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Section 1: 8-K (FORM 8-K)

Document
false0000887343 0000887343 2020-01-23 2020-01-23
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 23, 2020
COLUMBIA BANKING SYSTEM, INC.
(Exact name of registrant as specified in its charter)
Washington
 
0-20288
 
91-1422237
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
1301 A Street
Tacoma, WA 98402-2156
(Address of principal executive offices and zip code)
(253) 305-1900
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading symbol
 
Name of each exchange on which registered
Common Stock, No Par Value
 
COLB
 
NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.




Items to be Included in this Report

Item 2.02 Results of Operations and Financial Condition
Item 8.01 Other Events
The following information is furnished pursuant to Item 2.02, "Results of Operations and Financial Condition" and Item 8.01 "Other Events."
On January 23, 2020, Columbia Banking System, Inc. issued a press release reporting its financial results for the quarter ended December 31, 2019, a quarterly cash dividend of $0.28 per share and a special dividend of $0.22 per share. The dividend will be paid on February 19, 2020 to shareholders of record at the close of business on February 5, 2020. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference in its entirety.
Item 9.01 Financial Statements and Exhibits
(d) The following exhibits are being furnished herewith:
99.1 Press release dated January 23, 2020 reporting the financial results of Columbia Banking System, Inc. for the quarter and year ended December 31, 2019, a quarterly cash dividend and a special cash dividend.
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)




SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
COLUMBIA BANKING SYSTEM, INC.
 
 
 
 
 
 
Date:
January 23, 2020
 
 
 
/s/ CLINT E. STEIN
 
 
 
 
 
Clint E. Stein
 
 
 
 
 
President and
Chief Executive Officer



(Back To Top)

Section 2: EX-99.1 (PRESS RELEASE - EARNINGS AND DIVIDEND)

Exhibit


Exhibit 99.1

402424272_cbsystemsolidbuga16.jpg

FOR IMMEDIATE RELEASE

January 23, 2020

                        


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



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


TACOMA, Washington, January 23, 2020 -- Clint Stein, President and Chief Executive Officer of Columbia Banking System, Inc. and Columbia Bank (NASDAQ: COLB) (“Columbia”), said today upon the release of Columbia’s 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.

2



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.

3



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.”

4



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


5



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.

6



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.

7



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.

8



Note Regarding Forward-Looking Statements
This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, descriptions of Columbia’s management’s expectations regarding future events and developments such as future operating results, growth in loans and deposits, continued success of Columbia’s style of banking and the strength of the local economy. 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
 
 
253-305-1921

9




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



10



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.

11



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.

12



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.

13



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