of $6.2 billion of historical Columbia balances, which were categorized as available for sale at quarter end. The net unrealized loss on historical Columbia securities was eliminated as of February 28, 2023, as part of the reverse merger method of accounting, and these securities had a pre-tax net unrealized gain of $84 million as of March 31, 2023. On a consolidated basis, our available for sale securities balance of $9.2 billion includes a pre-tax net unrealized loss of $397 million as historical UHC balances were not marked as part of the merger, and the net unrealized gain position associated with historical Columbia balances does not fully offset the net unrealized loss position related to the remainder of the consolidated portfolio. Held to maturity securities were $2.4 million at March 31, 2023, and represent investments in local community housing bonds; there is no unrealized loss associated with these balances.

Following the close of the merger, we restructured a portion of the historical Columbia securities portfolio during the first week of March by selling $1.2 billion of securities and purchasing $937 million of securities with the proceeds. The restructure transactions resulted in no gain or loss on the income statement. Purchases included agencies, mortgage-backed securities, and collateralized mortgage obligations with a projected average yield of 4.63%. The restructuring reduced the potential adverse impact to net interest income in a declining interest rate environment, which the Q1 2023 Earnings Presentation reviews.

Gross loans and leases were $37.1 billion as of March 31, 2023, an increase of $10.9 billion relative to December 31, 2022, due to the addition of $10.9 billion of historical Columbia balances at fair value. "On an organic basis, loans were up just slightly during the first quarter, as drawdowns related to single-family home construction offset slight declines in commercial portfolio balances," commented Tory Nixon, President of Umpqua Bank. Please refer to the Q1 2023 Earnings Presentation for additional details related to our loan portfolio, which include underwriting characteristics, the composition of our commercial portfolios, and enhanced disclosure related to our office portfolio.

Total deposits were $41.6 billion as of March 31, 2023, an increase of $14.5 billion relative to December 31, 2022, primarily due to the addition of $15.2 billion of historical Columbia balances at fair value. "Our deposit balances continued to be affected by market liquidity tightening and the impact of inflation on customer spending," stated Mr. Nixon. "Declining balances with existing customers was the primary driver of the net reduction in deposits during the month of March and for the first quarter on an organic basis. We were pleased to see continued new account acquisition in March in both the consumer and commercial bank across all major product types." Please refer to the Q1 2023 Earnings Presentation for additional details related to deposit characteristics and flows.

Credit Quality

The allowance for credit losses was $436 million, or 1.18% of loans and leases, as of March 31, 2023, compared to $315 million, or 1.21% of loans and leases, as of December 31, 2022.  The $121 million increase in the allowance includes the addition of $26 million related to historical Columbia purchased credit deteriorated ("PCD") loans and $5.8 million related to historical Columbia off balance sheet commitments, which were booked at the merger's close and did not affect the income statement. The provision for credit losses was $106 million for the first quarter of 2023, which includes an initial provision of $88 million for historical Columbia non-PCD loans. Outside the initial provision, the quarter's expense was driven almost entirely by changes between the November 2022 and February 2023 economic forecasts used in credit models, with a modest expense associated with the change in mix. Please refer to the Q1 2023 Earnings Presentation for additional details related to the allowance for credit losses, including a breakout of the aforementioned impacts of the merger.

Net charge-offs were 0.23% of average loans and leases (annualized) for the first quarter of 2023, compared to 0.19% for the fourth quarter of 2022. Net charge-off activity continued to be centered in the FinPac portfolio as bank charge-off activity was de minimis. As of March 31, 2023, non-performing assets were $76 million, or 0.14% of total assets, compared to $59 million, or 0.18% as of December 31, 2022. The $17 million linked-quarter increase primarily reflects the addition of historical Columbia balances.

Capital

As of March 31, 2023, Columbia's book value per common share increased to $23.44, compared to $19.18 at December 31, 2022, which was retrospectively restated under the reverse merger method of accounting. The linked-quarter change in book value primarily reflects common shares issued and exchanged as a result of the merger and a change in accumulated other comprehensive (loss) income ("AOCI") to $(300) million at March 31, 2023, compared to $(427) million at the prior quarter-end. The change in AOCI is due primarily to a reduction in the tax-effected net unrealized loss on available for sale securities to $295 million at March 31, 2023, compared to $403 million at December 31, 2022.  Tangible book value per common share[3] decreased to $15.12, compared to $19.14 at December 31, 2023 as a result of $1.0 billion of goodwill and $710 million of core deposit intangible assets added through the merger.

Columbia's estimated total risk-based capital ratio was 11.0% and its estimated common equity tier 1 risk-based capital ratio was 8.9% as of March 31, 2023. Columbia remains above current "well-capitalized" regulatory minimums. "While initial fair value marks drove the linked quarter decline in our regulatory capital ratios, we expect loan and investment securities discount accretion to contribute meaningfully to capital build over time," stated Ron Farnsworth, Chief Financial Officer of Columbia. The regulatory capital ratios as of March 31, 2023 are estimates, pending completion and filing of Columbia's regulatory reports. 

Earnings Presentation and Conference Call Information

Columbia's Q1 2023 Earnings Presentation provides additional disclosure. A copy will be available on our investor relations page: www.columbiabankingsystem.com.

Columbia will host its first quarter 2023 earnings conference call on April 26, 2023, at 2:00 p.m. PT (5:00 p.m. ET).  During the call, Columbia's management will provide an update on recent activities and discuss its first quarter 2023 financial results. Participants may register for the call using the below link to receive dial-in details and their own unique PINs or join the audiocast. It is recommended you join 10 minutes prior to the start time.

Register for the call: https://register.vevent.com/register/BI3ca3e280dadd437cafdf87ba3e2fcb28 
Join the audiocast: https://edge.media-server.com/mmc/p/jtad2627
Access the replay through Columbia's investor relations page: www.columbiabankingsystem.com 

About Columbia Banking System, Inc.

Columbia (Nasdaq: COLB) is headquartered in Tacoma, Washington and is the parent company of Umpqua Bank, an award-winning western U.S. regional bank based in Lake Oswego, Oregon. In March of 2023, Columbia and Umpqua combined two of the Pacific Northwest's premier financial institutions under the Umpqua Bank brand to create one of the largest banks headquartered in the West and a top-30 U.S. bank. With over $50 billion of assets, Umpqua Bank combines the resources, sophistication and expertise of a national bank with a commitment to deliver personalized service at scale. The bank operates in Arizona, California, Colorado, Idaho, Nevada, Oregon, Utah, and Washington and supports consumers and businesses through a full suite of services, including retail and commercial banking; Small Business Administration lending; institutional and corporate banking; and equipment leasing. Umpqua Bank customers also have access to comprehensive investment and wealth management expertise as well as healthcare and private banking through Columbia Wealth Management and Columbia Trust Company, a subsidiary of Columbia. Learn more at www.columbiabankingsystem.com.

Forward-Looking Statements

This press release includes forward-looking statements within the meaning of the "Safe-Harbor" provisions of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders. These statements are necessarily subject to risk and uncertainty and actual results could differ materially due to various risk factors, including those set forth from time to time in our filings with the Securities and Exchange Commission (the "SEC"). You should not place undue reliance on forward-looking statements and we undertake no obligation to update any such statements. Forward-looking statements can be identified by words such as "anticipates," "intends," "plans," "seeks," "believes," "estimates," "expects," "target," "projects," "outlook," "forecast," "will," "may," "could," "should," "can" and similar references to future periods. In this press release we make forward-looking statements about strategic and growth initiatives and the result of such activity. Risks that could cause results to differ from forward-looking statements we make include, without limitation: current and future economic and market conditions, including the effects of declines in housing and commercial real estate prices, high unemployment rates, continued inflation and any recession or slowdown in economic growth particularly in the western United States; economic forecast variables that are either materially worse or better than end of quarter projections and deterioration in the economy that could result in increased loan and lease losses, especially those risks associated with concentrations in real estate related loans; our ability to effectively manage problem credits; the impact of bank failures or adverse developments at or news developments concerning other banks on general investor sentiment regarding the liquidity stability of banks; changes in interest rates that could significantly reduce net interest income and negatively affect asset yields and valuations and funding sources; changes in the scope and cost of FDIC insurance and other coverage; our ability to successfully implement efficiency and operational excellence initiatives; our ability to successfully develop and market new products and technology; changes in laws or regulations; any failure to realize the anticipated benefits of the merger when expected or at all; the possibility that the integration following the merger may be more expensive than anticipated, including as a result of unexpected factors or events, diversion of management's attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the completion of the merger and integration of the companies; the effect of geopolitical instability, including wars, conflicts and terrorist attacks; and natural disasters and other similar unexpected events outside of our control. We also caution that the amount and timing of any future common stock dividends or repurchases will depend on the earnings, cash requirements and financial condition of the Columbia, market conditions, capital requirements, applicable law and regulations (including federal securities laws and federal banking regulations), and other factors deemed relevant by Columbia's Board of Directors, and may be subject to regulatory approval or conditions.

¹ "Non-GAAP" financial measure.  See GAAP to Non-GAAP Reconciliation for the comparable GAAP measurement.
² Prior periods have been restated as a result of the adjustment to common shares outstanding based on the exchange ratio from the merger of 0.5958.
³ "Non-GAAP" financial measure. See GAAP to Non-GAAP Reconciliation for the comparable GAAP measurement.

 

TABLE INDEX
	Page
Consolidated Statements of Operations	7
Consolidated Balance Sheets	7
Financial Highlights	9
Loan & Lease Portfolio Balances and Mix	9
Deposit Portfolio Balances and Mix	11
Credit Quality - Non-performing Assets	12
Credit Quality - Allowance for Credit Losses	13
Consolidated Average Balance Sheets, Net Interest Income, and Yields/Rates	14
Residential Mortgage Banking Activity	14
Purchase Price Allocation	15
GAAP to Non-GAAP Reconciliation	17

 

Columbia Banking System, Inc.
Consolidated Statements of Operations
(Unaudited)
	Quarter Ended										% Change
($ in thousands, except per share data)	Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022		Seq. Quarter		Year over Year
Interest income:
Loans and leases	$      413,525		$      322,350		$      278,830		$      234,674		$      214,404		28 %		93 %
Interest and dividends on investments:
Taxable	39,729		18,108		18,175		17,256		18,725		119 %		112 %
Exempt from federal income tax	3,397		1,288		1,322		1,369		1,372		164 %		148 %
Dividends	719		182		86		84		86		295 %		nm
Temporary investments and interest bearing deposits	18,581		10,319		5,115		2,919		1,353		80 %		nm
Total interest income	475,951		352,247		303,528		256,302		235,940		35 %		102 %
Interest expense:
Deposits	63,613		31,174		9,090		4,015		3,916		104 %		nm
Securities sold under agreement to repurchase and federal funds purchased	406		323		545		66		63		26 %		nm
Borrowings	28,764		8,023		798		50		49		259 %		nm
Junior and other subordinated debentures	8,470		7,248		5,491		4,001		3,149		17 %		169 %
Total interest expense	101,253		46,768		15,924		8,132		7,177		117 %		nm
Net interest income	374,698		305,479		287,604		248,170		228,763		23 %		64 %
Provision for credit losses	105,539		32,948		27,572		18,692		4,804		220 %		nm
Non-interest income:
Service charges on deposits	14,312		12,139		12,632		12,011		11,583		18 %		24 %
Card-based fees	11,561		9,017		9,115		10,530		8,708		28 %		33 %
Financial services and trust revenue	1,297		25		27		27		11		nm		nm
Residential mortgage banking revenue (loss), net	7,816		(1,812)		17,341		30,544		60,786		nm		(87) %
Gain on sale of debt securities, net	—		—		—		—		2		nm		(100) %
Gain (loss)  on equity securities, net	2,416		284		(2,647)		(2,075)		(2,661)		nm		nm
Gain on loan and lease sales, net	940		1,531		1,525		1,303		2,337		(39) %		(60) %
BOLI income	2,790		2,033		2,023		2,110		2,087		37 %		34 %
Other income (loss)	13,603		11,662		(10,571)		785		(2,884)		17 %		nm
Total non-interest income	54,735		34,879		29,445		55,235		79,969		57 %		(32) %
Non-interest expense:
Salaries and employee benefits	136,092		107,982		109,164		110,942		113,138		26 %		20 %
Occupancy and equipment, net	41,700		34,021		35,042		34,559		34,829		23 %		20 %
Intangible amortization	12,660		1,019		1,025		1,026		1,025		nm		nm
FDIC assessments	6,113		3,487		3,007		2,954		4,516		75 %		35 %
Merger related expenses	115,898		11,637		769		2,672		2,278		nm		nm
Other expenses	30,355		36,836		28,957		27,421		26,644		(18) %		14 %
Total non-interest expense	342,818		194,982		177,964		179,574		182,430		76 %		88 %
(Loss) income before (benefit) provision for income taxes	(18,924)		112,428		111,513		105,139		121,498		(117) %		(116) %
(Benefit) provision for income taxes	(4,886)		29,464		27,473		26,548		30,341		(117) %		(116) %
Net (loss) income	$      (14,038)		$        82,964		$        84,040		$        78,591		$        91,157		(117) %		(115) %
Weighted average basic shares outstanding (1)	156,383		129,321		129,319		129,306		129,159		21 %		21 %
Weighted average diluted shares outstanding (1)	156,383		129,801		129,733		129,673		129,693		20 %		21 %
(Loss) earnings per common share – basic (1)	$          (0.09)		$           0.64		$           0.65		$           0.61		$           0.71		(114) %		(113) %
(Loss) earnings per common share – diluted (1)	$          (0.09)		$           0.64		$           0.65		$           0.61		$           0.70		(114) %		(113) %

nm = not meaningful

(1)	Prior periods have been restated as a result of the adjustment to common shares outstanding based on the exchange ratio from the merger of 0.5958.

 

Columbia Banking System, Inc. Consolidated Balance Sheets
(Unaudited)
											% Change
($ in thousands, except per share data)	Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022		Seq. Quarter		Year over Year
Assets:
Cash and due from banks	$       555,919		$       327,313		$       321,447		$       315,348		$       307,144		70 %		81 %
Interest bearing cash and temporary investments	3,079,266		967,330		1,232,412		687,233		2,358,292		218 %		31 %
Investment securities:
Equity and other, at fair value	76,532		72,959		72,277		75,347		78,966		5 %		(3) %
Available for sale, at fair value	9,249,600		3,196,166		3,136,391		3,416,707		3,638,080		189 %		154 %
Held to maturity, at amortized cost	2,432		2,476		2,547		2,637		2,700		(2) %		(10) %
Loans held for sale	49,338		71,647		148,275		228,889		309,946		(31) %		(84) %
Loans and leases	37,091,280		26,155,981		25,507,951		24,432,678		22,975,761		42 %		61 %
Allowance for credit losses on loans and leases	(417,464)		(301,135)		(283,065)		(261,111)		(248,564)		39 %		68 %
Net loans and leases	36,673,816		25,854,846		25,224,886		24,171,567		22,727,197		42 %		61 %
Restricted equity securities	246,525		47,144		40,993		10,867		10,889		423 %		nm
Premises and equipment, net	375,190		176,016		165,305		165,196		167,369		113 %		124 %
Operating lease right-of-use assets	127,296		78,598		81,729		87,249		87,333		62 %		46 %
Goodwill	1,030,142		—		—		—		—		nm		nm
Other intangible assets, net	702,315		4,745		5,764		6,789		7,815		nm		nm
Residential mortgage servicing rights, at fair value	178,800		185,017		196,177		179,558		165,807		(3) %		8 %
Bank owned life insurance	641,922		331,759		329,699		328,764		328,040		93 %		96 %
Deferred tax asset, net	351,229		132,823		128,120		70,134		39,051		164 %		nm
Other assets	653,904		399,800		385,938		389,409		408,497		64 %		60 %
Total assets	$  53,994,226		$  31,848,639		$  31,471,960		$  30,135,694		$  30,637,126		70 %		76 %
Liabilities:
Deposits
Non-interest bearing	$  17,215,781		$  10,288,849		$  11,246,358		$  11,129,209		$  11,058,251		67 %		56 %
Interest bearing	24,370,566		16,776,763		15,570,749		15,003,214		15,641,336		45 %		56 %
Total deposits	41,586,347		27,065,612		26,817,107		26,132,423		26,699,587		54 %		56 %
Securities sold under agreements to repurchase	271,047		308,769		383,569		527,961		499,539		(12) %		(46) %
Borrowings	5,950,000		906,175		756,214		6,252		6,290		nm		nm
Junior subordinated debentures, at fair value	297,721		323,639		325,744		321,268		305,719		(8) %		(3) %
Junior and other subordinated debentures, at amortized cost	108,066		87,813		87,870		87,927		87,984		23 %		23 %
Operating lease liabilities	140,648		91,694		95,512		101,352		101,732		53 %		38 %
Other liabilities	755,674		585,111		588,430		440,235		328,677		29 %		130 %
Total liabilities	49,109,503		29,368,813		29,054,446		27,617,418		28,029,528		67 %		75 %
Shareholders' equity:
Common stock	5,788,553		3,450,493		3,448,007		3,445,531		3,443,266		68 %		68 %
Accumulated deficit	(603,696)		(543,803)		(580,933)		(619,108)		(651,912)		11 %		(7) %
Accumulated other comprehensive loss	(300,134)		(426,864)		(449,560)		(308,147)		(183,756)		(30) %		63 %
Total shareholders' equity	4,884,723		2,479,826		2,417,514		2,518,276		2,607,598		97 %		87 %
Total liabilities and shareholders' equity	$  53,994,226		$  31,848,639		$  31,471,960		$  30,135,694		$  30,637,126		70 %		76 %
Common shares outstanding at period end (2)	208,429		129,321		129,320		129,318		129,269		61 %		61 %
Book value per common share (2)	$          23.44		$          19.18		$          18.69		$          19.47		$          20.17		22 %		16 %
Tangible book value per common share (1),(2)	$          15.12		$          19.14		$          18.65		$          19.42		$          20.11		(21) %		(25) %
Tangible equity - common (1),(2)	$    3,152,266		$    2,475,081		$    2,411,750		$    2,511,487		$    2,599,783		27 %		21 %
Tangible common equity to tangible assets (1)	6.03 %		7.77 %		7.66 %		8.34 %		8.49 %		(1.74)		(2.46)

nm = not meaningful

(1)	See GAAP to Non-GAAP Reconciliation.
(2)	Prior periods have been restated as a result of the adjustment to common shares outstanding based on the exchange ratio from the merger of 0.5958.

 

Columbia Banking System, Inc.
Financial Highlights
(Unaudited)
		Quarter Ended										% Change
		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022		Seq. Quarter		Year over Year
Per Common Share Data: (5)
Dividends (5)		$         0.35		$         0.35		$         0.35		$         0.35		$         0.35		0 %		0 %
Book value (5)		$       23.44		$       19.18		$       18.69		$       19.47		$       20.17		22 %		16 %
Tangible book value (1),(5)		$       15.12		$       19.14		$       18.65		$       19.42		$       20.11		(21) %		(25) %
Tangible book value, ex accumulated other comprehensive income (1),(5)		$       16.56		$       22.44		$       22.13		$       21.80		$       21.53		(26) %		(23) %
Performance Ratios:
Efficiency ratio		79.71 %		57.24 %		56.07 %		59.12 %		59.02 %		22.47		20.69
Pre-provision net revenue ("PPNR") ROAA (1)		0.89 %		1.82 %		1.80 %		1.64 %		1.67 %		(0.93)		(0.78)
Return on average assets ("ROAA")		(0.14) %		1.04 %		1.09 %		1.04 %		1.21 %		(1.18)		(1.35)
Return on average common equity		(1.70) %		13.50 %		12.99 %		12.20 %		13.62 %		(15.20)		(15.32)
Return on average tangible common equity (1)		(2.09) %		13.53 %		13.02 %		12.23 %		13.66 %		(15.62)		(15.75)
Performance Ratios - Operating: (1)
Operating efficiency ratio (1)		53.46 %		52.01 %		51.72 %		58.27 %		62.02 %		1.45		(8.56)
Operating PPNR return on average assets (1)		2.01 %		2.10 %		2.12 %		1.66 %		1.43 %		(0.09)		0.58
Operating return on average assets (1)		0.74 %		1.24 %		1.33 %		1.06 %		1.03 %		(0.50)		(0.29)
Operating return on average common equity (1)		8.66 %		16.14 %		15.86 %		12.46 %		11.58 %		(7.48)		(2.92)
Operating return on average tangible common equity (1)		10.64 %		16.18 %		15.90 %		12.49 %		11.62 %		(5.54)		(0.98)
Average Balance Sheet Yields, Rates, & Ratios:
Yield on loans and leases		5.55 %		4.92 %		4.41 %		3.94 %		3.79 %		0.63		1.76
Yield on earning assets (2)		5.19 %		4.62 %		4.10 %		3.53 %		3.24 %		0.57		1.95
Cost of interest bearing deposits		1.32 %		0.77 %		0.23 %		0.11 %		0.10 %		0.55		1.22
Cost of interest bearing liabilities		1.82 %		1.05 %		0.39 %		0.20 %		0.18 %		0.77		1.64
Cost of total deposits		0.80 %		0.46 %		0.14 %		0.06 %		0.06 %		0.34		0.74
Cost of total funding (3)		1.16 %		0.65 %		0.23 %		0.12 %		0.11 %		0.51		1.05
Net interest margin (2)		4.08 %		4.01 %		3.88 %		3.41 %		3.14 %		0.07		0.94
Average interest bearing cash / Average interest earning assets		4.33 %		3.62 %		3.04 %		5.71 %		8.92 %		0.71		(4.59)
Average loans and leases / Average interest earning assets		80.96 %		85.32 %		84.54 %		80.91 %		76.85 %		(4.36)		4.11
Average loans and leases / Average total deposits		93.01 %		95.85 %		93.55 %		89.23 %		84.77 %		(2.84)		8.24
Average non-interest bearing deposits / Average total deposits		39.55 %		40.30 %		42.29 %		42.00 %		41.35 %		(0.75)		(1.80)
Average total deposits / Average total funding (3)		91.36 %		94.52 %		96.34 %		96.66 %		96.82 %		(3.16)		(5.46)
Select Credit & Capital Ratios:
Non-performing loans and leases to total loans and leases		0.20 %		0.22 %		0.20 %		0.18 %		0.18 %		(0.02)		0.02
Non-performing assets to total assets		0.14 %		0.18 %		0.16 %		0.15 %		0.14 %		(0.04)		—
Allowance for credit losses to loans and leases		1.18 %		1.21 %		1.16 %		1.12 %		1.14 %		(0.03)		0.04
Total risk-based capital ratio (4)		11.0 %		13.7 %		13.2 %		13.5 %		14.0 %		(2.70)		(3.00)
Common equity tier 1 risk-based capital ratio (4)		8.9 %		11.0 %		10.7 %		11.0 %		11.4 %		(2.10)		(2.50)

(1)	See GAAP to Non-GAAP Reconciliation.
(2)	Tax exempt interest has been adjusted to a taxable equivalent basis using a 21% tax rate.
(3)	Total funding = Total deposits + Total borrowings.
(4)	Estimated holding company ratios.
(5)	Prior periods have been restated as a result of the adjustment to common shares outstanding based on the exchange ratio from the merger of 0.5958.

 

Columbia Banking System, Inc.
Loan & Lease Portfolio Balances and Mix
(Unaudited)
	Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022		% Change
($ in thousands)	Amount		Amount		Amount		Amount		Amount		Seq. Quarter		Year over Year
Loans and leases:
Commercial real estate:
Non-owner occupied term, net	$    6,353,550		$    3,894,840		$    3,846,426		$    3,798,242		$    3,884,784		63 %		64 %
Owner occupied term, net	5,156,848		2,567,761		2,549,761		2,497,553		2,327,899		101 %		122 %
Multifamily, net	5,590,587		5,285,791		5,090,661		4,768,273		4,323,633		6 %		29 %
Construction & development, net	1,467,561		1,077,346		1,036,931		1,017,297		940,286		36 %		56 %
Residential development, net	440,667		200,838		205,935		194,909		195,308		119 %		126 %
Commercial:
Term, net	5,906,774		3,029,547		3,003,424		2,904,861		2,772,206		95 %		113 %
Lines of credit & other, net	2,184,762		960,054		914,507		920,604		871,483		128 %		151 %
Leases & equipment finance, net	1,746,267		1,706,172		1,669,817		1,576,144		1,484,252		2 %		18 %
Residential:
Mortgage, net	6,187,964		5,647,035		5,470,624		5,168,457		4,748,266		10 %		30 %
Home equity loans & lines, net	1,870,002		1,631,965		1,565,094		1,415,722		1,250,702		15 %		50 %
Consumer & other, net	186,298		154,632		154,771		170,616		176,942		20 %		5 %
Total loans and leases, net of deferred fees and costs	$  37,091,280		$  26,155,981		$  25,507,951		$  24,432,678		$  22,975,761		42 %		61 %
Loans and leases mix:
Commercial real estate:
Non-owner occupied term, net	16 %		15 %		15 %		15 %		17 %
Owner occupied term, net	14 %		10 %		10 %		10 %		10 %
Multifamily, net	15 %		20 %		20 %		20 %		19 %
Construction & development, net	4 %		4 %		4 %		4 %		4 %
Residential development, net	1 %		1 %		1 %		1 %		1 %
Commercial:
Term, net	16 %		12 %		12 %		12 %		12 %
Lines of credit & other, net	6 %		4 %		4 %		4 %		4 %
Leases & equipment finance, net	5 %		6 %		6 %		6 %		6 %
Residential:
Mortgage, net	17 %		21 %		21 %		21 %		21 %
Home equity loans & lines, net	5 %		6 %		6 %		6 %		5 %
Consumer & other, net	1 %		1 %		1 %		1 %		1 %
Total	100 %		100 %		100 %		100 %		100 %

 

Columbia Banking System, Inc.
Deposit Portfolio Balances and Mix
(Unaudited)
	Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022		% Change
($ in thousands)	Amount		Amount		Amount		Amount		Amount		Seq. Quarter		Year over Year
Deposits:
Demand, non-interest bearing	$  17,215,781		$  10,288,849		$  11,246,358		$  11,129,209		$  11,058,251		67 %		56 %
Demand, interest bearing	5,900,462		4,080,469		3,903,746		3,723,650		3,955,329		45 %		49 %
Money market	10,681,422		7,721,011		7,601,506		7,284,641		7,572,581		38 %		41 %
Savings	3,469,112		2,265,052		2,455,917		2,446,876		2,429,073		53 %		43 %
Time	4,319,570		2,710,231		1,609,580		1,548,047		1,684,353		59 %		156 %
Total	$  41,586,347		$  27,065,612		$  26,817,107		$  26,132,423		$  26,699,587		54 %		56 %
Total core deposits (1)	$  39,155,298		$  25,616,010		$  26,292,548		$  25,619,500		$  26,140,993		53 %		50 %
Deposit mix:
Demand, non-interest bearing	41 %		38 %		42 %		43 %		42 %
Demand, interest bearing	14 %		15 %		15 %		14 %		15 %
Money market	26 %		29 %		28 %		28 %		28 %
Savings	9 %		8 %		9 %		9 %		9 %
Time	10 %		10 %		6 %		6 %		6 %
Total	100 %		100 %		100 %		100 %		100 %

(1)	Core deposits are defined as total deposits less time deposits greater than $250,000 and all brokered deposits.

 

	Columbia Banking System, Inc.
	Credit Quality – Non-performing Assets
	(Unaudited)
		Quarter Ended										% Change
($ in thousands)		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022		Seq. Quarter		Year over  Year
Non-performing assets:
Loans and leases on non-accrual status:
	Commercial real estate, net	$     15,612		$       5,011		$       5,403		$       5,514		$       5,950		212 %		162 %
	Commercial, net	42,301		25,691		18,652		12,645		12,415		65 %		241 %
	Residential, net	—		—		—		—		—		nm		nm
	Consumer & other, net	—		—		—		—		—		nm		nm
	Total loans and leases on non-accrual status	57,913		30,702		24,055		18,159		18,365		89 %		215 %
Loans and leases past due 90+ days and accruing (1):
	Commercial real estate, net	1		1		1		23		1		0 %		0 %
	Commercial, net	151		7,909		5,143		3,311		8		(98) %		nm
	Residential, net (1)	17,423		19,894		21,411		22,340		23,162		(12) %		(25) %
	Consumer & other, net	140		134		152		196		111		4 %		26 %
	Total loans and leases past due 90+ days and accruing (1)	17,715		27,938		26,707		25,870		23,282		(37) %		(24) %
Total non-performing loans and leases		75,628		58,640		50,762		44,029		41,647		29 %		82 %
Other real estate owned		409		203		—		1,868		1,868		101 %		(78) %
Total non-performing assets		$     76,037		$     58,843		$     50,762		$     45,897		$     43,515		29 %		75 %
Loans and leases past due 31-89 days		$     78,641		$     64,893		$     53,538		$     34,659		$     42,409		21 %		85 %
Loans and leases past due 31-89 days to total loans and leases		0.21 %		0.25 %		0.21 %		0.14 %		0.18 %		(0.04)		0.03
Non-performing loans and leases to total loans and leases (1)		0.20 %		0.22 %		0.20 %		0.18 %		0.18 %		(0.02)		0.02
Non-performing assets to total assets (1)		0.14 %		0.18 %		0.16 %		0.15 %		0.14 %		(0.04)		—

nm = not meaningful

(1)	Excludes certain mortgage loans guaranteed by Ginnie Mae, which Columbia has the unilateral right to repurchase but has not done so, totaling $5.4 million, $6.6 million, $1.0 million, and $356,000 at March 31, 2023, December 31, 2022, September 30, 2022, and June 30, 2022, respectively.

 

	Columbia Banking System, Inc.
	Credit Quality – Allowance for Credit Losses
	(Unaudited)
		Quarter Ended										% Change
($ in thousands)		Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022		Seq. Quarter		Year over Year
Allowance for credit losses on loans and leases (ACLLL)
Balance, beginning of period		$   301,135		$   283,065		$   261,111		$   248,564		$   248,412		6 %		21 %
Initial ACL recorded for PCD loans acquired during the period		26,492		—		—		—		—		nm		nm
Provision for credit losses on loans and leases (1)		106,498		30,580		28,542		18,787		5,696		248 %		nm
Charge-offs
	Commercial real estate, net	—		(128)		—		(8)		—		nm		nm
	Commercial, net	(19,248)		(14,721)		(9,459)		(9,035)		(7,858)		31 %		145 %
	Residential, net	(248)		(53)		(4)		—		(167)		368 %		49 %
	Consumer & other, net	(774)		(906)		(929)		(836)		(885)		(15) %		(13) %
	Total charge-offs	(20,270)		(15,808)		(10,392)		(9,879)		(8,910)		28 %		127 %
Recoveries
	Commercial real estate, net	58		163		123		73		25		(64) %		132 %
	Commercial, net	3,058		2,708		2,842		2,934		2,545		13 %		20 %
	Residential, net	124		24		249		216		173		417 %		(28) %
	Consumer & other, net	369		403		590		416		623		(8) %		(41) %
	Total recoveries	3,609		3,298		3,804		3,639		3,366		9 %		7 %
Net (charge-offs) recoveries
	Commercial real estate, net	58		35		123		65		25		66 %		132 %
	Commercial, net	(16,190)		(12,013)		(6,617)		(6,101)		(5,313)		35 %		205 %
	Residential, net	(124)		(29)		245		216		6		328 %		nm
	Consumer & other, net	(405)		(503)		(339)		(420)		(262)		(19) %		55 %
	Total net charge-offs	(16,661)		(12,510)		(6,588)		(6,240)		(5,544)		33 %		201 %
Balance, end of period		$   417,464		$   301,135		$   283,065		$   261,111		$   248,564		39 %		68 %
Reserve for unfunded commitments
Balance, beginning of period		$    14,221		$    11,853		$    12,823		$    12,918		$    12,767		20 %		11 %
Initial ACL recorded for unfunded commitments acquired during the period		5,767		—		—		—		—		nm		nm
(Recapture) provision for credit losses on unfunded commitments		(959)		2,368		(970)		(95)		151		(140) %		nm
Balance, end of period		19,029		14,221		11,853		12,823		12,918		34 %		47 %
Total Allowance for credit losses (ACL)		$   436,493		$   315,356		$   294,918		$   273,934		$   261,482		38 %		67 %
Net charge-offs to average loans and leases (annualized)		0.23 %		0.19 %		0.11 %		0.11 %		0.10 %		0.04		0.13
Recoveries to gross charge-offs		17.80 %		20.86 %		36.61 %		36.84 %		37.78 %		(3.06)		(19.98)
ACLLL to loans and leases		1.13 %		1.15 %		1.11 %		1.07 %		1.08 %		(0.02)		0.05
ACL to loans and leases		1.18 %		1.21 %		1.16 %		1.12 %		1.14 %		(0.03)		0.04

nm = not meaningful

(1)	Includes $88.4 million initial provision related to non-PCD loans acquired during the period.

 

Columbia Banking System, Inc. Consolidated Average Balance Sheets, Net Interest Income, and Yields/Rates
(Unaudited)
	Quarter Ended
	March 31, 2023						December 31, 2022						March 31, 2022
($ in thousands)	Average Balance		Interest Income or Expense		Average Yields or Rates		Average Balance		Interest Income or Expense		Average Yields or Rates		Average Balance		Interest Income or Expense		Average Yields or Rates
INTEREST-EARNING ASSETS:
Loans held for sale	$        54,008		$       799		5.92 %		$      110,850		$     1,603		5.79 %		$      286,307		$     2,262		3.16 %
Loans and leases (1)	29,998,630		412,726		5.55 %		25,855,556		320,747		4.92 %		22,566,109		212,142		3.79 %
Taxable securities	4,960,966		40,448		3.26 %		3,042,044		18,290		2.40 %		3,659,145		18,811		2.06 %
Non-taxable securities (2)	437,020		4,068		3.72 %		200,825		1,571		3.13 %		234,186		1,726		2.95 %
Temporary investments and interest-bearing cash	1,605,081		18,581		4.69 %		1,095,854		10,319		3.74 %		2,618,528		1,353		0.21 %
Total interest-earning assets	37,055,705		$ 476,622		5.19 %		30,305,129		$ 352,530		4.62 %		29,364,275		$ 236,294		3.24 %
Goodwill and other intangible assets	623,042						5,298						8,407
Other assets	1,747,228						1,327,063						1,224,731
Total assets	$  39,425,975						$  31,637,490						$  30,597,413
INTEREST-BEARING LIABILITIES:
Interest-bearing demand deposits	$   4,759,251		$     9,815		0.84 %		$   4,005,643		$     5,372		0.53 %		$   3,812,173		$       498		0.05 %
Money market deposits	8,845,784		32,238		1.48 %		7,651,974		17,473		0.91 %		7,640,810		1,408		0.07 %
Savings deposits	2,686,388		556		0.08 %		2,345,564		226		0.04 %		2,405,958		205		0.03 %
Time deposits	3,205,128		21,004		2.66 %		2,100,803		8,103		1.53 %		1,753,880		1,805		0.42 %
Total interest-bearing deposits	19,496,551		63,613		1.32 %		16,103,984		31,174		0.77 %		15,612,821		3,916		0.10 %
Repurchase agreements and federal funds purchased	281,032		406		0.59 %		354,624		323		0.36 %		486,542		63		0.05 %
Borrowings	2,352,715		28,764		4.96 %		796,414		8,023		4.00 %		6,313		49		3.16 %
Junior and other subordinated debentures	417,966		8,470		8.22 %		413,708		7,248		6.95 %		380,985		3,149		3.35 %
Total interest-bearing liabilities	22,548,264		$ 101,253		1.82 %		17,668,730		$   46,768		1.05 %		16,486,661		$     7,177		0.18 %
Non-interest-bearing deposits	12,755,080						10,870,842						11,007,034
Other liabilities	772,870						659,279						388,659
Total liabilities	36,076,214						29,198,851						27,882,354
Common equity	3,349,761						2,438,639						2,715,059
Total liabilities and shareholders' equity	$  39,425,975						$  31,637,490						$  30,597,413
NET INTEREST INCOME			$ 375,369						$ 305,762						$ 229,117
NET INTEREST SPREAD					3.37 %						3.57 %						3.06 %
NET INTEREST INCOME TO EARNING ASSETS OR NET INTEREST MARGIN (1), (2)					4.08 %						4.01 %						3.14 %

(1)	Non-accrual loans and leases are included in the average balance.
(2)	Tax-exempt income has been adjusted to a tax equivalent basis at a 21% tax rate. The amount of such adjustment was an addition to recorded income of approximately $671,000 for the three months ended March 31, 2023, as compared to $283,000 for the three months ended December 31, 2022 and $354,000 for the three months ended March 31, 2022.

 

Columbia Banking System, Inc. Residential Mortgage Banking Activity
(Unaudited)
	Quarter Ended										% Change
($ in thousands)	Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022		Seq. Quarter		Year over Year
Residential mortgage banking revenue:
Origination and sale	$       3,587		$       4,252		$     10,515		$     15,101		$     16,844		(16) %		(79) %
Servicing	9,397		9,184		9,529		9,505		9,140		2 %		3 %
Change in fair value of MSR asset:
Changes due to collection/realization of expected cash flows over time	(4,881)		(4,986)		(4,978)		(4,961)		(5,347)		(2) %		(9) %
Changes due to valuation inputs or assumptions	(2,937)		(9,914)		16,403		10,899		40,149		(70) %		(107) %
MSR hedge gain (loss) (1)	2,650		(348)		(14,128)		—		—		nm		nm
Total	$       7,816		$      (1,812)		$     17,341		$     30,544		$     60,786		nm		(87) %
Closed loan volume for-sale	$    131,726		$    216,833		$    396,979		$    576,532		$    649,122		(39) %		(80) %
Gain on sale margin	2.72 %		1.96 %		2.65 %		2.62 %		2.59 %		0.76		0.13
Residential mortgage servicing rights:
Balance, beginning of period	$    185,017		$    196,177		$    179,558		$    165,807		$    123,615		(6) %		50 %
Additions for new MSR capitalized	1,601		3,740		5,194		7,813		7,390		(57) %		(78) %
Change in fair value of MSR asset:
Changes due to collection/realization of expected cash flows over time	(4,881)		(4,986)		(4,978)		(4,961)		(5,347)		(2) %		(9) %
Changes due to valuation inputs or assumptions	(2,937)		(9,914)		16,403		10,899		40,149		(70) %		(107) %
Balance, end of period	$    178,800		$    185,017		$    196,177		$    179,558		$    165,807		(3) %		8 %
Residential mortgage loans serviced for others	$  12,911,341		$  13,020,189		$  12,997,911		$  12,932,747		$  12,810,574		(1) %		1 %
MSR as % of serviced portfolio	1.38 %		1.42 %		1.51 %		1.39 %		1.29 %		(0.04)		0.09

(1)	MSR hedges were put in place during the three months ended September 30, 2022.

 

Columbia Banking System, Inc. Purchase Price Allocation(1)
(Unaudited)
($ in thousands)		February 28, 2023
Purchase price consideration
	Total merger consideration			$                   2,337,632
Fair value of assets acquired:
	Cash and due from banks	$                     274,587
	Equity and other	1,288
	Available for sale	4,516,574
	Held to maturity	1,707,409
	Loans held for sale	2,358
	Loans and leases	10,884,106
	Restricted equity securities	101,760
	Premises and equipment	203,270
	Other intangible assets	710,230
	Deferred tax assets	253,481
	Other assets	571,753
	Total assets acquired	$                 19,226,816
Fair value of liabilities assumed:
	Deposits	$                 15,193,474
	Securities sold under agreements to repurchase	70,025
	Borrowings	2,294,360
	Junior and other subordinated debentures	20,310
	Other liabilities	341,157
	Total liabilities assumed	$                 17,919,326
Net assets acquired				$                   1,307,490
Goodwill				$                   1,030,142

(1)	The estimates of fair value were recorded based on initial valuations available at February 28, 2023 (the "Merger Date") and these estimates, including initial accounting for deferred taxes, were considered preliminary as of March 31, 2023 and subject to adjustment for up to one year after the Merger Date.

 

Non-GAAP Financial Measures

In addition to results presented in accordance with generally accepted accounting principles in the United States of America (GAAP), this press release contains certain non-GAAP financial measures. The company believes presenting certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, our performance trends, and our financial position. We utilize these measures for internal planning and forecasting purposes. We, as well as securities analysts, investors, and other interested parties, also use these measures to compare peer company operating performance. We believe that our presentation and discussion, together with the accompanying reconciliations, provides a complete understanding of factors and trends affecting our business and allows investors to view performance in a manner similar to management. These non-GAAP measures should not be considered a substitution for GAAP basis measures and results, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.

 

Columbia Banking System, Inc. GAAP to Non-GAAP Reconciliation
(Unaudited)
			Quarter Ended										% Change
($ in thousands, except per share data)			Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022		Seq. Quarter		Year over Year
Total shareholders' equity	a		$  4,884,723		$  2,479,826		$  2,417,514		$  2,518,276		$  2,607,598		97 %		87 %
Less: Goodwill			1,030,142		—		—		—		—		nm		nm
Less: Other intangible assets, net			702,315		4,745		5,764		6,789		7,815		nm		nm
Tangible common shareholders' equity	b		$  3,152,266		$  2,475,081		$  2,411,750		$  2,511,487		$  2,599,783		27 %		21 %
Less: Accumulated other comprehensive (loss) income (AOCI)			$   (300,134)		(426,864)		(449,560)		(308,147)		(183,756)		(30) %		63 %
Tangible common shareholders' equity, ex AOCI	c		$  3,452,400		$  2,901,945		$  2,861,310		$  2,819,634		$  2,783,539		19 %		24 %
Total assets	d		$   53,994,226		$   31,848,639		$   31,471,960		$   30,135,694		$   30,637,126		70 %		76 %
Less: Goodwill			1,030,142		—		—		—		—		nm		nm
Less: Other intangible assets, net			702,315		4,745		5,764		6,789		7,815		nm		nm
Tangible assets	e		$   52,261,769		$   31,843,894		$   31,466,196		$   30,128,905		$   30,629,311		64 %		71 %
Common shares outstanding at period end (1)	f		208,429		129,321		129,320		129,318		129,269		61 %		61 %
Total shareholders' equity to total assets ratio	a / d		9.05 %		7.79 %		7.68 %		8.36 %		8.51 %		1.26		0.54
Tangible common equity ratio	b / e		6.03 %		7.77 %		7.66 %		8.34 %		8.49 %		(1.74)		(2.46)
Tangible common equity ratio, ex AOCI	c / e		6.61 %		9.11 %		9.09 %		9.36 %		9.09 %		(2.50)		(2.48)
Book value per common share (1)	a / f		$           23.44		$           19.18		$           18.69		$           19.47		$           20.17		22 %		16 %
Tangible book value per common share (1)	b / f		$           15.12		$           19.14		$           18.65		$           19.42		$           20.11		(21) %		(25) %
Tangible book value per common share, ex AOCI (1)	c / f		$           16.56		$           22.44		$           22.13		$           21.80		$           21.53		(26) %		(23) %

nm = not meaningful

(1)	Prior periods have been restated as a result of the adjustment to common shares outstanding based on the exchange ratio from the merger of 0.5958.

 

Columbia Banking System, Inc. GAAP to Non-GAAP Reconciliation - Continued
(Unaudited)
			Quarter Ended										% Change
($ in thousands)			Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022		Seq. Quarter		Year over Year
Non-Interest Income Adjustments
Gain on sale of debt securities, net			$                   —		$                   —		$                   —		$                   —		$                     2		nm		(100) %
Gain (loss) on equity securities, net			2,416		284		(2,647)		(2,075)		(2,661)		nm		nm
(Loss) gain on swap derivatives			(3,543)		(2,329)		4,194		7,337		7,047		52 %		(150) %
Change in fair value of certain loans held for investment			9,488		4,192		(26,397)		(15,210)		(21,049)		126 %		nm
Change in fair value of MSR due to valuation inputs or assumptions			(2,937)		(9,914)		16,403		10,899		40,149		(70) %		(107) %
MSR hedge gain (loss)			2,650		(348)		(14,128)		—		—		nm		nm
Total non-interest income adjustments	a		$             8,074		$          (8,115)		$        (22,575)		$                951		$          23,488		nm		(66) %
Non-Interest Expense Adjustments
Merger related expenses			$        115,898		$          11,637		$                769		$             2,672		$             2,278		nm		nm
Exit and disposal costs			1,291		1,966		1,364		442		3,033		(34) %		(57) %
Total non-interest expense adjustments	b		$        117,189		$          13,603		$             2,133		$             3,114		$             5,311		nm		nm
Net interest income (1)	c		$        375,369		$        305,762		$        287,933		$        248,522		$        229,117		23 %		64 %
Non-interest income (GAAP)	d		$          54,735		$          34,879		$          29,445		$          55,235		$          79,969		57 %		(32) %
Less: Non-interest income adjustments	a		(8,074)		8,115		22,575		(951)		(23,488)		(199) %		(66) %
Operating non-interest income (non-GAAP)	e		$          46,661		$          42,994		$          52,020		$          54,284		$          56,481		9 %		(17) %
Revenue (GAAP) (1)	f=c+d		$        430,104		$        340,641		$        317,378		$        303,757		$        309,086		26 %		39 %
Operating revenue (non-GAAP)  (1)	g=c+e		$        422,030		$        348,756		$        339,953		$        302,806		$        285,598		21 %		48 %
Non-interest expense (GAAP)	h		$        342,818		$        194,982		$        177,964		$        179,574		$        182,430		76 %		88 %
Less: Non-interest expense adjustments	b		(117,189)		(13,603)		(2,133)		(3,114)		(5,311)		nm		nm
Operating non-interest expense (non-GAAP)	i		$        225,629		$        181,379		$        175,831		$        176,460		$        177,119		24 %		27 %
Net (loss) income (GAAP)	j		$        (14,038)		$          82,964		$          84,040		$          78,591		$          91,157		(117) %		(115) %
(Benefit) provision for income taxes			(4,886)		29,464		27,473		26,548		30,341		(117) %		(116) %
(Loss) income before provision for income taxes			(18,924)		112,428		111,513		105,139		121,498		(117) %		(116) %
Provision for credit losses			105,539		32,948		27,572		18,692		4,804		220 %		nm
Pre-provision net revenue (PPNR) (non-GAAP)	k		86,615		145,376		139,085		123,831		126,302		(40) %		(31) %
Less: Non-interest income adjustments	a		(8,074)		8,115		22,575		(951)		(23,488)		(199) %		(66) %
Add: Non-interest expense adjustments	b		117,189		13,603		2,133		3,114		5,311		nm		nm
Operating PPNR (non-GAAP)	l		$        195,730		$        167,094		$        163,793		$        125,994		$        108,125		17 %		81 %
Net (loss) income (GAAP)	j		$        (14,038)		$          82,964		$          84,040		$          78,591		$          91,157		(117) %		(115) %
Less: Non-interest income adjustments	a		(8,074)		8,115		22,575		(951)		(23,488)		(199) %		(66) %
Add: Non-interest expense adjustments	b		117,189		13,603		2,133		3,114		5,311		nm		nm
Tax effect of adjustments			(23,565)		(5,459)		(6,116)		(480)		4,576		332 %		nm
Operating net income (non-GAAP)	m		$          71,512		$          99,223		$        102,632		$          80,274		$          77,556		(28) %		(8) %

nm = not meaningful

(1)	Tax exempt interest has been adjusted to a taxable equivalent basis using a 21% tax rate.

 

Columbia Banking System, Inc. GAAP to Non-GAAP Reconciliation - Continued
(Unaudited)
			Quarter Ended										% Change
($ in thousands, except per share data)			Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022		Seq. Quarter		Year over Year
Average assets	n		$   39,425,975		$   31,637,490		$   30,668,177		$   30,356,903		$   30,597,413		25 %		29 %
Less: Average goodwill and other intangible assets, net			623,042		5,298		6,343		7,379		8,407		nm		nm
Average tangible assets	o		$   38,802,933		$   31,632,192		$   30,661,834		$   30,349,524		$   30,589,006		23 %		27 %
Average common shareholders' equity	p		$     3,349,761		$     2,438,639		$     2,567,266		$     2,584,836		$     2,715,059		37 %		23 %
Less: Average goodwill and other intangible assets, net			623,042		5,298		6,343		7,379		8,407		nm		nm
Average tangible common equity	q		$     2,726,719		$     2,433,341		$     2,560,923		$     2,577,457		$     2,706,652		12 %		1 %
Weighted average basic shares outstanding  (1)	r		156,383		129,321		129,319		129,306		129,159		21 %		21 %
Weighted average diluted shares outstanding  (1)	s		156,383		129,801		129,733		129,673		129,693		20 %		21 %
Select Per-Share & Performance Metrics
Earnings-per-share - basic (1)	j / r		$         (0.09)		$            0.64		$            0.65		$            0.61		$            0.71		(114) %		(113) %
Earnings-per-share - diluted (1)	j / s		$         (0.09)		$            0.64		$            0.65		$            0.61		$            0.70		(114) %		(113) %
Efficiency ratio	h / f		79.71 %		57.24 %		56.07 %		59.12 %		59.02 %		22.47		20.69
PPNR return on average assets	k / n		0.89 %		1.82 %		1.80 %		1.64 %		1.67 %		(0.93)		(0.78)
Return on average assets	j / n		(0.14) %		1.04 %		1.09 %		1.04 %		1.21 %		(1.18)		(1.35)
Return on average tangible assets	j / o		(0.15) %		1.04 %		1.09 %		1.04 %		1.21 %		(1.19)		(1.36)
Return on average common equity	j / p		(1.70) %		13.50 %		12.99 %		12.20 %		13.62 %		(15.20)		(15.32)
Return on average tangible common equity	j / q		(2.09) %		13.53 %		13.02 %		12.23 %		13.66 %		(15.62)		(15.75)
Operating Per-Share & Performance Metrics
Operating earnings-per-share - basic (1)	m / r		$            0.46		$            0.77		$            0.79		$            0.62		$            0.60		(40) %		(23) %
Operating earnings-per-share - diluted (1)	m / s		$            0.46		$            0.76		$            0.79		$            0.62		$            0.60		(39) %		(23) %
Operating efficiency ratio	i / g		53.46 %		52.01 %		51.72 %		58.27 %		62.02 %		1.45		(8.56)
Operating PPNR return on average assets	l / n		2.01 %		2.10 %		2.12 %		1.66 %		1.43 %		(0.09)		0.58
Operating return on average assets	m / n		0.74 %		1.24 %		1.33 %		1.06 %		1.03 %		(0.50)		(0.29)
Operating return on average tangible assets	m / o		0.75 %		1.24 %		1.33 %		1.06 %		1.03 %		(0.49)		(0.28)
Operating return on average common equity	m / p		8.66 %		16.14 %		15.86 %		12.46 %		11.58 %		(7.48)		(2.92)
Operating return on average tangible common equity	m / q		10.64 %		16.18 %		15.90 %		12.49 %		11.62 %		(5.54)		(0.98)

(1)	Prior periods have been restated as a result of the adjustment to common shares outstanding based on the exchange ratio from the merger of 0.5958.

 

Columbia Banking System, Inc. GAAP to Non-GAAP Reconciliation - Continued
(Unaudited)
			Quarter Ended										% Change
($ in thousands)			Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022		Seq. Quarter		Year over Year
Loans and leases interest income	a		$  412,726		$  320,747		$  276,625		$  231,932		$    212,142		29 %		95 %
Less: Acquired loan accretion - rate related (2), (3)	b		11,832		387		789		1,069		1,432		nm		nm
Less: Acquired loan accretion - credit related (3)	c		3,806		—		—		—		—		nm		nm
Adjusted loans and leases interest income	d=a-b-c		$     397,088		$     320,360		$     275,836		$     230,863		$       210,710		24 %		88 %
Taxable securities interest income	e		40,448		18,290		18,261		17,340		18,811		121 %		115 %
Less: Acquired taxable securities accretion - rate related	f		15,356		—		—		—		—		nm		nm
Adjusted Taxable securities interest income	g=e-f		$       25,092		$       18,290		$       18,261		$       17,340		$          18,811		37 %		33 %
Non-taxable securities interest income (1)	h		4,068		1,571		1,651		1,721		1,726		159 %		136 %
Less: Acquired non-taxable securities accretion - rate related	i		901		—		—		—		—		nm		nm
Adjusted Taxable securities interest income (1)	j=h-i		$          3,167		$          1,571		$          1,651		$          1,721		$            1,726		102 %		83 %
Interest income (1)	k		$     476,622		$     352,530		$     303,857		$     256,654		$       236,294		35 %		102 %
Less: Acquired loan and securities accretion - rate related	l=b+f+i		28,089		387		789		1,069		1,432		nm		nm
Less: Acquired loan accretion - credit related	c		3,806		—		—		—		—		nm		nm
Adjusted interest income (1)	m=k-l-c		$     444,727		$     352,143		$     303,068		$     255,585		$       234,862		26 %		89 %
Interest-bearing deposits interest expense	n		63,613		31,174		9,090		4,015		3,916		104 %		nm
Less: Acquired deposit accretion	o		(93)		—		—		—		—		nm		nm
Adjusted interest-bearing deposits interest expense	p=n-o		$       63,706		$       31,174		$          9,090		$          4,015		$            3,916		104 %		nm
Interest expense	q		101,253		46,768		15,924		8,132		7,177		117 %		nm
Less: Acquired interest-bearing liabilities accretion (2)	r		(150)		(57)		(57)		(57)		(57)		163 %		163 %
Adjusted interest expense	s=q-r		$     101,403		$       46,825		$       15,981		$          8,189		$            7,234		117 %		nm
Net Interest Income (1)	t		$     375,369		$     305,762		$     287,933		$     248,522		$       229,117		23 %		64 %
Less: Acquired loan, securities, and interest-bearing liabilities  accretion - rate related	u=l-r		27,939		330		732		1,012		1,375		nm		nm
Less: Acquired loan accretion - credit related	c		3,806		—		—		—		—		nm		nm
Adjusted interest income (1)	v=t-u-c		$     343,624		$     305,432		$     287,201		$     247,510		$       227,742		13 %		51 %
Average loans and leases	aa		29,998,630		25,855,556		24,886,203		23,550,796		22,566,109		16 %		33 %
Average taxable securities	ab		4,960,966		3,042,044		3,271,185		3,410,091		3,659,145		63 %		36 %
Average non-taxable securities	ac		437,020		200,825		212,847		220,327		234,186		118 %		87 %
Average interest-earning assets	ad		37,055,705		30,305,129		29,437,103		29,108,988		29,364,275		22 %		26 %
Average interest-bearing deposits	ae		19,496,551		16,103,984		15,350,390		15,308,058		15,612,821		21 %		25 %
Average interest-bearing liabilities	af		22,548,264		17,668,730		16,359,575		16,220,936		16,486,661		28 %		37 %

(1)	Tax exempt interest has been adjusted to a taxable equivalent basis using a 21% tax rate.
(2)	Includes discount accretion related to UHC's 2014 acquisition of Sterling Financial Corporation.
(3)	The cumulative fair value discount on historical Columbia loans was established as of February 28, 2023, and the allocation between the credit-related discount and the rate-related discount was established at that time. Our disclosure of credit-related and rate-related discount accretion is an estimate based on the relative allocation of these two items to the discount at closing.

 

Columbia Banking System, Inc. GAAP to Non-GAAP Reconciliation - Continued
(Unaudited)
			Quarter Ended										% Change
($ in thousands)			Mar 31, 2023		Dec 31, 2022		Sep 30, 2022		Jun 30, 2022		Mar 31, 2022		Seq. Quarter		Year over Year
Average yield on loans and leases	a / aa		5.55 %		4.92 %		4.41 %		3.94 %		3.79 %		0.63		1.76
Less: Acquired loan accretion - rate related (2),(3)	b / aa		0.16 %		0.01 %		0.01 %		0.02 %		0.03 %		0.15		0.13
Less: Acquired loan accretion - credit related (3)	c / aa		0.05 %		— %		— %		— %		— %		0.05		0.05
Adjusted average yield on loans and leases	d / aa		5.34 %		4.91 %		4.40 %		3.92 %		3.76 %		0.43		1.58
Average yield on taxable securities	e / ab		3.26 %		2.40 %		2.23 %		2.03 %		2.06 %		0.86		1.20
Less: Acquired taxable securities accretion - rate related	f / ab		1.26 %		— %		— %		— %		— %		1.26		1.26
Adjusted average yield on taxable securities	g / ab		2.00 %		2.40 %		2.23 %		2.03 %		2.06 %		(0.40)		(0.06)
Average yield on non-taxable securities (1)	h / ac		3.72 %		3.13 %		3.10 %		3.13 %		2.95 %		0.59		0.77
Less: Acquired non-taxable securities accretion - rate related	i / ac		0.84 %		— %		— %		— %		— %		0.84		0.84
Adjusted yield on non-taxable securities (1)	j / ac		2.88 %		3.13 %		3.10 %		3.13 %		2.95 %		(0.25)		(0.07)
Average yield on interest-earning assets (1)	k / ad		5.19 %		4.62 %		4.10 %		3.53 %		3.24 %		0.57		1.95
Less: Acquired loan and securities accretion - rate related	l / ad		0.31 %		0.01 %		0.01 %		0.01 %		0.02 %		0.30		0.29
Less: Acquired loan accretion - credit related	c / ad		0.04 %		— %		— %		— %		— %		0.04		0.04
Adjusted average yield on interest-earning assets (1)	m / ad		4.84 %		4.61 %		4.09 %		3.52 %		3.22 %		0.23		1.62
Average rate on interest-bearing deposits	n / ae		1.32 %		0.77 %		0.23 %		0.11 %		0.10 %		0.55		1.22
Less: Acquired deposit accretion	o / ae		— %		— %		— %		— %		— %		—		—
Adjusted average rate on interest-bearing deposits	p / ae		1.33 %		0.77 %		0.23 %		0.11 %		0.10 %		0.56		1.23
Average rate on interest-bearing liabilities	q / af		1.82 %		1.05 %		0.39 %		0.20 %		0.18 %		0.77		1.64
Less: Acquired interest-bearing liabilities accretion (2)	r / af		— %		— %		— %		— %		— %		—		—
Adjusted average rate on interest-bearing liabilities	s / af		1.82 %		1.05 %		0.39 %		0.20 %		0.18 %		0.77		1.64
Net interest margin (1)	t / ad		4.08 %		4.01 %		3.88 %		3.41 %		3.14 %		0.07		0.94
Less: Acquired loan, securities, and interest-bearing liabilities  accretion - rate related	u / ad		0.31 %		— %		0.01 %		0.01 %		0.02 %		0.31		0.29
Less: Acquired loan accretion - credit related	c / ad		0.04 %		— %		— %		— %		— %		0.04		0.04
Adjusted net interest margin (1)	v / ad		3.73 %		4.01 %		3.87 %		3.40 %		3.12 %		(0.28)		0.61

(1)	Tax exempt interest has been adjusted to a taxable equivalent basis using a 21% tax rate.
(2)	Includes discount accretion related to UHC's 2014 acquisition of Sterling Financial Corporation.
(3)	The cumulative fair value discount on historical Columbia loans was established as of February 28, 2023, and the allocation between the credit-related discount and the rate-related discount was established at that time. Our disclosure of credit-related and rate-related discount accretion is an estimate based on the relative allocation of these two items to the discount at closing.

 

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SOURCE Columbia Banking System, Inc.

FAQ

What are the financial results of Columbia Banking System for Q1 2023?

Columbia Banking System reported a net loss of $14 million or $(0.09) per share, with operating net income of $72 million or $0.46 per share.

How did the merger with Umpqua Holdings affect Columbia Banking System's assets?

The merger led to an increase in total consolidated assets to $54 billion, up by $22 billion.

What was the net interest income for Columbia Banking System in Q1 2023?

The net interest income for Q1 2023 was $375 million, reflecting a 23% increase from the previous quarter.

What is the estimated total risk-based capital ratio for Columbia Banking System?

As of March 31, 2023, the estimated total risk-based capital ratio is 11.0%.

What was the organic loan growth for Columbia Banking System after the merger?

Organic loan growth was modest during the first quarter, primarily due to slight declines in commercial portfolios.