COLB - Earnings call transcript Q3 2019 | Columbia Banking System, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Columbia Banking System’s Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session through both the telephone and web. Instructions will be given at that time. Instructions] [Operator

Officer this the recorded. host, call President Chief reminder, like would Hadley is System. and turn Banking to over Executive conference a I being now Robbins, As Columbia of to your

Hadley Robbins

are Thank supplemental you, thank joining and at our on morning. available us market year-to-date review earnings everyone. slide results, call and we released quarter The you opened before as the for today’s third Good Mike. morning, presentation And XXXX a which release columbiabank.com. we this

I with $XX third on results. million income XXXX quarter for basis, and over was year-to-date am quarter results our pleased million. Earnings to up XX% the exceeded second a $XXX net straight

they did quarter, the bankers directly excellent our that During an in focusing job third control. on things those

production public million $XXX of Sigrist, to that strong $XXX were continued quality expanded in $XXX portion our million, Financial his and will a Credit increase funds Loans strengthen an up discuss million. deposits in which Officer comments. Greg Chief is by of on

Our sustaining I our process smoothly. succession underway that report is business component CEO now the of key happy to and going am model very is a plan succession

thoughtful investors support of expressed spectrum Our and a leadership. of other have appreciate stakeholders and employees, broad the continuity strong

successfully and banker Clint Clint the I I spent future. growing am am of he is Columbia into a with to experience, confident talented lead Bank. torch the proud years XX including Bank Columbia on XX to will pass

incoming our Andy our review who quality will and will our Credit On our Officer, Operating some of about earnings Merrywell, our production our activity and with Officer Officer, the Chief Stein, highlight the our Chief today Chief details Chris CEO, provide digital information; review Financial who Officer. performance; will credit investments; call who me Chief and Sigrist, Greg incoming are Clint of our McDonald, Operating status

will be answer comments, happy your prepared Following to our we questions.

subject to forward-looking be factors. economic that are today, that and we statements remind which you It’s will other I making important

full our discussion the and of XX-K. our uncertainties refer the risks filings to associated in securities Form a particular, with please SEC For and forward-looking statements, XXXX

At Greg to financial about this over performance. point, the call our like turn I’d to to talk

Greg Sigrist

Thank you, Hadley.

Third quarter million the history $X.XX quarter quarter of was in second after best diluted of of per share $XX.X the our EPS and second earnings XXXX.

know, you to latter place defend diligently been we of to interest have net should As put and interest working NIM half in decline. since income, our rates XXXX protections the

our using three down primary tools rate balance borrowing sheet been As the purchase risk interest well respond assets, selectively zero of been fund have collar. to to cost we the a a duration by short-term the the derivative a reminder, have strategy utilizing that management in grow of rate and increase would securities environment the

portfolio XX% the and the quarter Since XX% have derivative XXXX, a place from notional remains with increased loans to million of in $XX fixed our our We security with entered third in strategy. approximately million strategy $XX rate amount.

corresponding public and public contingency to some the increase $XXX securities our security The periodically quarter by an alternative with using FHLB million is with desired funding the line strategy funds to plan quarter to as us. We in sources funds increasing decision did selectively of by increase our test to this approximately in use advances third in available alternative the funding portfolio.

we increased at stands protection now loan rates. derivative and strategy provide further declining security in the million with approximately will $XXX event strategy Our the and of duration along

growth in assets increase interest net After part income loan the interest second and million considering did to quarter, during of -- net Thanks recoveries an $X.X interest earning in part quarter-on-quarter. large million loan thanks $X.X XXXX. in the in increase

third that NIM, quarter will points security operating the When we in the to recall, basis second extra out was the X increasing we remaining strategy. interest quarter form insurance in XX NIM. the of added driven took you of the NIM the basis factor points As decline also by recoveries the

deposits as part rate strategy. our of management interest our risk Cost did of increase funds, in increase public modestly, overall selectively decision given to participation

cost which If funds, you are exclude boastful public in the was nature, deposits of our unchanged.

was for income XXXX. quarter up quarter, to the which a on Non-interest was $XX linked-quarter compared the up $X third $X.X basis and million of million million

non-interest items, While positive each and seeing loans, as focus quarter benefited services on are we continue financial revenues, cards in generating from trends income. to we one-time

anticipate million. million digital range. Third We and includes digital initiatives $XX expense efforts. tied our quarter full million in $X.X expense impact anticipate on year-to-date to expense, was run The managing $X.X year remain our impact of million $XX.X that continue digital excluding to a is closely of million. expense We mid-XXs to non-interest to of rate directly focused the $X our

schedule laid As roadmap we to create we year that year to ago. back three-year the foundational projects the to capacity and digital focused on on we on out go offices, and the strategic first meet journey, have front a are in

expect $XX million the range. We the similar digital investment to million impact $X level in a with in year XXXX, of full

rate XX.X% target XX% range both quarter XX% of tax the was our to effective for range. within Our year-to-date, and XX.X%

to We so feel of will shareholders. actively our third the part quarter repurchased will shares our provided capital during and continue benefit strategy do we as we

special we continue have with balance have position we and a strategic to and strong will shared in calls, we opportunities. As dividends the buybacks prior capital

increase on forecasted working our indicative or XX% from expected we performed, an quarter standards. day five loss Lastly, the on one accounting team impact has contributing look-back from ranging reflects the losses Based current conditions, we range and variables with the a forecasted credit macroeconomic to quarter-on-quarter of the variations. credit portfolio of for or an CECL been of decrease estimated to on current macroeconomic implementation new hard This X%. allowance ACL

our to material capital levels No is anticipated. impact

the macroeconomic date. refine it to will and our at adoption of and and portfolio While ultimate models environment impact characteristics depend CECL validate loan the does continue on the the

call At Clint. like this point, turn to the I’d over to

Clint Stein

Good Thank morning, you, Greg. everyone.

value long-term driving on focused our stakeholders. always for have We

embodies thinking. solid of our long-term performance This the outcomes quarter’s

Our deposits. in bankers relationships by the build sides as continue of the evidenced loans balance on and both to sheet growth

gain how example. allocate we a gain of replacement on sale the resources. the of reallocated better The contemporary The transaction during evaluate our other to of is remainder growing our and small into leaseback reinvest a In will continue that portion parts facility be We business. we suits clients. can coming the an those years, quarter needs the our to

Without still the noise million by quarter. or increase annualized approximately in created deposits during public the funds, XX% grew $XXX the by

and As the result, shifted consumer. a XX% slightly from XX% business deposit mix

with setting production $XXX been billion record generating pace, $X.X was pipeline. a production exceeding basis, bankers new have on loan our loan quarter Third million, even resulting busy in a leads year-to-date this solid

quarterly Term XX% XX% fixed, XX% floating production and loans production, of total. floating The mix the were was XX% X% lines fixed, XX% variable. overall portfolio now variable. the XX% of The and comprised mix XX% whereas is

was decline booked production space, construction of loan of quarter adjusted overall variable portfolio and the as higher rate the throughout rate tax an in coupon which re-pricing yielding than X.XX%. X.XX%, rate New CRE coupled and loans. of repayments average the result with The lower is the in

current the prior quarter of million with were million. amount consistent and quarter $XXX of Prepayments in stable $XXX the

prepayment third current basis, quarter linked-quarter is XX% activity XXXX. a on stable down While about from

total. production C&I $XXX XX% billion commercial quarter, was of of or the and production total $XXX the or real million XX% and production was the estate During multi-family

in ag finance were along in increases seasonal C&I and million, by up loans insurance $XX the book with activities driven sectors. the

and were space loan increases $XX and estate during totals by sectors. office million Commercial quarter, land, multi-family recreational in real warehouse, up driven the the

Sound during we quarter. finalized process, rationalization branch our underway ongoing completion scheduled quarter, our and and additional market the consolidation fourth Portland during branches the One our of Puget part in region. for As branch of in three the one consolidation is two

Human In operational we rollout our Capital management across talent of program. We we new digital the advance employee system, our Online the our Management quarter, Banking Management implemented platform improving base. efficiencies continue and and third and our to Commercial Treasury completed new

currently We multiple projects have underway.

efforts opening, We money and path. out as digitize through roadmap will digital account are business capabilities rather capabilities, automation view our the moving our primary a ongoing lending an destination. well and company. peer-to-peer across we small pillars the efficiencies place, the in drive our is increased than The enhance down are We journey improve deposit transfer laid

a long and a moment and thank past contribution to building for the Hadley wishes leadership, retirement. franchise team take friendship our his to Hadley over entire happy to want seven I years. The

I to turn call will Andy. Now, over the

Andy McDonald

Thanks, Clint. XX were In level summary, assets to to credit which quality in lowest is is very points, total good. NPAs years. basis XX the down

to continue positive both criticized loan category. we enjoy the In and in migration addition, classified

affected by We Oregon basis. as the the condition. macroeconomic watching tariffs likely to will a Washington, among on experience persists, war carefully with region and our states respect it are, top seven tariff most however, are is negative economic impacts clients that Alaska GDP these If

recent and and discussions trade monitor developments with by actively are We sector this China. Japan ongoing encouraged with

an rated trade impacts watch increase assets further However, by the to we on in monitor did in this $XX portfolio. and us our roughly million development help was see quarter

prior PCI again from Our third originated was large the quarter and quarter from $XXX,XXX portfolio. a and essentially lease very in losses The modest recovery loan of both quarter. unchanged provision level for and the benefited of

would were more special recoveries is Most to related by these recession. dedication these provision our recoveries. relationships The exemplified the the our dating Absent great the quarter to team for of two been credit back of meaningful. recoveries, have

offset by and provision a for $XXX,XXX West a million Heritage the portfolios. million the release of River, had Columbia portfolio we First quarter, for the $X.X net Pacific for Continental and originated $X.XX portfolio the So release of a for Coast

loans As to basis of of total to September allowance total our XX by basis XXXX, XX, X increased loans. points point

you were fair our As impacted ratio the acquisitions that recorded always, remind associated is we and value. like at to this by that loans

which West portfolio. million million portfolio, is Embedded with with $X the portfolio million discount, million Pacific of Coast Continental approximately approximately Intermountain net is those valuations the for in €XX associated and with €XX $X

the to that, turn call will With Hadley. I back

Hadley Robbins

Thanks, Andy.

price of on a We the our October XXrd. regular ratio on of for announce to X.XX% which pleased quarterly payout quarter a constitutes dividend a of based $X.XX, stock our XX% yield dividend closing and of are

close record on to business dividend paid XXXX. This quarter’s as be will of X, November November shareholders on XX of of

customers a inspired stronger commitment employees be have In to by closing, unwavering help other, the daily their build of our privilege I been this part by our and been it’s for to communities. care each company. way

This concludes this comments afternoon. our prepared

to are answer Greg, Chris reminder, questions. Andy and me with a As your here Clint,

Now, Mike, questions. the open for call we will

Operator

[Operator Instructions] Rulis. is line first of Your from question Jeff the

Your is open. line

Jeff Rulis

Thanks. Good morning.

Hadley Robbins

Jeff. morning, Good

Jeff Rulis

I one is guess, Greg. first for

those back kind to Just expenses, get topic. your into favorite of

what the I is range full what you ex I million past. $XX that year-to-date? $X -- year mid-XXs said spend, to had million digital think digital and have is said the the the in

Greg Sigrist

versus range it in this last Year-to-date million was that almost the $X reflect did I what actually we quarter, indicated $X.X said that to I it believe which my provided and I year-to-date capitalize million able comments year-to-date were quarter.

Jeff Rulis

Okay.

I Was Sorry hear $X.X number. you that it, said year-to-date million? didn’t

Greg Sigrist

Yes. million, capitalize. -- X able of $X.X approximately we it’s a net to $X which were million is

have absent higher. So been would it the capitalization

Jeff Rulis

Got it.

guess, guess, for mid-XXs looking ramp spend I are in the full guidance? year, I QX for in we a Okay. addition the to that still

Greg Sigrist

the the are as But, projects however, mid-XXs have correct. cornerstone far are comments, I along pretty XX said guidance, has think, I going of year roughly his lot are pretty we over the of mean, projects in Incremental the along. the I Clint and we to think, in done. a to balance year far

run little first be yeah, mid-XXs be quarter So fourth and some would that bit between incremental we still will XX flip there a rate. are to there But, -- the --- quarter. could

Jeff Rulis

that added the of for discussing we Okay. $XX comfortable rate digital you are base on kind And mid-XXs of What if you spend. if about that? we talked kind additional could assume million into expense took the million to number, $X mid-XXs another core ‘XX,

Greg Sigrist

a bit there we talking me on core. the time Give little more are just

Jeff Rulis

$XX XXXX So, yeah, $X to digital million mention spend? million did for additional you in

Greg Sigrist

Right.

Jeff Rulis

Okay.

Greg Sigrist

you I the inflation. rate see X% would something the I hear of growth. to mean ex expect to mean, in -- line X% to spend, I digital the didn’t with probably

of to I it -- So, model inflation. were I the to try would I rate I take if that, mean, trying to

Jeff Rulis

indeed for guess, Okay. and down. I that to understood recoveries number transactions trying was just go. quarters, last to Other of have timing couple there read into recaptures helpful. seen just on in just these of question, prompting in anything an it that coming is kind them couple or the last to and that trying That the like we -- Andy, the a kind the It all in Is quarters. that? I is seems anything past flurry of of get come of

Andy McDonald

value a bit quarter as this to we We we strategy a in $X.X decided you mean, money. absent I recovery. in one that assets them to of to kind still were with the significant for on one that assets something two for action waiting the had the create actually finally to Yeah. and assets portfolio. do originated could place collect classify I able surprise. us million afforded ones, taking had a those guess been opportunity encumber have would some try with principals and the the Yeah, about to where we of

The $X.X wanted ahead what the in to and had actually the opportunity a year was it again, they of PCI actually And individual we investment million advantage of. negotiated was a to. take we agreed they that in where had settlement what book came expected an --

I that’s the would combination how I but a large of So, things, of of guess, kind number recoveries. a explain two

Jeff Rulis

congrats retirement. Hadley, the on Okay. Thanks, and

in the history, a commendable you think congrats. job of stepped point I in critical bank’s so kind a when

Hadley Robbins

Well, thank Jeff. you,

Operator

line the of Deer. comes Your from next Aaron question

is line Your open.

Aaron Deer

Good everyone. Hi. morning,

Hadley Robbins

Good morning.

Aaron Deer

the but well congratulations guess, of I guidance. of on the $X to well. The trying to million million your looks like, my Hadley expense I the the am expenses. am amount year-to-date as role, about a retirement on quarter, basically talking little full-year hit I as about size could guess, into and the on Jeff’s understand Chris Clinton you in -- expecting I a extend $X bit as fourth it. well It just are that some new that you And inquiry given your following-up to versus

occur? to must what breakdown that you -- You of some how give be capitalize or looking might can us

Hadley Robbins

in always, experience talked piece about the just this I it’s than And would the we say think, what’s it’s we once earlier fall-out it late triggered the -- Yeah. negotiating on the capitalization better year. able paper. probably contracts piece and process are mean, planned in is negotiate to contracts really I of year we and we I had of

end that could to a a But the also that there, million so am next that a we so range, capitalize, of piece into that could of $X there’s that’s down why lower something of that hopeful of bring range, it Aaron. Of we million I so. $X range out to flip could there’s year, bit

Aaron Deer

be is year? of spend the sorry, will I year capitalized up some Okay. was being in and And of amount for and it you next of kind won’t am recognized where a end that expect what situation that at the that similar fully so

Greg Sigrist

given I $X The was able probably prepared capitalize on there’s my be call until for opportunity -- next -- of Aaron. end really what year’s and scope. cornerstone range been million in at we I there looking of really the lower remarks that to projects, to less projects, comment than a predict. it’s could get range, have to But into some next I year. that the some it’s we down to hard size could do But play the

Aaron Deer

Sure.

what’s you fourth -- the rate net into into just interest environment, we here expectation your strategies into Okay. next as margin quarter And in quarter, that margins, given sheet during the the as looking going then just head at the well the as and balance year? the change of employed some for

Greg Sigrist

absent next week think, you any I again, a are to at pricings really down Federal the Well, continue to very environment, potential looking Yeah. be from action competitive. flat Reserve,

change it’s next We absent quarter. have am our week, about are way going funding thinking its think, quarter-on-quarter be a I first deposits a But, bit. some mix the -- always is the flat This given to going just will I it. in am to we again, have and I little down well, fluctuation to

Aaron Deer

for Thanks Great. taking my Okay. question.

Hadley Robbins

welcome. are you Aaron,

Operator

question line comes the from McGuire. Gordon next Your of

is line open. Your

Gordon McGuire

Good morning.

Hadley Robbins

Gordon. morning, Good

Gordon McGuire

wanted operating was decline Greg, NIM recoveries That the X full quarter. And strategy? congrats, from security basis Hadley said last just of you to clarify, the ex points the Clint. all I and

Greg Sigrist

have Yeah. The a security basis strategy Gordon. that X point impact,

Gordon McGuire

Okay.

Greg Sigrist

out there in are the and with -- I factor you But impacts points. downs, are mean, of X ups it quarter. other you when left really those those some basis

Gordon McGuire

Okay.

recoveries? back you the flat up So pretty it if interest held

Greg Sigrist

right. That’s

Gordon McGuire

strategy? the In

Greg Sigrist

That’s right.

Gordon McGuire

your said a the the absent you or cut you or And then, absent a rate comment just to in question, last any down the change are change just flat for cut? clarifying a is absent projections NIM saying your -- on last rate

Greg Sigrist

rate stands and if just curve But the look a I take it next and go hope where -- the just in just next would week down. does -- a slightly cut. as look today the you to look at forward at a I into down I would to quarter, flat expect, factor and Absent cut now, the think, at we is curve curve

Gordon McGuire

Okay. from are And the and kind of update impact it last can cut, in strategy? Is just same us then, what just quarter, the net still the the talking the still you is from rate just basis protection about on? range it you

Greg Sigrist

good XX-basis-point say… the That’s we mean, I question. cut future, a consistent. next Yeah. If a in have it’s or let’s week fairly

Gordon McGuire

Okay.

Greg Sigrist

over have million $X of and strategies. from an the months would interest next following we $X.X million … risk -- the estimated impact the of XX rate that’s protection net

Gordon McGuire

Okay. And then…

Greg Sigrist

may in a They come little.

Gordon McGuire

Sorry.

Greg Sigrist

ahead. Go No.

Gordon McGuire

base lot little to And the the ratio it’s on while I about in changed talked call next year. the outlook a this a then. since have is of moving pieces the rate you there efficiency target But mid-XX% expense been understand and since

you So I if provide there? update am wondering an could

Greg Sigrist

Yeah. Sure.

digital rate interest up slowed you this year we efficiency a expect little impact execute out, and did does bit point strategy. As we as that environment on the the ratio the

I the year. probably then next following so think the in horizon, later longer into and into year

next driving think We make initiatives flow in digital of couple are are are But we be probably going range down due that -- is in that the I the the do efficiencies range we back to that operational in we and focused on expect really part happen. for quarters. that to

to in ratio I that’s ratio X.XX% quarter in kind you think that and really and of been a that for too, about the range we that the while about think, just average in having X.XX%. of assets, also expense which have the segue talking non-interest If is was,

we eye keeping close on as well. the is So that a other are metric

Gordon McGuire

it. Got average was price weighted And the then this housekeeping, just quarter? of the what repurchases

Greg Sigrist

question front one have in of asked I me. You don’t

slightly it think a was I share. over $XX

Gordon McGuire

Thank Okay. you.

Greg Sigrist

get once the you down. -- math XX-Q the will But numbers the drop

Gordon McGuire

Thanks.

Greg Sigrist

You are welcome.

Operator

line Your next question comes Matthew of from Clark. the

is line Your open.

Matthew Clark

morning. Good Hey.

Hadley Robbins

Good morning.

Matthew Clark

as Hadley And to and congrats Clint well.

Hadley Robbins

Matt. you, Thank

Matthew Clark

echo Clint those comments. as well

Does on modest the maybe X% digital, it systems you midpoint an -- to dual call million that branch gain expense $XX of the million closings $X that average some these On next it on implies a outlook, year? mid-XXs run of The and of recent off closures efficiencies million year. rate might consider next $XX the layer but from the inflation. coming

Hadley Robbins

Yeah.

it think does lot are cycle of next for say, it But foundationally of both What still midstream the I yet to make those. both really year, would is where factors. those us doesn’t a is budget that this decisions on reflect better, point, which it can help number of doesn’t calibrate start will our look those we at I reflect we Matt.

Matthew Clark

to looks as tracking feel X% growth change outlook Okay. you brought I look whether to you the in And I on consider into do do are like this loan new outlook? how the for about might we the onboard, guess, some digits just have you past. outlook, and think, of that around year. then growth producers not next you low-single year It conservatively guided your or you the

Chris Merrywell

Hi, is Matt. Chris. This

difficult full. to continuing ahead are say our activity, stay with we to so, monitor credit are despite which stay seeing frequently very we are in that a remains yeah, environment, that opportunities forecast to in and pipeline range. match But Let’s clients sufficient The to of that, discipline. we and to is try our contact competitive we prepayment

Matthew Clark

quarter, the the think, not you payoffs. happen And Okay. I you but did to have the payoffs overall spoke in to prepays, loan

Clint Stein

create took we thing. I and had number loans part Matt, when is and you Yeah. the of because of script I It’s expect actually that good Clint. considered in the what just variance. it this the as it’s know kind payoffs out, prepayments I a that we make

to… back me Let come

Matthew Clark

Okay. No problem.

Clint Stein

report. also, in follow-up prepayments have the I offline just pull same guided I it’s because here. what from we that report report … the in the can the

get the can we you number. So

Matthew Clark

last And quarter, then have able we one on just find been they some million, recoveries, quarter last $X.X the were? Okay. this reason what to interest

Andy McDonald

normally Andy. so recoveries recoveries of anything Matt, norm Interest the this what last and didn’t is quarter The we out and we above quarter enjoy. far this were highlight. were not

Matthew Clark

Okay. Thanks.

Hadley Robbins

Thanks, Matt.

Operator

of question next Your Arfstrom. line Jon Please ahead. from comes the go

Jon Arfstrom

Hi. Thanks. Good morning, everyone.

Hadley Robbins

Good morning.

Jon Arfstrom

Greg for maybe first, follow-ups, call few you liability asset management. an terms A morning. in of Good

about collars. talked the You

are more at rate securities we You like were the little see environment, where you or the talked more in curve you do satisfied you changes you the some a few do, public terms and feel about fund do bit What the in of forward think you next look strategy. need at and you when might quarters? today set just to are things

Greg Sigrist

It’s obviously, management comes mean, the -- have looking we honestly, Jon, sides pricing both into balance very around active ever we a I mix something asset/liability on sheet, our dialogue it’s and not stop and of well. at. as play

are we resting where we not this are point. So at on

absolute interest manage actively to still net intending our NIM, manage actively are and We as as well our income. protect to

Jon Arfstrom

Okay.

I that growth of expectation talked guys interest loan even maybe margin still for think, is is cards with net is about, XXXX? feel with growth the incremental in you have income some the pressure the expectation you some

Greg Sigrist

are mean, at still looking I budgeting process. have mentioned, at point. It’s hard this things we to I the as figure

give Jon. to hate any on I you So that, indicators leading

Jon Arfstrom

Yeah.

Greg Sigrist

and commented through something Clint the to we year. that we to on, it’s pipeline next work we feel with as as still are going continue But, comfortable into get

Jon Arfstrom

real -- still last where all or pretty or bit commercial of might pipelines part you like healthy a your best Chris, originations. It’s what this pipelines your be quarter year commercial Okay. in estate follow-up new consistent? is you optimism number. is fading like second high you you growth, but do have Are any this seeing a any on but loan for feel problem you terms changes the of class or a had below or in this

Chris Merrywell

our seeking that pipeline need The again, plenty credit is Clint said, of full, say pretty disciplined we it remains are consistent. and philosophy. I’d opportunities as

time, I consistent. say this would remains it at So,

Jon Arfstrom

follow-up, in -- leaseback on might the the there kind a Okay. give can coming XXXX? last you sale potential us consolidations little details horizon more of if Thanks. the and then And what branch then, on be

Clint Stein

Hi, in is It’s growth location. the The the of a that, in time the facility we the sale with period on of have leaseback that’s owned a dated a This there very piece fairly market happening dirt. all Jon. obviously, facility branch Clint. was Bellevue and and that valuable

as because with we we the to consolidations, coming at so in but in years. generally, just prepared branch remarks, And looked what in reinvest my a footprint wanted the not more just do branch I location mentioned, we will contemporary

that have We three we that up so can going got of to where or town. be are years we to part evaluate same in

that about talked our the in and like replace this facility you location. will have We expected I that NeighborHub concept specific a see past

within locations other like relationships. would serving generate we our But be our some clients that, footprint also have where new additional we beneficial helping branch to our feel places and bankers

deck the So part we put we website in we it. rationalization our years over ongoing. last on that have what out the this that’s reinvestment or XX so that’s in of The component that have done the morning, regards

we we putting been that look or there, never traffic what see drives because how foreclosures. of that as don’t and potential a or fans how I customers additional using branch number consolidations is are the really at a we And really different channels -- target out have have changing, in

than So simply more number it’s of just the reducing branches.

for a any we as see through. a forward. current expansion worked and our does branches. I you it it’s several and by am that think on don’t new of it want I we means. with closely But get see as very strategy what go to Chris Chris years in will very, you dynamic won’t a move branch excited capacity process So I to have very we pretty ton

Jon Arfstrom

And ahead. Great. the congratulations Chris comments, long and Hadley echo Okay. Clint and runway

luck. best So of

Hadley Robbins

Thank Yeah. you.

Clint Stein

you. Thank

Chris Merrywell

Thanks.

Operator

Instructions] is the from next Bohlen. Jackie And question [Operator

open. line Your is

Jackie Bohlen

morning. Hi, everyone. Good

Hadley Robbins

Hi, Jackie.

Clint Stein

Good back. Welcome morning, Jackie.

Jackie Bohlen

you. Thank

the Just regarding make wanted base had. on I positive to on strategy touch the the security impact comments that -- has and understood sure

have of then approximately that million next million that? income understand a Do we a week to have $X saying, undertaken. and properly you So, months that cut you the from Greg, were be $X.X were over would rate XX decline strategy benefit if net I a in

Greg Sigrist

Yeah.

Jackie Bohlen

Okay.

I to where those are fair cut that we assume it is potential environment is we then, have have of to continued to that at continuing alluded the So, actively if look you you think, benefit strategies, this kind would fair? for

Greg Sigrist

to the That’s entire reassess management dynamically would really rate risk interest correct. strategy. continue We

Jackie Bohlen

Okay.

Okay. some understanding, And Thank concerns tariffs and just CECL? customer for then, think impact anything course, that from question to of do you. you your methodology, base the this about within are possible we about given businesses. you, changed seeing reserve enter Andy, that you how might over Has the your what of that are

Andy McDonald

Yes. us CECL all save will And guess. I

does Well, as be So from it economic a a our that will forward. standpoint, qualitative certainly, wonderful impact thing. outlook we look

to last look with So on and other basis. Brexit indicators it’s over the when several at a we are especially trade calculating decelerating manufacturing occurring our reserve, we are economic what’s very cognizant been wars, quarters of

of qualitative see kinds the materialize course, issues off those allowance. ease model, are when of our we of would And as we then, So of our the to assumptions. those on side it would quantitative methodology those always if are were looking on things, at part we

Jackie Bohlen

CECL I political the then, and And Okay. lot methodology introduction that could would noise volatility… that of assume given a the increase that have of we

Andy McDonald

Yeah. could you I of... think mean, if

Jackie Bohlen

…up there?

Andy McDonald

very think part. I key that’s on observation your a

environment the economic a we economic today, can just quarter quite a If quarter think of the you to volatility where of and ‘XX forecasts. of in in now about see are data bit ‘XX and first fourth you the through

Jackie Bohlen

the today? minus X%, up that for thank stand Fine. XX% guidance provided And you and is based to much that, on that, very range where of you for CECL a we

Greg Sigrist

Andy, range, reflect entire just the does really about. range That talked

a we quarter say range So the would of reflects we where five I are high just look absolutely wrapped today. end up the back.

Jackie Bohlen

Okay.

comments congratulations lot And Hadley, and everyone’s you. remiss I have a and on Thank be echo I Okay. Thanks, this hope you shifts, management I didn’t would fun. if of Clint.

Hadley Robbins

Well, you, Jackie. I do. Thank

Operator

time, the phone. further questions this At have no we on

Clint Stein

so it million, payoffs your conclude back payoffs $XXX I circle of will million, quarter Matt, $XX $XX the the we total. our prepayments question Before of us to on during were million got $XXX million, regarding call, that

Hadley Robbins

concludes Okay. Thank day. call it. for Appreciate That our you. the

Operator

Thanks webcast our and hope presentation joining We to good all This webcast of us our participants concludes you informative. you for day. found now today. disconnect. this Have a may

Columbia Banking System (COLB) 26 Oct 192019 Q3 Earnings call transcript