Exhibit 99.1
FOR IMMEDIATE RELEASE
January 29, 2015
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 Fourth Quarter and
Record Full Year 2014 Earnings
Highlights
| |
| • | Record loan production for both the quarter and year of $325 million and $1.04 billion, respectively |
| |
| • | Completed acquisition of Intermountain Community Bancorp |
| |
| • | Fourth quarter net income of $18.9 million with diluted earnings per share of $0.34, net of reductions in net income of $3.6 million, or $0.07 per diluted share, associated with acquisition-related expenses and FDIC acquired loan accounting and $1.8 million, or $0.03 per diluted share, in provision for loan losses related to the acquired Intermountain loan portfolio |
| |
| • | Record full year 2014 net income of $81.6 million with diluted earnings per share of $1.52 compared to net income of $60.0 million and diluted earnings per share of $1.21 for the prior year |
| |
| • | Forbes ranks Columbia Bank among America’s top 20 best banks |
TACOMA, Washington, January 29, 2015 -- 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 fourth quarter 2014 earnings, “We continued to build on the momentum created by our recent acquisitions and the outstanding efforts of our bankers whose activities resulted in record-setting full year earnings and loan production for the quarter and year.” Ms. Dressel continued, “Our entire team also worked hard preparing for and closing the Intermountain Community Bancorp acquisition which we announced during the third quarter.”
Significant Influences on the Quarter Ended December 31, 2014
Our reported net income for the current quarter was impacted by $5.4 million, or $0.10 per diluted share, in acquisition and accounting related items. Specifically, on a pre-tax basis, these items consisted of $4.6 million in acquisition-related expenses, $948 thousand of impact from FDIC loan accounting, and $2.8 million in provision for loan and lease losses related to the establishment of an allowance for loans acquired in the Intermountain transaction.
As the Intermountain transaction also impacted comparability of our balance sheet to prior periods, the table below is provided to summarize the amounts recognized as of the transaction date for each major class of assets acquired and liabilities assumed:
|
| | | | |
| | | November 1, 2014 |
| | | (in thousands) |
| | | |
| Purchase price as of November 1, 2014 | | $ | 131,935 |
|
| Recognized amounts of identifiable assets acquired and (liabilities assumed), at fair value: | | |
| Cash and cash equivalents | | $ | 47,283 |
|
| Investment securities | | 299,458 |
|
| Federal Home Loan Bank stock | | 2,124 |
|
| Acquired loans | | 502,595 |
|
| Interest receivable | | 4,656 |
|
| Premises and equipment | | 20,696 |
|
| Other real estate owned | | 2,752 |
|
| Core deposit intangible | | 10,900 |
|
| Other assets | | 35,353 |
|
| Deposits | | (736,795 | ) |
| Other borrowings | | (22,904 | ) |
| Securities sold under agreements to repurchase | | (59,043 | ) |
| Other liabilities | | (13,725 | ) |
| Total fair value of identifiable net assets | | 93,350 |
|
| Goodwill | | $ | 38,585 |
|
Balance Sheet
Loans were $5.45 billion at December 31, 2014, up $622.4 million, or 13% from $4.82 billion at September 30, 2014. The increase in loans was driven by the acquisition of Intermountain as well as strong organic loan growth of approximately $120 million during the current quarter. Securities were $2.13 billion at December 31, 2014, an increase of $488.6 million, or 30% from $1.64 billion at September 30, 2014, again, primarily due to the acquisition of Intermountain. Compared to the prior year end period, loans increased $928.1 million, or 21%, during 2014. The growth during the year was comprised of $502.6 million acquired with Intermountain and $425.5 million of organic growth.
Total deposits at December 31, 2014 were $6.92 billion, an increase of $680.3 million, or 11% from $6.24 billion at September 30, 2014 due to the acquisition of Intermountain. Core deposits comprised 96% of total deposits and were $6.62 billion at December 31, 2014. The average rate on interest bearing deposits for the quarter was 0.08% compared to 0.07% for the third quarter of 2014. The slight uptick is attributed to the deposits obtained in the Intermountain acquisition.
Asset Quality
At December 31, 2014, nonperforming assets to total assets were 0.62% or $53.6 million, compared to 0.67%, or $49.9 million, at September 30, 2014. The $3.7 million increase was due to $5.2 million in nonperforming assets established through the Intermountain transaction, partially offset by a $1.5 million decrease in pre-acquisition nonperforming assets.
The following table sets forth, at the dates indicated, information regarding nonaccrual loans and total nonperforming assets:
|
| | | | | | | | | | | | |
| | | December 31, 2014 | | September 30, 2014 (1) | | December 31, 2013 (1) |
| | | (in thousands) |
| Nonaccrual loans: | | | | | | |
| Commercial business | | $ | 16,799 |
| | $ | 11,490 |
| | $ | 12,609 |
|
| Real estate: | | | | | | |
| One-to-four family residential | | 2,822 |
| | 3,513 |
| | 2,667 |
|
| Commercial and multifamily residential | | 7,847 |
| | 8,468 |
| | 11,043 |
|
| Total real estate | | 10,669 |
| | 11,981 |
| | 13,710 |
|
| Real estate construction: | | | | | | |
| One-to-four family residential | | 465 |
| | 1,031 |
| | 3,705 |
|
| Total real estate construction | | 945 |
| | 1,031 |
| | 3,705 |
|
| Consumer | | 2,939 |
| | 3,496 |
| | 3,991 |
|
| Total nonaccrual loans | | 31,352 |
| | 27,998 |
| | 34,015 |
|
| Other real estate owned and other personal property owned (1) | | 22,225 |
| | 21,941 |
| | 36,037 |
|
| Total nonperforming assets | | $ | 53,577 |
| | $ | 49,939 |
| | $ | 70,052 |
|
__________
(1) Reclassified to conform to the current period’s presentation. The reclassification was limited to including historically reported covered OREO and OPPO in the line item for “Other real estate owned and personal property owned”.
The following table provides an analysis of the Company's allowance for loan and lease losses ("ALLL") at the dates and for the periods indicated:
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended December 31, | | Twelve Months Ended December 31, |
| | | 2014 | | 2013 (1) | | 2014 | | 2013 (1) |
| | | (in thousands) |
| Beginning balance | | $ | 67,871 |
| | $ | 78,581 |
| | $ | 72,454 |
| | $ | 82,300 |
|
| Charge-offs: | | | | | | | | |
| Commercial business | | (991 | ) | | (1,912 | ) | | (4,289 | ) | | (4,942 | ) |
| One-to-four family residential real estate | | (23 | ) | | (37 | ) | | (230 | ) | | (228 | ) |
| Commercial and multifamily residential real estate | | — |
| | (489 | ) | | (2,993 | ) | | (2,543 | ) |
| One-to-four family residential real estate construction | | — |
| | — |
| | — |
| | (133 | ) |
| Consumer | | (518 | ) | | (980 | ) | | (2,774 | ) | | (2,242 | ) |
| Purchased credit impaired (1) | | (3,086 | ) | | (3,822 | ) | | (14,436 | ) | | (13,852 | ) |
| Total charge-offs | | (4,618 | ) | | (7,240 | ) | | (24,722 | ) | | (23,940 | ) |
| Recoveries: | | | | | | | | |
| Commercial business | | 449 |
| | 1,124 |
| | 3,007 |
| | 2,443 |
|
| One-to-four family residential real estate | | 56 |
| | 90 |
| | 159 |
| | 270 |
|
| Commercial and multifamily residential real estate | | 224 |
| | 524 |
| | 940 |
| | 1,033 |
|
| One-to-four family residential real estate construction | | 1,426 |
| | 16 |
| | 1,930 |
| | 2,665 |
|
| Consumer | | 422 |
| | 200 |
| | 1,353 |
| | 553 |
|
| Purchased credit impaired (1) | | 2,031 |
| | 2,841 |
| | 7,721 |
| | 7,231 |
|
| Total recoveries | | 4,608 |
| | 4,795 |
| | 15,110 |
| | 14,195 |
|
| Net charge-offs | | (10 | ) | | (2,445 | ) | | (9,612 | ) | | (9,745 | ) |
| Provision (recapture) for loan and lease losses (1) | | 1,708 |
| | (3,682 | ) | | 6,727 |
| | (101 | ) |
| Ending balance | | $ | 69,569 |
| | $ | 72,454 |
| | $ | 69,569 |
| | $ | 72,454 |
|
__________
(1) Reclassified to conform to the current period’s presentation. The reclassification was limited to including charge-off, recovery, and provision activity related to the purchased credit impaired loan portfolio.
The allowance for loan losses to period end loans was 1.28% at December 31, 2014 compared to 1.41% at September 30, 2014. Excluding acquired loans, the allowance at December 31, 2014 represented 1.21% of non acquired loans, compared to 1.27% of non acquired loans at September 30, 2014. The allowance to loans, excluding acquired loans, is a non-GAAP financial measure. See the section titled “Non-GAAP Financial Measures” on the last pages of this earnings release for the reconciliation of the allowance for loan losses to period end 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 fourth quarter of 2014, Columbia recorded a provision for loan and lease losses of $1.7 million. For the comparable quarter last year, the Company had a provision recapture of $3.7 million. The provision for loan and lease losses recorded during the current quarter was primarily driven by establishing an allowance for loans acquired in the Intermountain transaction.
Net Interest Margin (“NIM”)
Columbia’s net interest margin (tax equivalent) of 4.50% for the fourth quarter of 2014 was down 35 basis points from the third quarter of 2014 margin of 4.85%. The decrease was due to the combination of the acquisition of Intermountain, the premium amortization adjustment on mortgage-backed securities recorded in the third quarter of 2014 and continued repricing within the loan portfolio. Compared to the fourth quarter of 2013, Columbia’s net interest margin decreased 53 basis points from 5.03%, due, in part, to lower incremental accretion on acquired loans, which was $13.3 million for the prior year quarter, and only $8.8 million for the current quarter as well as the previously mentioned loan repricing.
Columbia’s operating net interest margin (tax equivalent)(1) decreased to 4.17% for the fourth quarter of 2014, compared to 4.22% for the third quarter of 2014. The decrease was primarily due to a combination of a continuing low rate environment and the acquisition of Intermountain.
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 | | Twelve Months Ended |
| | | December 31, 2014 | | December 31, 2013 | | December 31, 2014 | | December 31, 2013 |
| | | (dollars in thousands) |
| Incremental accretion income due to: | | | | | | | | |
| FDIC purchased credit impaired loans | | $ | 3,796 |
| | $ | 6,540 |
| | $ | 20,224 |
| | $ | 29,815 |
|
| Other FDIC acquired loans | | 10 |
| | 237 |
| | 484 |
| | 2,211 |
|
| Other acquired loans | | 4,957 |
| | 6,540 |
| | 21,093 |
| | 26,200 |
|
| Incremental accretion income | | $ | 8,763 |
| | $ | 13,317 |
| | $ | 41,801 |
| | $ | 58,226 |
|
| | | | | | | | | |
| Net interest margin (tax equivalent) | | 4.50 | % | | 5.03 | % | | 4.76 | % | | 5.16 | % |
| Operating net interest margin (tax equivalent) (1) | | 4.17 | % | | 4.31 | % | | 4.21 | % | | 4.32 | % |
__________
(1) Operating net interest margin (tax equivalent) is a non-GAAP financial measure. See the section titled “Non-GAAP Financial Measures” on the last pages of this earnings release for the reconciliation of operating net interest margin (tax equivalent) 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 | | Twelve Months Ended |
| | | December 31, 2014 | | December 31, 2013 | | December 31, 2014 | | December 31, 2013 |
| | | (in thousands) |
| Incremental accretion income on FDIC purchased credit impaired loans | | $ | 3,796 |
| | $ | 6,540 |
| | $ | 20,224 |
| | $ | 29,815 |
|
| Incremental accretion income on other FDIC acquired loans | | 10 |
| | 237 |
| | 484 |
| | 2,211 |
|
| Recapture (provision) for losses on FDIC purchased credit impaired loans | | 542 |
| | 1,582 |
| | (2,877 | ) | | 3,261 |
|
| Change in FDIC loss-sharing asset | | (5,304 | ) | | (9,571 | ) | | (19,989 | ) | | (45,017 | ) |
| FDIC clawback liability benefit (expense) | | 8 |
| | (36 | ) | | (294 | ) | | (278 | ) |
| Pre-tax earnings impact | | $ | (948 | ) | | $ | (1,248 | ) | | $ | (2,452 | ) | | $ | (10,008 | ) |
The incremental accretion income on FDIC purchased credit impaired loans represents the amount of income recorded 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 December 31, 2014, the accretable yield on purchased credit impaired loans was $73.8 million. Accretable yield is subject to change based upon expected future loan cash flows, which are remeasured by Columbia on a quarterly basis.
The $5.3 million change in the FDIC loss-sharing asset in the current quarter negatively affected noninterest income and consisted primarily of $5.1 million in amortization expense. Additional details of the components of the change in the FDIC loss-sharing asset are provided in tabular format on the following page in the section titled “Noninterest Income”. With the expiration of our two most significant FDIC loss-sharing agreements on March 31, 2015, the amortization of our loss-sharing asset will continue to decline.
Fourth Quarter 2014 Results
Net Interest Income
Net interest income for the fourth quarter of 2014 was $78.8 million, an increase of $2.5 million compared to the third quarter of 2014. This increase was primarily due to the acquired loans and securities from the Intermountain transaction. Compared to the fourth quarter of 2013, net interest income increased by $1.6 million from $77.2 million. The increase from the prior year period is due to the acquired loans and securities from the acquisition of Intermountain and organic loan growth, tempered by the decline in incremental accretion income. For additional information regarding net interest income, see “Average Balances and Rates” tables.
Noninterest Income
Total noninterest income was $15.2 million for the fourth quarter of 2014, a decrease of $745 thousand compared to $15.9 million for the third quarter of 2014. This decrease was due to the gain of $565 thousand recorded during the third quarter related to the deposit premium realized on the sale of three branches to Sound Community Bancorp coupled with an additional $488 thousand in expense associated with the change in FDIC loss-sharing asset during the fourth quarter.
Compared to the fourth quarter of 2013, noninterest income increased by $4.6 million. The increase from the prior year period was primarily due to the expense recorded for the change in FDIC loss-sharing asset, which was $4.3 million less in the current quarter compared to the fourth quarter of 2013.
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 periods indicated:
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Twelve Months Ended |
| | | December 31, | | December 31, |
| | | 2014 | | 2013 | | 2014 | | 2013 |
| | | (in thousands) |
| Adjustments reflected in income | | | | | | | | |
| Amortization, net | | (5,071 | ) | | (7,259 | ) | | (21,279 | ) | | (36,729 | ) |
| Loan impairment (recapture) | | (434 | ) | | (1,265 | ) | | 2,301 |
| | (2,609 | ) |
| Sale of other real estate | | (75 | ) | | (1,101 | ) | | (2,179 | ) | | (6,177 | ) |
| Write-downs of other real estate | | 206 |
| | (10 | ) | | 1,065 |
| | 364 |
|
| Other | | 70 |
| | 64 |
| | 103 |
| | 132 |
|
| Change in FDIC loss-sharing asset | | $ | (5,304 | ) | | $ | (9,571 | ) | | $ | (19,989 | ) | | $ | (45,019 | ) |
Noninterest Expense
Total noninterest expense for the fourth quarter of 2014 was $64.2 million, an increase of $535 thousand, or 1% from $63.6 million for the same quarter in 2013. The small increase from the prior year period was due to additional ongoing noninterest expense resulting from the Intermountain acquisition and increased cost of OREO. These increases were partially offset by lower acquisition-related expenses of $4.6 million for the current quarter compared to $7.9 million for the prior year period. Of the $4.6 million in acquisition-related expenses recorded during the current quarter, $4.5 million related to the recently completed Intermountain acquisition and the remaining $119 thousand related to the West Coast acquisition. Compared to the third quarter of 2014, noninterest expense increased $4.2 million, due to the $1.3 million increase in acquisition-related expenses, an increase in cost of OREO as well as additional ongoing expense resulting from the Intermountain acquisition.
Organizational Update
Ms. Dressel commented, “We feel very fortunate to have added such a qualified team of bankers to the Columbia Bank family as the result of our acquisition of Intermountain. Throughout our footprint, our bankers remain committed to retaining and developing full service relationships with customers. We continue to have opportunity for growth in all of our markets. In particular, the Boise market is one of the areas on which we will concentrate in 2015.”
Forbes Ranking 2015
“We are gratified to rank in the top 20 on the annual Forbes list of best banks in the country, based on safety and soundness measures,” Ms. Dressel said. “Columbia ranked #17, a significant jump from our previous position of #31 a year ago. In addition, we ranked as the best in Washington State, and second in the Pacific Northwest for the fourth year in a row.”
Conference Call Information
Columbia’s management will discuss the fourth quarter 2014 results on a conference call scheduled for Thursday, January 29, 2015 at 1:00 p.m. PST (4:00 pm EST). Interested parties may listen to this discussion by calling 1-866-378-3802; Conference ID code #62154937.
A conference call replay will be available from approximately 4:00 p.m. PST on January 29, 2015 through midnight PST on February 5, 2015. The conference call replay can be accessed by dialing 1-855-859-2056 and entering Conference ID code #62154937.
Annual Meeting of Shareholders
Columbia Banking System’s Annual Meeting of Shareholders will be held at 1:00 PDT on April 22, 2015, at the William W. Philip Hall at the University of Washington Tacoma., 1900 Commerce Street, Tacoma, Washington 98402. The Hall is named in honor of William W. “Bill” Philip, who had a seminal role in establishing UW Tacoma, and was a co-founder of Columbia Bank.
Directions and parking information are available at www.tacoma.washington.edu/conference.
About Columbia
Headquartered in Tacoma, Washington, Columbia Banking System, Inc. is the holding company of Columbia Bank, a Washington state-chartered full-service commercial bank, with 78 branches in Washington, 60 in Oregon, and 16 in Idaho. For the eighth consecutive year, the bank was named in 2014 as one of Puget Sound Business Journal’s “Washington’s Best Workplaces.” Columbia ranked in the top 20 on the 2015 Forbes list of best banks in the country, as well as ranking the best in Washington and second in the Pacific Northwest for the fourth year in a row.
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 | | Twelve Months Ended |
| Unaudited | | December 31, | | December 31, |
| | | 2014 | | 2013 (1) | | 2014 | | 2013 (1) |
| Earnings | | (dollars in thousands except per share amounts) |
| Net interest income | | $ | 78,764 |
| | $ | 77,209 |
| | $ | 304,048 |
| | $ | 291,095 |
|
| Provision (recapture) for loan and lease losses (1) | | $ | 1,708 |
| | $ | (3,682 | ) | | $ | 6,727 |
| | $ | (101 | ) |
| Noninterest income | | $ | 15,185 |
| | $ | 10,612 |
| | $ | 59,750 |
| | $ | 26,700 |
|
| Noninterest expense | | $ | 64,154 |
| | $ | 63,619 |
| | $ | 239,286 |
| | $ | 230,886 |
|
| Acquisition-related expense (included in noninterest expense) | | $ | 4,556 |
| | $ | 7,910 |
| | $ | 9,432 |
| | $ | 25,488 |
|
| Net income | | $ | 18,920 |
| | $ | 19,973 |
| | $ | 81,574 |
| | $ | 60,016 |
|
| Per Common Share | | | | | | | | |
| Earnings (basic) | | $ | 0.34 |
| | $ | 0.39 |
| | $ | 1.53 |
| | $ | 1.24 |
|
| Earnings (diluted) | | $ | 0.34 |
| | $ | 0.38 |
| | $ | 1.52 |
| | $ | 1.21 |
|
| Book value | | $ | 21.34 |
| | $ | 20.50 |
| | $ | 21.34 |
| | $ | 20.50 |
|
| Averages | | | | | | | | |
| Total assets | | $ | 8,152,463 |
| | $ | 7,192,084 |
| | $ | 7,468,091 |
| | $ | 6,558,517 |
|
| Interest-earning assets | | $ | 7,199,443 |
| | $ | 6,269,894 |
| | $ | 6,561,047 |
| | $ | 5,754,543 |
|
| Loans | | $ | 5,168,761 |
| | $ | 4,504,587 |
| | $ | 4,782,369 |
| | $ | 4,140,826 |
|
| Securities, including Federal Home Loan Bank stock | | $ | 1,918,690 |
| | $ | 1,662,720 |
| | $ | 1,708,575 |
| | $ | 1,474,744 |
|
| Deposits | | $ | 6,759,259 |
| | $ | 6,003,657 |
| | $ | 6,187,342 |
| | $ | 5,420,577 |
|
| Interest-bearing deposits | | $ | 4,174,459 |
| | $ | 3,839,060 |
| | $ | 3,901,524 |
| | $ | 3,596,343 |
|
| Interest-bearing liabilities | | $ | 4,282,273 |
| | $ | 3,886,126 |
| | $ | 3,986,017 |
| | $ | 3,683,145 |
|
| Noninterest-bearing deposits | | $ | 2,584,800 |
| | $ | 2,164,597 |
| | $ | 2,285,818 |
| | $ | 1,824,234 |
|
| Shareholders' equity | | $ | 1,185,346 |
| | $ | 1,056,694 |
| | $ | 1,109,581 |
| | $ | 979,099 |
|
| Financial Ratios | | | | | | | | |
| Return on average assets | | 0.93 | % | | 1.11 | % | | 1.09 | % | | 0.92 | % |
| Return on average common equity | | 6.39 | % | | 7.57 | % | | 7.36 | % | | 6.14 | % |
| Average equity to average assets | | 14.54 | % | | 14.69 | % | | 14.86 | % | | 14.93 | % |
| Net interest margin (tax equivalent) | | 4.50 | % | | 5.03 | % | | 4.76 | % | | 5.16 | % |
| Efficiency ratio (tax equivalent) (2) | | 66.30 | % | | 70.69 | % | | 63.97 | % | | 70.87 | % |
| Operating efficiency ratio (tax equivalent) (3) | | 60.82 | % | | 64.43 | % | | 63.33 | % | | 64.85 | % |
| | | | | | | | | |
| | | December 31, | | | | |
| Period end | | 2014 | | 2013 (1) | | | | |
| Total assets | | $ | 8,584,325 |
| | $ | 7,161,582 |
| | | | |
| Loans, net of unearned income (1) | | $ | 5,445,378 |
| | $ | 4,517,296 |
| | | | |
| Allowance for loan and lease losses (1) | | $ | 69,569 |
| | $ | 72,454 |
| | | | |
| Securities, including Federal Home Loan Bank stock | | $ | 2,131,622 |
| | $ | 1,696,640 |
| | | | |
| Deposits | | $ | 6,924,722 |
| | $ | 5,959,475 |
| | | | |
| Core deposits | | $ | 6,619,944 |
| | $ | 5,696,357 |
| | | | |
| Shareholders' equity | | $ | 1,228,175 |
| | $ | 1,053,249 |
| | | | |
| Nonperforming assets | | | | | | | | |
| Nonaccrual loans | | $ | 31,352 |
| | $ | 34,015 |
| | | | |
| Other real estate owned and other personal property owned (1) | | 22,225 |
| | 36,037 |
| | | | |
| Total nonperforming assets (1) | | $ | 53,577 |
| | $ | 70,052 |
| | | | |
| Nonperforming loans to period-end loans (4) | | 0.58 | % | | 0.75 | % | | | | |
| Nonperforming assets to period-end assets (4) | | 0.62 | % | | 1.02 | % | | | | |
| Allowance for loan and lease losses to period-end loans (4) | | 1.28 | % | | 1.60 | % | | | | |
| Net loan charge-offs (1) | | $ | 9,612 |
| (5) | $ | 9,745 |
| (6) | | | |
| | | | | | | | | |
| (1) Adjusted to conform to current period presentation. The adjustment was limited to including historically disclosed “covered” amounts into the respective rows as these amounts are no longer disclosed separately in the consolidated balance sheets or consolidated statements of income. |
| (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) Nonperforming asset ratios have been adjusted as a result of the adjustments noted in (1) above to no longer calculate ratios exclusive of “covered” amounts. |
| (5) For the twelve months ended December 31, 2014. | | | | | | | | |
| (6) For the twelve months ended December 31, 2013. | | | | | | | | |
|
| | | | | | | | | | | | | | |
| FINANCIAL STATISTICS | | | | | | | | |
| Columbia Banking System, Inc. | | | | | | | | |
| Unaudited | | December 31, | | December 31, |
| | | 2014 | | 2013 |
| Loan Portfolio Composition | | (dollars in thousands) |
| Commercial business | | $ | 2,119,565 |
| | 38.9 | % | | $ | 1,561,782 |
| | 34.6 | % |
| Real estate: | | | | | | | | |
| One-to-four family residential | | 175,571 |
| | 3.2 | % | | 108,317 |
| | 2.4 | % |
| Commercial and multifamily residential | | 2,363,541 |
| | 43.5 | % | | 2,080,075 |
| | 46.0 | % |
| Total real estate | | 2,539,112 |
| | 46.7 | % | | 2,188,392 |
| | 48.4 | % |
| Real estate construction: | | | | | | | | |
| One-to-four family residential | | 116,866 |
| | 2.1 | % | | 54,155 |
| | 1.2 | % |
| Commercial and multifamily residential | | 134,443 |
| | 2.5 | % | | 126,390 |
| | 2.8 | % |
| Total real estate construction | | 251,309 |
| | 4.6 | % | | 180,545 |
| | 4.0 | % |
| Consumer | | 364,182 |
| | 6.7 | % | | 357,014 |
| | 7.9 | % |
| Purchased credit impaired | | 230,584 |
| | 4.2 | % | | 297,845 |
| | 6.6 | % |
| Subtotal loans | | 5,504,752 |
| | 101.1 | % | | 4,585,578 |
| | 101.5 | % |
| Less: Net unearned income | | (59,374 | ) | | (1.1 | )% | | (68,282 | ) | | (1.5 | )% |
| Loans, net of unearned income | | 5,445,378 |
| | 100.0 | % | | 4,517,296 |
| | 100.0 | % |
| Less: Allowance for loan and lease losses | | (69,569 | ) | | | | (52,280 | ) | | |
| Total loans, net | | 5,375,809 |
| | | | 4,465,016 |
| | |
| Loans held for sale | | $ | 1,116 |
| | | | $ | 735 |
| | |
| | | | | | | | | |
| | | December 31, | | December 31, |
| | | 2014 | | 2013 |
| Deposit Composition | | (dollars in thousands) |
| Core deposits: | | | | | | | | |
| Demand and other non-interest bearing | | $ | 2,651,373 |
| | 38.3 | % | | $ | 2,171,703 |
| | 36.4 | % |
| Interest bearing demand | | 1,304,258 |
| | 18.8 | % | | 1,170,006 |
| | 19.6 | % |
| Money market | | 1,760,331 |
| | 25.4 | % | | 1,569,261 |
| | 26.3 | % |
| Savings | | 615,721 |
| | 8.9 | % | | 496,444 |
| | 8.3 | % |
| Certificates of deposit less than $100,000 | | 288,261 |
| | 4.2 | % | | 288,943 |
| | 4.9 | % |
| Total core deposits | | 6,619,944 |
| | 95.6 | % | | 5,696,357 |
| | 95.5 | % |
| | | | | | | | | |
| Certificates of deposit greater than $100,000 | | 202,014 |
| | 2.9 | % | | 201,498 |
| | 3.5 | % |
| Certificates of deposit insured by CDARS® | | 18,429 |
| | 0.3 | % | | 19,488 |
| | 0.3 | % |
| Brokered money market accounts | | 83,402 |
| | 1.2 | % | | 41,765 |
| | 0.7 | % |
| Subtotal | | 6,923,789 |
| | 100.0 | % | | 5,959,108 |
| | 100.0 | % |
| Premium resulting from acquisition date fair value adjustment | | 933 |
| | | | 367 |
| | |
| Total deposits | | $ | 6,924,722 |
| | | | $ | 5,959,475 |
| | |
|
| | | | | | | | | | | | | | | | | | | | |
| QUARTERLY FINANCIAL STATISTICS | | | | | | | | | | |
| Columbia Banking System, Inc. | | Three Months Ended |
| Unaudited | | December 31, | | September 30, | | June 30, | | March 31, | | December 31, |
| | | 2014 | | 2014 (1) | | 2014 (1) | | 2014 (1) | | 2013 (1) |
| | | (dollars in thousands except per share) |
| Earnings | | |
| Net interest income | | $ | 78,764 |
| | $ | 76,220 |
| | $ | 75,124 |
| | $ | 73,940 |
| | $ | 77,209 |
|
| Provision (recapture) for loan and lease losses (1) | | $ | 1,708 |
| | $ | 980 |
| | $ | 2,117 |
| | $ | 1,922 |
| | $ | (3,682 | ) |
| Noninterest income | | $ | 15,185 |
| | $ | 15,930 |
| | $ | 14,627 |
| | $ | 14,008 |
| | $ | 10,612 |
|
| Noninterest expense | | $ | 64,154 |
| | $ | 59,982 |
| | $ | 57,764 |
| | $ | 57,386 |
| | $ | 63,619 |
|
Acquisition-related expense (included in noninterest expense) | | $ | 4,556 |
| | $ | 3,238 |
| | $ | 672 |
| | $ | 966 |
| | $ | 7,910 |
|
| Net income | | $ | 18,920 |
| | $ | 21,583 |
| | $ | 21,227 |
| | $ | 19,844 |
| | $ | 19,973 |
|
| Per Common Share | | | | | | | | | | |
| Earnings (basic) | | $ | 0.34 |
| | $ | 0.41 |
| | $ | 0.40 |
| | $ | 0.38 |
| | $ | 0.39 |
|
| Earnings (diluted) | | $ | 0.34 |
| | $ | 0.41 |
| | $ | 0.40 |
| | $ | 0.37 |
| | $ | 0.38 |
|
| Book value | | $ | 21.34 |
| | $ | 20.78 |
| | $ | 20.71 |
| | $ | 20.39 |
| | $ | 20.50 |
|
| Averages | | | | | | | | | | |
| Total assets | | $ | 8,152,463 |
| | $ | 7,337,306 |
| | $ | 7,229,187 |
| | $ | 7,143,759 |
| | $ | 7,192,084 |
|
| Interest-earning assets | | $ | 7,199,443 |
| | $ | 6,451,660 |
| | $ | 6,339,102 |
| | $ | 6,244,692 |
| | $ | 6,269,894 |
|
| Loans | | $ | 5,168,761 |
| | $ | 4,770,443 |
| | $ | 4,646,356 |
| | $ | 4,537,107 |
| | $ | 4,504,587 |
|
| Securities, including Federal Home Loan Bank stock | | $ | 1,918,690 |
| | $ | 1,585,996 |
| | $ | 1,645,993 |
| | $ | 1,682,370 |
| | $ | 1,662,720 |
|
| Deposits | | $ | 6,759,259 |
| | $ | 6,110,809 |
| | $ | 5,968,881 |
| | $ | 5,901,838 |
| | $ | 6,003,657 |
|
| Interest-bearing deposits | | $ | 4,174,459 |
| | $ | 3,847,730 |
| | $ | 3,807,710 |
| | $ | 3,772,370 |
| | $ | 3,839,060 |
|
| Interest-bearing liabilities | | $ | 4,282,273 |
| | $ | 3,889,233 |
| | $ | 3,901,016 |
| | $ | 3,868,060 |
| | $ | 3,886,126 |
|
| Noninterest-bearing deposits | | $ | 2,584,800 |
| | $ | 2,263,079 |
| | $ | 2,161,171 |
| | $ | 2,129,468 |
| | $ | 2,164,597 |
|
| Shareholders' equity | | $ | 1,185,346 |
| | $ | 1,099,512 |
| | $ | 1,084,927 |
| | $ | 1,067,353 |
| | $ | 1,056,694 |
|
| Financial Ratios | | | | | | | | | | |
| Return on average assets | | 0.93 | % | | 1.18 | % | | 1.17 | % | | 1.11 | % | | 1.11 | % |
| Return on average common equity | | 6.39 | % | | 7.86 | % | | 7.83 | % | | 7.45 | % | | 7.57 | % |
| Average equity to average assets | | 14.54 | % | | 14.99 | % | | 15.01 | % | | 14.94 | % | | 14.69 | % |
| Net interest margin (tax equivalent) | | 4.50 | % | | 4.85 | % | | 4.86 | % | | 4.85 | % | | 5.03 | % |
| Period end | | | | | | | | | | |
| Total assets | | $ | 8,584,325 |
| | $ | 7,466,081 |
| | $ | 7,297,458 |
| | $ | 7,237,053 |
| | $ | 7,161,582 |
|
| Loans, net of unearned income (1) | | $ | 5,445,378 |
| | $ | 4,823,022 |
| | $ | 4,714,575 |
| | $ | 4,577,363 |
| | $ | 4,517,296 |
|
| Allowance for loan and lease losses (1) | | $ | 69,569 |
| | $ | 67,871 |
| | $ | 69,295 |
| | $ | 70,571 |
| | $ | 72,454 |
|
| Securities, including Federal Home Loan Bank stock | | $ | 2,131,622 |
| | $ | 1,643,003 |
| | $ | 1,621,929 |
| | $ | 1,671,594 |
| | $ | 1,696,640 |
|
| Deposits | | $ | 6,924,722 |
| | $ | 6,244,401 |
| | $ | 5,985,069 |
| | $ | 6,044,416 |
| | $ | 5,959,475 |
|
| Core deposits | | $ | 6,619,944 |
| | $ | 5,990,118 |
| | $ | 5,735,047 |
| | $ | 5,768,434 |
| | $ | 5,696,357 |
|
| Shareholders' equity | | $ | 1,228,175 |
| | $ | 1,096,211 |
| | $ | 1,092,151 |
| | $ | 1,074,491 |
| | $ | 1,053,249 |
|
| Nonperforming, assets | | | | | | | | | | |
| Nonaccrual loans | | $ | 31,352 |
| | $ | 27,998 |
| | $ | 30,613 |
| | $ | 36,397 |
| | $ | 34,015 |
|
| Other real estate owned and other personal property owned (1) | | 22,225 |
| | 21,941 |
| | 28,254 |
| | 30,662 |
| | 36,037 |
|
| Total nonperforming assets (1) | | $ | 53,577 |
| | $ | 49,939 |
| | $ | 58,867 |
| | $ | 67,059 |
| | $ | 70,052 |
|
| Nonperforming loans to period-end loans (2) | | 0.58 | % | | 0.58 | % | | 0.65 | % | | 0.80 | % | | 0.75 | % |
| Nonperforming assets to period-end assets (2) | | 0.62 | % | | 0.67 | % | | 0.81 | % | | 0.93 | % | | 0.98 | % |
| Allowance for loan and lease losses to period-end loans (2) | | 1.28 | % | | 1.41 | % | | 1.47 | % | | 1.54 | % | | 1.60 | % |
| Net loan charge-offs (1) | | $ | 10 |
| | $ | 2,404 |
| | $ | 3,393 |
| | $ | 3,805 |
| | $ | 2,445 |
|
| | | | | | | | | | | |
| (1) Adjusted to conform to current period presentation. The adjustment was limited to including historically disclosed “covered” amounts into the respective rows as these amounts are no longer disclosed separately in the consolidated balance sheets or consolidated statements of income. |
| (2) Nonperforming asset ratios have been adjusted as a result of the adjustments noted in (1) above to no longer calculate ratios exclusive of “covered” amounts. |
|
| | | | | | | | | | | | | | | | |
| CONSOLIDATED STATEMENTS OF INCOME | | | | | | |
| Columbia Banking System, Inc. | | Three Months Ended | | Twelve Months Ended |
| Unaudited | | December 31, | | December 31, |
| | | 2014 | | 2013 (1) | | 2014 | | 2013 (1) |
| | | (in thousands except per share) |
| Interest Income | | | | | | | | |
| Loans | | $ | 69,831 |
| | $ | 69,294 |
| | $ | 268,279 |
| | $ | 266,284 |
|
| Taxable securities | | 7,075 |
| | 6,400 |
| | 28,754 |
| | 20,459 |
|
| Tax-exempt securities | | 2,917 |
| | 2,548 |
| | 10,830 |
| | 9,837 |
|
| Deposits in banks | | 74 |
| | 65 |
| | 179 |
| | 355 |
|
| Total interest income | | 79,897 |
| | 78,307 |
| | 308,042 |
| | 296,935 |
|
| Interest Expense | | | | | | | | |
| Deposits | | 811 |
| | 890 |
| | 3,005 |
| | 3,962 |
|
| Federal Home Loan Bank advances | | 87 |
| | 89 |
| | 396 |
| | (404 | ) |
| Prepayment charge on Federal Home Loan Bank advances | | — |
| | — |
| | — |
| | 1,548 |
|
| Other borrowings | | 235 |
| | 119 |
| | 593 |
| | 734 |
|
| Total interest expense | | 1,133 |
| | 1,098 |
| | 3,994 |
| | 5,840 |
|
| Net Interest Income | | 78,764 |
| | 77,209 |
| | 304,048 |
| | 291,095 |
|
| Provision (recapture) for loan and lease losses (1) | | 1,708 |
| | (3,682 | ) | | 6,727 |
| | (101 | ) |
| Net interest income after provision (recapture) for loan and lease losses | | 77,056 |
| | 80,891 |
| | 297,321 |
| | 291,196 |
|
| Noninterest Income | | | | | | | | |
| Service charges and other fees | | 14,575 |
| | 13,840 |
| | 55,555 |
| | 48,351 |
|
| Merchant services fees | | 1,961 |
| | 2,878 |
| | 7,975 |
| | 8,812 |
|
| Investment securities gains, net | | — |
| | — |
| | 552 |
| | 462 |
|
| Bank owned life insurance | | 926 |
| | 960 |
| | 3,823 |
| | 3,570 |
|
| Change in FDIC loss-sharing asset | | (5,304 | ) | | (9,571 | ) | | (19,989 | ) | | (45,017 | ) |
| Other | | 3,027 |
| | 2,505 |
| | 11,834 |
| | 10,522 |
|
| Total noninterest income | | 15,185 |
| | 10,612 |
| | 59,750 |
| | 26,700 |
|
| Noninterest Expense | | | | | | | | |
| Compensation and employee benefits | | 35,903 |
| | 34,835 |
| | 130,864 |
| | 125,432 |
|
| Occupancy | | 8,024 |
| | 11,494 |
| | 32,300 |
| | 33,054 |
|
| Merchant processing | | 948 |
| | 891 |
| | 4,006 |
| | 3,551 |
|
| Advertising and promotion | | 1,218 |
| | 895 |
| | 3,964 |
| | 4,090 |
|
| Data processing and communications | | 3,900 |
| | 3,573 |
| | 15,369 |
| | 14,076 |
|
| Legal and professional fees | | 4,012 |
| | 2,363 |
| | 11,389 |
| | 12,338 |
|
| Taxes, licenses and fees | | 1,165 |
| | 996 |
| | 4,552 |
| | 5,033 |
|
| Regulatory premiums | | 1,105 |
| | 1,300 |
| | 4,549 |
| | 4,706 |
|
| Net cost (benefit) of operation of other real estate | | 162 |
| | (1,295 | ) | | (1,045 | ) | | (7,401 | ) |
| Amortization of intangibles | | 1,777 |
| | 1,657 |
| | 6,293 |
| | 6,045 |
|
| Other (1) | | 5,940 |
| | 6,910 |
| | 27,045 |
| | 29,962 |
|
| Total noninterest expense | | 64,154 |
| | 63,619 |
| | 239,286 |
| | 230,886 |
|
| Income before income taxes | | 28,087 |
| | 27,884 |
| | 117,785 |
| | 87,010 |
|
| Provision for income taxes | | 9,167 |
| | 7,911 |
| | 36,211 |
| | 26,994 |
|
| Net Income | | $ | 18,920 |
| | $ | 19,973 |
| | $ | 81,574 |
| | $ | 60,016 |
|
| Earnings per common share | | | | | | | | |
| Basic | | $ | 0.34 |
| | $ | 0.39 |
| | $ | 1.53 |
| | $ | 1.24 |
|
| Diluted | | $ | 0.34 |
| | $ | 0.38 |
| | $ | 1.52 |
| | $ | 1.21 |
|
| Dividends paid per common share | | $ | 0.30 |
| | $ | 0.11 |
| | $ | 0.94 |
| | $ | 0.41 |
|
| Weighted average number of common shares outstanding | | 55,137 |
| | 50,847 |
| | 52,618 |
| | 47,993 |
|
| Weighted average number of diluted common shares outstanding | | 55,272 |
| | 52,358 |
| | 53,183 |
| | 49,051 |
|
__________
(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 as well as removing the separate line item for provision for losses on covered loans and including the prior period activity in the line item for provision for loan and lease losses.
|
| | | | | | | | | | | | | |
| CONSOLIDATED BALANCE SHEETS | | | | | | | |
| Columbia Banking System, Inc. | | | | | | | |
| Unaudited | | | | | December 31, | | December 31, |
| | | | | | 2014 | | 2013 (1) |
| | | | | | (in thousands) |
| ASSETS | | |
| Cash and due from banks | | $ | 171,221 |
| | $ | 165,030 |
|
| Interest-earning deposits with banks | | 16,949 |
| | 14,531 |
|
| Total cash and cash equivalents | | 188,170 |
| | 179,561 |
|
| Securities available for sale at fair value (amortized cost of $2,087,069 and $1,680,491, respectively) | | 2,098,257 |
| | 1,664,111 |
|
| Federal Home Loan Bank stock at cost | | 33,365 |
| | 32,529 |
|
| Loans held for sale | | 1,116 |
| | 735 |
|
| Loans, net of unearned income of ($59,374) and ($68,282), respectively (1) | | 5,445,378 |
| | 4,517,296 |
|
| Less: allowance for loan and lease losses (1) | | 69,569 |
| | 72,454 |
|
| Loans, net | | 5,375,809 |
| | 4,444,842 |
|
| FDIC loss-sharing asset | | 15,174 |
| | 39,846 |
|
| Interest receivable | | 27,802 |
| | 22,206 |
|
| Premises and equipment, net | | 172,090 |
| | 154,732 |
|
| Other real estate owned | | 22,190 |
| | 35,927 |
|
| Goodwill | | 382,537 |
| | 343,952 |
|
| Other intangible assets, net | | 30,459 |
| | 25,852 |
|
| Other assets | | 237,356 |
| | 217,289 |
|
| Total assets | | $ | 8,584,325 |
| | $ | 7,161,582 |
|
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | |
| Deposits: | | | | |
| Noninterest-bearing | | $ | 2,651,373 |
| | $ | 2,171,703 |
|
| Interest-bearing | | 4,273,349 |
| | 3,787,772 |
|
| Total deposits | | 6,924,722 |
| | 5,959,475 |
|
| Federal Home Loan Bank advances | | 216,568 |
| | 36,606 |
|
| Securities sold under agreements to repurchase | | 105,080 |
| | 25,000 |
|
| Other borrowings | | | | | 8,248 |
| | — |
|
| Other liabilities | | 101,532 |
| | 87,252 |
|
| Total liabilities | | 7,356,150 |
| | 6,108,333 |
|
| Commitments and contingent liabilities | | | | | | | |
| | December 31, | | 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 | 57,437 |
| | 51,265 |
| | 985,839 |
| | 860,562 |
|
| Retained earnings | | 234,498 |
| | 202,514 |
|
| Accumulated other comprehensive loss | | 5,621 |
| | (12,044 | ) |
| Total shareholders' equity | | 1,228,175 |
| | 1,053,249 |
|
| Total liabilities and shareholders' equity | | $ | 8,584,325 |
| | $ | 7,161,582 |
|
__________
(1) Reclassified to conform to the current period’s presentation. The reclassification was limited to removing the separate line items for covered loans and including the prior period balances in the line items for loans, net of unearned income and allowance for loan and lease losses.
|
| | | | | | | | | | | | | | | | | | | | | | |
| AVERAGE BALANCES AND RATES | | | | | | | | | | |
| Columbia Banking System, Inc. | | | | | | | | | | |
| Unaudited | | | | | | | | | | | | |
| | | Three Months Ended December 31, | | Three Months Ended December 31, |
| | | 2014 | | 2013 |
| | | Average
Balances | | Interest
Earned / Paid | | Average
Rate | | Average
Balances | | Interest
Earned / Paid | | Average
Rate |
| | | (dollars in thousands) |
| ASSETS | | | | | | | | | | | | |
| Loans, net (1)(2)(3) | | $ | 5,168,761 |
| | $ | 70,463 |
| | 5.45 | % | | $ | 4,504,587 |
| | $ | 69,542 |
| | 6.18 | % |
| Taxable securities | | 1,491,930 |
| | 7,075 |
| | 1.90 | % | | 1,319,447 |
| | 6,400 |
| | 1.94 | % |
| Tax exempt securities (3) | | 426,759 |
| | 4,577 |
| | 4.29 | % | | 343,273 |
| | 3,952 |
| | 4.61 | % |
| Interest-earning deposits with banks | | 111,993 |
| | 74 |
| | 0.26 | % | | 102,587 |
| | 65 |
| | 0.25 | % |
| Total interest-earning assets | | 7,199,443 |
| | $ | 82,189 |
| | 4.57 | % | | 6,269,894 |
| | $ | 79,959 |
| | 5.10 | % |
| Other earning assets | | 140,135 |
| | | | | | 125,788 |
| | | | |
| Noninterest-earning assets | | 812,885 |
| | | | | | 796,402 |
| | | | |
| Total assets | | $ | 8,152,463 |
| | | | | | $ | 7,192,084 |
| | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
| Certificates of deposit | | $ | 497,704 |
| | $ | 284 |
| | 0.23 | % | | $ | 520,764 |
| | $ | 426 |
| | 0.33 | % |
| Savings accounts | | 591,137 |
| | 18 |
| | 0.01 | % | | 491,756 |
| | 23 |
| | 0.02 | % |
| Interest-bearing demand | | 1,260,231 |
| | 138 |
| | 0.04 | % | | 1,158,016 |
| | 129 |
| | 0.04 | % |
| Money market accounts | | 1,825,387 |
| | 371 |
| | 0.08 | % | | 1,668,524 |
| | 312 |
| | 0.07 | % |
| Total interest-bearing deposits | | 4,174,459 |
| | 811 |
| | 0.08 | % | | 3,839,060 |
| | 890 |
| | 0.09 | % |
| Federal Home Loan Bank advances | | 24,823 |
| | 87 |
| | 1.40 | % | | 22,066 |
| | 89 |
| | 1.62 | % |
| Other borrowings | | 82,991 |
| | 235 |
| | 1.13 | % | | 25,000 |
| | 119 |
| | 1.90 | % |
| Total interest-bearing liabilities | | 4,282,273 |
| | $ | 1,133 |
| | 0.11 | % | | 3,886,126 |
| | $ | 1,098 |
| | 0.11 | % |
| Noninterest-bearing deposits | | 2,584,800 |
| | | | | | 2,164,597 |
| | | | |
| Other noninterest-bearing liabilities | | 100,044 |
| | | | | | 84,667 |
| | | | |
| Shareholders’ equity | | 1,185,346 |
| | | | | | 1,056,694 |
| | | | |
| Total liabilities & shareholders’ equity | | $ | 8,152,463 |
| | | | | | $ | 7,192,084 |
| | | | |
| Net interest income (tax equivalent) | | $ | 81,056 |
| | | | | | $ | 78,861 |
| | |
| Net interest margin (tax equivalent) | | 4.50 | % | | | | | | 5.03 | % |
| |
| (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 $1.0 million for the three months ended December 31, 2014 and 2013, respectively. The accretion of net unearned discounts on certain acquired loans was $5.0 million and $6.8 million for the three months ended December 31, 2014 and 2013, respectively. |
| |
| (2) | Incremental accretion on purchased credit impaired loans is included in loan interest earned. The incremental accretion income on purchased credit impaired loans was $3.8 million and $6.5 million for the three months ended December 31, 2014 and 2013, respectively. |
| |
| (3) | Yields on a fully tax equivalent basis. The tax equivalent yield adjustment to interest earned on noncovered loans was $632 thousand and $248 thousand for the three months ended December 31, 2014 and 2013, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.7 million and $1.4 million for the three months ended December 31, 2014 and 2013, respectively. |
|
| | | | | | | | | | | | | | | | | | | | | | |
| AVERAGE BALANCES AND RATES | | | | | | | | | | |
| Columbia Banking System, Inc. | | | | | | | | | | |
| Unaudited | | | | | | | | | | | | |
| | | Twelve Months Ended December 31, | | Twelve Months Ended December 31, |
| | | 2014 | | 2013 |
| | | Average
Balances | | Interest
Earned / Paid | | Average
Rate | | Average
Balances | | Interest
Earned / Paid | | Average
Rate |
| | | (dollars in thousands) |
| ASSETS | | | | | | | | | | | | |
| Loans, net (1)(2)(4) | | $ | 4,782,369 |
| | $ | 270,210 |
| | 5.65 | % | | $ | 4,140,826 |
| | $ | 266,903 |
| | 6.45 | % |
| Taxable securities (3) | | 1,332,144 |
| | 28,754 |
| | 2.16 | % | | 1,155,066 |
| | 20,459 |
| | 1.77 | % |
| Tax exempt securities (4) | | 376,431 |
| | 16,997 |
| | 4.52 | % | | 319,678 |
| | 15,262 |
| | 4.77 | % |
| Interest-earning deposits with banks | | 70,103 |
| | 179 |
| | 0.26 | % | | 138,973 |
| | 355 |
| | 0.26 | % |
| Total interest-earning assets | | 6,561,047 |
| | $ | 316,140 |
| | 4.82 | % | | 5,754,543 |
| | $ | 302,979 |
| | 5.27 | % |
| Other earning assets | | 132,419 |
| | | | | | 111,228 |
| | | | |
| Noninterest-earning assets | | 774,625 |
| | | | | | 692,746 |
| | | | |
| Total assets | | $ | 7,468,091 |
| | | | | | $ | 6,558,517 |
| | | | |
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
| Certificates of deposit | | $ | 485,487 |
| | $ | 1,259 |
| | 0.26 | % | | $ | 535,656 |
| | $ | 1,998 |
| | 0.37 | % |
| Savings accounts | | 543,303 |
| | 60 |
| | 0.01 | % | | 445,666 |
| | 94 |
| | 0.02 | % |
| Interest-bearing demand | | 1,204,584 |
| | 478 |
| | 0.04 | % | | 1,048,482 |
| | 587 |
| | 0.06 | % |
| Money market accounts | | 1,668,150 |
| | 1,208 |
| | 0.07 | % | | 1,566,539 |
| | 1,283 |
| | 0.08 | % |
| Total interest-bearing deposits | | 3,901,524 |
| | 3,005 |
| | 0.08 | % | | 3,596,343 |
| | 3,962 |
| | 0.11 | % |
| Federal Home Loan Bank advances (5) | | 44,876 |
| | 396 |
| | 0.88 | % | | 51,030 |
| | 1,144 |
| | 2.24 | % |
| Other borrowings | | 39,617 |
| | 593 |
| | 1.50 | % | | 35,772 |
| | 734 |
| | 2.05 | % |
| Total interest-bearing liabilities | | 3,986,017 |
| | $ | 3,994 |
| | 0.10 | % | | 3,683,145 |
| | $ | 5,840 |
| | 0.16 | % |
| Noninterest-bearing deposits | | 2,285,818 |
| | | | | | 1,824,234 |
| | | | |
| Other noninterest-bearing liabilities | | 86,675 |
| | | | | | 72,039 |
| | | | |
| Shareholders’ equity | | 1,109,581 |
| | | | | | 979,099 |
| | | | |
| Total liabilities & shareholders’ equity | | $ | 7,468,091 |
| | | | | | $ | 6,558,517 |
| | | | |
| Net interest income (tax equivalent) | | $ | 312,146 |
| | | | | | $ | 297,139 |
| | |
| Net interest margin (tax equivalent) | | 4.76 | % | | | | | | 5.16 | % |
| |
| (1) | Nonaccrual loans have been included in the table as loans carrying a zero yield. Amortized net deferred loan fees and net unearned discounts on certain acquired loans were included in the interest income calculations. The amortization of net deferred loan fees was $4.5 million and $3.3 million for the twelve months ended December 31, 2014 and 2013, respectively. The accretion of net unearned discounts on certain acquired loans was $21.6 million and $28.4 million for the twelve months ended December 31, 2014 and 2013, respectively. |
| |
| (2) | Incremental accretion on purchased credit impaired loans is also included in loan interest earned. The incremental accretion income on purchased credit impaired loans was $20.2 million and $29.8 million for the twelve months ended December 31, 2014 and 2013, respectively. |
| |
| (3) | During the twelve months ended December 31, 2014, the Company recorded a $2.6 million reversal of premium amortization, which increased interest income on taxable securities. |
| |
| (4) | Yields on a fully tax equivalent basis. The tax equivalent yield adjustment to interest earned on noncovered loans was $1.9 million and $619 thousand for the twelve months ended December 31, 2014 and 2013, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $6.2 million and $5.4 million for the twelve months ended December 31, 2014 and 2013, respectively. |
| |
| (5) | Federal Home Loan Bank advances includes a prepayment charge of $1.5 million during the twelve months ended December 31, 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 December 31, | | Twelve Months Ended December 31, |
| | | 2014 | | 2013 | | 2014 | | 2013 |
| Operating net interest margin non-GAAP reconciliation: | | (dollars in thousands) |
| Net interest income (tax equivalent) (1) | | $ | 81,056 |
| | $ | 78,861 |
| | $ | 312,146 |
| | $ | 297,139 |
|
| Adjustments to arrive at operating net interest income (tax equivalent): | | | | | | | | |
| Incremental accretion income on FDIC purchased credit impaired loans | | (3,796 | ) | | (6,540 | ) | | (20,224 | ) | | (29,815 | ) |
| Incremental accretion income on other FDIC acquired loans | | (10 | ) | | (237 | ) | | (484 | ) | | (2,211 | ) |
| Incremental accretion income on other acquired loans | | (4,957 | ) | | (6,540 | ) | | (21,093 | ) | | (26,200 | ) |
| Premium amortization on acquired securities | | 2,490 |
| | 1,828 |
| | 7,123 |
| | 7,309 |
|
| Correction of immaterial error - securities premium amortization | | — |
| | — |
| | (2,622 | ) | | — |
|
| Interest reversals on nonaccrual loans | | 189 |
| | 161 |
| | 1,291 |
| | 882 |
|
| Prepayment charges on FHLB advances | | — |
| | — |
| | — |
| | 1,548 |
|
| Operating net interest income (tax equivalent) (1) | | $ | 74,972 |
| | $ | 67,533 |
| | $ | 276,137 |
| | $ | 248,652 |
|
| Average interest earning assets | | $ | 7,199,443 |
| | $ | 6,269,894 |
| | $ | 6,561,047 |
| | $ | 5,754,543 |
|
| Net interest margin (tax equivalent) (1) | | 4.50 | % | | 5.03 | % | | 4.76 | % | | 5.16 | % |
| Operating net interest margin (tax equivalent) (1) | | 4.17 | % | | 4.31 | % | | 4.21 | % | | 4.32 | % |
|
| | | | | | | | | | | | | | | | |
| | | Three Months Ended December 31, | | Twelve Months Ended December 31, |
| | | 2014 | | 2013 | | 2014 | | 2013 |
| Operating efficiency ratio non-GAAP reconciliation: | | (dollars in thousands) |
| Noninterest expense (numerator A) | | $ | 64,154 |
| | $ | 63,619 |
| | $ | 239,286 |
| | $ | 230,886 |
|
| Adjustments to arrive at operating noninterest expense: | | | | | | | | |
| Acquisition-related expenses | | (4,556 | ) | | (7,910 | ) | | (9,432 | ) | | (25,488 | ) |
| Net benefit of operation of OREO and OPPO | | (160 | ) | | 1,308 |
| | 1,182 |
| | 7,539 |
|
| FDIC clawback liability benefit (expense) | | 8 |
| | (36 | ) | | (294 | ) | | (278 | ) |
| Loss on asset disposals | | (6 | ) | | (107 | ) | | (563 | ) | | (141 | ) |
| State of Washington Business and Occupation ("B&O") taxes | | (1,067 | ) | | (908 | ) | | (4,183 | ) | | (4,727 | ) |
| Operating noninterest expense (numerator B) | | $ | 58,373 |
| | $ | 55,966 |
| | $ | 225,996 |
| | $ | 207,791 |
|
| | | | | | | | | |
| Net interest income (tax equivalent) (1) | | $ | 81,056 |
| | $ | 78,861 |
| | $ | 312,146 |
| | $ | 297,139 |
|
| Noninterest income | | 15,185 |
| | 10,612 |
| | 59,750 |
| | 26,700 |
|
| Bank owned life insurance tax equivalent adjustment | | 528 |
| | 530 |
| | 2,177 |
| | 1,969 |
|
| Total revenue (tax equivalent) (denominator A) | | $ | 96,769 |
| | $ | 90,003 |
| | $ | 374,073 |
| | $ | 325,808 |
|
| | | | | | | | | |
| Operating net interest income (tax equivalent) (1) | | $ | 74,972 |
| | $ | 67,533 |
| | $ | 276,137 |
| | $ | 248,652 |
|
| Adjustments to arrive at operating noninterest income (tax equivalent): | | | | | | | | |
| Investment securities gains, net | | — |
| | — |
| | (552 | ) | | (462 | ) |
| Gain on asset disposals | | (8 | ) | | (354 | ) | | (86 | ) | | (421 | ) |
| Other nonrecurring gain | | — |
| | (1,025 | ) | | — |
| | (1,025 | ) |
| Gain related to branch sale deposit premium | | — |
| | — |
| | (565 | ) | | — |
|
| Change in FDIC loss-sharing asset | | 5,304 |
| | 9,571 |
| | 19,989 |
| | 45,017 |
|
| Operating noninterest income (tax equivalent) | | 21,009 |
| | 19,334 |
| | 80,713 |
| | 71,778 |
|
| Total operating revenue (tax equivalent) (denominator B) | | $ | 95,981 |
| | $ | 86,867 |
| | $ | 356,850 |
| | $ | 320,430 |
|
| Efficiency ratio (tax equivalent) (numerator A/denominator A) | | 66.30 | % | | 70.69 | % | | 63.97 | % | | 70.87 | % |
| Operating efficiency ratio (tax equivalent) (numerator B/denominator B) | | 60.82 | % | | 64.43 | % | | 63.33 | % | | 64.85 | % |
__________
(1) Tax-exempt interest income has been adjusted to a tax equivalent basis. The amount of such adjustment was an addition to net interest income of $2.3 million and $1.7 million for the three months ended December 31, 2014 and 2013, respectively, and $8.1 million and $6.0 million for the twelve months ended December 31, 2014 and 2013, respectively.
Non-GAAP Financial Measures - Continued
The Company considers its ratio of allowance for loan and lease losses to period-end loans, excluding acquired loans to be an important measurement because 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 loans, excluding acquired loans:
|
| | | | | | | | | | | | |
| | | December 31, | | September 30, | | December 31, |
| | | 2014 | | 2014 | | 2013 |
| | | (dollars in thousands) |
| Allowance for loan and lease losses (numerator a) | | $ | 69,569 |
| | $ | 67,871 |
| | $ | 72,454 |
|
| Less: Allowance for loan and lease losses attributable to acquired loans | | (23,212 | ) | | (21,876 | ) | | (24,362 | ) |
| Equals: Allowance for loan and lease losses, excluding acquired loans (numerator b) | | $ | 46,357 |
| | 45,995 |
| | 48,092 |
|
| | | | | | | |
| Loans, net of unearned income (denominator a) | | $ | 5,445,378 |
| | $ | 4,823,022 |
| | $ | 4,517,296 |
|
| Less: acquired loans, net | | (1,615,496 | ) | | (1,187,487 | ) | | (1,479,387 | ) |
| Equals: Loans, excluding acquired loans, net of unearned income (denominator b) | | $ | 3,829,882 |
| | $ | 3,635,535 |
| | $ | 3,037,909 |
|
| | | | | | | |
| Allowance for loan and lease losses to period-end loans (numerator a/denominator a) | | 1.28 | % | | 1.41 | % | | 1.60 | % |
| Allowance for loan and lease losses to period-end loans, excluding acquired loans (numerator b/denominator b) | | 1.21 | % | | 1.27 | % | | 1.58 | % |
Explanatory Note
Our two most significant FDIC loss-sharing agreements expire on March 31, 2015. As a result, a significant portion of receivables previously disclosed as "covered loans" will no longer be covered by FDIC loss-sharing. To prepare for this event, we have changed our consolidated balance sheet presentation, and reclassified our prior period balance sheets, to no longer differentiate between covered and noncovered loans. Further, when presenting certain loan portfolio details, we refer to loans acquired with deteriorated credit quality as "purchased credit impaired" loans. Purchased credit impaired loan balances approximate balances previously presented as "covered loans".
