COLB - Earnings call transcript Q3 2020 | Columbia Banking System, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Columbia Banking Systems Third Quarter 2020 Earnings Release 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 Clint is System. and turn Banking to over Executive conference a I being now Stein, As Columbia of to your

Clint Stein

team and rebuild work dividends. We loan to Thank available quarter into team's newest the learning and evidenced children. this you, everyone. the for continue the their remained campaign, thinking ingenuity results, valuable Boise, for review expanding we third loan momentum us in core environment earnings saw in juggling that as mindset joining solutions this NeighborHub Southern and in portals, resources our have which we of current by us and the parents clients good deposits, at real-time externally of XXXX. like time we could in be today's successful presentation or as earnings, the third release and onset the is well to who with Thank morning. It focused for market pandemic, call is opened bankers new you on the our pipeline. paying growth it Welcome midst Tamara. Idaho. In a and our such our highly and with our the columbiabank.com. Out-of-the-box From be morning quarter all, distance The our opened are commitment released our creative, to implementing investor before providing PPP for The standing our up Pass employees, continues our forgiveness to are as quickly On

Chris Chief Chief today Deer, our Merrywell, Officer; Chief Andy Credit call are and with Financial me On our McDonald, our the Officer. Operating Aaron Officer;

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

you we make call. Let forward-looking statements the me remind may during that

I'd like comments, Aaron our our forward-looking over call filings. to to point, to on performance. either or turn website to please SEC earnings At release information or this the refer further review For our financial

Aaron Deer

Thank you, Clint.

EPS are the portion $X.XX respectively, in combined interest million in on borrowings XXth. point together to and million quarter. the $XX.X million securities earnings in earning by drove the gain $XX.X from sale the interest to Of Class increase about billion, of quarter $XX.X second was margin non-recurring other inflows liquidity to in nine when $X.X by basis mostly with which X.XX%. of PPP subsequent note, invested Visa $XX.X quarter million loan compared a a FHLB of remaining million earnings down This factors of increase and of margin contributed reduction of lower to XX drop million quarter. $X.X an second mortgage-backed lower-yielding Excess resulted yields were further pre-tax stock of due an quarter in deposit shares basis weighed B $X.XX at assets, basis. our net Total on from a write-up and loans preprovision restricted a supported income Quarterly linked-quarter the net First and that the points. up ended million on deposits that up the $XX.X June $XXX and

floors mitigate reduced we we rate purchases continue, adding prepayment measures production. adjustments pressure rate taken of loan our have including anticipate pricing, outlook, environment to the agency to risk, deposit to targeted with new and Given and but pressure, to this securities

on terminated last that one week basis increased at point we collar the note billion, $XXX dropped Our XXth. a industry-leading Loan our sequentially that just I notional for six June cost points. through volumes locking Total of value quarter. production ripe interest loans throughout February will down quarter in collar $XX million the $XXX XXXX. deposits quarter also rate ended production was basis margin from effectively at to by million to third $X.X benefit million, however, the gain

was on million fees production at $X in tax million $XXX,XXX orders non-interest actually the a volume program of $XXX,XXX the deferral offset transaction in non-interest and million, This of up the $X.X disposal loan income million Non-interest commitment, loan revenue in of After respond $XXX,XXX, million overall drove respectively, was legal in the and and million. quarter increase $XX.X and to was of deposit the second second from coupon Visa in quarter, various gains income loan other loan reduction adjusted for expense set related quarter, was card by systems, the new the Much mortgage Non-interest to on of relaxation sold. expense increased $X.X onetime professional, Compensation program incurred and PPP, million of costs and up and restricted an expense of Excluding provision XX%. the a by $X.X to loans loan due costs was an from the $XX.X was revenues loans the variance to increased which stock quarter. the new linked-quarter rate million, other the average included of shelter-in-place $XX.X Increased PPP portfolio pandemic. non-interest decrease which the X.XX%. in expense. and brought remaining million the and unfunded and the up compares factoring Class $XX.X B million of basis. $X.X or service to $X third principally to PPP second on was mostly out by of benefits a due origination by originated X.XX%,

the remained ratio ratio to point XX%. for about efficiency a operating expense our X.XX% non-interest increased Our quarter rate at and

quarterly non-interest for mid-XXs fourth to expense rate in the the our quarter. run expect remain We

the quarter XX.X% to call the was over I'll XX% to that, tax turn remain should range rate With Chris. effective for the year. full Our in and for XX% the

Chris Merrywell

good and Aaron you, everyone. Thank morning,

have to they to teams actively securing businesses. new across what they run Our our need partnering business ensure been have with their production engaged footprint, our and clients

support creative in the distance to and the solutions the the been In footprint needed, in to bankers past bringing addition, season while midst with regulations of over diligent and our finding complying months. client with teams COVID the unusual our both and still organization physical relationship maintaining when and our fire operations have

team needed assist members into each stepped our smoke. is with issues, have time to and evacuations, heavy COVID Additionally, when support other

We record quarter, million client are and set and from growth, very of proud stemming quarter of our continues reduced apart. and XXth. new deposit of highlight to of shifted us split spending economic existing the strong accounts. excellent XX% business team by third and combination largely second attributed by off grew as a consumers. the stimulus, another this a new relationships, XX% feel Coming deposit business The businesses was deposits continued mix during bankers in The evenly deposits XXth $XXX with increase XX% business June to consumer from consumer seasonality. September The is quarter, XX% and normal at and to growth between of

the flat balances were consumer On card side, as account an saw we essentially debit increase transactions. in

restrictions relaxed, normal were September a demand resumed as From As habits. consumers XX% deposits non-interest-bearing of product more spending XXth, and interest-bearing. perspective, the COVID XX% and other were

included loan during construction C&I $XXX amidst the the $X.X new by million busy we during by quarter, Most loans. $X additional $XX in been which the million new brought overall million quarter generated followed rebuilding and early have billion. loans CRE the as of of decreased in PPP production pandemic pipeline production Ag, mentioned, July. Loans bankers X-X the was on to of and and family, Our

million. of payments New reduction $XX were on $XX in originations of to by utilization a net million, and payoffs line was loans due decline million, The offset existing mostly of prepayments. $XX loan remaining

the from XX.X% $XXX driven consumer, fees declined second by end, gross total as XX% the FCA by mid-August our receiving in line decline from to forgiveness loans. quarter at begin quarter of forgiveness representing rate statements portal at and of the of in early October. construction, million should were and Our utilization we loans opened end PPP declines in followed That here from deferred C&I. XX.X%

the the accelerated interest environment. revenue driving variable. and on now loans, by XX% floating million and fixed, basis. XX% mix Excluding been activity overall was This non-interest has variable. higher quarter, loans, non-PPP mortgage PPP XX% lower fixed, Residential portfolio XX% a PPP the production quarter a The rate floating, XX% the linked-quarter given XX% spot mix third in XX% loan $X bright is

As a low production sells and a conventional increased revenues from card $X.X and and Columbia state, charges levels shelter-in-place service generally quarter a orders. activity its government-mandated Bank by normalized million reminder, the Deposit transaction portfolios originates caused by second to of combined Jumbos. return after

our of and been past in our with years. have branch optimizing and service continually branches market over the five are branches, delivery coverage approximately local representing In consolidated past have expanding we past projected area each XX of several XX in proactive growth. years, the strategy given We XX% of the years, those conditions consolidating network, three

the our consolidation one quarter, of other this consolidated our rationalization announced we past Sound of branches branch next ongoing part will Puget in in As fourth occur process, the weekend the and our the in two two weeks. coastal in region,

of by newest well in opened received has indicated, our which we NeighborHub also branch the at Clint style September, As Boise end the been community.

performance. call Now our review I to the Andy turn will credit to over

Andy McDonald

anticipates France, within any, Certainly, slower reflects like and are continues Chris. pandemic. $X.X be recovery if XXXX. my growth a continue currently into Germany, going by unemployment coronavirus comments this. attributed Europe, to a Therefore, modeling reflect of head we contraction path CECL our and impact United to uncertainty rising XXXX, rebound, Italy, quarter, the States the an protracted the government strong Consistent to The of that general, million unfolding elevated by second stimulus case with and that consumer under rate events XXXX. forecast to in as recovery more our momentum in Spain may a increased provision and reactions counts look the last remains QX with In Thanks, what, GDP will the will negated future in uncertain winter. threatened into

of GDP gross X.X% XXXX reminder, Markit slowly decline for the quarter Annualized we the begins is X.X%, the by followed in our a where quarter to by as rebound exit pandemic. in a use economic to forecast. of the fourth domestic IHS As fourth product economy XXXX grows anticipated

the its coronavirus. While has due in retreated from the QX, the of to XXXX we XX% high effects unemployment lasting rate ending at to close anticipate

to for increases for reserves downstream losses estate, a and These quarter quarter employer. ended added additional period-end the amounted loans, with loans relatively unchanged quarter. potential and what quarter basis relative X.XX%. also a Adjusting in $X.X. the we hospitality, consider in a basically, impacts real period $X permanent this office, to retail Northwest of the at of combined for significant overlay high-risk to NPAs allowance points. job XX loans were We PPP at million We provision the an commercial for the

we whose as issues only comparison However, forward With basis comprised feel quarter consistent do points for quarter to relatively pandemic. XX capital move due the quarter. quarter I folks, for for predate a PPP points, XX increase, and loans XX.X% eight Net provides modestly are NPAs XX by to but were still remind charge-offs basis would of adjustment, our ratio into Past credits compared unchanged. adjusting I to basis two NPAs again annualized XXXX. last more basis this points points like loans XX.X%. from impaired were the last rose the versus so

standard as credit were alluded for stable. metrics your quarter earlier, So relatively the to

increase million mention million from These front, again, of just watch $X and million Special changes million total million substandard loans, unchanged saw million $XXX around very increased rating an loans below going or total. $XX from to at and $XXX in $X.XXX below saw our ratings now increased On XX% are $XXX $XX billion. loans metrics. watch loans to XX.X% the $XXX risk and stable was rated million. loans to of risk We declined watch around

active today represents X/Xrd move the active had deferrals. At amount on quarter, $XXX close loans million deferral of Approximately which their Most accounts of the active of the portfolio, we period. in in of of close let's in in for are the deferrals. had deferrals second $X.X loan this billion the At the million hospitality quarter, deferrals. Okay, the beginning to to deferrals. we $XX

identified had the our hotel, As the as first which mentioned be it retail, the with falls strategy is restaurants, first $X.X of of we and the be much relative portfolio. impacted dental portfolios are roughly this about to quarter, we deferral days, better exclude healthcare to aviation, little was the more the portfolio pandemic, any and loan consistent our or At portfolio. our does before, than with cause which end dental feeling portfolios these The to largest entered loan of amounted billion of us we borrowers. or to concerned XX% over and and healthcare not billion portfolios, XX% If we our portfolio. being includes about some by these again the we a our were this to identified sector we dental when $X.X

pass, between quarter, last rated forward of loans are portfolio -- discussed, little deferrals As in of watch, sheet. combination a this by to and during generating is a are portfolio our XX.X% relative portfolio impact and substandard. to move practices higher this of believe remaining total practices this these disruption we PPP evenly above split levels. around the mention identified further with X% from less than the COVID-XX economic evidenced the bank's deferrals these largest previously The on as balance X% the operating to most XX% the Today, having of risk portfolio X.X This caused is breakeven. XX% next of of was Again pre-pandemic is is retail impact to portfolio allowing revenue transitory. and these on declining we portfolio. the truly special and Similar to X% generation, XX% of the practices At by revenue the segment quarter. at are level is

for of loans, approximately of strip the suburban MSA. idea types is estate four in split Washington unchanged retail the an have and expect, estate million portfolio. largest of and centered most and retail $XXX the you and Seattle of account total. in We located real which exposure, essentially quarter. real prior small $XXX total commercial we within size as properties loans, would the of represents loan is which It between split and The of five-day It's approximately $XXX,XXX. is average common communities. evenly business X.X% million about commercial part our or Portland between the is finance, give to retail-related loan Oregon, comprised The exposure commercial you the centers To from

companies, stores. also do fair and amount be stores, which as and characterized of and retailers gas beverage a goods, would also called garden/building furniture home sporting along Park stores, stations, convenience Auto We with single-tenant stand-alone properties, as well food as

use the properties. addition, In contains grocery-anchored portfolio mixed centers and

the XX% less loan-to-value We core having we areas is are at downtown the values, XX%, portfolio portfolio regional origination finance do loan-to-value malls. large not in with Using metropolitan nor average of for XX%. a the than

this during XX% the XX%. tested than equivalent properties decline less seen stress average The rises about Recession. have as for We in having an Great a loan-to-value the portfolio with value to loan-to-value XX% of

For the retail rated. pass XX% when was pass which entire improvement rated, is a is slight quarter, last XX.X% portfolio, over

quarter Deferrals portfolio breakdown mentions, the For XX.X% is is the X% is exhausted of of weakening X% would another in special unchanged X% the and subside. that stimulus, essentially opinion. declined the benefits balance portfolio at my this portfolio This and quarter. portfolio. funds PPP less end, we first is expectation our become than X% as watch, pleased is are in substandard. entire Obviously, and the portfolio would from segment portfolio of of from how This deferral cautious by this we is we greatly but benefit performing, with this in round remain see to

Okay, hotels. let's discuss

have $XXX hotel representing Portland and We MSAs. would in which of major include in portfolio. X.X% About Seattle million XX% loan our markets, the is about loans,

Many Oregon is the Inn, of of we XX% have flags: To hotels we following an more most hotel on you deferral, of $XX recovery our of However, about working the crafted million is the Wyndham. along Coast. which loan We Western are during on With consistent, $XX million The anticipate properties have also total, quarter portfolio solutions period. down this are Best was before, our out of borrowers today last which portfolio. type of Many with USDA deferral. size exposure is have second clients, the the plans with hotel idea options one a the of loans the these on street to deferral as Holiday in finance, $XXX prolonged. portfolio. In I program, on with Today, of number this mind, deferral, deferral for main when approximately the on for sector on of concert programs, conventional lending or as the in were include be the about their strategy $X.X million. and our we average give million from in we first flag which XX% well. mentioned Choice, Marriott comprise

We second has to well. are about loan-to-value on based originated well total. XX%. real this for a of million the we as is on the testing is optometrists the portfolio less appraised and basis, The are than orthopedist, loans, than here able with commercial healthcare their stress to having continue these of as of portfolio, loan-to-value to strategies. using do individuals XX%. the deferral a XX%, in the On the portfolio the of saw loan-to-value be effectuate less to estate portfolio so a on. XX% portfolio dental period now Similar see stress retail pandemic the again XX% value average once upon Non-dental as dermatologists, impacts we transitory about to to Similar $XXX

elective breakout with again MRI, $XX are knee follows: being along million of replacements, is hip addition, as EKGs. cataracts blood surgeries, such veterinary. performed In The replacements, the sonograms, test, is approximately as portfolio and

of are The $XXX,XXX. and kind such therapists, million size practices million chiropractors, services. $XX is counseling providers, and physical varying $XXX healthcare of Another other types physician is as loan average

million of of $XXX,XXX $XXX June the the in pass or XX% with deferral of or portfolio portfolio. XX% portfolio on rated for we Today, deferral roughly as have on than X% and had segment We less XXth. X% the is this total of XX, substandard. June X% about of watch As requests rated a in

we I about As mentioned feeling this portfolio. earlier, are good

Okay, restaurants services. and food

X/Xrds such is about is deferrals We this million. XXX Today, Similar mention, to average deferral approximately size this pass XX% portfolio in today, portfolio $XX on and is loans. or real have rated, substandard. in $XXX $XXX,XXX. for granted X% commercial watch, We XX million see impact while significant this The of time remain comprising make heal. we but special pleased to some are will these roughly difficult with and we with million performance loan months the businesses, we the had estate Outside $XX balance these options X% but have the dining the well. portfolio, to retail segments, here revenue-generating taking colder And of the ahead cautious and as it a remain hotel we for for many area viable.

to a the airlines anticipate million both watch, have to a airline we raised rises such, well this come. this of having airline additional loan-to-value pre-pandemic on stress the pandemic. to the months centered on capital portion loan-to-value We domestic the Today, in XX% pre-pandemic discuss portfolio again, most direct rated capital which this Again, with have billion been testing domestic average as they we raised CRE average on is in with than It the about do Most entities and $XX loan-to-value scenario, additional the total, domestic airplanes carriers. is loan-to-value stress was portfolio. XX% the to is I'm Of our through amount the lessors. engines year-to-date. U.S. $XXX them XX%. an only segment, to a and airlines aviation in as over with XX% upgrades thanks exposure to, last the to segment in basis. the basis, of comprised of significant portfolio portfolio is $XX quarter. test remaining XX%, improvement As have $XX million our assist exposure of XX% a to of domestic exposure over leasing is of the have borrowers than of stress last our portfolio carriers and to In less Under to having going airline less being exposure in direct million

and Just this secured additional if have $XX billion for treasury raised an agreements needed. the U.S. past quarter, additional they funding with

over that our to reduction results now. and XX expense the mention value burn additional as of by the their this This has relative the our months a rate burn airlines all a special on gives driver rises we loan pandemic primary efforts business impact was secured for to loan-to-value stress increase models the exposure combined a with XX% Most of it to domestic in to with to XX%. of adjust placed of aircraft basis, capital current XX%. watch them. such, pre-stress borrowers On As upgrade years to rate the two having believe airline closer from loan-to-value test is in

leasing The years. the of average for in of We X% XX%. demand exposure origination portfolio consists majority portfolio, Europe, age younger, and average values, Based in aircraft more as As our of XX% the America. with post fuel-efficient the North most the the is is the XX% aircraft being portfolio pandemic. of X.X view Asia, narrow-body for an on loan-to-value

loan-to-value what loan-to-value is on rises the and today's However, test believe XX%. value, we to based basis, the to a is stress on closer XX%

that, With to Clint. back Okay.

Clint Stein

Thanks, Andy.

total Given million and our of approved new repurchase to earnings Directors yesterday, X.X stream a Board program XX.X%, our share strong of up shares. for capital

we arise $X.XX should further strategic quarterly the M&A. business, morning. options In special have and dividends, this our right our excess of repurchases, deploying regular capital, addition to including opportunity dividend We investment a full in for menu share announced of

dividend the of be comments. will November record XX of our shareholders paid close This This to November business of prepared quarter's concludes on as XX. on

are questions. and open answer Aaron And the Chris, we me Andy, will with reminder, a now, questions. to your for Tamara, As call

Operator

Instructions]. [Operator

Okay, Feaster. have line via go Please of we line a on phone response ahead. David the the

David Feaster

down are competitive I bit. everybody. thoughts morning, get sense loan and just wanted of growth. on a Good a to the Originations dynamics

the trending, have any and of is appetite loans, your the might maybe landscape, Just you your curious forward? thoughts and pulse clients, going how for just just new competitive your pipeline

Clint Stein

Andy opportunities back bankers look we to traveled market is footprint, then see occurring fill things much and and start, And has creating more as going that's optimistic. are on, as our And are national time doing, and turn of some the There bankers the extensively it that's of disruption I for to opportunities have that getting the We things clients. us throughout I'll the Chris banks large some Chris come well. gaps. over some with at. and every met well. I'll some our with in our that a that within are our And

I the was that think but of we mentioned what production a terms from on what percentage there a the at. is was bankers second standpoint, basis, in in the what of consistent similar that saw the things down, quarter it we pipelines terms it I -- rebuilding experienced look are pretty with a to we've just seen getting with our in

for of that deepening last step and we're we a us And that liquidity still so and definitely it very and with of that of competitive unfavorable that let team perspective. on we're our a And tough found But very It's the way that all more of its the environment. six that of The hard months. have curve capturing making the balance Chris provide Aaron, nature. to his folks a back is sheet lot in home importantly Chris, that things Andy business and yield are that we're sure and working gives finding relationships new that, optimism. I'll all with has their

Chris Merrywell

would and comfortable cautiously that in say, Yes, echo talked be David. with morning, at potentially and it Thanks, in new come everything cautious right continue that general road, credits that excess just pipeline and the optimistic and with where, that on news is to yield The time cautiously I looking optimistic, say that is what the takes the itself, liquidity. curve in environment is have all Clint's Clint. in where moving extra the see comments to overlay would at COVID what considered about can in we expect on. down the to of direction. Good But we're I at, we bringing a the very moving direction, environment and with the it right the of Andy and it's at in loan say the and you they good with yields probably can I is, what

share volume again, I everybody. fair is cautiously for And we paramount optimistic move forward. New and winning our loan we're think as

David Feaster

good of Okay, what I only growth But helpful. just implemented. out the of I performance one sort this you've is got forward, and then about mean that's this And do of two concept going there we've plans organic how and of beta M&A of this just or a on this capitalize you that backfill market some talking kind for going you these expansion and concept plan how to way know think or NeighborHubs market do test forward? lift-outs and for use you're to potentially just about with disruption

Chris Merrywell

some Yes. that in different ago. square in of rooms traditional been at in have space. two available. there and new you into around areas we'll we're nature consultation the feet and and question. seen are. continue feet, options with to would typically that more easier talking than people a and that is where are they It community concept And the Thanks years well look are the it. that lot to have and manner of square itself, The for less market go X,XXX The for sharing digital into It's the concept concept the things a that built certainly a and around within of X,XXX branches at It's received about that not out built what to fits transactions solutions draw first.

we we using concept to where can X,XXX best do can about we do downsize other them get need population X,XXX, the that. how square branch that we're the maybe the a of how thing things have foot using then is use all model. we centers network and think and some into I But to branch same it, You do how our traditional

driving with those I as there have we're being rushing to out success are bunch into now, relationship results. regional wouldn't and part a pleased commercial put will piloted full we're the can to we're that our really support them at they we few out great take branching. certainly brand-new of strategy a it where the of We right is loan say looking our of that volume next level teams bankers having commitment but of branches and a areas, the and what other where are

Clint Stein

what And they're then on to of at learn really can is years And opened how add little learning I'll the network. a we just that, was ago over with that some in technology, first one with Boise, that and NeighborHub model to and labs that is how the getting take Chris our from staffing apply that's can existing different. we we and the two the that

though And may I over think drive opportunity NeighborHubs. from so to four change, learnings through our greatest And efficiencies the two facility that's next probably these not physical we can the some even our that years especially on the physical group our the applying footprint branches, the retail more -- it's network. complex, entire much with The it's of across changing of is actual leased. banking

I lot just dynamics in I different, play here a more but concept much a having there's of think at than it's guess, So markets. that's certain

we the I is think the that. bigger from do learnings with potential what

David Feaster

play following kind your I Okay. sounds a DNA. is It talked And in into might just really the That's we mean up that, past. on savings just like this of that. Cost of helpful. part

expenses forward? kind how your this and and do to Just inflationary thoughts and how using think the that you and wanted about downsizing branches some on various concept, have headwinds going you combat to other get might expenses pressures, initiatives potentially of revenue

Clint Stein

and as last one, what a aspects. are of here was regional think building terms in pretty touches We're occurred tools that all where line that in as paying run today are let and Aaron digital as two But the is we've traditional because geared we it that a receiving think dynamic with how when will a a XX rate. of NeighborHub we'll minute we he's that kind question, paying COVID at and of consulting result available I that about and the different transition of and to about sales receiving, well many things function X that we other people next a orders, and And of activities invested help consulting. that's the accelerate And that each staffed the largest toward and thinking in and our the occupancy the concept for acceleration talk down looking And in stay-in-place think months on sales it's we really that there through kind branch will our really the to and and the items. that from pipeline the come model NeighborHub the versus to staffing our functions. have response things the think lot question

And things break. testing and take with us that that's do custody given Actually, done requirements different another. our where I'm don't feet people lot branches, we're have where able know that apart two we to, simple I of we dual things equals two have staffing do money, you I some are are opportunity better our social one transactions, counting have to I this guess, standpoint. missed piloting makes it's and great if novo variety sense. we've from branch great that add volume the base. higher been now and onto that efficiencies it and branch to we that's think transactions And a what the that to building we're given de a do thousands our and there. that distancing alluded works to like its have of piece, folks did If a that some challenging is sure people in NeighborHub terms real response. that of technology in just is technology there So and in and that I daily to earlier, downtime, process some how lies thousands -- Chris locations you process -- and things from and less Chris, customer a have that's fewer of The the what wider

Chris Merrywell

that we those that's of our de by evaluate. evaluating the you bankers and values think the time. be part our that. And concept of a not captured pretty at be -- consistently it big like you something to that the there why to seen are It's obviously in walking may I anything captured our the well. And DNA. David, equipping progress the all And and beginning we rash the being we're from DNA because NeighborHub our it's table and for looking or consistent over is it's it what transactions said as around in is the It's And novos more clients it door. outbound. when And -- that decision you well you've the is for pretty part them. strategy ongoing are our help And within turning many as there not bring years.

sharing turning we out rate environment. being results group you've because in seen reaching more now the to with all the that So of clients, the mortgage outbound how and things the them they do, right into are

road we're While will that anything I things, help but such. financial And done, you departments accomplish we're continue sure let out we've can and I'll that in do. and proactive we else And that where they making on what the offset know stuff areas down that's our that in run more look to much those Aaron reaching to the of mortgages many do other the we think add to and also in aspect. of we services some already trust clients, rate

Aaron Deer

redirect continue little But Yes. about unfunded good a of give just quarter, heading project into the there's drift think even this some But might to that we over up pretty tick next fourth streamline were hopefully, try things. in I in bit, guidance costs provision probably and what resources I to some true-ups still areas, we going look year-end productivity run see next always mid-XXs overall we're certain kind might that continue it commitments pick quarter. you're more It's rate, up ways some our see and if to see for on to could some we'll time. And the we quarter. to year, right then direction. revenue-generating to those into is to areas look that the the continue -- in and Heading to and down find feeling increase as

David Feaster

Great Thanks, color, Okay, everybody. quarter. helpful. and that's great

Aaron Deer

David. Thanks,

Operator

you. Thank

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

Jon Arfstrom

in. little materially have of Maybe wins It to with point, levels Great, bit change seems of a a everyone. you talk and the you've worsening that morning, over conservatism the like Good XXXX thanks. in some built Hey, in put bit you reserves. about the for like quite adequately approach feels need to you're more it reserves, you, drive again? to would what need happen reserved at to up but for go what for reserve Andy those this would the need on

Andy McDonald

occurring footprint Well, across and biggest there the get our the I that would shut think to is another weather the are Europe, example, there how the are in to difficult wildcard look a storm El you evolve. for And very Paso, weathered probably down, country that's seem situation have places pandemic at like pandemic to I portfolio in the think is biggest back-to-back that so the goes where chunks to storm. businesses then alluded into first still. back But I that the if wildcard be what's continues

Jon Arfstrom

it in seems that Okay, is that but place, in you've you fair? thinking some into like put built overlay the of that

Andy McDonald

Yes, that still we historic degree certain a believe numbers. itself the to model on relies

we got losses. You long to had back where go way a

for is a exposure and to of while we will not and and prudent specific to it necessarily particular have and going And be given acknowledge to loss our for that some in South numbers. Northwest particular of add have Boeing, I Dreamliner it's outlined. concerns have announcement then, national And Pacific somehow believe there into XXX of default some GDP going reserve. us unique captured Carolina we direct a part your lot so unemployment don't the course, to that a that our community the And leaving ripple. sort the to of so we it's of footprint, And segments that

Jon Arfstrom

clearly of do the then net fair little you will from Aaron. I some is, bit But picture again, the you steps can income because touch to a now decision the to can some about to the that offset want margin expectations the And set of you're terminate okay, you pressure? of way the like the in called grow I some continue Thanks. guess And feel release the big you Okay, here? your on collar, enough. talk to and take up you interest it out

Aaron Deer

our of go washed think expectation see Whereas rates move higher, kind in Hey it's I We'd any with we is reflects would of that the -- Jon, had benefit be yield gain have in benefit terms that just out. additional negative there. rate The was to down that that see Aaron. the risk the diminished. do if to rates really to have could respect collar, there

that time and clear to as just rate felt that will right the So been locked would remain to that in that, -- in. And has result lock rate a the is of that in that's run then of run be the benefit having a note, like in. it just I the

you're benefit rate. to So going not is existing from run an that. the additional see It in

on a it's In now the where at likely continue in terms think optimistic rates yield a I have where curve would given expectations some but margin general, of I obviously to there view, pressure of least are shape the and like see we're to core the to right more the -- basis.

you're and numbers, over of and PPP these points looking at million getting securities are or into funds into it points. Now $XX basis from down of yields. XX yielding if that basis is redeployed we back five loans, round kind down quarters, you excess at those past this portfolio, is securities turning basis The is we've I'm probably the And of portfolio. over liquidity go million out offsetting pulling time, away securities But it look in and effectively right? still side as the that's on liquidity. getting couple We've but Fed the X%. the and and got just over going XX higher assets million benefit points. the some or funding another loan should you're PPP $XX of into sub on that most $XX point got of funds say

something loans there, you're you'd the back picking of it's driving And yield but not -- be or a kind up as that getting so be if that to it better you're though if getting it's in rate environment. into we're we were to going

on sense PPP also the in be a away, about realizing pays those either where you aspect $XX lower-yielding of of just on both loans unearned are to that but are as going to fees the the that there, that. there's be we've will PPP amortizing down So go from as being of stuff the recognized in forgiven. give having And million some loans income or volatility we got it,

volatility, forgiveness, all add going the especially quarters the gets those over some probably that's to forgiven three next that presumably. of so as two, And bulk

to some be a margin. the continued lot think but I all going is pressure it noise, there's of on So underlying core

Jon Arfstrom

income, but like interest do dollar, to the the you I got deploy defend net you've level. you NII can feel dollar the well, amount, liquidity feels And as guess, some

Aaron Deer

confidence us think what's heard we is objective. better able the That talking building and that and of should that hit some target. to see on And loan given terms happening help Chris think in pipelines about be front that I that growth I you should able to that be our that

Clint Stein

to challenge tell in points I'll through of and it that went and add in all or just items impact contraction as the margin expansion we included Yes, you that, variables kind or Aaron nature. makes that anything of the of on that expect are it that the a basis three zero

interest internally our conversations net the with income think business interest line conversations ALCO around the I really are what those that's at and key net our of income spot. expanding and our targets centered like bright opportunities so leaders, And look are and as have for we and what

securities on getting move we're in NII. there's mentioned, into, if it the basis book, is funds as even Aaron those pickup we XX overnight As points a

given So rate that's we amount and focus, the of very have. current the much that environment current our liquidity

Jon Arfstrom

I number. Yes, That's a agree. more agree. I important

appreciate I for everyone. it. thanks the So help,

Clint Stein

Thanks, Jon.

Operator

Thank you.

Jeff from of go next response ahead. Your the Please Rulis. line

Jeffrey Rulis

morning. Thanks, good

this the the kind you maybe how about have with shared it perhaps and follow-on, Clint, is liquidity too, liquidity is as XXXX? discussions that timing just surplus system. in interested -- that the be we out that thoughts for the going it are in a or a Maybe you outlook Just in on And a the I kind any your bigger of me plays of XXXX, guys internally in outflow to question of of a while in liquidity strikes of touched this for stuck pace industry, mean the bit.

Clint Stein

typically We've last lot half because That's the a over the and compounded $X.X it's seasonal us And then question thinking couple spent back it's of given question. of stickiness inflow time the billion and deposit of have in that quarters, for of we it. about the us, any that growth a of for occurs great year.

business. search And deposits what they're I of bifurcate bankers growth and and what are so are trying and our to some between normal really new activities the mentioned winning out of

And that of some business very, are significant very deposit relationships.

But to challenged through. course, We year-to-date we PPP the that spend but had details, that they or to walk to ourselves forgiveness, number of just gets talked the a get stickiness is quarter-over-quarter. that so have about something And Well we've And order you added think and have noise about money. forgiveness. growth in all we in. from can't seeing that get there

and almost few about money of obtain than it us. depositors billion elsewhere we when that we so because think those that be And a more hundred with and million it's put have $X PPP, to related the actually PPP could deposits

customers peel just trying they're is greening it's have back layers that then out of so much great of how is much And onion how figure up, the been that of and the to years. it

more want either Some because doing the certainty. investment are for very on they're of and their well, in their just cash they them reinvestment very, own or sitting purposes business,

because team and put of issue, their a conversation daily bond into part And of Chris So to in -- I much them. two it's jump of how and the the terms a daily the that's quite back the I'll almost struggle and had between very in let but add have not is this perspective that market. that know and been Aaron complex Aaron

Chris Merrywell

Chris, there. This Yes. and is is it almost

because stimulus. to describe businesses put investment an and business things be as we'll they encourage an out. maybe with that winter just little crystal and there's have being to of I then start a they're things We're pull there But of lower for are would make us at stay what some seen, people what spend else of I part that how accumulated those investment of spending. bit sure funds very And down to the would choose Do of that see ball more may of are and to always they another saying. mentioned, Deposits other them out some some or thriving. that aspect? of to record plays it in is to But trying get time? that the conservative track Do money of a are them of basically the somewhere add humping who it is, the think that. that Clint as I couple nature. are holds not through that They some remain what side and is in on round to

in would I it stickier. and a announced, add there. to what anything. probably lot continue So outside I'd and think And I coming knew what's we think us a round see normal sticky. grew was more see as today going be I about you're if comfortable stimulus, remains be those Aaron things. between been tell to another is could the two And with you it to I and let second our in activities. I'll what that, saw of seasonal happen has And of you say quarter it's and little continued But conversations, -- for our results the then

Aaron Deer

and try of But up. think, of a we understand summing a behavior. continue analysis I say do to good that No, job depositor Clint lot Chris kind would that I just and did the to

Jeffrey Rulis

the appreciate the given But touched hotels. your you Northwest months the on in side, and question, again. maybe winter kind I Andy, variety of the my -- the there. on knows kind other thoughts kind restaurants, the of who And exposure of hospitality

what it's for the that? or practices, they've that point to business but their as borrowers some borrowers As do a are they trying a into maybe saying to or more to changed at group indeed being get maybe prepare white that, black you adept new outside sense a for can you talk environment sense normal guess, the a weather winter at months, and a versus and a that's tougher get that's they managing or I colder indoors little

Andy McDonald

I one who [indiscernible] the the summer example, they liquidity places. a collect would get going key have on had is collect to go overseas to worse quarantine. the Oregon together winter flow because people that people same it of those in turned Yes, did there. or to summer. be But winter vacation-type that easiest lot the end, Well, not talk of places and aren't get to everybody travel an a about on example out interest record comfortable the when the can of hospitality and is in getting looked Certainly, to something, together some with airplane won't that A organizations cash Coast get is, would the Coast, X-week enough vacation they spring, Dolls folks but different flock was of hotels have coins now have be more this incremental my and what I portfolio that the would Barbie in stuck different right, we things saw canceling. out to the occur meetings able where so consistent Well, yes, this an meetings. we to or be back in kind properties, those Hawaii, to people will Coast that for out the have or lot next of with generate season convention. have on They business to Oregon Oregon to think still or behavior is and that not

was that have our sufficient the owners if into borrowers with summer project the get season, now a of season. And to be we're liquidity going generally to successful they exactly So that's of out to people. are what And very amount what next on. business out that's have working summer accumulated coming optimistic we

a where mentioned, adapted they're around see us how challenges. lot of. So have very footprint a already it traveled of have Clint and they're coming of businesses again, has And good, to the encouraging pretty especially these to lot been feeling out as

story did But we summer how better. have because now, hotel if with occupancy during or you liquidity that generate you able lot a record and able segments. had enough those end revenues you you attendance your is at feeling were much I you still through conversations that's ongoing it the dining, those the we'll we'll that's cautious the and of your the if those back know to come winter boost nevertheless, course, right to always do And that I the that. cold outside you be to and So liquidity as having. remain fourth more in get are of to get conversations assess because months why we're quarter And

Jeffrey Rulis

helps. Thanks. That's it me. that Yes, for

Andy McDonald

Jeff. Thanks,

Operator

Thank you.

Your response Jackie is go from Bohlen. next Please ahead.

Jacquelynne Bohlen

Hi, everyone. morning, good

really You appears It so what had than good some the bit other little trend far submitting conversations you've for forgiveness. I've been be to in a having. higher been of

to the the versus portfolio what lot to you be of and Just but for think some as quarter just this of for curious I what might getting curious interpretations, a know as -- XXXX? forgiveness timing there's you

Chris Merrywell

as Jackie and August, to third We've back the opened in forgiveness. up had actually as applied to -- far portal we've that about good Yes, we this a is response of Chris. had numbers go have our

that million over a this don't we've We a hundred dollars. to that So have expect of It's year. little get couple probably had X,XXX applied. level back

they're we're applied have third any you it it looking some say But borrowers, quarter. of trickle in. next that the Aaron wouldn't earlier, it that likely into most and for quarter if we're So starting alluded and maybe it's some forgiveness the to year will, first, even by trails of second and I about fast of already. into -- again, the probably third to seeing means

Jacquelynne Bohlen

you challenging what environment given say, in lives. going versus and ago? now I you. talent has comment that thank it year very their remarks on been people well press then interesting how helpful. okay, just working a of of retention was, a it part to terms a Okay, retain prepared personal have think That's during How in had as And both was the the it in release was

Chris Merrywell

things distance are that help has able creative issues to we've nature and Retention, ways that be bit good. actually bit turnover. of little stepping to around I'd so can work minimize a We're flexible. to say, been finding a Other been members we of learning, pretty team little in so

is positive. conversations, I that's always calling and that there, wanting that us and to we're of things you've a that probably think talent seen see going the very I'm to us. high-quality with work the From to and on all that optimistic are in reengaging that come more is starting disruption out there bankers the are

Jacquelynne Bohlen

Okay.

Clint Stein

in consider few uptick small add folks normal on what I'll would couple pandemic, that points. saw you the or a to age just months, that the retire. were a Early retirement first we of beyond in elected a at

in I with. they pandemic think to the coming and of was a than deal wanted to uncertainty work strain environment more

understandable. So was did a we see of and that bit little it

a across of that maintaining Chris when culture. to maybe is starting team in a footprint I remote with things keeping and in some a what one done on the think think that our I outreach that that job challenging as a team environment. our outreach employees. to folks And really that's you're very And seeing some as organizations we're have terms And good And get that work culture mentioned, that of I of we're that's as of bankers from the struggled management regard. we're in we've other think, that organization. connected that maintaining focused our biggest other challenges seeing we've from of their been

encouraging we think -- perspective to guess, as we'll organic time what be do encouraging from able from an in standpoint that's an of move so terms an And I our we forward.

Jacquelynne Bohlen

the second XX are sums And included that up I then that the of it just branches And count the lastly, in great. the was quarter follow-up part fourth a closing it. you question of to actually just answered XX? that’s or that in no guess to Okay, you two is that my

Clint Stein

to up sums XX. It

Jacquelynne Bohlen

XX, Great, thank okay. you.

Chris Merrywell

Jackie. Thanks,

Operator

you. Thank

Your next response go Please is from Matthew Clark. ahead.

Matthew Clark

kind Hey, versus good fairly just unusual been of morning of still here how just quarter? maybe and coming on get new sense customers whether a there's want this where or robust guys. for deposit much On it's existing growth, I its -- from, anything to the and not it's

Chris Merrywell

was unusual for tell third quarter, mix but you new for the it pretty the business. fourth I much quarter can't a between

of mentioned, clients seasonal the some and some accounts that bankers Clint brought some and As had of just new as in spending just increase the is our reduced have existing pretty significant some habits. it of

side, return back more to as nature. saw normal On I mentioned, of card spend consumer a we the or that to with approaching normal of and things

We see bit come most if hasn't anybody And we're wants week. a to of that a commercial. a it's So day big the watching or frequently been I'll about almost during -- that's that. mix talked add to there of something where it -- we of daily, anything and that been yet It's again, And I it anything a out nature. in it's watch see but... runoff

Aaron Deer

that, I that the just up. would characterize would or the like nothing was Yes, number character. a out broker I that any that happening could what's lot that certainly bump deposit add front unusual. on of -- There's something well, as say didn't of We

Matthew Clark

be pipeline able I'm your ex not then of on you that might or prepared if size show the you linked Ag? loan to year-over-year during net whether growth sure pipeline, the quarter the And the on color any but comments quantified just is not and expectation either Okay.

Chris Merrywell

previous where understandable that, say typically can I'd tell you rebuilding the is We're But I cautiously amounts the it's in The years. it's a were looks that like. on we're the comparison. into positive we fourth pipeline. yes, don't environment. Matt, the based quarter not we for optimistic what on year-over-year that's rebuilding. share of

Some nature. timing closures of and into may that the kind play things of year up

Matthew Clark

also buyback any I M&A whether on you might conversations And an the aggressive management. M&A on I capital on give buyback touch what they've just picked -- get update Okay. in you us active commentary around the conversations. and up? how then and with terms guess could wanted if to of

Clint Stein

let those. for a with Yes, period tools various things from very in what and pandemic at with well long some we're the comfortable the new out buyback see expired comfortable plan management of that we've current we've we're levels, a done like. has played May and And had decided we capital a scenarios been one very for of capital view. look looking our and plan wanted we stress We're that used capital the to might time. how And just time on pass with we the and test all point before of

around and appropriate level, like look when flexibility of the volatility wanted our portfolio Our going we current the bring the tool the we to just expectation time that loan back forward, at and that's market it performance felt there, mix. the ACL into the was

followed anything give specifics a the our very frequency and or but dividend those higher M&A I you us for think and and can’t of for time, know we period capital good goal levels. that to we've and of capital total significantly and so still special And have X% repurchases share And the you capital that used regular combination like that stewards XX% or long of than you've or we're we've levels it that with manage long-term I any TCE. been around dividend

we outlook that strategic went with it. on be to to the appropriate, I think as stabilize, everybody industry is has is quarter four difficult starting that hunkered on of we'll business And to use respect the that started folks I So think rate tool. the down clarity to second you for third the be the two of quarter. environment for operating And faced think kind and for next With we'll M&A, when started is to own the I they with their much years, and it will. get were reconnecting environment to and going started if the --

just the from all and scale the that for will challenges, comes expected. shareholders value need have that think that don't their that drive banks the not to seeing touch robust So in one the of the pandemic as tail M&A -- call but credit we another end of M&A be ripple progress the what conversations, necessarily a if definitely with I through they and there's and staying lot I'd that

see M&A we'll an to there And industry's from so think And be year. going the pent-up in play I think opportunities and just really will perspective, to I think think for start that there's out coming demand. some I be I

Matthew Clark

color. Okay. Thanks the for

Clint Stein

Yes.

Operator

There remarks? closing have at are queue Do you any no this time. further questions the in

Clint Stein

look thank to you fourth Well quarter. forward speaking and the everyone again you we after with

Operator

concludes today. us presentation This Thank hope you our informative. you again found webcast joining for this We webcast.

have disconnect You may and now a good day.

Columbia Banking System (COLB) 31 Oct 202020 Q3 Earnings call transcript