Exhibit 99.1
FOR IMMEDIATE RELEASE
July 23, 2014
Contacts: Melanie J. Dressel,
President and
Chief Executive Officer
(253) 305-1911
Clint E. Stein,
Executive Vice President
and Chief Financial Officer
(253) 593-8304
Columbia Banking System Announces Second Quarter 2014 Earnings
And Revised Conference Call Time
Highlights
| |
| • | Net income of $21.2 million and diluted earnings per share of $0.40, net of a reduction in net income of $850 thousand, or $0.02 per diluted share, associated with acquisition-related expenses and FDIC acquired loan accounting |
| |
| • | Record loan production of over $250 million during the quarter |
| |
| • | Compared to the first quarter of 2014, both net interest margin and operating net interest margin expanded to 4.86% and 4.27%, respectively |
| |
| • | Nonperforming assets to period end noncovered assets reduced to 0.65%, a decrease of 19 basis points from year end and a decrease of 10 basis points from March 31, 2014 |
TACOMA, Washington, July 23, 2014 -- Melanie Dressel, President and Chief Executive Officer of Columbia Banking System and Columbia Bank (NASDAQ: COLB (“Columbia”) said today upon the release of Columbia's second quarter 2014 earnings, “We had a very solid quarter driven by record loan production that resulted in over 14% annualized noncovered loan growth for the period. Our reported earnings per share of $0.40 was negatively impacted by $0.02 due to the combination of acquisition related expense and the impact of our FDIC acquired loan accounting.” Ms. Dressel continued, “The second quarter marked the one year anniversary of the closing of our acquisition of West Coast Bancorp, and we have achieved the anticipated cost saves and expected earnings accretion.”
Significant Influences on the Quarter Ended June 30, 2014
Balance Sheet
Noncovered loans were $4.45 billion at June 30, 2014, up $155.6 million, or 4% from $4.30 billion at March 31, 2014. The increase in noncovered loans was driven by originations, which were over $250 million during the current quarter. Securities were $1.62 billion at June 30, 2014, a decrease of $49.7 million, or 3% from $1.67 billion at March 31, 2014.
Total deposits at June 30, 2014 were $5.99 billion, a decrease of $59.3 million, or 1% from $6.04 billion at March 31, 2014 due largely to seasonal deposit fluctuations. Compared to year end 2013, total deposits have increased $25.6 million. Core deposits comprised 96% of total deposits and were $5.74 billion at June 30, 2014.
Asset Quality
At June 30, 2014, nonperforming assets to noncovered assets were 0.65% or $45.8 million, down from 0.75%, or $52.3 million, at March 31, 2014. Nonaccrual loans decreased $5.8 million during the second quarter driven by payments of $3.7 million, the return of $3.5 million of nonaccrual loans to accrual status, charge-offs of $1.8 million, and $2.1 million of loans transferred to other real estate owned ("OREO"), partially offset by $5.3 million of new nonaccrual loans. Noncovered OREO and other personal property owned ("OPPO") decreased by $721 thousand during the second quarter, primarily due to $2.1 million in sales and $636 thousand in write-downs, partially offset by the previously mentioned $2.1 million transferred from loans.
The following table sets forth, at the dates indicated, information regarding noncovered nonaccrual loans and total noncovered nonperforming assets:
|
| | | | | | | | | | | | |
| | | June 30, 2014 | | March 31, 2014 | | December 31, 2013 |
| | | (in thousands) |
| Nonaccrual noncovered loans: | | | | | | |
| Commercial business | | $ | 11,484 |
| | $ | 14,541 |
| | $ | 12,609 |
|
| Real estate: | | | | | | |
| One-to-four family residential | | 3,024 |
| | 2,900 |
| | 2,667 |
|
| Commercial and multifamily residential | | 11,039 |
| | 11,050 |
| | 11,043 |
|
| Total real estate | | 14,063 |
| | 13,950 |
| | 13,710 |
|
| Real estate construction: | | | | | | |
| One-to-four family residential | | 1,040 |
| | 3,026 |
| | 3,705 |
|
| Total real estate construction | | 1,040 |
| | 3,026 |
| | 3,705 |
|
| Consumer | | 4,026 |
| | 4,880 |
| | 3,991 |
|
| Total nonaccrual loans | | 30,613 |
| | 36,397 |
| | 34,015 |
|
| Noncovered other real estate owned and other personal property owned | | 15,203 |
| | 15,924 |
| | 23,918 |
|
| Total nonperforming noncovered assets | | $ | 45,816 |
| | $ | 52,321 |
| | $ | 57,933 |
|
The following table provides an analysis of the Company's allowance for loan and lease losses ("ALLL") at the dates and the periods indicated:
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, | | Six Months Ended June 30, |
| | | 2014 | | 2013 | | 2014 | | 2013 |
| | | (in thousands) |
| Beginning balance | | $ | 50,442 |
| | $ | 51,119 |
| | $ | 52,280 |
| | $ | 52,244 |
|
| Charge-offs: | | | | | | | | |
| Commercial business | | (1,717 | ) | | (961 | ) | | (1,950 | ) | | (2,275 | ) |
| One-to-four family residential real estate | | — |
| | (28 | ) | | (207 | ) | | (144 | ) |
| Commercial and multifamily residential real estate | | (1,963 | ) | | (614 | ) | | (2,986 | ) | | (1,397 | ) |
| One-to-four family residential real estate construction | | — |
| | — |
| | — |
| | (133 | ) |
| Consumer | | (909 | ) | | (638 | ) | | (1,636 | ) | | (809 | ) |
| Total charge-offs | | (4,589 | ) | | (2,241 | ) | | (6,779 | ) | | (4,758 | ) |
| Recoveries: | | | | | | | | |
| Commercial business | | 1,712 |
| | 352 |
| | 2,202 |
| | 465 |
|
| One-to-four family residential real estate | | 12 |
| | 141 |
| | 40 |
| | 141 |
|
| Commercial and multifamily residential real estate | | 537 |
| | 84 |
| | 576 |
| | 177 |
|
| One-to-four family residential real estate construction | | 442 |
| | 49 |
| | 484 |
| | 2,188 |
|
| Consumer | | 338 |
| | 194 |
| | 591 |
| | 241 |
|
| Total recoveries | | 3,041 |
| | 820 |
| | 3,893 |
| | 3,212 |
|
| Net charge-offs | | (1,548 | ) | | (1,421 | ) | | (2,886 | ) | | (1,546 | ) |
| Provision for loan and lease losses | | 600 |
| | 2,000 |
| | 100 |
| | 1,000 |
|
| Ending balance | | $ | 49,494 |
| | $ | 51,698 |
| | $ | 49,494 |
| | $ | 51,698 |
|
Columbia's allowance for loan losses to nonperforming, noncovered loans ratio was 162% at June 30, 2014, up from 139% at March 31, 2014. The increase in this ratio was caused by a decrease in nonperforming, noncovered loans. The allowance for noncovered loan losses to period end loans was 1.11% at June 30, 2014 compared to 1.17% at March 31, 2014. Excluding acquired loans, the allowance at June 30, 2014 represented 1.34% of noncovered loans, compared to 1.58% of noncovered loans at December 31, 2013. The allowance to noncovered loans, excluding acquired loans is a non-GAAP financial measure. See section titled "Non-GAAP Financial Measures" on the last pages of this earnings release for the reconciliation of the allowance to noncovered loans, excluding acquired loans. The decline reflects strong organic loan growth as well as continued improvement in the Company's asset quality metrics.
For the second quarter of 2014, Columbia had a provision of $600 thousand for noncovered loans. For the comparable quarter last year the company had a provision of $2.0 million. The provision recorded during the current quarter was driven by net loan charge-offs experienced in the quarter, partially offset by improving asset quality metrics.
Andy McDonald, Columbia’s Chief Credit Officer stated, “Our credit metrics continue to improve and we are moving closer to our long-term average for nonperforming assets. With the credit challenges of the economic downturn largely in the rearview mirror, our charge-off and nonaccrual loan activity has been in the normal course of business and is not the result of any troubled portfolio sectors.”
Net Interest Margin ("NIM")
Columbia's net interest margin (tax equivalent) of 4.86% for the second quarter of 2014 was consistent with the linked quarter margin of 4.85%. Compared to the second quarter of 2013, Columbia's net interest margin decreased 33 basis points from 5.19%, primarily due to lower incremental accretion on acquired loans, which was $18.1 million for the prior year quarter, and only $11.3 million for the current quarter.
Columbia's operating net interest margin (tax equivalent)(1) increased to 4.27% for the second quarter of 2014, compared to the linked quarter margin of 4.19%. The increase was primarily due to higher average loan balances. Compared to the second quarter of 2013, the operating net interest margin decreased 7 basis points from 4.34% primarily due to the continuing low interest rate environment.
The following table shows the impact to interest income resulting from accretion of income on acquired loan portfolios as well as the net interest margin and operating net interest margin for the periods presented:
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Six Months Ended |
| | | June 30, 2014 | | June 30, 2013 | | June 30, 2014 | | June 30, 2013 |
| | | (dollars in thousands) |
| Incremental accretion income due to: | | | | | | | | |
| FDIC acquired impaired loans | | $ | 5,734 |
| | $ | 7,837 |
| | $ | 12,223 |
| | $ | 16,212 |
|
| Other FDIC acquired loans | | 95 |
| | 638 |
| | 299 |
| | 1,708 |
|
| Other acquired loans | | 5,481 |
| | 9,635 |
| | 11,096 |
| | 9,635 |
|
| Incremental accretion income | | $ | 11,310 |
| | $ | 18,110 |
| | $ | 23,618 |
| | $ | 27,555 |
|
| | | | | | | | | |
| Net interest margin (tax equivalent) | | 4.86 | % | | 5.19 | % | | 4.86 | % | | 5.13 | % |
Operating net interest margin (tax equivalent) (1) | | 4.27 | % | | 4.34 | % | | 4.23 | % | | 4.28 | % |
__________
(1) Operating net interest margin (tax equivalent) is a non-GAAP financial measure. See section titled "Non-GAAP Financial Measures" on the last pages of this earnings release for the reconciliation of operating net interest margin to net interest margin.
Impact of FDIC Acquired Loan Accounting
The following table illustrates the impact to earnings associated with Columbia's FDIC acquired loan portfolios: |
| | | | | | | | | | | | | | | | |
| FDIC Acquired Loan Activity |
| | | | | | | | | |
| | | Three Months Ended | | Six Months Ended |
| | | June 30, 2014 | | June 30, 2013 | | June 30, 2014 | | June 30, 2013 |
| | | (in thousands) |
| Incremental accretion income on FDIC acquired impaired loans | | $ | 5,734 |
| | $ | 7,837 |
| | $ | 12,223 |
| | $ | 16,212 |
|
| Incremental accretion income on other FDIC acquired loans | | 95 |
| | 638 |
| | 299 |
| | 1,708 |
|
| Recapture (provision) for losses on covered loans | | (1,517 | ) | | 1,712 |
| | (3,939 | ) | | 732 |
|
| Change in FDIC loss-sharing asset | | (5,050 | ) | | (13,137 | ) | | (9,869 | ) | | (23,620 | ) |
| FDIC clawback liability benefit (expense) | | 103 |
| | (199 | ) | | (101 | ) | | (430 | ) |
| Pre-tax earnings impact | | $ | (635 | ) | | $ | (3,149 | ) | | $ | (1,387 | ) | | $ | (5,398 | ) |
The incremental accretion income on FDIC acquired impaired loans in the table above represents the amount of income recorded on acquired loans above the contractual rate stated in the individual loan notes and stems from the discount established at the time these loan portfolios were acquired. At June 30, 2014, the accretable yield on acquired impaired loans was $92.5 million. The accretable yield represents income to be recorded by Columbia over the remaining life of the acquired loans. Accretable yield is subject to change based upon expected future loan cash flows, which are remeasured by Columbia on a quarterly basis.
The $1.5 million net provision for losses on covered loans in the current period is substantially offset by an 80%, or $1.2 million, benefit to the change in the FDIC loss-sharing asset, resulting in a negative net pre-tax earnings impact of $303 thousand. The provision for losses on covered loans was primarily due to decreased expected future cash flows as remeasured during the current quarter when compared to the prior quarter's remeasurement.
The $5.1 million change in the FDIC loss-sharing asset in the current quarter negatively affected noninterest income and consists of $5.8 million of amortization expense and approximately $500 thousand of expense related to covered other real estate owned, partially offset by the $1.2 million adjustment described above.
Second Quarter 2014 Results
Net Interest Income
Net interest income for the second quarter of 2014 was $75.1 million, an increase of $1.2 million compared to the first quarter of 2014. This increase was due to higher average noncovered loan balances during the current quarter. Compared to the second quarter of 2013, net interest income decreased by $4.9 million from $80.0 million. The decrease from the prior year period is primarily due to the $4.2 million decrease in loan accretion income related to the West Coast acquisition. For additional information regarding net interest income, see "Average Balances and Rates" tables.
Noninterest Income
Total noninterest income was $14.6 million for the second quarter of 2014, compared to $6.8 million for the second quarter of 2013. The increase from the prior year period was due to the expense recorded for the change in FDIC loss-sharing asset, which was $8.1 million less in the current quarter compared to the second quarter of 2013. Compared to the first quarter of 2014, noninterest income before change in loss-sharing asset increased $850 thousand, from $18.8 million to $19.7 million, primarily due to an increase of $854 thousand in service charges and other fees.
The change in the FDIC loss-sharing asset is a significant component of noninterest income. The following table reflects the income statement components of the change in the FDIC loss-sharing asset for the three and six month periods indicated:
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Six Months Ended |
| | | June 30, | | June 30, |
| | | 2014 | | 2013 | | 2014 | | 2013 |
| | | (in thousands) |
| Adjustments reflected in income | | | | | | | | |
| Amortization, net | | (5,764 | ) | | (9,801 | ) | | (12,216 | ) | | (19,580 | ) |
| Loan impairment (recapture) | | 1,214 |
| | (1,370 | ) | | 3,151 |
| | (585 | ) |
| Sale of other real estate | | (965 | ) | | (2,251 | ) | | (1,721 | ) | | (3,597 | ) |
| Write-downs of other real estate | | 276 |
| | 102 |
| | 792 |
| | 154 |
|
| Other | | 189 |
| | 183 |
| | 125 |
| | (12 | ) |
| Change in FDIC loss-sharing asset | | $ | (5,050 | ) | | $ | (13,137 | ) | | $ | (9,869 | ) | | $ | (23,620 | ) |
Noninterest Expense
Total noninterest expense for the second quarter of 2014 was $57.8 million, a decrease of $6.7 million, or 10% from $64.5 million for the same quarter in 2013. The decrease from the prior year period was primarily due to lower acquisition-related expenses of $672 thousand for the current quarter compared to $9.2 million for the prior year period. This reduction in acquisition-related costs was partially offset by the reduction in OREO benefit, which went from $2.8 million in the second quarter of 2013 to only $97 thousand in the current quarter.
Compared to the first quarter of 2014, noninterest expense increased $378 thousand. The slight increase was primarily due to an increase in other noninterest expense of $391 thousand related to branch consolidation expenses.
Organizational Update
Melanie Dressel commented, “We continually review our branch system to ensure that we are running effectively and efficiently, while providing the best possible customer service. We currently operate 139 branches throughout our Washington and Oregon footprint, down from 142 at year-end 2013. During the second quarter, we merged two of our downtown Tacoma, Washington branches, and announced we have entered into an agreement to sell three Olympic Peninsula branches to Sound Community Bank; the transaction is expected to close during the third quarter this year. Also during the third quarter, our Clackamas, Oregon branch will relocate to a more convenient new location.”
Ms. Dressel continued, “We are very gratified that our employees enjoy being a part of the Columbia family. For the eighth consecutive year, we have been named one of “Washington’s Best Workplaces” for 2014.”
Revised Conference Call Information
Columbia's management will discuss the second quarter 2014 results on a conference call scheduled for Thursday, July 24, 2014 at 9:00 a.m. PDT (12:00 pm EDT). Interested parties may listen to this discussion by calling 1-866-378-3802; Conference ID code #71565968.
A conference call replay will be available from approximately 12:00 p.m. PDT on July 24, 2014 through midnight PDT on July 31, 2014. The conference call replay can be accessed by dialing 1-855-859-2056 and entering Conference ID code #71565968.
About Columbia
Headquartered in Tacoma, Washington, Columbia Banking System, Inc. is the holding Company of Columbia State Bank, a Washington state-chartered full-service commercial bank, with 79 branches in Washington and 60 in Oregon. For the eighth consecutive year, the bank was named in 2014 as one of Puget Sound Business Journal's "Washington's Best Workplaces."
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, which management believes are a benefit to shareholders. These forward looking statements describe 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” and 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 risk and uncertainty 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, including 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, 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 may reduce interest margins more than expected 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; and (6) 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. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 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.
|
| | | | | | | | | | | | | | | | |
| FINANCIAL STATISTICS | | | | | | | | |
| Columbia Banking System, Inc. | | Three Months Ended | | Six Months Ended |
| Unaudited | | June 30, | | June 30, |
| | | 2014 | | 2013 | | 2014 | | 2013 |
| Earnings | | (dollars in thousands except per share amounts) |
| Net interest income | | $ | 75,124 |
| | $ | 79,989 |
| | $ | 149,064 |
| | $ | 133,471 |
|
| Provision for loan and lease losses | | $ | 600 |
| | $ | 2,000 |
| | $ | 100 |
| | $ | 1,000 |
|
Provision for losses on covered loans, net (1) | | $ | 1,517 |
| | $ | (1,712 | ) | | $ | 3,939 |
| | $ | (732 | ) |
| Noninterest income | | $ | 14,627 |
| | $ | 6,808 |
| | $ | 28,635 |
| | $ | 8,466 |
|
| Noninterest expense | | $ | 57,764 |
| | $ | 64,504 |
| | $ | 115,150 |
| | $ | 102,553 |
|
| Acquisition-related expense (included in noninterest expense) | | $ | 672 |
| | $ | 9,234 |
| | $ | 1,638 |
| | $ | 9,957 |
|
| Net income | | $ | 21,227 |
| | $ | 14,591 |
| | $ | 41,071 |
| | $ | 26,767 |
|
| Per Common Share | | | | | | | | |
| Earnings (basic) | | $ | 0.40 |
| | $ | 0.28 |
| | $ | 0.79 |
| | $ | 0.59 |
|
| Earnings (diluted) | | $ | 0.40 |
| | $ | 0.28 |
| | $ | 0.77 |
| | $ | 0.58 |
|
| Book value | | $ | 20.71 |
| | $ | 20.07 |
| | $ | 20.71 |
| | $ | 20.07 |
|
| Averages | | | | | | | | |
| Total assets | | $ | 7,229,187 |
| | $ | 7,110,957 |
| | $ | 7,186,709 |
| | $ | 5,987,243 |
|
| Interest-earning assets | | $ | 6,339,102 |
| | $ | 6,284,281 |
| | $ | 6,292,157 |
| | $ | 5,316,008 |
|
| Loans, including covered loans | | $ | 4,646,356 |
| | $ | 4,571,181 |
| | $ | 4,592,033 |
| | $ | 3,771,314 |
|
| Securities | | $ | 1,645,993 |
| | $ | 1,665,180 |
| | $ | 1,664,081 |
| | $ | 1,360,114 |
|
| Deposits | | $ | 5,968,881 |
| | $ | 5,824,802 |
| | $ | 5,935,544 |
| | $ | 4,912,533 |
|
| Interest-bearing deposits | | $ | 3,807,710 |
| | $ | 3,986,581 |
| | $ | 3,790,137 |
| | $ | 3,366,784 |
|
| Interest-bearing liabilities | | $ | 3,901,016 |
| | $ | 4,161,095 |
| | $ | 3,884,628 |
| | $ | 3,470,257 |
|
| Noninterest-bearing deposits | | $ | 2,161,171 |
| | $ | 1,838,221 |
| | $ | 2,145,407 |
| | $ | 1,545,749 |
|
| Shareholders' equity | | $ | 1,084,927 |
| | $ | 1,051,380 |
| | $ | 1,076,189 |
| | $ | 910,667 |
|
| Financial Ratios | | | | | | | | |
| Return on average assets | | 1.17 | % | | 0.82 | % | | 1.14 | % | | 0.89 | % |
| Return on average common equity | | 7.83 | % | | 5.56 | % | | 7.64 | % | | 5.88 | % |
| Average equity to average assets | | 15.01 | % | | 14.79 | % | | 14.97 | % | | 15.21 | % |
| Net interest margin (tax equivalent) | | 4.86 | % | | 5.19 | % | | 4.86 | % | | 5.13 | % |
Efficiency ratio (tax equivalent) (2) | | 62.61 | % | | 72.60 | % | | 63.06 | % | | 70.35 | % |
Operating efficiency ratio (tax equivalent) (3) | | 63.80 | % | | 64.13 | % | | 64.49 | % | | 64.99 | % |
| | | | | | | | | |
| | | June 30, | | December 31, | | |
| Period end | | 2014 | | 2013 | | 2013 | | |
| Total assets | | $ | 7,297,458 |
| | $ | 7,070,465 |
| | $ | 7,161,582 |
| | |
| Covered assets, net | | $ | 255,151 |
| | $ | 351,545 |
| | $ | 289,790 |
| | |
| Loans, excluding covered loans, net | | $ | 4,452,674 |
| | $ | 4,181,018 |
| | $ | 4,219,451 |
| | |
| Allowance for noncovered loan and lease losses | | $ | 49,494 |
| | $ | 51,698 |
| | $ | 52,280 |
| | |
| Securities | | $ | 1,621,929 |
| | $ | 1,541,039 |
| | $ | 1,696,640 |
| | |
| Deposits | | $ | 5,985,069 |
| | $ | 5,747,861 |
| | $ | 5,959,475 |
| | |
| Core deposits | | $ | 5,735,047 |
| | $ | 5,467,899 |
| | $ | 5,696,357 |
| | |
| Shareholders' equity | | $ | 1,092,151 |
| | $ | 1,030,674 |
| | $ | 1,053,249 |
| | |
| Nonperforming, noncovered assets | | | | | | | | |
| Nonaccrual loans | | $ | 30,613 |
| | $ | 43,610 |
| | $ | 34,015 |
| | |
| Other real estate owned ("OREO") and other personal property owned("OPPO") | | 15,203 |
| | 24,423 |
| | 23,918 |
| | |
| Total nonperforming, noncovered assets | | $ | 45,816 |
| | $ | 68,033 |
| | $ | 57,933 |
| | |
| Nonperforming assets to period-end noncovered loans + OREO and OPPO | | 1.03 | % | | 1.62 | % | | 1.37 | % | | |
| Nonperforming loans to period-end noncovered loans | | 0.69 | % | | 1.04 | % | | 0.81 | % | | |
| Nonperforming assets to period-end noncovered assets | | 0.65 | % | | 1.01 | % | | 0.84 | % | | |
| Allowance for loan and lease losses to period-end noncovered loans | | 1.11 | % | | 1.24 | % | | 1.24 | % | | |
| Allowance for loan and lease losses to nonperforming noncovered loans | | 161.68 | % | | 118.55 | % | | 153.70 | % | | |
| Net noncovered loan charge-offs | | $ | 2,886 |
| (4) | $ | 1,546 |
| (5) | $ | 3,124 |
| (6) | |
| | | | | | | | | |
| (1) Provision(recapture) for losses on covered loans was partially offset by $1.2 million in income and $1.4 million in expense recorded to Change in FDIC loss-sharing asset in the Consolidated Statements of Income for the three months ended June 30, 2014 and 2013, respectively. For the six months ended June 30, 2014 and 2013, provision(recapture) for losses on covered loans was partially offset by $3.2 million in income and $586 thousand in expense, respectively. |
| (2) Noninterest expense divided by the sum of net interest income on a tax equivalent basis and noninterest income on a tax equivalent basis. |
| (3) The operating efficiency ratio (tax equivalent) is a non-GAAP financial measure. See section titled "Non-GAAP Financial Measures" on the last pages of this earnings release for the reconciliation of the operating efficiency ratio (tax equivalent) to the efficiency ratio (tax equivalent). During the second quarter of 2014, the methodology was changed to now exclude Washington state Business and Occupation ("B&O") taxes. Amounts presented in prior periods have been adjusted to conform with the current methodology. |
| (4) For the six months ended June 30, 2014. | | | | | | | | |
| (5) For the six months ended June 30, 2013. | | | | | | | | |
| (6) For the twelve months ended December 31, 2013. | | | | | | | | |
|
| | | | | | | | | | | | | | |
| FINANCIAL STATISTICS | | | | | | | | |
| Columbia Banking System, Inc. | | | | | | | | |
| Unaudited | | June 30, | | December 31, |
| | | 2014 | | 2013 |
| Loan Portfolio Composition | | (dollars in thousands) |
| Noncovered loans: | | | | | | | | |
| Commercial business | | $ | 1,735,588 |
| | 39.0 | % | | $ | 1,561,782 |
| | 37.0 | % |
| Real estate: | | | | | | | | |
| One-to-four family residential | | 102,632 |
| | 2.3 | % | | 108,317 |
| | 2.6 | % |
| Commercial and multifamily residential | | 2,127,520 |
| | 47.8 | % | | 2,080,075 |
| | 49.2 | % |
| Total real estate | | 2,230,152 |
| | 50.1 | % | | 2,188,392 |
| | 51.8 | % |
| Real estate construction: | | | | | | | | |
| One-to-four family residential | | 61,481 |
| | 1.4 | % | | 54,155 |
| | 1.3 | % |
| Commercial and multifamily residential | | 134,140 |
| | 3.0 | % | | 126,390 |
| | 3.0 | % |
| Total real estate construction | | 195,621 |
| | 4.4 | % | | 180,545 |
| | 4.3 | % |
| Consumer | | 348,439 |
| | 7.8 | % | | 357,014 |
| | 8.5 | % |
| Subtotal loans | | 4,509,800 |
| | 101.3 | % | | 4,287,733 |
| | 101.6 | % |
| Less: Net unearned income | | (57,126 | ) | | (1.3 | )% | | (68,282 | ) | | (1.6 | )% |
| Total noncovered loans, net of unearned income | | 4,452,674 |
| | 100.0 | % | | 4,219,451 |
| | 100.0 | % |
| Less: Allowance for loan and lease losses | | (49,494 | ) | | | | (52,280 | ) | | |
| Noncovered loans, net | | 4,403,180 |
| | | | 4,167,171 |
| | |
| Covered loans, net of allowance for loan losses of ($19,801) and ($20,174), respectively | | 242,100 |
| | | | 277,671 |
| | |
| Total loans, net | | $ | 4,645,280 |
| | | | $ | 4,444,842 |
| | |
| Loans held for sale | | $ | 750 |
| | | | $ | 735 |
| | |
| | | | | | | | | |
| | | June 30, | | December 31, |
| | | 2014 | | 2013 |
| Deposit Composition | | (dollars in thousands) |
| Core deposits: | | | | | | | | |
| Demand and other non-interest bearing | | $ | 2,190,161 |
| | 36.6 | % | | $ | 2,171,703 |
| | 36.4 | % |
| Interest bearing demand | | 1,189,620 |
| | 19.9 | % | | 1,170,006 |
| | 19.6 | % |
| Money market | | 1,553,269 |
| | 26.0 | % | | 1,569,261 |
| | 26.3 | % |
| Savings | | 532,276 |
| | 8.9 | % | | 496,444 |
| | 8.3 | % |
| Certificates of deposit less than $100,000 | | 269,721 |
| | 4.4 | % | | 288,943 |
| | 4.9 | % |
| Total core deposits | | 5,735,047 |
| | 95.8 | % | | 5,696,357 |
| | 95.5 | % |
| | | | | | | | | |
| Certificates of deposit greater than $100,000 | | 182,697 |
| | 3.1 | % | | 201,498 |
| | 3.5 | % |
| Certificates of deposit insured by CDARS® | | 18,690 |
| | 0.3 | % | | 19,488 |
| | 0.3 | % |
| Brokered money market accounts | | 48,408 |
| | 0.8 | % | | 41,765 |
| | 0.7 | % |
| Subtotal | | 5,984,842 |
| | 100.0 | % | | 5,959,108 |
| | 100.0 | % |
| Premium resulting from acquisition date fair value adjustment | | 227 |
| | | | 367 |
| | |
| Total deposits | | $ | 5,985,069 |
| | | | $ | 5,959,475 |
| | |
|
| | | | | | | | | | | | | | | | |
| FINANCIAL STATISTICS | | | | | | | | |
| Columbia Banking System, Inc. | | | | | | | | |
| Unaudited | | | | | | | | |
| | | | | | | |
| | | June 30, | | December 31, |
| | | 2014 | | 2013 |
| | | OREO | | OPPO | | OREO | | OPPO |
| OREO and OPPO Composition | | (in thousands) |
| Covered | | $ | 13,051 |
| | $ | — |
| | $ | 12,093 |
| | $ | 26 |
|
| Noncovered | | 15,203 |
| | — |
| | 23,834 |
| | 84 |
|
| Total | | $ | 28,254 |
| | $ | — |
| | $ | 35,927 |
| | $ | 110 |
|
| | | | | | | | | |
| | | Three Months Ended | | Six Months Ended |
| | | June 30, | | June 30, |
| | | 2014 | | 2013 | | 2014 | | 2013 |
| OREO and OPPO Earnings Impact | | (in thousands) |
| Net cost of operation of noncovered OREO | | $ | 730 |
| | $ | 393 |
| | $ | 1,057 |
| | $ | 339 |
|
| Net benefit of operation of covered OREO | | (827 | ) | | (3,221 | ) | | (1,008 | ) | | (5,668 | ) |
| Net cost (benefit) of operation of OREO | | $ | (97 | ) | | $ | (2,828 | ) | | $ | 49 |
| | $ | (5,329 | ) |
| | | | | | | | | |
| Noncovered OPPO cost (benefit), net | | $ | — |
| | $ | 8 |
| | $ | (125 | ) | | $ | (96 | ) |
| Covered OPPO benefit, net | | (20 | ) | | — |
| | (19 | ) | | — |
|
OPPO benefit, net (1) | | $ | (20 | ) | | $ | 8 |
| | $ | (144 | ) | | $ | (96 | ) |
| | | | | | | | | |
| (1) OPPO cost (benefit), net is included in Other noninterest expense in the Consolidated Statements of Income. |
The following table shows a summary of FDIC acquired loan accounting for the five most recent quarters:
|
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended |
| | | June 30, | | March 31, | | December 31, | | September 30, | | June 30, |
| | | 2014 | | 2014 | | 2013 | | 2013 | | 2013 |
| | | (in thousands) |
Expense to pre-tax earnings (1) | | $ | (635 | ) | | $ | (752 | ) | | $ | (1,248 | ) | | $ | (3,362 | ) | | $ | (3,149 | ) |
| | | | | | | | | | | |
| Balance sheet components: | | | | | | | | | | |
| Covered loans, net of allowance | | $ | 242,100 |
| | $ | 260,158 |
| | $ | 277,671 |
| | $ | 302,160 |
| | $ | 338,661 |
|
| Covered OREO | | 13,051 |
| | 14,712 |
| | 12,093 |
| | 12,730 |
| | 12,854 |
|
| FDIC loss-sharing asset | | 27,981 |
| | 36,837 |
| | 39,846 |
| | 53,559 |
| | 67,374 |
|
| | | | | | | | | | | |
| (1) For details of the components of expense to pre-tax earnings related to FDIC acquired loan accounting, see previous table entitled "FDIC Acquired Loan Activity." |
|
| | | | | | | | | | | | | | | | | | | | |
| QUARTERLY FINANCIAL STATISTICS | | | | | | | | | | |
| Columbia Banking System, Inc. | | Three Months Ended |
| Unaudited | | June 30, | | March 31, | | December 31, | | September 30, | | June 30, |
| | | 2014 | | 2014 | | 2013 | | 2013 | | 2013 |
| | | (dollars in thousands except per share) |
| Earnings | | |
| Net interest income | | $ | 75,124 |
| | $ | 73,940 |
| | $ | 77,209 |
| | $ | 80,415 |
| | $ | 79,989 |
|
| Provision (recapture) for loan and lease losses | | $ | 600 |
| | $ | (500 | ) | | $ | (2,100 | ) | | $ | 4,260 |
| | $ | 2,000 |
|
| Provision (recapture) for losses on covered loans | | $ | 1,517 |
| | $ | 2,422 |
| | $ | (1,582 | ) | | $ | (947 | ) | | $ | (1,712 | ) |
| Noninterest income | | $ | 14,627 |
| | $ | 14,008 |
| | $ | 10,612 |
| | $ | 7,622 |
| | $ | 6,808 |
|
| Noninterest expense | | $ | 57,764 |
| | $ | 57,386 |
| | $ | 63,619 |
| | $ | 64,714 |
| | $ | 64,504 |
|
Acquisition-related expense (included in noninterest expense) | | $ | 672 |
| | $ | 966 |
| | $ | 7,910 |
| | $ | 7,621 |
| | $ | 9,234 |
|
| Net income | | $ | 21,227 |
| | $ | 19,844 |
| | $ | 19,973 |
| | $ | 13,276 |
| | $ | 14,591 |
|
| Per Common Share | | | | | | | | | | |
| Earnings (basic) | | $ | 0.40 |
| | $ | 0.38 |
| | $ | 0.39 |
| | $ | 0.26 |
| | $ | 0.28 |
|
| Earnings (diluted) | | $ | 0.40 |
| | $ | 0.37 |
| | $ | 0.38 |
| | $ | 0.25 |
| | $ | 0.28 |
|
| Book value | | $ | 20.71 |
| | $ | 20.39 |
| | $ | 20.50 |
| | $ | 20.35 |
| | $ | 20.07 |
|
| Averages | | | | | | | | | | |
| Total assets | | $ | 7,229,187 |
| | $ | 7,143,759 |
| | $ | 7,192,084 |
| | $ | 7,048,864 |
| | $ | 7,110,957 |
|
| Interest-earning assets | | $ | 6,339,102 |
| | $ | 6,244,692 |
| | $ | 6,269,894 |
| | $ | 6,101,960 |
| | $ | 6,284,281 |
|
| Loans, including covered loans | | $ | 4,646,356 |
| | $ | 4,537,107 |
| | $ | 4,504,587 |
| | $ | 4,504,040 |
| | $ | 4,571,181 |
|
| Securities | | $ | 1,645,993 |
| | $ | 1,682,370 |
| | $ | 1,662,720 |
| | $ | 1,512,292 |
| | $ | 1,665,180 |
|
| Deposits | | $ | 5,968,881 |
| | $ | 5,901,838 |
| | $ | 6,003,657 |
| | $ | 5,837,018 |
| | $ | 5,824,802 |
|
| Interest-bearing deposits | | $ | 3,807,710 |
| | $ | 3,772,370 |
| | $ | 3,839,060 |
| | $ | 3,805,260 |
| | $ | 3,986,581 |
|
| Interest-bearing liabilities | | $ | 3,901,016 |
| | $ | 3,868,060 |
| | $ | 3,886,126 |
| | $ | 3,898,997 |
| | $ | 4,161,095 |
|
| Noninterest-bearing deposits | | $ | 2,161,171 |
| | $ | 2,129,468 |
| | $ | 2,164,597 |
| | $ | 2,031,758 |
| | $ | 1,838,221 |
|
| Shareholders' equity | | $ | 1,084,927 |
| | $ | 1,067,353 |
| | $ | 1,056,694 |
| | $ | 1,036,134 |
| | $ | 1,051,380 |
|
| Financial Ratios | | | | | | | | | | |
| Return on average assets | | 1.17 | % | | 1.11 | % | | 1.11 | % | | 0.75 | % | | 0.82 | % |
| Return on average common equity | | 7.83 | % | | 7.45 | % | | 7.57 | % | | 5.13 | % | | 5.56 | % |
| Average equity to average assets | | 15.01 | % | | 14.94 | % | | 14.69 | % | | 14.70 | % | | 14.79 | % |
| Net interest margin (tax equivalent) | | 4.86 | % | | 4.85 | % | | 5.03 | % | | 5.37 | % | | 5.19 | % |
| Period end | | | | | | | | | | |
| Total assets | | $ | 7,297,458 |
| | $ | 7,237,053 |
| | $ | 7,161,582 |
| | $ | 7,150,297 |
| | $ | 7,070,465 |
|
| Covered assets, net | | $ | 255,151 |
| | $ | 274,896 |
| | $ | 289,790 |
| | $ | 314,898 |
| | $ | 351,545 |
|
| Loans, excluding covered loans, net | | $ | 4,452,674 |
| | $ | 4,297,076 |
| | $ | 4,219,451 |
| | $ | 4,193,732 |
| | $ | 4,181,018 |
|
| Allowance for noncovered loan and lease losses | | $ | 49,494 |
| | $ | 50,442 |
| | $ | 52,280 |
| | $ | 55,844 |
| | $ | 51,698 |
|
| Securities | | $ | 1,621,929 |
| | $ | 1,671,594 |
| | $ | 1,696,640 |
| | $ | 1,602,484 |
| | $ | 1,541,039 |
|
| Deposits | | $ | 5,985,069 |
| | $ | 6,044,416 |
| | $ | 5,959,475 |
| | $ | 5,948,967 |
| | $ | 5,747,861 |
|
| Core deposits | | $ | 5,735,047 |
| | $ | 5,768,434 |
| | $ | 5,696,357 |
| | $ | 5,662,958 |
| | $ | 5,467,899 |
|
| Shareholders' equity | | $ | 1,092,151 |
| | $ | 1,074,491 |
| | $ | 1,053,249 |
| | $ | 1,045,797 |
| | $ | 1,030,674 |
|
| Nonperforming, noncovered assets | | | | | | | | | | |
| Nonaccrual loans | | $ | 30,613 |
| | $ | 36,397 |
| | $ | 34,015 |
| | $ | 35,961 |
| | $ | 43,610 |
|
| OREO and OPPO | | 15,203 |
| | 15,924 |
| | 23,918 |
| | 23,641 |
| | 24,423 |
|
| Total nonperforming, noncovered assets | | $ | 45,816 |
| | $ | 52,321 |
| | $ | 57,933 |
| | $ | 59,602 |
| | $ | 68,033 |
|
| Nonperforming assets to period-end noncovered loans + OREO and OPPO | | 1.03 | % | | 1.21 | % | | 1.37 | % | | 1.41 | % | | 1.62 | % |
| Nonperforming loans to period-end noncovered loans | | 0.69 | % | | 0.85 | % | | 0.81 | % | | 0.86 | % | | 1.04 | % |
| Nonperforming assets to period-end noncovered assets | | 0.65 | % | | 0.75 | % | | 0.84 | % | | 0.87 | % | | 1.01 | % |
| Allowance for loan and lease losses to period-end noncovered loans | | 1.11 | % | | 1.17 | % | | 1.24 | % | | 1.33 | % | | 1.24 | % |
| Allowance for loan and lease losses to nonperforming noncovered loans | | 161.68 | % | | 138.59 | % | | 153.70 | % | | 155.29 | % | | 118.55 | % |
| Net noncovered loan charge-offs | | $ | 1,548 |
| | $ | 1,338 |
| | $ | 1,464 |
| | $ | 114 |
| | $ | 1,421 |
|
|
| | | | | | | | | | | | | | | | |
| CONSOLIDATED STATEMENTS OF INCOME | | | | | | |
| Columbia Banking System, Inc. | | Three Months Ended | | Six Months Ended |
| Unaudited | | June 30, | | June 30, |
| | | 2014 | | 2013 (1) | | 2014 | | 2013 (1) |
| | | (in thousands except per share) |
| Interest Income | | | | | | | | |
| Loans | | $ | 67,004 |
| | $ | 74,837 |
| | $ | 132,545 |
| | $ | 122,865 |
|
| Taxable securities | | 6,382 |
| | 4,890 |
| | 13,134 |
| | 9,124 |
|
| Tax-exempt securities | | 2,671 |
| | 2,508 |
| | 5,289 |
| | 4,806 |
|
| Federal funds sold and deposits in banks | | 30 |
| | 33 |
| | 44 |
| | 234 |
|
| Total interest income | | 76,087 |
| | 82,268 |
| | 151,012 |
| | 137,029 |
|
| Interest Expense | | | | | | | | |
| Deposits | | 729 |
| | 1,054 |
| | 1,481 |
| | 2,143 |
|
| Federal Home Loan Bank advances | | 115 |
| | (699 | ) | | 229 |
| | (628 | ) |
| Prepayment charge on Federal Home Loan Bank advances | | — |
| | 1,548 |
| | — |
| | 1,548 |
|
| Other borrowings | | 119 |
| | 376 |
| | 238 |
| | 495 |
|
| Total interest expense | | 963 |
| | 2,279 |
| | 1,948 |
| | 3,558 |
|
| Net Interest Income | | 75,124 |
| | 79,989 |
| | 149,064 |
| | 133,471 |
|
| Provision for loan and lease losses | | 600 |
| | 2,000 |
| | 100 |
| | 1,000 |
|
| Provision (recapture) for losses on covered loans, net | | 1,517 |
| | (1,712 | ) | | 3,939 |
| | (732 | ) |
| Net interest income after provision (recapture) for loan and lease losses | | 73,007 |
| | 79,701 |
| | 145,025 |
| | 133,203 |
|
| Noninterest Income | | | | | | | | |
| Service charges and other fees | | 13,790 |
| | 13,560 |
| | 26,726 |
| | 21,154 |
|
| Merchant services fees | | 2,040 |
| | 2,013 |
| | 3,910 |
| | 3,864 |
|
| Investment securities gains, net | | 296 |
| | 92 |
| | 519 |
| | 462 |
|
| Bank owned life insurance | | 976 |
| | 1,008 |
| | 1,941 |
| | 1,706 |
|
| Change in FDIC loss-sharing asset | | (5,050 | ) | | (13,137 | ) | | (9,869 | ) | | (23,620 | ) |
| Other | | 2,575 |
| | 3,272 |
| | 5,408 |
| | 4,900 |
|
| Total noninterest income | | 14,627 |
| | 6,808 |
| | 28,635 |
| | 8,466 |
|
| Noninterest Expense | | | | | | | | |
| Compensation and employee benefits | | 31,064 |
| | 35,657 |
| | 62,402 |
| | 57,310 |
|
| Occupancy | | 8,587 |
| | 7,543 |
| | 16,831 |
| | 12,296 |
|
| Merchant processing | | 998 |
| | 852 |
| | 1,978 |
| | 1,709 |
|
| Advertising and promotion | | 950 |
| | 1,160 |
| | 1,719 |
| | 2,030 |
|
| Data processing and communications | | 3,680 |
| | 3,638 |
| | 7,200 |
| | 6,218 |
|
| Legal and professional fees | | 2,303 |
| | 5,504 |
| | 4,472 |
| | 7,554 |
|
| Taxes, licenses and fees | | 1,051 |
| | 1,204 |
| | 2,231 |
| | 2,591 |
|
| Regulatory premiums | | 1,073 |
| | 1,177 |
| | 2,249 |
| | 2,034 |
|
| Net cost (benefit) of operation of other real estate | | (97 | ) | | (2,828 | ) | | 49 |
| | (5,329 | ) |
| Amortization of intangibles | | 1,480 |
| | 1,693 |
| | 3,060 |
| | 2,722 |
|
| Other (1) | | 6,675 |
| | 8,904 |
| | 12,959 |
| | 13,418 |
|
| Total noninterest expense | | 57,764 |
| | 64,504 |
| | 115,150 |
| | 102,553 |
|
| Income before income taxes | | 29,870 |
| | 22,005 |
| | 58,510 |
| | 39,116 |
|
| Provision for income taxes | | 8,643 |
| | 7,414 |
| | 17,439 |
| | 12,349 |
|
| Net Income | | $ | 21,227 |
| | $ | 14,591 |
| | $ | 41,071 |
| | $ | 26,767 |
|
| Earnings per common share | | | | | | | | |
| Basic | | $ | 0.40 |
| | $ | 0.28 |
| | $ | 0.79 |
| | $ | 0.59 |
|
| Diluted | | $ | 0.40 |
| | $ | 0.28 |
| | $ | 0.77 |
| | $ | 0.58 |
|
| Dividends paid per common share | | $ | 0.24 |
| | $ | 0.10 |
| | $ | 0.36 |
| | $ | 0.20 |
|
| Weighted average number of common shares outstanding | | 52,088 |
| | 50,788 |
| | 51,600 |
| | 45,099 |
|
| Weighted average number of diluted common shares outstanding | | 52,494 |
| | 52,125 |
| | 52,463 |
| | 45,758 |
|
__________
(1) Reclassified to conform to the current period's presentation. The reclassification was limited to removing the separate line item for FDIC clawback liability expense within noninterest expense and including the prior period activity in the line item for other noninterest expense.
|
| | | | | | | | | | | | | |
| CONSOLIDATED BALANCE SHEETS | | | | | | | |
| Columbia Banking System, Inc. | | | | | | | |
| Unaudited | | | | | June 30, | | December 31, |
| | | | | | 2014 | | 2013 |
| | | | | | (in thousands) |
| ASSETS | | |
| Cash and due from banks | | $ | 193,816 |
| | $ | 165,030 |
|
| Interest-earning deposits with banks | | 30,646 |
| | 14,531 |
|
| Total cash and cash equivalents | | 224,462 |
| | 179,561 |
|
| Securities available for sale at fair value (amortized cost of $1,581,989 and $1,680,491, respectively) | | 1,590,017 |
| | 1,664,111 |
|
| Federal Home Loan Bank stock at cost | | 31,912 |
| | 32,529 |
|
| Loans held for sale | | 750 |
| | 735 |
|
| Loans, excluding covered loans, net of unearned income of ($57,126) and ($68,282), respectively | | 4,452,674 |
| | 4,219,451 |
|
| Less: allowance for loan and lease losses | | 49,494 |
| | 52,280 |
|
| Loans, excluding covered loans, net | | 4,403,180 |
| | 4,167,171 |
|
| Covered loans, net of allowance for loan losses of ($19,801) and ($20,174), respectively | | 242,100 |
| | 277,671 |
|
| Total loans, net | | 4,645,280 |
| | 4,444,842 |
|
| FDIC loss-sharing asset | | 27,981 |
| | 39,846 |
|
| Interest receivable | | 22,183 |
| | 22,206 |
|
| Premises and equipment, net | | 156,645 |
| | 154,732 |
|
| Other real estate owned ($13,051 and $12,093 covered by FDIC loss-share, respectively) | | 28,254 |
| | 35,927 |
|
| Goodwill | | 343,952 |
| | 343,952 |
|
| Other intangible assets, net | | 22,792 |
| | 25,852 |
|
| Other assets | | 203,230 |
| | 217,289 |
|
| Total assets | | $ | 7,297,458 |
| | $ | 7,161,582 |
|
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | |
| Deposits: | | | | |
| Noninterest-bearing | | $ | 2,190,161 |
| | $ | 2,171,703 |
|
| Interest-bearing | | 3,794,908 |
| | 3,787,772 |
|
| Total deposits | | 5,985,069 |
| | 5,959,475 |
|
| Federal Home Loan Bank advances | | 110,587 |
| | 36,606 |
|
| Securities sold under agreements to repurchase | | 25,000 |
| | 25,000 |
|
| Other liabilities | | 84,651 |
| | 87,252 |
|
| Total liabilities | | 6,205,307 |
| | 6,108,333 |
|
| Commitments and contingent liabilities | | | | | | | |
| | June 30, | | December 31, | | | | |
| | 2014 | | 2013 | | | | |
| Preferred stock (no par value) | | | | | | | |
| Authorized shares | 2,000 |
| | 2,000 |
| | | | |
| Issued and outstanding | 9 |
| | 9 |
| | 2,217 |
| | 2,217 |
|
| Common stock (no par value) | | | | | | | |
| Authorized shares | 63,033 |
| | 63,033 |
| | | | |
| Issued and outstanding | 52,635 |
| | 51,265 |
| | 861,609 |
| | 860,562 |
|
| Retained earnings | | 224,765 |
| | 202,514 |
|
| Accumulated other comprehensive income (loss) | | 3,560 |
| | (12,044 | ) |
| Total shareholders' equity | | 1,092,151 |
| | 1,053,249 |
|
| Total liabilities and shareholders' equity | | $ | 7,297,458 |
| | $ | 7,161,582 |
|
|
| | | | | | | | | | | | | | | | | | | | | | |
| AVERAGE BALANCES AND RATES | | | | | | | | | | |
| Columbia Banking System, Inc. | | | | | | | | | | |
| Unaudited | | | | | | | | | | | | |
| | | Three Months Ended June 30, | | Three Months Ended June 30, |
| | | 2014 | | 2013 |
| | | Average
Balances | | Interest
Earned / Paid | | Average
Rate | | Average
Balances | | Interest
Earned / Paid | | Average
Rate |
| | | (dollars in thousands) |
| ASSETS | | | | | | | | | | | | |
Loans, excluding covered loans, net (1) (3) | | $ | 4,373,439 |
| | $ | 56,807 |
| | 5.20 | % | | $ | 4,192,519 |
| | $ | 60,881 |
| | 5.81 | % |
Covered loans, net (2) | | 272,917 |
| | 10,622 |
| | 15.57 | % | | 378,662 |
| | 14,074 |
| | 14.87 | % |
| Taxable securities | | 1,281,753 |
| | 6,382 |
| | 1.99 | % | | 1,328,806 |
| | 4,890 |
| | 1.47 | % |
Tax exempt securities (3) | | 364,240 |
| | 4,192 |
| | 4.60 | % | | 336,375 |
| | 3,890 |
| | 4.63 | % |
| Interest-earning deposits with banks and federal funds sold | | 46,753 |
| | 30 |
| | 0.26 | % | | 47,919 |
| | 33 |
| | 0.27 | % |
| Total interest-earning assets | | 6,339,102 |
| | $ | 78,033 |
| | 4.92 | % | | 6,284,281 |
| | $ | 83,768 |
| | 5.33 | % |
| Other earning assets | | 130,462 |
| | | | | | 113,403 |
| | | | |
| Noninterest-earning assets | | 759,623 |
| | | | | | 713,273 |
| | | | |
| Total assets | | $ | 7,229,187 |
| | | | | | $ | 7,110,957 |
| | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
| Certificates of deposit | | $ | 480,459 |
| | $ | 325 |
| | 0.27 | % | | $ | 590,261 |
| | $ | 535 |
| | 0.36 | % |
| Savings accounts | | 527,370 |
| | 14 |
| | 0.01 | % | | 477,574 |
| | 28 |
| | 0.02 | % |
| Interest-bearing demand | | 1,187,274 |
| | 115 |
| | 0.04 | % | | 1,059,772 |
| | 153 |
| | 0.06 | % |
| Money market accounts | | 1,612,607 |
| | 275 |
| | 0.07 | % | | 1,858,974 |
| | 338 |
| | 0.07 | % |
| Total interest-bearing deposits | | 3,807,710 |
| | 729 |
| | 0.08 | % | | 3,986,581 |
| | 1,054 |
| | 0.11 | % |
Federal Home Loan Bank advances (4) | | 68,306 |
| | 115 |
| | 0.67 | % | | 106,309 |
| | 849 |
| | 3.19 | % |
| Other borrowings | | 25,000 |
| | 119 |
| | 1.90 | % | | 68,205 |
| | 376 |
| | 2.21 | % |
| Total interest-bearing liabilities | | 3,901,016 |
| | $ | 963 |
| | 0.10 | % | | 4,161,095 |
| | $ | 2,279 |
| | 0.22 | % |
| Noninterest-bearing deposits | | 2,161,171 |
| | | | | | 1,838,221 |
| | | | |
| Other noninterest-bearing liabilities | | 82,073 |
| | | | | | 60,261 |
| | | | |
| Shareholders’ equity | | 1,084,927 |
| | | | | | 1,051,380 |
| | | | |
| Total liabilities & shareholders’ equity | | $ | 7,229,187 |
| | | | | | $ | 7,110,957 |
| | | | |
| Net interest income (tax equivalent) | | $ | 77,070 |
| | | | | | $ | 81,489 |
| | |
| Net interest margin (tax equivalent) | | 4.86 | % | | | | | | 5.19 | % |
| |
| (1) | Nonaccrual loans have been included in the tables as loans carrying a zero yield. Amortized net deferred loan fees and net unearned discounts on certain acquired loans were included in the interest income calculations. The amortization of net deferred loan fees was $1.2 million and $840 thousand for the three months ended June 30, 2014 and 2013, respectively. The accretion of net unearned discounts on certain acquired loans was $5.6 million and $10.3 million for the three months ended June 30, 2014 and 2013, respectively. |
| |
| (2) | Incremental accretion on acquired impaired loans is included in covered loan interest earned. The incremental accretion income on acquired impaired loans was $5.7 million and $7.8 million for the three months ended June 30, 2014 and 2013, respectively. |
| |
| (3) | Yields on a fully tax equivalent basis. The tax equivalent yield adjustment to interest earned on noncovered loans was $425 thousand and $118 thousand for the three months ended June 30, 2014 and 2013, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.5 million and $1.4 million for the three months ended June 30, 2014 and 2013, respectively. |
| |
| (4) | Federal Home Loan Bank advances includes a prepayment charge of $1.5 million during the three months ended June 30, 2013. As a result of the prepayment, the Company recorded $874 thousand in premium amortization, which partially offset the impact of the prepayment charge. |
|
| | | | | | | | | | | | | | | | | | | | | | |
| AVERAGE BALANCES AND RATES | | | | | | | | | | |
| Columbia Banking System, Inc. | | | | | �� | | | | | |
| Unaudited | | | | | | | | | | | | |
| | | Six Months Ended June 30, | | Six Months Ended June 30, |
| | | 2014 | | 2013 |
| | | Average
Balances | | Interest
Earned / Paid | | Average
Rate | | Average
Balances | | Interest
Earned / Paid | | Average
Rate |
| | | (dollars in thousands) |
| ASSETS | | | | | | | | | | | | |
Loans, excluding covered loans, net (1) (3) | | $ | 4,311,118 |
| | $ | 111,753 |
| | 5.18 | % | | $ | 3,380,360 |
| | $ | 94,045 |
| | 5.56 | % |
Covered loans, net (2) | | 280,915 |
| | 21,574 |
| | 15.36 | % | | 390,954 |
| | 29,066 |
| | 14.87 | % |
| Taxable securities | | 1,305,584 |
| | 13,134 |
| | 2.01 | % | | 1,056,992 |
| | 9,124 |
| | 1.73 | % |
Tax exempt securities (3) | | 358,497 |
| | 8,301 |
| | 4.63 | % | | 303,122 |
| | 7,457 |
| | 4.92 | % |
| Interest-earning deposits with banks and federal funds sold | | 36,043 |
| | 44 |
| | 0.24 | % | | 184,581 |
| | 234 |
| | 0.25 | % |
| Total interest-earning assets | | 6,292,157 |
| | $ | 154,806 |
| | 4.92 | % | | 5,316,009 |
| | $ | 139,926 |
| | 5.26 | % |
| Other earning assets | | 128,703 |
| | | | | | 97,094 |
| | | | |
| Noninterest-earning assets | | 765,849 |
| | | | | | 574,140 |
| | | | |
| Total assets | | $ | 7,186,709 |
| | | | | | $ | 5,987,243 |
| | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
| Certificates of deposit | | $ | 491,731 |
| | $ | 687 |
| | 0.28 | % | | $ | 536,750 |
| | $ | 1,115 |
| | 0.42 | % |
| Savings accounts | | 520,678 |
| | 28 |
| | 0.01 | % | | 402,584 |
| | 44 |
| | 0.02 | % |
| Interest-bearing demand | | 1,178,042 |
| | 223 |
| | 0.04 | % | | 950,352 |
| | 331 |
| | 0.07 | % |
| Money market accounts | | 1,599,686 |
| | 543 |
| | 0.07 | % | | 1,477,098 |
| | 653 |
| | 0.09 | % |
| Total interest-bearing deposits | | 3,790,137 |
| | 1,481 |
| | 0.08 | % | | 3,366,784 |
| | 2,143 |
| | 0.13 | % |
Federal Home Loan Bank advances (4) | | 69,491 |
| | 229 |
| | 0.66 | % | | 56,751 |
| | 920 |
| | 3.24 | % |
| Other borrowings | | 25,000 |
| | 238 |
| | 1.90 | % | | 46,722 |
| | 495 |
| | 2.12 | % |
| Total interest-bearing liabilities | | 3,884,628 |
| | $ | 1,948 |
| | 0.10 | % | | 3,470,257 |
| | $ | 3,558 |
| | 0.21 | % |
| Noninterest-bearing deposits | | 2,145,407 |
| | | | | | 1,545,749 |
| | | | |
| Other noninterest-bearing liabilities | | 80,485 |
| | | | | | 60,570 |
| | | | |
| Shareholders’ equity | | 1,076,189 |
| | | | | | 910,667 |
| | | | |
| Total liabilities & shareholders’ equity | | $ | 7,186,709 |
| | | | | | $ | 5,987,243 |
| | | | |
| Net interest income (tax equivalent) | | $ | 152,858 |
| | | | | | $ | 136,368 |
| | |
| Net interest margin (tax equivalent) | | 4.86 | % | | | | | | 5.13 | % |
| |
| (1) | Nonaccrual loans have been included in the tables as loans carrying a zero yield. Amortized net deferred loan fees and net unearned discounts on certain acquired loans were included in the interest income calculations. The amortization of net deferred loan fees was $2.1 million and $1.5 million for the six months ended June 30, 2014 and 2013, respectively. The accretion of net unearned discounts on certain acquired loans was $11.4 million and $11.3 million for the six months ended June 30, 2014 and 2013, respectively. |
| |
| (2) | Incremental accretion on acquired impaired loans is included in covered loan interest earned. The incremental accretion income on acquired impaired loans was $12.2 million and $16.2 million for the six months ended June 30, 2014 and 2013, respectively. |
| |
| (3) | Yields on a fully tax equivalent basis. The tax equivalent yield adjustment to interest earned on noncovered loans was $782 thousand and $246 thousand for the six months ended June 30, 2014 and 2013, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $3.0 million and $2.7 million for the six months ended June 30, 2014 and 2013, respectively. |
| |
| (4) | Federal Home Loan Bank advances includes a prepayment charge of $1.5 million during the six months ended June 30, 2013. As a result of the prepayment, the Company recorded $874 thousand in premium amortization, which partially offset the impact of the prepayment charge. |
Non-GAAP Financial Measures
The Company considers its operating net interest margin and operating efficiency ratios to be important measurements as they more closely reflect the ongoing operating performance of the Company. Despite the importance of the operating net interest margin and operating efficiency ratio to the Company, there are no standardized definitions for them and, as a result, the Company's calculations may not be comparable with other organizations. Also, there may be limits in the usefulness of these measure to investors. As a result, the Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.
The following tables reconcile the Company's calculation of the operating net interest margin and operating efficiency ratio:
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, | | Six Months Ended June 30, |
| | | 2014 | | 2013 | | 2014 | | 2013 |
| Operating net interest margin non-GAAP reconciliation: | | (dollars in thousands) |
| Net interest income (tax equivalent) (1) | | $ | 77,070 |
| | $ | 81,489 |
| | $ | 152,858 |
| | $ | 136,368 |
|
| Adjustments to arrive at operating net interest income (tax equivalent): | | | | | | | | |
| Incremental accretion income on FDIC acquired impaired loans | | (5,734 | ) | | (7,837 | ) | | (12,223 | ) | | (16,212 | ) |
| Incremental accretion income on other FDIC acquired loans | | (95 | ) | | (638 | ) | | (299 | ) | | (1,708 | ) |
| Incremental accretion income on other acquired loans | | (5,481 | ) | | (9,635 | ) | | (11,096 | ) | | (9,635 | ) |
| Premium amortization on acquired securities | | 1,554 |
| | 3,054 |
| | 3,179 |
| | 3,054 |
|
| Interest reversals on nonaccrual loans | | 392 |
| | 145 |
| | 680 |
| | 394 |
|
| Prepayment charges on FHLB advances | | — |
| | 1,548 |
| | — |
| | 1,548 |
|
| Operating net interest income (tax equivalent) (1) | | $ | 67,706 |
| | $ | 68,126 |
| | $ | 133,099 |
| | $ | 113,809 |
|
| Average interest earning assets | | $ | 6,339,102 |
| | $ | 6,284,281 |
| | $ | 6,292,157 |
| | $ | 5,316,009 |
|
| Net interest margin (tax equivalent) (1) | | 4.86 | % | | 5.19 | % | | 4.86 | % | | 5.13 | % |
| Operating net interest margin (tax equivalent) (1) | | 4.27 | % | | 4.34 | % | | 4.23 | % | | 4.28 | % |
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended June 30, | | Six Months Ended June 30, |
| | | 2014 | | 2013 | | 2014 | | 2013 |
| Operating efficiency ratio non-GAAP reconciliation: | | (dollars in thousands) |
| Noninterest expense (numerator A) | | $ | 57,764 |
| | $ | 64,504 |
| | $ | 115,150 |
| | $ | 102,553 |
|
| Adjustments to arrive at operating noninterest expense: | | | | | | | | |
| Acquisition-related expenses | | (672 | ) | | (9,234 | ) | | (1,638 | ) | | (9,957 | ) |
| Net benefit of operation of OREO and OPPO | | 117 |
| | 2,820 |
| | 95 |
| | 5,425 |
|
| FDIC clawback liability benefit (expense) | | 103 |
| | (199 | ) | | (101 | ) | | (430 | ) |
| Loss on asset disposals | | (431 | ) | | (8 | ) | | (450 | ) | | (33 | ) |
| State of Washington Business and Occupation ("B&O") taxes | | (972 | ) | | (1,120 | ) | | (2,047 | ) | | (2,455 | ) |
| Operating noninterest expense (numerator B) | | $ | 55,909 |
| | $ | 56,763 |
| | $ | 111,009 |
| | $ | 95,103 |
|
| | | | | | | | | |
| Net interest income (tax equivalent) (1) | | $ | 77,070 |
| | $ | 81,489 |
| | $ | 152,858 |
| | $ | 136,368 |
|
| Noninterest income | | 14,627 |
| | 6,808 |
| | 28,635 |
| | 8,466 |
|
| Bank owned life insurance tax equivalent adjustment | | 556 |
| | 556 |
| | 1,105 |
| | 941 |
|
| Total revenue (tax equivalent) (denominator A) | | $ | 92,253 |
| | $ | 88,853 |
| | $ | 182,598 |
| | $ | 145,775 |
|
| | | | | | | | | |
| Operating net interest income (tax equivalent) (1) | | $ | 67,706 |
| | $ | 68,126 |
| | $ | 133,099 |
| | $ | 113,809 |
|
| Adjustments to arrive at operating noninterest income (tax equivalent): | | | | | | | | |
| Investment securities gains, net | | (296 | ) | | (92 | ) | | (519 | ) | | (462 | ) |
| Gain on asset disposals | | (18 | ) | | (21 | ) | | (50 | ) | | (41 | ) |
| Change in FDIC loss-sharing asset | | 5,050 |
| | 13,137 |
| | 9,869 |
| | 23,620 |
|
| Operating noninterest income (tax equivalent) | | 19,919 |
| | 20,388 |
| | 39,040 |
| | 32,524 |
|
| Total operating revenue (tax equivalent) (denominator B) | | $ | 87,625 |
| | $ | 88,514 |
| | $ | 172,139 |
| | $ | 146,333 |
|
| Efficiency ratio (tax equivalent) (numerator A/denominator A) | | 62.61 | % | | 72.60 | % | | 63.06 | % | | 70.35 | % |
| Operating efficiency ratio (tax equivalent) (numerator B/denominator B) | | 63.80 | % | | 64.13 | % | | 64.49 | % | | 64.99 | % |
__________
(1) Tax-exempt interest income has been adjusted to a tax equivalent basis. The amount of such adjustment was an addition to net interest income of $1.9 million and $1.5 million for the three months ended June 30, 2014 and 2013, respectively, and $3.8 million and $2.9 million for the six months ended June 30, 2014 and 2013, respectively.
Non-GAAP Financial Measures - Continued
The Company considers its ratio of allowance for loan and lease losses to period-end noncovered loans, excluding acquired loans to be an important measurement it more closely reflects the ongoing allowance coverage and provides a ratio that is more comparable to other bank holding companies that have not had similar acquisitions. Despite the importance of this ratio to the Company, there are no standardized definitions for it and, as a result, the Company's calculations may not be comparable with other organizations. Also, there may be limits in the usefulness of this measure to investors. As a result, 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 loan and lease losses to period-end noncovered loans, excluding acquired loans:
|
| | | | | | | | |
| | | June 30, | | December 31, |
| | | 2014 | | 2013 |
| | | (dollars in thousands) |
| Allowance for loan and lease losses (numerator a) | | $ | 49,494 |
| | $ | 52,280 |
|
| Less: Allowance for loan and lease losses attributable to acquired loans | | (3,626 | ) | | (4,188 | ) |
| Equals: Allowance for noncovered loans, excluding acquired loans (numerator b) | | $ | 45,868 |
| | 48,092 |
|
| | | | | |
| Loans, excluding covered loans, net of unearned income (denominator a) | | $ | 4,452,674 |
| | $ | 4,219,451 |
|
| Less: Acquired loans, net of unearned income | | (1,031,516 | ) | | (1,181,542 | ) |
| Equals: Loans, excluding covered loans and acquired loans, net of unearned income (denominator b) | | $ | 3,421,158 |
| | $ | 3,037,909 |
|
| | | | | |
| Allowance for loan and lease losses to period-end noncovered loans (numerator a/denominator a) | | 1.11 | % | | 1.24 | % |
| Allowance for loan and lease losses to period-end noncovered loans, excluding acquired loans (numerator b/denominator b) | | 1.34 | % | | 1.58 | % |
