Columbia Banking System Announces Fourth Quarter and Full Year 2022 Results and Quarterly Cash Dividend
01/24/2023 - 08:00 AM
Notable Items for Fourth Quarter and Fiscal Year 2022
Record full year net income of $250.2 million $3.20 Record quarterly net income of $68.9 million $0.88 $0.05 Net interest margin of 3.64% , an increase of 17 basis points from the linked quarter Fourth quarter loan production of $402.5 million $2.20 billion Nonperforming assets to period-end assets ratio of 0.07% Expect to close the merger with Umpqua Holdings after close of business on February 28, 2023 , subject to the satisfaction of closing conditions Regular cash dividend declared of $0.30 TACOMA, Wash Jan. 24, 2023 Columbia ", "we" or "us"), the parent company of Columbia Bank (the "Bank"), announced record earnings for the fourth quarter of $68.9 million $0.88 Columbia's earnings, "Words cannot describe how proud I am of what our team accomplished in 2022. Their determination and commitment to our stakeholders resulted in record performance for the quarter and year while preparing for our transformative merger with Umpqua Holdings." He continued, "Record annual and quarterly revenue and earnings reflect the continued energy, commitment and discipline of our bankers on our frontline and in our back office as they continue to concentrate on doing what is best for our customers and communities over the long term."
Balance Sheet
Total assets at December 31, 2022 were $20.27 billion $139.5 million $11.61 billion $81.3 million $402.5 million $6.62 billion $156 $6.78 billion $16.71 billion $1.23 billion 50% noninterest-bearing and 50% interest-bearing.
Chris Merrywell , Columbia's Executive Vice President and Chief Operating Officer, stated, "While loans declined slightly during the quarter from normal seasonality, loan growth for the year was strong and the overall loan portfolio yield rose as we selectively considered the long-term impact of deals in our pipeline." He continued, "We continue to focus on the whole client relationship including loans, deposits and investments."
Income Statement
Net Interest Income
Net interest income for the fourth quarter of 2022 was $166.7 million $4.2 million $21.2 million
Provision for Credit Losses
Columbia recorded a $2 $5 $11
Noninterest Income
Noninterest income was $23.3 million $3.3 million $909 thousand $3.7 million $354 thousand
Noninterest Expense
Total noninterest expense for the fourth quarter of 2022 was $100.5 million $941 thousand $4.9 million $3.2 million $2.1 million
The provision for credit losses on unfunded loan commitments, a component of other noninterest expense, for the periods indicated are as follows:
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2022
2022
2021
2022
2021
(in thousands)
Provision (recapture) for credit losses on unfunded
$ (500)
$ (500)
$ (2,000)
$ (500)
$ 200
Net Interest Margin
Columbia's net interest margin (tax equivalent) for the fourth quarter of 2022 was 3.64% , an increase of 17 basis points from the linked quarter and an increase of 59 basis points from the prior-year period. The increase in the net interest margin (tax equivalent) compared to the linked quarter and prior-year period was predominantly driven by higher average loan rates and a stronger earning assets mix. This was partially offset by a shift in the funding mix from deposits to higher-costing FHLB advances. The average cost of total deposits for the quarter was 18 basis points compared to 10 basis points for the linked quarter. The increase was predominantly related to higher rates associated with public funds deposits and money market accounts. For additional information regarding net interest margin, see the "Average Balances and Rates" tables.
Columbia's operating net interest margin (tax equivalent)1 was 3.67% for the fourth quarter of 2022, an increase of 17 basis points from the linked quarter and an increase of 59 basis points from the prior-year period. The increase in the operating net interest margin for the fourth quarter of 2022 compared to the linked quarter and the prior-year period were both due to higher average loan rates and a stronger earning assets mix partially offset by a higher-costing funding mix as noted above.
Aaron James Deer , Columbia's Executive Vice President and Chief Financial Officer, said, "Our margin benefited from the continued impact of rising rates on the loan portfolio, which was partly offset by the impact of the shift in funding mix from deposits to higher-costing borrowings." He continued, "Our cost of funds is still among the lowest in the industry on the strength of our low-cost, relationship-focused deposit base."
Asset Quality
Nonperforming assets to total assets were 0.07% at December 31, 2022 and September 30, 2022. Total nonperforming assets decreased $44 thousand
The following table sets forth information regarding nonaccrual loans and total nonperforming assets:
December 31, 2022
September 30, 2022
December 31, 2021
(in thousands)
Nonaccrual loans:
Commercial loans:
Commercial real estate
$ 3,244
$ 3,431
$ 1,872
Commercial business
5,133
7,181
13,321
Agriculture
4,367
2,179
5,396
Consumer loans:
One-to-four family residential real estate
685
602
2,433
Other consumer
12
92
19
Total nonaccrual loans
13,441
13,485
23,041
OREO and other personal property owned
—
—
381
Total nonperforming assets
$ 13,441
$ 13,485
$ 23,422
Nonperforming assets to total loans were 0.12% at December 31, 2022 and September 30, 2022.
The following table provides an analysis of the Company's allowance for credit losses:
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2022
2022
2021
2022
2021
(in thousands)
Beginning balance
$ 154,871
$ 149,935
$ 142,785
$ 155,578
$ 149,140
Initial ACL recorded for PCD loans acquired during the period
—
—
2,616
—
2,616
Charge-offs:
Commercial loans:
Commercial real estate
—
—
(728)
(299)
(1,044)
Commercial business
(89)
(296)
(871)
(2,108)
(6,364)
Agriculture
(69)
(706)
(200)
(799)
(322)
Consumer loans:
One-to-four family residential real estate
—
—
(24)
(3)
(170)
Other consumer
(322)
(430)
(355)
(1,240)
(1,163)
Total charge-offs
(480)
(1,432)
(2,178)
(4,449)
(9,063)
Recoveries:
Commercial loans:
Commercial real estate
35
11
63
207
633
Commercial business
613
482
446
2,183
4,862
Agriculture
622
98
332
869
355
Construction
234
9
18
387
593
Consumer loans:
One-to-four family residential real estate
27
331
150
943
907
Other consumer
116
187
246
770
735
Total recoveries
1,647
1,118
1,255
5,359
8,085
Net (charge-offs) recoveries
1,167
(314)
(923)
910
(978)
Provision for credit losses
2,400
5,250
11,100
1,950
4,800
Ending balance
$ 158,438
$ 154,871
$ 155,578
$ 158,438
$ 155,578
The allowance for credit losses to period-end loans was 1.36% at December 31, 2022 compared to 1.32% at September 30, 2022. Excluding PPP loans, the allowance for credit losses to period-end loans2 was 1.37% at December 31, 2022 compared to 1.33% at September 30, 2022 .
Organizational Update
Umpqua Merger
On January 9, 2023 , we announced that we had received approval of the Federal Deposit Insurance Corporation ("FDIC") related to the merger with Umpqua Holdings Corporation, the final outstanding regulatory approval necessary to complete the transaction, and the deal is expected to close after close of business on February 28, 2023 with a core-system conversion anticipated soon thereafter. "The dedication and perseverance of each and every one of our associates over the past 15 months as they worked to build on the existing relationships while simultaneously supporting and executing merger integration planning efforts has been outstanding," said Clint Stein . He continued, "Every single associate has contributed, and I could not be more confident in what we will accomplish as we work to serve all of our clients and communities as a premier western regional bank."
Warm Hearts
The 2022 "Warm Hearts Winter Drive" to end homelessness raised $278 thousand $2.1 million David Moore Devine , Chief Marketing and Experience Officer. He continued, "It has been especially gratifying to see our associates' care, focus and dedication to supporting the drive and their communities notwithstanding responsibilities associated with the merger and other activities."
Cash Dividend Announcement
Columbia will pay a regular cash dividend of $0.30 February 21, 2023 to shareholders of record as of the close of business on February 6, 2023 .
Conference Call Information
Columbia's management will discuss the fourth quarter and full-year 2022 financial results on a conference call scheduled for Tuesday, January 24, 2023 at 11:00 a.m. Pacific Time (2:00 p.m. ET ). Interested parties may register for the call to receive dial-in details and their own unique PIN using the following link:
https://register.vevent.com/register/BIb1b0b02fb69840d9bf7c2798adcdc01a
Alternatively, the webcast can be joined by using the following link:
https://edge.media-server.com/mmc/p/sgycoxq4
A replay of the webcast will be accessible beginning Wednesday, January 25, 2023 using the link below:
https://edge.media-server.com/mmc/p/sgycoxq4
About Columbia
Headquartered in Tacoma, Washington , Columbia Banking System, Inc. (NASDAQ: COLB) is the holding company of Columbia Bank, a Washington state -chartered full-service commercial bank with offices in Washington , Oregon , California , Idaho , Utah , and Arizona . The bank has been named one of Puget Sound Business Journal's "Washington's Best Workplaces," more than 10 times. Columbia was named on the Forbes 2022 list of "America's Best Banks" marking 11 consecutive years on the publication's list of top financial institutions.
More information about Columbia can be found on its website at www.columbiabank.com .
Note Regarding Forward-Looking Statements
This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, descriptions of Columbia's management's expectations regarding future events and developments such as future operating results, growth in loans and deposits, continued success of Columbia's style of banking and the strength of the local economy as well as the potential effects of the COVID-19 pandemic on Columbia's business, operations, financial performance and prospects. The words "will," "believe," "expect," "intend," "should," and "anticipate" or the negative of these words or words of similar construction are intended in part to help identify forward-looking statements. Future events are difficult to predict, and the expectations described above are necessarily subject to risks and uncertainties, many of which are outside our control, that may cause actual results to differ materially and adversely. In addition to discussions about risks and uncertainties set forth from time to time in Columbia's filings with the Securities and Exchange Commission (the "SEC"), available at the SEC's website at www.sec.gov www.columbiabank.com
national and global economic conditions could be less favorable than expected or could have a more direct and pronounced effect on us than expected and adversely affect our ability to continue internal growth and maintain the quality of our earning assets; the markets where we operate and make loans could face challenges; the risks presented by the economy, which could adversely affect credit quality, collateral values, including real estate collateral, investment values, liquidity and loan originations and loan portfolio delinquency rates; continued increases in inflation, and the risk that information may differ, possibly materially, from expectations, and actions taken by the Board of Governors of the Federal Reserve System in response to inflation and their potential impact on economic conditions including the possibility of a recession or economic downturn; risks related to the proposed merger with Umpqua including, among others, (i) failure to complete the merger with Umpqua or unexpected delays related to the merger or either party's inability to satisfy other closing conditions required to complete the merger, (ii) certain restrictions during the pendency of the proposed transaction with Umpqua that may impact the parties' ability to pursue certain business opportunities or strategic transactions, (iii) diversion of management's attention from ongoing business operations and opportunities, (iv) cost savings and any revenue synergies from the merger may not be fully realized or may take longer than anticipated to be realized, (v) the integration of each party's management, personnel and operations will not be successfully achieved or may be materially delayed or will be more costly or difficult than expected, (vi) deposit attrition, customer or employee loss and/or revenue loss as a result of the proposed merger, and (vii) expenses related to the proposed merger being greater than expected; the efficiencies and enhanced financial and operating performance we expect to realize from investments in personnel, acquisitions and infrastructure may not be realized; the ability to successfully integrate future acquired entities; interest rate changes could significantly reduce net interest income and negatively affect asset yields and funding sources; the effect of the discontinuation or replacement of LIBOR; results of operations following strategic expansion, including the impact of acquired loans on our earnings, could differ from expectations; changes in the scope and cost of FDIC insurance and other coverages; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies could materially affect our financial statements and how we report those results, and expectations and preliminary analysis relating to how such changes will affect our financial results could prove incorrect; changes in laws and regulations affecting our businesses, including changes in the enforcement and interpretation of such laws and regulations by applicable governmental and regulatory agencies; increased competition among financial institutions and nontraditional providers of financial services; continued consolidation in the financial services industry resulting in the creation of larger financial institutions that have greater resources could change the competitive landscape; the goodwill we have recorded in connection with acquisitions could become impaired, which may have an adverse impact on our earnings and capital; our ability to identify and address cyber-security risks, including security breaches, "denial of service attacks," "hacking" and identity theft; any material failure or interruption of our information and communications systems; inability to keep pace with technological changes; our ability to effectively manage credit risk, interest rate risk, market risk, operational risk, legal risk, liquidity risk and regulatory and compliance risk; failure to maintain effective internal control over financial reporting or disclosure controls and procedures; the effect of geopolitical instability, including wars, conflicts and terrorist attacks, including the impacts of Russia's invasion of Ukraine ; our profitability measures could be adversely affected if we are unable to effectively manage our capital; the risks from climate change and its potential to disrupt our business and adversely impact the operations and creditworthiness of our customers; natural disasters, including earthquakes, tsunamis, flooding, fires and other unexpected events; the effect of COVID-19 and other infectious illness outbreaks that may arise in the future, which has created significant impacts and uncertainties in U.S. and global markets; changes in governmental policy and regulation, including measures taken in response to economic, business, political and social conditions, including with regard to COVID-19; and the effects of any damage to our reputation resulting from developments related to any of the items identified above. Additional factors that could cause results to differ materially from those described above can be found in Columbia's Annual Report on Form 10-K for the year ended December 31, 2021 , which is on file with the SEC and available on Columbia's website, www.columbiabank.com , under the heading "Financial Information" and in other documents Columbia files with the SEC, and in Umpqua's Annual Report on Form 10-K for the year ended December 31, 2021 , which is on file with the SEC and available on Umpqua's investor relations website, www.umpquabank.com , under the heading "Financials," and in other documents Umpqua files with the SEC.
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. Neither Columbia nor Umpqua assumes any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws.
Contacts:
Clint Stein,
Aaron James Deer,
President and
Executive Vice President and
Chief Executive Officer
Chief Financial Officer
Investor Relations
InvestorRelations@columbiabank.com
253-471-4065
(COLB-ER)
CONSOLIDATED BALANCE SHEETS
Columbia Banking System, Inc.
Unaudited
December 31,
September 30,
December 31,
2022
2022
2021
(in thousands)
ASSETS
Cash and due from banks
$ 262,458
$ 263,551
$ 153,414
Interest-earning deposits with banks
29,283
54,124
671,300
Total cash and cash equivalents
291,741
317,675
824,714
Debt securities available for sale at fair value (amortized cost of $5,282,846 ,$5,447,566 and $5,898,041 , respectively)
4,589,099
4,700,821
5,910,999
Debt securities held to maturity at amortized cost (fair value of $1,722,778 ,$1,747,282 and $2,122,606 , respectively)
2,034,792
2,079,285
2,148,327
Equity securities
13,425
13,425
13,425
Federal Home Loan Bank ("FHLB") stock at cost
48,160
10,560
10,280
Loans held for sale
76,843
1,251
9,774
Loans, net of unearned income
11,610,973
11,692,261
10,641,937
Less: Allowance for credit losses
158,438
154,871
155,578
Loans, net
11,452,535
11,537,390
10,486,359
Interest receivable
64,908
61,652
56,019
Premises and equipment, net
160,578
161,853
172,144
Other real estate owned
—
—
381
Goodwill
823,172
823,172
823,172
Other intangible assets, net
25,949
27,921
34,647
Other assets
684,641
670,364
455,092
Total assets
$ 20,265,843
$ 20,405,369
$ 20,945,333
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing
$ 8,373,350
$ 8,911,267
$ 8,856,714
Interest-bearing
8,338,100
9,030,058
9,153,401
Total deposits
16,711,450
17,941,325
18,010,115
FHLB advances
954,315
14,322
7,359
Securities sold under agreements to repurchase
95,168
48,733
86,013
Subordinated debentures
10,000
10,000
10,000
Junior subordinated debentures
10,310
10,310
10,310
Other liabilities
271,447
265,198
232,794
Total liabilities
18,052,690
18,289,888
18,356,591
Commitments and contingent liabilities
Shareholders' equity:
December 31,
September 30,
December 31,
2022
2022
2021
(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
80,830
80,831
80,695
1,944,471
1,940,385
1,930,187
Outstanding
78,646
78,647
78,511
Retained earnings
850,011
804,774
694,227
Accumulated other comprehensive income (loss)
(510,495)
(558,844)
35,162
Treasury stock at cost
2,184
2,184
2,184
(70,834)
(70,834)
(70,834)
Total shareholders' equity
2,213,153
2,115,481
2,588,742
Total liabilities and shareholders' equity
$ 20,265,843
$ 20,405,369
$ 20,945,333
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,
2022
2022
2021
2022
2021
Interest Income
(in thousands except per share amounts)
Loans
$ 146,769
$ 130,908
$ 110,575
$ 495,829
$ 415,770
Taxable securities
29,313
31,987
33,654
133,084
107,594
Tax-exempt securities
3,678
3,662
3,447
14,820
11,746
Deposits in banks
375
1,191
360
2,748
955
Total interest income
180,135
167,748
148,036
646,481
536,065
Interest Expense
Deposits
7,827
4,446
1,807
16,533
6,186
FHLB advances and Federal Reserve Bank ("FRB")
4,406
109
74
4,659
291
Subordinated debentures
271
220
561
807
1,932
Other borrowings
938
481
71
1,646
137
Total interest expense
13,442
5,256
2,513
23,645
8,546
Net Interest Income
166,693
162,492
145,523
622,836
527,519
Provision for credit losses
2,400
5,250
11,100
1,950
4,800
Net interest income after provision for credit losses
164,293
157,242
134,423
620,886
522,719
Noninterest Income
Deposit account and treasury management fees
7,992
8,181
7,155
31,498
27,107
Card revenue
5,200
4,988
5,108
20,186
18,503
Financial services and trust revenue
4,543
4,292
3,877
17,659
15,753
Loan revenue
2,655
2,853
4,977
12,582
22,044
Bank owned life insurance
1,885
1,939
1,753
7,636
6,533
Investment securities gains (losses), net
(9)
—
—
(9)
314
Other
1,065
4,374
1,370
9,592
3,840
Total noninterest income
23,331
26,627
24,240
99,144
94,094
Noninterest Expense
Compensation and employee benefits
59,930
60,744
64,169
241,139
224,034
Occupancy
10,040
10,469
10,076
41,150
37,815
Data processing and software
11,060
10,548
9,130
41,117
33,498
Legal and professional fees
4,839
4,022
7,937
20,578
18,910
Amortization of intangibles
1,972
2,219
2,376
8,698
7,987
Business and Occupation ("B&O") taxes
1,853
1,771
1,571
6,797
5,903
Advertising and promotion
1,198
830
1,357
3,962
3,383
Regulatory premiums
1,840
1,782
1,481
6,619
4,912
Net cost (benefit) of operation of other real estate
(8)
(4)
14
114
66
Other
7,781
9,065
4,511
32,209
23,796
Total noninterest expense
100,505
101,446
102,622
402,383
360,304
Income before income taxes
87,119
82,423
56,041
317,647
256,509
Provision for income taxes
18,213
17,481
13,130
67,469
53,689
Net Income
$ 68,906
$ 64,942
$ 42,911
$ 250,178
$ 202,820
Earnings per common share
Basic
$ 0.88
$ 0.83
$ 0.55
$ 3.20
$ 2.79
Diluted
$ 0.88
$ 0.83
$ 0.55
$ 3.20
$ 2.78
Dividends declared per common share (1)
$ 0.30
$ 0.30
$ —
$ 1.20
$ 1.14
Weighted average number of common shares
78,104
78,100
77,784
78,047
72,683
Weighted average number of diluted common shares
78,371
78,233
77,977
78,193
72,873
___________
(1)
No dividends were declared during the three months ended December 31, 2021 as dividends were declared on September 30, 2021.
FINANCIAL STATISTICS
Columbia Banking System, Inc.
Three Months Ended
Twelve Months Ended
Unaudited
December 31,
September 30,
December 31,
December 31,
December 31,
2022
2022
2021
2022
2021
Earnings
(dollars in thousands except per share amounts)
Net interest income
$ 166,693
$ 162,492
$ 145,523
$ 622,836
$ 527,519
Provision for credit losses
$ 2,400
$ 5,250
$ 11,100
$ 1,950
$ 4,800
Noninterest income
$ 23,331
$ 26,627
$ 24,240
$ 99,144
$ 94,094
Noninterest expense
$ 100,505
$ 101,446
$ 102,622
$ 402,383
$ 360,304
Merger-related expense (included in noninterest expense)
$ 4,897
$ 3,246
$ 11,812
$ 19,101
$ 14,514
Net income
$ 68,906
$ 64,942
$ 42,911
$ 250,178
$ 202,820
Per Common Share
Earnings (basic)
$ 0.88
$ 0.83
$ 0.55
$ 3.20
$ 2.79
Earnings (diluted)
$ 0.88
$ 0.83
$ 0.55
$ 3.20
$ 2.78
Book value
$ 28.14
$ 26.90
$ 32.97
$ 28.14
$ 32.97
Tangible book value per common share (1)
$ 17.34
$ 16.08
$ 22.05
$ 17.34
$ 22.05
Averages
Total assets
$ 20,270,911
$ 20,698,252
$ 20,857,983
$ 20,671,949
$ 18,448,135
Interest-earning assets
$ 18,378,384
$ 18,864,445
$ 19,186,398
$ 18,868,795
$ 16,910,818
Loans
$ 11,663,093
$ 11,513,653
$ 10,545,172
$ 11,211,442
$ 9,832,385
Securities, including debt securities, equity securities and FHLB
$ 6,666,850
$ 7,130,114
$ 7,693,659
$ 7,320,503
$ 6,353,278
Deposits
$ 17,367,875
$ 18,075,358
$ 17,935,311
$ 17,922,958
$ 15,722,403
Interest-bearing deposits
$ 8,671,874
$ 9,196,381
$ 9,147,184
$ 9,149,447
$ 7,910,523
Interest-bearing liabilities
$ 9,173,526
$ 9,292,615
$ 9,255,214
$ 9,342,996
$ 8,008,221
Noninterest-bearing deposits
$ 8,696,001
$ 8,878,977
$ 8,788,127
$ 8,773,511
$ 7,811,880
Shareholders' equity
$ 2,129,671
$ 2,271,012
$ 2,584,110
$ 2,307,453
$ 2,402,455
Financial Ratios
Return on average assets
1.36 %
1.26 %
0.82 %
1.21 %
1.10 %
Return on average common equity
12.94 %
11.44 %
6.64 %
10.84 %
8.44 %
Return on average tangible common equity (1)
22.03 %
18.81 %
10.36 %
17.68 %
13.10 %
Average equity to average assets
10.51 %
10.97 %
12.39 %
11.16 %
13.02 %
Shareholders' equity to total assets
10.92 %
10.37 %
12.36 %
10.92 %
12.36 %
Tangible common shareholders' equity to tangible assets (1)
7.03 %
6.47 %
8.62 %
7.03 %
8.62 %
Net interest margin (tax equivalent)
3.64 %
3.47 %
3.05 %
3.34 %
3.17 %
Efficiency ratio (tax equivalent) (2)
52.29 %
52.84 %
59.57 %
54.95 %
57.09 %
Operating efficiency ratio (tax equivalent) (1)
48.38 %
50.73 %
51.48 %
51.14 %
53.92 %
Noninterest expense ratio
1.98 %
1.96 %
1.97 %
1.95 %
1.95 %
Core noninterest expense ratio (1)
1.89 %
1.90 %
1.74 %
1.85 %
1.87 %
December 31,
September 30,
December 31,
Period-end
2022
2022
2021
Total assets
$ 20,265,843
$ 20,405,369
$ 20,945,333
Loans, net of unearned income
$ 11,610,973
$ 11,692,261
$ 10,641,937
Allowance for credit losses
$ 158,438
$ 154,871
$ 155,578
Securities, including debt securities, equity securities and FHLB
$ 6,685,476
$ 6,804,091
$ 8,083,031
Deposits
$ 16,711,450
$ 17,941,325
$ 18,010,115
Shareholders' equity
$ 2,213,153
$ 2,115,481
$ 2,588,742
Nonperforming assets
Nonaccrual loans
$ 13,441
$ 13,485
$ 23,041
Other real estate owned ("OREO") and other personal property
—
—
381
Total nonperforming assets
$ 13,441
$ 13,485
$ 23,422
Nonperforming loans to period-end loans
0.12 %
0.12 %
0.22 %
Nonperforming assets to period-end assets
0.07 %
0.07 %
0.11 %
Allowance for credit losses to period-end loans
1.36 %
1.32 %
1.46 %
Net loan charge-offs (recoveries) (for the three months ended)
$ (1,167)
$ 314
$ 923
__________
(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
(2)
Noninterest expense divided by the sum of net interest income on a tax equivalent basis and noninterest income on a tax equivalent basis.
QUARTERLY FINANCIAL STATISTICS
Columbia Banking System, Inc.
Three Months Ended
Unaudited
December 31,
September 30,
June 30,
March 31,
December 31,
2022
2022
2022
2022
2021
Earnings
(dollars in thousands except per share amounts)
Net interest income
$ 166,693
$ 162,492
$ 147,451
$ 146,200
$ 145,523
Provision (recapture) for credit losses
$ 2,400
$ 5,250
$ 2,100
$ (7,800)
$ 11,100
Noninterest income
$ 23,331
$ 26,627
$ 25,006
$ 24,180
$ 24,240
Noninterest expense
$ 100,505
$ 101,446
$ 95,379
$ 105,053
$ 102,622
Merger-related expense (included in noninterest expense)
$ 4,897
$ 3,246
$ 3,901
$ 7,057
$ 11,812
Net income
$ 68,906
$ 64,942
$ 58,808
$ 57,522
$ 42,911
Per Common Share
Earnings (basic)
$ 0.88
$ 0.83
$ 0.75
$ 0.74
$ 0.55
Earnings (diluted)
$ 0.88
$ 0.83
$ 0.75
$ 0.74
$ 0.55
Book value
$ 28.14
$ 26.90
$ 28.53
$ 30.02
$ 32.97
Averages
Total assets
$ 20,270,911
$ 20,698,252
$ 20,770,202
$ 20,955,666
$ 20,857,983
Interest-earning assets
$ 18,378,384
$ 18,864,445
$ 18,975,517
$ 19,266,644
$ 19,186,398
Loans
$ 11,663,093
$ 11,513,653
$ 10,989,493
$ 10,665,242
$ 10,545,172
Securities, including debt securities, equity securities and
$ 6,666,850
$ 7,130,114
$ 7,491,299
$ 8,010,607
$ 7,693,659
Deposits
$ 17,367,875
$ 18,075,358
$ 18,157,075
$ 18,097,872
$ 17,935,311
Interest-bearing deposits
$ 8,671,874
$ 9,196,381
$ 9,335,004
$ 9,402,040
$ 9,147,184
Interest-bearing liabilities
$ 9,173,526
$ 9,292,615
$ 9,414,361
$ 9,495,579
$ 9,255,214
Noninterest-bearing deposits
$ 8,696,001
$ 8,878,977
$ 8,822,071
$ 8,695,832
$ 8,788,127
Shareholders' equity
$ 2,129,671
$ 2,271,012
$ 2,298,611
$ 2,535,376
$ 2,584,110
Financial Ratios
Return on average assets
1.36 %
1.26 %
1.13 %
1.10 %
0.82 %
Return on average common equity
12.94 %
11.44 %
10.23 %
9.08 %
6.64 %
Average equity to average assets
10.51 %
10.97 %
11.07 %
12.10 %
12.39 %
Shareholders' equity to total assets
10.92 %
10.37 %
10.91 %
11.26 %
12.36 %
Net interest margin (tax equivalent)
3.64 %
3.47 %
3.16 %
3.12 %
3.05 %
Period-end
Total assets
$ 20,265,843
$ 20,405,369
$ 20,564,390
$ 20,963,958
$ 20,945,333
Loans, net of unearned income
$ 11,610,973
$ 11,692,261
$ 11,322,387
$ 10,759,684
$ 10,641,937
Allowance for credit losses
$ 158,438
$ 154,871
$ 149,935
$ 146,949
$ 155,578
Securities, including debt securities, equity securities and
$ 6,685,476
$ 6,804,091
$ 7,295,528
$ 7,753,513
$ 8,083,031
Deposits
$ 16,711,450
$ 17,941,325
$ 17,956,926
$ 18,299,213
$ 18,010,115
Shareholders' equity
$ 2,213,153
$ 2,115,481
$ 2,243,218
$ 2,360,779
$ 2,588,742
Goodwill
$ 823,172
$ 823,172
$ 823,172
$ 823,172
$ 823,172
Other intangible assets, net
$ 25,949
$ 27,921
$ 30,140
$ 32,359
$ 34,647
Nonperforming assets
Nonaccrual loans
$ 13,441
$ 13,485
$ 16,998
$ 17,441
$ 23,041
OREO and OPPO
—
—
33
381
381
Total nonperforming assets
$ 13,441
$ 13,485
$ 17,031
$ 17,822
$ 23,422
Nonperforming loans to period-end loans
0.12 %
0.12 %
0.15 %
0.16 %
0.22 %
Nonperforming assets to period-end assets
0.07 %
0.07 %
0.08 %
0.09 %
0.11 %
Allowance for credit losses to period-end loans
1.36 %
1.32 %
1.32 %
1.37 %
1.46 %
Net loan charge-offs (recoveries)
$ (1,167)
$ 314
$ (886)
$ 829
$ 923
LOAN PORTFOLIO COMPOSITION
Columbia Banking System, Inc.
Unaudited
December 31,
September 30,
June 30,
March 31,
December 31,
2022
2022
2022
2022
2021
Loan Portfolio Composition - Dollars
(dollars in thousands)
Commercial loans:
Commercial real estate
$ 5,352,785
$ 5,375,051
$ 5,251,100
$ 5,047,472
$ 4,981,263
Commercial business
3,750,564
3,783,696
3,646,956
3,492,307
3,423,268
Agriculture
848,903
903,260
853,099
765,319
795,715
Construction
540,861
512,308
482,211
409,242
384,755
Consumer loans:
One-to-four family residential real estate
1,077,494
1,071,222
1,042,190
1,003,157
1,013,908
Other consumer
40,366
46,724
46,831
42,187
43,028
Total loans
11,610,973
11,692,261
11,322,387
10,759,684
10,641,937
Less: Allowance for credit losses
(158,438)
(154,871)
(149,935)
(146,949)
(155,578)
Total loans, net
$ 11,452,535
$ 11,537,390
$ 11,172,452
$ 10,612,735
$ 10,486,359
Loans held for sale
$ 76,843
$ 1,251
$ 3,718
$ 4,271
$ 9,774
December 31,
September 30,
June 30,
March 31,
December 31,
Loan Portfolio Composition - Percentages
2022
2022
2022
2022
2021
Commercial loans:
Commercial real estate
46.1 %
45.9 %
46.4 %
46.9 %
46.8 %
Commercial business
32.3 %
32.4 %
32.2 %
32.5 %
32.2 %
Agriculture
7.3 %
7.7 %
7.5 %
7.1 %
7.5 %
Construction
4.7 %
4.4 %
4.3 %
3.8 %
3.6 %
Consumer loans:
One-to-four family residential real estate
9.3 %
9.2 %
9.2 %
9.3 %
9.5 %
Other consumer
0.3 %
0.4 %
0.4 %
0.4 %
0.4 %
Total loans
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
DEPOSIT COMPOSITION
Columbia Banking System, Inc.
Unaudited
December 31,
September 30,
June 30,
March 31,
December 31,
2022
2022
2022
2022
2021
Deposit Composition - Dollars
(dollars in thousands)
Demand and other noninterest-bearing
$ 8,373,350
$ 8,911,267
$ 8,741,488
$ 8,790,138
$ 8,856,714
Money market
2,972,838
3,355,705
3,402,555
3,501,723
3,525,299
Interest-bearing demand
1,980,631
2,047,169
2,104,118
2,103,053
1,999,407
Savings
1,555,765
1,657,799
1,646,363
1,637,451
1,617,546
Interest-bearing public funds, other than certificates of deposit
670,580
701,741
737,297
775,048
779,146
Certificates of deposit, less than $250,000
215,848
221,087
232,063
239,863
249,120
Certificates of deposit, $250,000 or more
124,411
127,229
138,945
145,372
160,490
Certificates of deposit insured by the CD Option of IntraFi
21,828
22,730
29,178
32,608
35,611
Reciprocal money market accounts
796,199
896,414
924,552
1,073,405
786,046
Subtotal
16,711,450
17,941,141
17,956,559
18,298,661
18,009,379
Valuation adjustment resulting from acquisition
—
184
367
552
736
Total deposits
$ 16,711,450
$ 17,941,325
$ 17,956,926
$ 18,299,213
$ 18,010,115
December 31,
September 30,
June 30,
March 31,
December 31,
Deposit Composition - Percentages
2022
2022
2022
2022
2021
Demand and other noninterest-bearing
50.1 %
49.8 %
48.7 %
48.1 %
49.1 %
Money market
17.8 %
18.7 %
18.9 %
19.1 %
19.6 %
Interest-bearing demand
11.9 %
11.4 %
11.7 %
11.5 %
11.1 %
Savings
9.3 %
9.2 %
9.2 %
8.9 %
9.0 %
Interest-bearing public funds, other than certificates of
4.0 %
3.9 %
4.1 %
4.2 %
4.3 %
Certificates of deposit, less than $250,000
1.3 %
1.2 %
1.3 %
1.3 %
1.4 %
Certificates of deposit, $250,000 or more
0.7 %
0.7 %
0.8 %
0.8 %
0.9 %
Certificates of deposit insured by the CD Option of IntraFi
0.1 %
0.1 %
0.2 %
0.2 %
0.2 %
Reciprocal money market accounts
4.8 %
5.0 %
5.1 %
5.9 %
4.4 %
Total
100.0 %
100.0 %
100.0 %
100.0 %
100.0 %
AVERAGE BALANCES AND RATES
Columbia Banking System, Inc.
Unaudited
Three Months Ended
Three Months Ended
December 31, 2022
December 31, 2021
Average
Balances
Interest
Earned / Paid
Average
Rate
Average
Balances
Interest
Earned / Paid
Average
Rate
(dollars in thousands)
ASSETS
Loans, net (1)(2)
$ 11,663,093
$ 147,487
5.02 %
$ 10,545,172
$ 111,709
4.20 %
Taxable securities
5,998,033
29,313
1.94 %
6,934,477
33,654
1.93 %
Tax exempt securities (2)
668,817
4,656
2.76 %
759,182
4,364
2.28 %
Interest-earning deposits with banks
48,441
375
3.07 %
947,567
360
0.15 %
Total interest-earning assets
18,378,384
181,831
3.93 %
19,186,398
150,087
3.10 %
Other earning assets
307,831
276,828
Noninterest-earning assets
1,584,696
1,394,757
Total assets
$ 20,270,911
$ 20,857,983
LIABILITIES AND SHAREHOLDERS' EQUITY
Money market accounts
$ 4,025,034
$ 2,760
0.27 %
$ 4,339,959
$ 951
0.09 %
Interest-bearing demand
1,991,397
673
0.13 %
1,967,559
376
0.08 %
Savings accounts
1,604,668
69
0.02 %
1,593,434
78
0.02 %
Interest-bearing public funds, other than certificates of deposit
681,829
3,961
2.30 %
787,395
252
0.13 %
Certificates of deposit
368,946
364
0.39 %
458,837
150
0.13 %
Total interest-bearing deposits
8,671,874
7,827
0.36 %
9,147,184
1,807
0.08 %
FHLB advances and FRB borrowings
425,059
4,406
4.11 %
7,368
74
3.98 %
Subordinated debentures
10,000
271
10.75 %
43,859
561
5.07 %
Other borrowings and interest-bearing liabilities
66,593
938
5.59 %
56,803
71
0.50 %
Total interest-bearing liabilities
9,173,526
13,442
0.58 %
9,255,214
2,513
0.11 %
Noninterest-bearing deposits
8,696,001
8,788,127
Other noninterest-bearing liabilities
271,713
230,532
Shareholders' equity
2,129,671
2,584,110
Total liabilities & shareholders' equity
$ 20,270,911
$ 20,857,983
Net interest income (tax equivalent)
$ 168,389
$ 147,574
Net interest margin (tax equivalent)
3.64 %
3.05 %
__________
(1)
Nonaccrual loans have been included in the tables as loans carrying a zero yield. Amortized net deferred loan fees and net unearned $2.1 $6.2 million for the three months ended December 31, 2022 and 2021, respectively. The net incremental amortization on$669 thousand for the three months ended December 31, 2022 compared to net incremental accretion of $16
(2)
Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $718 $1.1 million for the three months ended December 31, 2022 and 2021, respectively. The tax equivalent yield adjustment $978 thousand and $917 thousand for the three months ended December 31, 2022
AVERAGE BALANCES AND RATES
Columbia Banking System, Inc.
Unaudited
Three Months Ended
Three Months Ended
December 31, 2022
September 30, 2022
Average
Balances
Interest
Earned / Paid
Average
Rate
Average
Balances
Interest
Earned / Paid
Average
Rate
(dollars in thousands)
ASSETS
Loans, net (1)(2)
$ 11,663,093
$ 147,487
5.02 %
$ 11,513,653
$ 132,302
4.56 %
Taxable securities
5,998,033
29,313
1.94 %
6,419,977
31,987
1.98 %
Tax exempt securities (2)
668,817
4,656
2.76 %
710,137
4,635
2.59 %
Interest-earning deposits with banks
48,441
375
3.07 %
220,678
1,191
2.14 %
Total interest-earning assets
18,378,384
181,831
3.93 %
18,864,445
170,115
3.58 %
Other earning assets
307,831
306,200
Noninterest-earning assets
1,584,696
1,527,607
Total assets
$ 20,270,911
$ 20,698,252
LIABILITIES AND SHAREHOLDERS' EQUITY
Money market accounts
$ 4,025,034
$ 2,760
0.27 %
$ 4,342,054
$ 1,378
0.13 %
Interest-bearing demand
1,991,397
673
0.13 %
2,085,124
419
0.08 %
Savings accounts
1,604,668
69
0.02 %
1,658,078
82
0.02 %
Interest-bearing public funds, other than
681,829
3,961
2.30 %
724,502
2,410
1.32 %
Certificates of deposit
368,946
364
0.39 %
386,623
157
0.16 %
Total interest-bearing deposits
8,671,874
7,827
0.36 %
9,196,381
4,446
0.19 %
FHLB advances and FRB borrowings
425,059
4,406
4.11 %
11,512
109
3.76 %
Subordinated debentures
10,000
271
10.75 %
10,000
220
8.73 %
Other borrowings and interest-bearing
66,593
938
5.59 %
74,722
481
2.55 %
Total interest-bearing liabilities
9,173,526
13,442
0.58 %
9,292,615
5,256
0.22 %
Noninterest-bearing deposits
8,696,001
8,878,977
Other noninterest-bearing liabilities
271,713
255,648
Shareholders' equity
2,129,671
2,271,012
Total liabilities & shareholders'
$ 20,270,911
$ 20,698,252
Net interest income (tax equivalent)
$ 168,389
$ 164,859
Net interest margin (tax equivalent)
3.64 %
3.47 %
__________
(1)
Nonaccrual loans have been included in the tables as loans carrying a zero yield. Amortized net deferred loan fees and net unearned $2.1 $669 thousand and $871 thousand for the three months ended December 31, 2022 and September 30, 2022,
(2)
Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $718 $1.4 million for the three months ended December 31, 2022 and September 30, 2022, respectively. The tax equivalent$978 thousand and $973 thousand for the three months ended
AVERAGE BALANCES AND RATES
Columbia Banking System, Inc.
Unaudited
Twelve Months Ended
Twelve Months Ended
December 31, 2022
December 31, 2021
Average
Balances
Interest
Earned / Paid
Average
Rate
Average
Balances
Interest
Earned / Paid
Average
Rate
(dollars in thousands)
ASSETS
Loans, net (1)(2)
$ 11,211,442
$ 500,112
4.46 %
$ 9,832,385
$ 420,439
4.28 %
Taxable securities
6,595,476
133,084
2.02 %
5,701,810
107,594
1.89 %
Tax exempt securities (2)
725,027
18,759
2.59 %
651,468
14,869
2.28 %
Interest-earning deposits with banks
336,850
2,748
0.82 %
725,155
955
0.13 %
Total interest-earning assets
18,868,795
$ 654,703
3.47 %
16,910,818
$ 543,857
3.22 %
Other earning assets
305,683
252,476
Noninterest-earning assets
1,497,471
1,284,841
Total assets
$ 20,671,949
$ 18,448,135
LIABILITIES AND SHAREHOLDERS' EQUITY
Money market accounts
$ 4,324,611
$ 6,098
0.14 %
$ 3,805,723
$ 3,083
0.08 %
Interest-bearing demand
2,056,059
1,877
0.09 %
1,637,531
1,225
0.07 %
Savings accounts
1,633,354
306
0.02 %
1,382,277
217
0.02 %
Interest-bearing public funds, other than
734,667
7,582
1.03 %
721,090
1,005
0.14 %
Certificates of deposit
400,756
670
0.17 %
363,902
656
0.18 %
Total interest-bearing deposits
9,149,447
16,533
0.18 %
7,910,523
6,186
0.08 %
FHLB advances and FRB borrowings
113,683
4,659
4.10 %
7,388
291
3.94 %
Subordinated debentures
10,000
807
8.07 %
37,258
1,932
5.19 %
Other borrowings and interest-bearing
69,866
1,646
2.36 %
53,052
137
0.26 %
Total interest-bearing liabilities
9,342,996
$ 23,645
0.25 %
8,008,221
$ 8,546
0.11 %
Noninterest-bearing deposits
8,773,511
7,811,880
Other noninterest-bearing liabilities
247,989
225,579
Shareholders' equity
2,307,453
2,402,455
Total liabilities & shareholders'
$ 20,671,949
$ 18,448,135
Net interest income (tax equivalent)
$ 631,058
$ 535,311
Net interest margin (tax equivalent)
3.34 %
3.17 %
__________
(1)
Nonaccrual loans have been included in the table as loans carrying a zero yield. Amortized net deferred loan fees and net unearned $11.2 $32.2 million for the twelve months ended December 31, 2022 and 2021, respectively. The net incremental amortization $3.9 million for the twelve months ended December 31, 2022 compared to net incremental accretion of $2.8
(2)
Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $4.3 $4.7 million for the twelve months ended December 31, 2022 and 2021, respectively. The tax equivalent yield adjustment$3.9 million and $3.1 million for the twelve months ended December 31, 2022 and
Non-GAAP Financial Measures
The Company considers its operating net interest margin (tax equivalent) and operating efficiency ratios to be useful measurements as they more closely reflect the ongoing operating performance of the Company. Despite the usefulness of the operating net interest margin (tax equivalent) and operating efficiency ratio to the Company, there are no standardized definitions for these metrics. As a result, the Company's calculations may not be comparable with those of other organizations. The Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.
The following tables reconcile the Company's calculation of the operating net interest margin (tax equivalent) and operating efficiency ratio:
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2022
2022
2021
2022
2021
Operating net interest margin non-GAAP reconciliation:
(dollars in thousands)
Net interest income (tax equivalent) (1)
$ 168,389
$ 164,859
$ 147,574
$ 631,058
$ 535,311
Adjustments to arrive at operating net interest income (tax
Premium amortization (discount accretion) on acquired loans
669
871
(16)
3,943
(2,811)
Premium amortization on acquired securities
812
877
1,278
3,852
2,752
Operating net interest income (tax equivalent) (1)
$ 169,870
$ 166,607
$ 148,836
$ 638,853
$ 535,252
Average interest earning assets
$ 18,378,384
$ 18,864,445
$ 19,186,398
$ 18,868,795
$ 16,910,818
Net interest margin (tax equivalent) (1)
3.64 %
3.47 %
3.05 %
3.34 %
3.17 %
Operating net interest margin (tax equivalent) (1)
3.67 %
3.50 %
3.08 %
3.39 %
3.17 %
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2022
2022
2021
2022
2021
Operating efficiency ratio non-GAAP reconciliation:
(dollars in thousands)
Noninterest expense (numerator A)
$ 100,505
$ 101,446
$ 102,622
$ 402,383
$ 360,304
Adjustments to arrive at operating noninterest expense:
Merger-related expenses
(4,897)
(3,246)
(11,812)
(19,101)
(14,514)
Net benefit (cost) of operation of OREO and OPPO
8
4
(14)
(114)
(56)
Loss on asset disposals
(46)
(13)
(10)
(99)
(29)
B&O taxes
(1,853)
(1,771)
(1,571)
(6,797)
(5,903)
Operating noninterest expense (numerator B)
$ 93,717
$ 96,420
$ 89,215
$ 376,272
$ 339,802
Net interest income (tax equivalent) (1)
$ 168,389
$ 164,859
$ 147,574
$ 631,058
$ 535,311
Noninterest income
23,331
26,627
24,240
99,144
94,094
Bank owned life insurance tax equivalent adjustment
501
516
466
2,030
1,737
Total revenue (tax equivalent) (denominator A)
$ 192,221
$ 192,002
$ 172,280
$ 732,232
$ 631,142
Operating net interest income (tax equivalent) (1)
$ 169,870
$ 166,607
$ 148,836
$ 638,853
$ 535,252
Adjustments to arrive at operating noninterest income (tax
Investment securities loss (gain), net
9
—
—
9
(314)
Gain on asset disposals
(11)
(3,696)
(242)
(4,218)
(529)
Operating noninterest income (tax equivalent)
23,830
23,447
24,464
96,965
94,988
Total operating revenue (tax equivalent) (denominator B)
$ 193,700
$ 190,054
$ 173,300
$ 735,818
$ 630,240
Efficiency ratio (tax equivalent) (numerator A/denominator A)
52.29 %
52.84 %
59.57 %
54.95 %
57.09 %
Operating efficiency ratio (tax equivalent) (numerator
48.38 %
50.73 %
51.48 %
51.14 %
53.92 %
__________
(1)
Tax-exempt interest income has been adjusted to a tax equivalent basis. The amount of such adjustment was an addition to net interest income of $1.7 $2.4 million for the three months ended December 31, 2022 and September 30, 2022, respectively, $2.1 million for the three months ended $8.2 million and $7.8 million for the twelve months ended December 31, 2022 and December 31, 2021, respectively.
Non-GAAP Financial Measures - Continued
The Company also considers its core noninterest expense ratio to be a useful measurement as it more closely reflects the ongoing operating performance of the Company. Despite the usefulness of the core noninterest expense ratio to the Company, there is not a standardized definition for it, as a result, the Company's calculations may not be comparable with those of other organizations. The Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.
The following table reconciles the Company's calculation of the core noninterest expense ratio:
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2022
2022
2021
2022
2021
Core noninterest expense ratio non-GAAP reconciliation:
(dollars in thousands)
Noninterest expense (numerator A)
$ 100,505
$ 101,446
$ 102,622
$ 402,383
$ 360,304
Adjustments to arrive at core noninterest expense:
Merger-related expenses
(4,897)
(3,246)
(11,812)
(19,101)
(14,514)
Core noninterest expense (numerator B)
$ 95,608
$ 98,200
$ 90,810
$ 383,282
$ 345,790
Average assets (denominator)
$ 20,270,911
$ 20,698,252
$ 20,857,983
$ 20,671,949
$ 18,448,135
Noninterest expense ratio (numerator A/denominator) (1)
1.98 %
1.96 %
1.97 %
1.95 %
1.95 %
Core noninterest expense ratio (numerator B/denominator)
1.89 %
1.90 %
1.74 %
1.85 %
1.87 %
__________
(1)
For the purpose of this ratio, interim noninterest expense has been annualized.
(2)
For the purpose of this ratio, interim core noninterest expense has been annualized.
The Company considers its pre-tax, pre-provision income to be a useful measurement in evaluating the earnings of the Company as it provides a method to assess income. Despite the usefulness of this measure to the Company, there is not a standardized definition for it. As a result, the Company's calculation may not always be comparable with those of other organizations. The Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.
The following table reconciles the Company's calculation of the pre-tax, pre-provision income:
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2022
2022
2021
2022
2021
Pre-tax, pre-provision income:
(in thousands)
Income before income taxes
$ 87,119
$ 82,423
$ 56,041
$ 317,647
$ 256,509
Provision (recapture) for credit losses
2,400
5,250
11,100
1,950
4,800
Provision (recapture) for unfunded commitments
(500)
(500)
(2,000)
(500)
200
B&O taxes
1,853
1,771
1,571
6,797
5,903
Pre-tax, pre-provision income
$ 90,872
$ 88,944
$ 66,712
$ 325,894
$ 267,412
Non-GAAP Financial Measures - Continued
The Company considers its tangible common equity ratio and tangible book value per share ratio to be useful measurements in evaluating the capital adequacy of the Company as they provide a method to assess management's success in utilizing our tangible capital. Despite the usefulness of these ratios to the Company, there is not a standardized definition for these metrics. As a result, the Company's calculation may not always be comparable with those of other organizations. The Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.
The following table reconciles the Company's calculation of the tangible common equity ratio and tangible book value per share ratio:
December 31,
September 30,
December 31,
2022
2022
2021
Tangible common equity ratio and tangible book value per common share non-GAAP
(dollars in thousands except per share amounts)
Shareholders' equity (numerator A)
$ 2,213,153
$ 2,115,481
$ 2,588,742
Adjustments to arrive at tangible common equity:
Goodwill
(823,172)
(823,172)
(823,172)
Other intangible assets, net
(25,949)
(27,921)
(34,647)
Tangible common equity (numerator B)
$ 1,364,032
$ 1,264,388
$ 1,730,923
Total assets (denominator A)
$ 20,265,843
$ 20,405,369
$ 20,945,333
Adjustments to arrive at tangible assets:
Goodwill
(823,172)
(823,172)
(823,172)
Other intangible assets, net
(25,949)
(27,921)
(34,647)
Tangible assets (denominator B)
$ 19,416,722
$ 19,554,276
$ 20,087,514
Shareholders' equity to total assets (numerator A/denominator A)
10.92 %
10.37 %
12.36 %
Tangible common shareholders' equity to tangible assets (numerator B/denominator B)
7.03 %
6.47 %
8.62 %
Common shares outstanding (denominator C)
78,646
78,647
78,511
Book value per common share (numerator A/denominator C)
$ 28.14
$ 26.90
$ 32.97
Tangible book value per common share (numerator B/denominator C)
$ 17.34
$ 16.08
$ 22.05
The Company considers its ratio of allowance for credit losses to period-end loans, excluding PPP loans, to be a useful measurement in evaluating the adequacy of the amount of allowance for credit losses to loans of the Company, as PPP loans are guaranteed by the U.S. Small Business Administration and thus do not require the same amount of reserve for credit losses as do other loans. Despite the usefulness of this ratio to the Company, there is not a standardized definition for it. As a result, the Company's calculation may not always be comparable with those of other organizations. The Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.
The following table reconciles the Company's calculation of the allowance for credit losses to period-end loans, excluding PPP loans:
December 31,
September 30,
December 31,
2022
2022
2021
Allowance coverage ratio non-GAAP reconciliation:
(dollars in thousands)
Allowance for credit losses ("ACL") (numerator)
$ 158,438
$ 154,871
$ 155,578
Total loans (denominator A)
11,610,973
11,692,261
10,641,937
Less: PPP loans (0% Allowance)
9,997
15,378
184,132
Total loans, net of PPP loans (denominator B)
$ 11,600,976
$ 11,676,883
$ 10,457,805
ACL to period end loans (numerator / denominator A)
1.36 %
1.32 %
1.46 %
ACL to period end loans, excluding PPP loans (numerator / denominator B)
1.37 %
1.33 %
1.49 %
Non-GAAP Financial Measures - Continued
The Company also considers its return on average tangible common equity ratio to be a useful measurement as it evaluates the Company's ongoing ability to generate returns for its common shareholders. By removing the impact of intangible assets and their related amortization and tax effects, the performance of the business can be evaluated, whether acquired or developed internally. Despite the usefulness of this ratio to the Company, there is not a standardized definition for it. As a result, the Company's calculation may not always be comparable with those of other organizations. The Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.
The following table reconciles the Company's calculation of the return on average tangible common shareholders' equity ratio:
Three Months Ended
Twelve Months Ended
December 31,
September 30,
December 31,
December 31,
December 31,
2022
2022
2021
2022
2021
Return on average tangible common equity non-GAAP
(dollars in thousands)
Net income (numerator A)
$ 68,906
$ 64,942
$ 42,911
$ 250,178
$ 202,820
Adjustments to arrive at tangible income applicable to
Amortization of intangibles
1,972
2,219
2,376
8,698
7,987
Tax effect on intangible amortization
(414)
(466)
(499)
(1,827)
(1,677)
Tangible income applicable to common shareholders
$ 70,464
$ 66,695
$ 44,788
257,049
$ 209,130
Average shareholders' equity (denominator A)
$ 2,129,671
$ 2,271,012
$ 2,584,110
2,307,453
$ 2,402,455
Adjustments to arrive at average tangible common equity:
Average intangibles
(850,331)
(852,468)
(854,985)
(853,622)
(806,345)
Average tangible common equity (denominator B)
$ 1,279,340
$ 1,418,544
$ 1,729,125
$ 1,453,831
$ 1,596,110
Return on average common equity (numerator A/denominator
12.94 %
11.44 %
6.64 %
10.84 %
8.44 %
Return on average tangible common equity (numerator
B/denominator B) (2)
22.03 %
18.81 %
10.36 %
17.68 %
13.10 %
__________
(1)
For the purpose of this ratio, interim net income has been annualized.
(2)
For the purpose of this ratio, interim tangible income applicable to common shareholders has been annualized.
1
Operating net interest margin (tax equivalent) is a non-GAAP financial measure. See the section titled "Non-GAAP Financial Measures" in this earnings release for the reconciliation of operating net interest margin (tax equivalent) to net interest margin.
2
Allowance for credit losses to period-end loans, excluding PPP loans is a non-GAAP financial measure. See the section titled "Non-GAAP Financial Measures" in this earnings release for the reconciliation of allowance for credit losses to period-end loans to allowance for credit losses to period-end loans, excluding PPP loans.
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SOURCE Columbia Banking System Inc
