COLB - Earnings call transcript Q1 2021 | Columbia Banking System, Inc.

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Columbia Banking System's First Quarter 2021 Earnings Update. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session, instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded. to President call of and System. like host, to Columbia now Stein, Clint Chief would turn over the your Banking I Executive Officer

Clint Stein

the was accelerated our calls, to you, market core us dedicate review our quarter remaining available our time a and Program attract quarter results which relationships. morning extremely The investor columbiabank.com and typically efficient team new us Thank released During weakest. building clients. today's are morning. within seasonal first world. and able before despite earnings two who dedicated in which end The presentations externally Protection is we few for clients release the Paycheck on bankers we that existing at last you to this our joining everyone are of of supporting as call the was operate which at Welcome They show I've determination of Michelle. the full attention accompanying to post-COVID opened thank first good bankers on and year not allowed past to commented the deepen and momentum continue up pandemic. focused our in-person confines the Their the limited round our their The earnings to

new quarter. and record set high As had of quarterly achieved inflows old a record we result, a deposit loan services financial our just originations. We for group PPP the first quarter the quarter impressive revenues surpassing new last excluding another for

this our build well-tested our and federal more response the our stimulus time state same shift strategy in to employees very while ensuring clients, time of the and of forward. gave changing our clients. to our ensuring met to and strategy evident teams loan early of needs of pandemic every the continued deposit more cannot business loan continuing that same to of We and at are be were mandates performance to time, in proud our of outcome our pandemic, programs. well support is plan and which we At Our new our longer-term benefits as strength a on their the in the deliberate resources move response all one as of throughout safety plans employees. immediate pipeline, growth, activated The the production focus

team, economy. very meeting a relationships while the expanded clients other improved of the we each and As unique with our operating challenges and leverage

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

Following your our open line take the prepared we'll remarks, and questions.

I statements we during remind you that forward-looking make to may need call. the However,

turn our further this on either call I'll information forward-looking our filings. release, comments, the to earnings please time, Aaron. SEC At our or For to over website refer

Aaron Deer

morning, And Clint. good Thanks, everyone.

the the first a Columbia pre-tax, generated recoveries pre-provision net yields, During to due to $XX.X and inflows deposits of due $XXX reduced and pre-tax of quarter lower increase $X.X ended banking accounts from non-interest-bearing largely to million costs, share, expenses. $XX.X throughout primarily an our of security million and was investment of activity lower were quarter, the million of quarter income up attributed less tempered billion, our increase footprint. two spending clients. funding as well spread mortgage from including The asset of stemming from income Total federal down were The $XX.X new is quarter was by stronger round prepayments. as which rose a the and income PPP, relationships interest interest at net stimulus, year-end. XXXX, income and income combination pre-provision $X.X Compared lower XXXX, fourth to per or in million $X.XX million,

low. quarter the Total to of which from one cost quarter dropped $X.X was our an at point linked million of all-time loans increase year-end. deposits basis $XXX ended matching basis Our four billion, points

production Loan two production million round including $XXX of $X.X $XXX million. billion. quarter balances was increased excluding First loan PPP slightly PPP to loans

brought Much rate non-accrual on the basis at behind XX overall on of an prior the on quarter impactful net an the income was XX were income tax PPP a which loan compares most New was XX a factors interest X.XX%. excluding on drop decline. slightly but to the coupon basis large number interest of which of adjusted X.XX% average on points the remaining X.XX%, down to linked excluding interest quarter, basis and portfolio, drop, on from rates of together of There points PPP a margin basis a lower points basis. was production of loans, quarter down coupon was less $XX.X The also repayment certain loan stemmed CMBS of in which pressure. about million. contributed recovery early the of contributed linked Non-interest

offset capitalized quarter originations. prior due in two of PPP mostly Non-interest benefited $XXX,XXX The XXXX. mortgage data benefited origination compared processing This the seasonally on with So decline costs, when income, $X.X million of favorable $XX.X costs from pleased and for compensation linked this mortgage Notably, up. by well we $X actually quarter the linked first held million partly was impact was both was volumes year of first banking million round a slightly quarter modest from just expense was by were to basis. loans. how the but that the our expense quarter lower quarter of round up two the down

we expense rate Provision quarter basis year. run return addition, commitments. mid XXs remainder In on million a for linked a billion, a $X.X effective rate. $XX.X a upper to the decreased of $X.X million representing quarterly taxes income the rates for provision unfunded for for to to XX.X% recorded We look run our

rate that, Chris. to be XX% call turn with in And to We expect XXXX the range over the our tax XX%. I'll of to

Chris Merrywell

year. in and deeper quarter. help to businesses in and This our with viable and flows Aaron. what clients Thank upward is We typically worked momentum, their past you, resulted And production and in the evident them our remain morning, everyone. has low the strong relationships deposit which loan seasonal over is good partnering tremendous hard healthy

While round has usual begin we a win PPP major this has year during exit as the to and us create crisis. to also focus, new to approach business and our production opportunities to communities tough been business emphasized allowed loan as new economic have

sixth be is investment to within typical economy. two a of decrease and quarter funding was shift As and of paydowns, as from partly Clint from $XX million the in excluding and expected to million record with come. of $XXX we first follows production was a million set of well during in new ever seasonal the existing the to Nonetheless, lines loan quarter the loan highest months year, the by production to $XXX fourth quarterly decline offset the X% generate are round uncertainty a noted, and million. as respectively. delayed PPP quality achieved which a loans, in we continue $XXX with optimistic the pipeline that was of This utilization record production due last year. agricultural production pleased past Loan the production quarter momentum headwind to in quarter X% PPP loan The of during is loans, the healthy

where this XX, loan qualified two in we March round round supported we one, funded and our loans X,XXX we did over PPP applications production than received applications. clients round all of in As more

support proud providing new our are support clients. We critical by both of to existing in communities funding and

Since programs. at PPP the were over from XX% of non-PPP opened XX% related Excluding X% mid-August, forgiveness fixed, quarterly the fixed, end X% the of the to PPP pay-offs remain in in pay-downs, XX. unearned PPP, received and of billion loans. benefited unprecedented our increase income, mix round impact or portal XX% now and quarter. Deposits relatively March we was with to the - as mix $XXX compensation favorable $XXX is two Overall, loans, million quarter at C&I - variable. XX loans floating have books billion million composition grew the months XX% variable. a floating $XX.X production Gross in quarter all first we one $XXX additional of XX% to the The unchanged by of the loans small portfolio of round PPP million due the and over of past in an and portfolio XX% first $X the

during Our increase was deposit as of of base mix at was demand non-interest remained and deposits half the XX% business the quarter XX% evenly between consumer. bearing. bearing and the XX, Over deposit and interest split in March

deposits account comprehensive new Ballard a location, Boise we from Tigard At loan as offer high, mentioned robust drive towards including was services down will in of basis cost four geared to is quarter. our on achieve to when financial activity the by and Tigard investments, financial revenue quarter. hub financial liquidity We a like declines on hub although of branch and of financial trust to open remained the customer's residential $X.X over increased XX% financial points. This trust July. quarter same XXXX the helping the and fees continue other revenue March, an hub up services goals, or the and deposit announced basis, The declined year The at financial drove Fee in industry-leading sheets. end and and our mortgage Tigard balance a scheduled our considerations. the exception the new to rates Oregon just our compared slowed clients linked first it XX% in million activity move prior NeighborHubs, banking their experience to offsets quarter up

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

Andy McDonald

Thank you, Chris.

charge-offs $XX,XXX led reduction ACL Net provision totaled million, of the year from quarter's a for only $XXX.X to of almost This end. the $XXX,XXX quarter. release

to the annual quarter. with to rate last at increase predicted an XXXX unemployment assumes X.X%, domestic improvement XXXX gross in forecast from for product Our the X.X% X.X%

As Markit which the showing continued industries, signs improved leisure for economic counterbalanced The noted forecast. is IHS travel our before, used stress of by forecast are stabilizing. and we in

significant overlay million amounted at As real continue $XX.X QX. to a to consider losses of commercial we previously, QX, permanent quarter noted apply we increase estate from combined what for an downstream Northwest job this These in $XX.X an employer. risk impacts potential a in and high million I

NPAs for industry. the to relative to was office for of dynamics of increases and retail allowance continuing the the the relatively quarter quarter and XX impact the closures restaurant PPP to unchanged loans pandemic shifting adjustment affecting X.XX%. X.XX%. an with restrictions points. driven the basis loans, ended allowance were We loans and capacity in at the period-end Adjusting Our by period-end in hospitality, business

as like adjust PPP loan not one believe always we XX Net charge-offs, quarter. versus for last earlier, basis XX points. the XX essentially have points as to points NPAs point due With move increased I basis basis more as quarter Past only adjustment However, this it points, to much provides nil a were basis loans XX, for did quarter, $XXX last last we capital as I comparison to loans, see noted forward. XX were basis was compared restaurants ratio allowance were categories watch loans or we special worse, Problem and migration We downward quarter impaired rated to Aviation, $XXX losses. million our migration. quarter, of from during substandard declined which to and the negative for also March XX.X%. the XXXX. credit impacted watch which define hospitality, million our where from saw as mention and consistent

run This deferral. $XXX Deferrals the the at PPP off deferrals from most of portfolio, to million we year. the end expected. the had active part, continue of deferrals Okay, than in million the At X% is less as for of loans. or close quarter our in last $XX excluding down

hospitality retail, our loan our classify portfolios the subject elevated aviation risk an these as or to due XX.X% to to account of In continue of and about billion aggregate $X.X portfolio. pandemic. portfolio restaurant level portfolios We for

have XXXX. portfolios our As alluded for few portfolios quarters, metrics of Both these Problem from loans very and healthcare stable modest this we to, throughout removed remained dental classification. the past in exhibited and $X There as $X.X deferrals basis quarter the in than or than billion one million combined no were dues segment. less past portfolio end. of of portfolio either points on less this were

those is in at the largest loans quarter. end at $XXX Okay, the so million segment outstanding that the we Retail classify. still for of

this on down problem While we loans year-over-year. are impact actually portfolio, concerned over remain the pandemic

difference only and points retail a basis March of We segment. borrowers XX. this have were loans for in no as Non-accruals past made three in were our loans dues PPP this have on portfolio. no deferral certainly

loans million evidence the in these a in all results. during the represent we In however, While declined cautious, problem positive, statistics about of to continue $XXX see be at mixed Hospitality footprint. from colloquial and are given quarter down shown bag XX%. segment our now the has we XX% of portfolio, this total

clearly travel about properties million than a during business accounts are assets increased and from account $XX to original portfolio assets year the about Leisure leisure which of struggle. business much leisure million. which pandemic negative migration There oriented. end. the of are However, properties the criticized continue XX% in $XXX which we increased between to business-oriented from bifurcation did to have for weathered better XX% to for while a expectation, see those, XX% XX% XX%. those substandard for XX% the oriented saw The is a our million and quarter. of $XX increased from while our Restaurants, loans Problem portfolio, modest classified accounts amount portfolio

at for We meaningful in loans restaurant operators. retail quarter million have portfolio have $X end. the Similar impact in businesses, about to PPP a deferrals this had

occupancy. of March at of As were operators XX, XX% XX% our restaurant

to by nature economic this of XX% put with place as recovery in Oregon move has the and forward demonstrating rollbacks for the cyclical governors this we Washington, and both dropped pandemic industry. thus today, of as in However that

summer This people month dining vaccinated, bode be will footprint. increasing the Pacific for Northwest. in combined arriving, our the well restaurant all returning with industry the becoming number with outdoor to However, of the

aviation $XXX year was ago quarter. by million the the roughly from relatively at a Finally, stable about million $XX during portfolio down

over past call some by were customers news positive that, All were airlines the continue this be quarter. the to agreed with been as to With and the deferral. end has all pay projecting area turn quarters, due. Almost past Clint. this positive no no cash loans in As of flow I'll back in to, loans on

Clint Stein

Thank you, Andy.

social the our of to proxy to our Columbia XXXX principles. information To governance corporate social invite Bank's we about in alignment values. our corporate commitment you our is found responsibility full ESG new website. in commitment statement, in more our you environmental, in There this Investors supporting with our visit efforts noted to area, some learn will section As page, and find

this Our regular announced morning. quarterly dividend of $X.XX was

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

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

Operator

[Operator Instructions] with Our Rulis first question Jeff Davidson. comes DA from

is open. line Your

Jeff Rulis

Good morning.

Clint Stein

Good morning.

Jeff Rulis

pegged mark recall margin. is the Clint, of size date bank Question half different here - on rate interest on the now in you margin. kind liquidity, - just Thanks decline but I bit is back But longer term, a environment. day, a as myself and sort probably guess peg we've that a a tangible Might term, the to got back quite longer the X.XX, just of I to of overtime the trying

Clint Stein

we is you're there that a different respond there's mean, And I - Yeah. lot of Jeff. that. ways right, to did

that shoes, guess mount. business been that Fed You continue being in and the steepening, think with - have that this what range the driving I different balance the and to liquidity is to focused meeting the that liquidity I kind there long liquidity about you've past that's our look and about what's compression. think environment through the Aaron work really think Aaron history why environments assume if And past with of doing lot loan remarks I of things have there on this to that and a week if lot prior gosh, terms in curve and that's know, of know are manner and of rate income, gravitated something years, I direct I his in deposit But a and maybe think - the Chris the our that's demand, interest normalizes if cycles. his ratio the to now time. toward. onto pressures come to that's of growing and Yeah, environment What, comes sheet I'm seen of year, net like really, and behave I business starts you continue inflation the period long a in do variables or the in because we'll I lot efforts talked throughout our bankers margin we've terms anything? a the things prior start the the absorbed seven we've deploying team don't think has some our of that us the and consistent done has you'll yield so seen liquidity. and to pre-pandemic company been you've cycles something your we will and been production see we've that eight that the excess that rate what of with in say has great a I up for that's what But of in over think prepared and

Aaron Deer

would I just I guess, add. Yes,

new Clint million deployed loans. of some X.XX We to sure, at of right? should is, trajectory. absolutely there's Our that, loan know, that heading top had we're and is very that's liquidity So getting we inconceivable. the [ph] now in, right we environment fees get you reality on least a as start be rate said, the [ph] But coupon has that back production of X.XX this be a in back the environment better in but

Jeff Rulis

guys. Clint. strategy it is Maybe but I - would I big just imagine more appreciate margin another if figure, little I the on wanted an NII a focused appreciate in M&A. I check to actual Okay, picture, than it.

and front the or wanted for of still opportunities while, any or at helpful. looking on toward update investing that on more in a you've would sort internally any inched see here, if sidelines acquisition-wise we've teams, to - lending as it been the You've focused Thanks. is be if business evolved

Clint Stein

that on out the said have think, is as our in and and in was of those We deck we investor integration, team shows - - chart we've of morning, part website of been have our many always we've past history the are terms part know, our and in put evaluating M&A You DNA. still of I updated which the individuals M&A that standing today. transactions this

focused especially the lot us work past did to we have I continuing that with. continuing that to environment. make at early touched of at think early operational it to that puts be really last consolidation that The we activated look and on half those spend but the grow there January going fact to the consolidation. we but over approach year in a really the we back going banks of is So to of rate it tested still out in months our look of place on we and of that partner And take all some business felt the and that we word use organic, A able plan progress on response opportunities our of I the feel have year, re-evaluate expertise. the kind it's to of the are position like briefly also, were we pandemic It efficiencies, in to and and a of throughout, pandemic, bank we significant some proactive industry, the face seek the before plan won't within XXXX. in just I pressures because and like to our that I terms

you're really more announcements level, in that see they chatter goal probably quarter. than our some reached out see come continue so that that M&A much our of expect would that within to when on you'll national to But going detail of shortlist marketplace. starting can't some that into on I we're get new who activity is the see to that up, that we're trend a and and sure point think things make have And call. that picking the do that. is I I And they

Jeff Rulis

thanks. Great, the Thanks thoughts. for

Clint Stein

bet. You

Operator

from Clark Piper comes question next Sandler. with Our Matthew

is line Your open.

Matthew Clark

everyone. Hey. Good morning,

Clint Stein

Morning.

Matthew Clark

purchases, new this on you the of yields start think quarter? the Can in as well. to X.XX% you there. security give experienced quarter us last want start margin was I I it terms Maybe

Clint Stein

end purchases. Yeah, list and that our some did curve towards the Sure. benefit with the we new the longer that, we saw see in of

a X.XX% were number that saw few for quarter purchases is that first while. the and X%, came I to the about first had in which we up that actually over time So a

obviously things as deploy. direction loans And moving the us are there. in and going liquidity we've forgiven So to got give with. work right to liquidity But to more are that's - PPP more

is front. there done to I would be that So, on expect more

- the you if As a necessarily be But mix but positive income. be on noted, should It's at should net it to, that better yield. not little to you it want we interest coming have. that's

Matthew Clark

then that X.XX%, think may Okay. - new be driven start bit of at I of quarter. points given the And steeper change was coupons XX basis on steepness a that's pricing kind last by little you experience the better mix from or of loan did up much to curve? How

Chris Merrywell

bit And I'd little Matt, Chris. this is of both. it's a say

it things depends And on during of deal, comes the and quarter obviously that nature. in some mix aspect what size particular it of of of the credit, of

a So, bit target. a it moving of is

the that the helps to that. continue attention of to think I and certainly curve and us, monitor steepening we'll pay

Matthew Clark

Aaron, the use trying degree. XXX-ish be do assets of in that then, you're margin may to margin securities on rates would at layering longer headed I'm some might you obviously margin if of guess mitigate what term, core a just it loans, help And additional you but remixing Okay. And toward month and happen I you the to in know, some be like your core kind where fees, incremental have seems is headed. to March. the get

with wondering helpful. monthly if you would had had core be not, why if basis. just that agree a the in - you That NIM would if and and then you So if on March

Aaron Deer

mention number down long But the about. and seems talked just mix is how it's environment, of have are that March really what the right? don't I front me. a that we we XXX extreme. not in zero down The comes - to changes stated interest in effectively number rate we've So little to

see Fed say happens more than I - and pessimistic the what would rate. with would we'll with But maybe view a that's I So have.

Matthew Clark

assume meaningful. be and an loan much Understood. give up order magnitude a year-over-year comps I easier on pipeline, the pipeline. of No just quarter? worries. the And It less us you might sounds lot it are how linked then Can strong.

Clint Stein

Matt. Yeah,

is through tell quarter-to-quarter, far to go quarter. and while based one disappointed. and market some of to we're to not ability - expectations certainly is on As things that it can continues the any throughput is, strong, how the that we have comes for as and pipeline the in you what much do the improve I we high our would

that so dividends. approach our certainly think so second XXXX opportunities. seeing half is more I the over the we're And second half, We're seeing paying certainly of

of - But investing low of thing and things. appears in a businesses, get might which rate but the are Our with people and to pricing actively that, all for getting approach new of taking with we getting second But taking interest relationships how of see then that the rollbacks things advantage is in very we're and is round at pleased here so that back plenty PPP on their and dividends in nature. that us. and down it we're affect where environment, all if structure engaged, pandemic how comes it we're and also any the we'll good

Matthew Clark

comp The Okay. there. FAS But the benefit And too? quarter, stuff. much of round in most and way mentioned, I you related the then can have also quantify the net just left this dollar how release confirm fees to on schedule in PPP decline you XX number amortization the you that. PPP in of can the was you related the and round just net then, PPP fees two one And think

Clint Stein

about PPP. million of quarter $XXX,XXX fees some PPP about was to the in also we to point out million. provision recorded $X.X item was material There was for related I'd the related FAS technology commitments. and The other XX $X.X unfunded at that kind Sure. had is

like lift PPP, in those which - second to what of to go going the looks into the as big and million unearned through the away quarter, we and terms the in The in quarter about that's year. tend remaining FICA XX. $XX shy of income Also modeling March of you're forward So will to first at out. a just head we and of that think about related as each contributions going have XXX(k) some forward,

Matthew Clark

five over, of round just amortize And came we I so how years, that you're different. much that something from assume can assuming unless two,

Clint Stein

$X.X you five me - it is assume - at - the wouldn't this way that that it we how so that years yeah, unearned $X.X although, yes, of were so to amounts put remaining guess should that the at So there had two. one, myself, related a I round million amortization, million had much way, to I and give of quarter if XX, during let think first you straight-line added year-end in we we with it but March is about PPP sense and income, the

Matthew Clark

to benefit, And XX Got million Okay. FAS of fees? I originated sure I you the it. want just you heard deferred make correctly, said $X.X

Clint Stein

correct. That's

Matthew Clark

Thank Okay. you.

Operator

James. comes question next from Raymond Our David Feaster with

Your line is open.

David Feaster

Good morning, everybody.

Clint Stein

Dave. morning, Good

David Feaster

all? PPP in investing NeighborHub versus whether just economic think outlook, contribution giving for where wanted of an non-PPP maybe is on the production just we from the real first just you start clients new quarter. of and from record your came to from started improved I new program I'm the acquisition confidence do curious to the see growth from? kind more hires any client much at the with kind How concepts

Clint Stein

could get XX%, couldn't and busy for of up simply more, And business XX% was of was very, labor very enough are They David, people opportunities talked But, in the context. skill-set actually just back that the conversation pre-pandemic, all hospitality labor. step right statement the but biggest and returned constraint just the as to then that the continue would enough clients we for the the and simply grow to with, you been give them. with numbers them. have lot keep I'll a pockets let clients say clients be then, Chris available the sector find our of hear dynamic. or about have that single and they There I'll their comment has would I things, with a they labor from start just our contact front in to they some Andy business that can't the with is to but going or

there. out know We there do a think about - So, that's thing also it, other of PPP I area. thousands feel helped that of lot supply talking of chain. there do I the has disruption we the within And in liquidity is market time our But the any like there. is spent don't lot have optimism businesses still that a really

things the the is that So, simply get for and piece ripples with they are and through looking with manage But directly something that of idled in. shortage and clients. the can our invest in production things chip of electronic or chips If not machinery how like they a necessarily components. terms because new or to delayed they

as think the will I for some the go of for industry clients. us things So to loose that for additional our and opportunities forward and create we break start those and are

Chris step and context. I'll add back his So, let

Chris Merrywell

support business support that total. is are and we're bigger situations at the a closed you the NeighborHubs migrating about, production of David, as well on I mix that I happening. over what's that the locations approach numbers tell concepts performing coming where most banking our or because it's from really institutions approach. of have do but being from network they expectations, but the have pretty footprint. to - talked how they're the a certainly They probably other opportunities that, overall of all can up It's you coming both diversified. more the commercial certainly some currently they open in of the picking and and the our advantage have, the as above don't of - efforts drive they're on exact support far clients support all notably of taking they're NeighborHub, and It's bankers business that And from benefit because we small or but and

David Feaster

That's the supply of up you your on comments, then And side. I'm following on curious guys color. Okay. just what Clint seeing good kind are chain. the just on C&I

start Sounds continued just think hit as that outlook, we're here? have we've utilizations economic Just lines? clients, come cash clients guess think are curious down. you kind to you improved thoughts an prefer to think what you starting to there. trough I a of But to needing guess do you inventory do their excess here or talk and build to do just trough though before your levels a draw use they I as

Clint Stein

first our quarter and or in of late start be where with this I'll a sometimes early conditions that particular Everything behind late have and weather weeks up, trough, Well, here picks be where to seasonal we typically depends with spring. of agricultural up terms And spring, an do had is in seems would some we've historically on, end clients. our and spring - we five now. about where we

XX is today but and did degree followed of stretch have of While spring we its a rain, stretch weather, by strong, sunny. XX

comment we're to clients business There's utilization of to So different that heat verticals your own seasonal the or demand, driven up. that their around in other their definitely as seasonally the starting in, also - activity components that changes. line book sometimes also lead using see pick what up liquidity, C&I in cool terms markets but down,

have We're it's still as saw vaccination footprint a backsliding not So about about hope you optimistic components typical I'm restrictions, of trough. last, grips various not counties rates a we year. our I bottom time what Andy the or the But the the backslid within what things. know, of are cusp mentioned, improve of the outside the like kind to last in of certainly pandemic, of at the your and is. you as comment that the various have has that this see to on in I'll year, is But into this are in add. the things like and what as pause us point pause data with of it say, anything just another they'd those But ago. of if same quarter that, seasonal weather past Chris activity it's might to And by necessarily very much cause some year second been, that be the time is of not well, the and driven our going know,

Chris Merrywell

somewhat add that where to we're unprecedented. at to I is, that think Whatever, is

optimistic to money starting liquidity services yield that or of those securities And division toward, to some shown starting in that to we're that other start still all and I forward change. on so, that trust near and sidelines looking of now of to it. liquidity trough markets think financial things the some of and is probably return additional and results to see it's in be is our the of look that's There's - lot we're optimistic areas ROEs moving thinking at seeing it's a what a what on invested into that we're we're for traditional or

we our But the has I the you'll some fixed up production, sense around of makes that seen now, certainly pay kind the down right of working through we that seeing think rate, opportunistic more piece spring the production echo just certainly of a on I and then, lots impact. to that an types and as picking start it of your things interest we've the system, on And exit liquidity, if as sitting would you're pandemic. line. once starts course, reiterate cash late low start certainly at

David Feaster

more on you get is order drive rate you're to And - about think earning supplement look, that's Okay, really to just increase drive margin willing do we've on hear to back to and in liquidity It's And deploy the talked put color. or good be back growth that still purchases production. new new that whether any curious increasingly the where that, to loan interested can then key on the liquidity. need the great to to line deploy has you for conversely, hold appetite or the are you rates growth in quicker? I'm assets. on there rate substantial you competitive

Clint Stein

intervene talk And are compete on David, question. we would to and on than rate I'll side the we I let rather much of a certainly given that long-term and would we've a the much second If choice, rather structure. what do. aspect would Aaron that who of can and about we production I is part

several at that are think there. I play things

transaction relationships, in continue can't Our and all other situations higher more higher certainly value And ability to little table, things and some a depends bring on the open, that. value proposition stayed a we a than coupon relationship. on help simple little show as to coupon, as drive yield, we around doing it long our process but that command we and a higher bit can

there makes say all pencil out it we if credit aspect and in nature. at Now sense, of I aspect those we'll said, some first right will in and it things then a of opportunities that a is look through with it's that our if competitive that passes if if will and necessary, also very sharpen from there our backyard

And say. It's so compete will price probably we best way the selectively. on to

Aaron Deer

are we in sense a growth something yeah, when doesn't on sheet. what came selectively which along attractive, of But right to loans loan something to And teams that preferences if lot that like do about really optimistic me. quite currently particularly that organic originations own fantastic record think to or to production isn't our seem our track pay-downs lending look. in want example, of made, for matching mean, book loan going the drive obviously I say, purchase, forward. production, big moving things are kind going now premiums around something necessarily and buying carry use we'll balance where terms take at and have we I very our of purchases our and ideally But We've drive mortgage - we or some backfill what own is to to we're make

David Feaster

right. All color. for Okay. the Thanks

Clint Stein

David. Thanks,

Operator

from comes RBC Arfstrom Jon question next with Our Markets. Capital

line Your open. is

Jon Arfstrom

Thanks. everyone. Good morning,

Clint Stein

Jon. Hi,

Jon Arfstrom

questions clean-up of Couple here.

comments they're activity you in question and with this? your driving you production or seeing well up, forward. that And some loan your I PPP are activity saying quite less the picking bankers numbers, the economic your looking of like the I'm and terms this feels are are is there but peers Clint, guess on increased this And yet. as production of Just not is burden earlier share big just taking now about picture you're it that's just this it's kind of economic curious, is

Chris Merrywell

It tell it both. Economic certainly its is not Jon, but it's you XXXX. starting where it you as Chris. increase, in has was activity mentioned, to would

fact seamless. August approach forgiveness through and of the round in we that considerably last I well technology have think pretty in for year round opened have really the we first with second bodes available that the back the was in our moved

was And much a easier process it us. so for

as that on see to the backside PPP well. expect forgiveness of We second the round

that our bankers kept too. requires that year. a streamline all is really We've as from got working and still on on near many what very as And hands but nowhere experienced we so being last process, people, deck

fantastic of out teams regions great be And there you broad us and in approach it's tell the real a sense and talking so being and out and It's about all states. our dividends all on to that's open. and paid are excited. and now our three the is the base. about It's It's again are for our - opportunities a capitalizing markets teams it would time of

share out about and been of acquired. part win is so trying - that business they're to yes, So your to leads some there that's

Jon Arfstrom

stressed - but about just non-performance? and for topic. on very that deterioration I'm some Andy, curious are higher your numbers that clean, question I thoughts concerned on the Okay. mean look you. you sectors of How are your into in leading

Andy McDonald

have we Well, I'm identified the how of segments surprised well performed. with all obviously have

So relative hospitality to If about see pay and that be into business for migration segment look that that traveler would be business of I extended non-performing before. time have that can the first of historically, terms rebound. one we period an to asset that in talked would with concerns leisure I travel we

me. area I be and would The have that the retail So continue concern. to restaurants surprise that just

is it As before, I know, put yet. next. meeting non-performing as but speaking, But retail ago. now restaurants I a they're deteriorating than restaurant, is guess better put a into relatively we not was I why you probably said, year hospitality expectations, mentioned And I'd first, loan

there think be there amount be I would see ultimately some a we well. as two modest will non-accruals of that could those charge-offs into migration segments, the So and

Jon Arfstrom

think and Okay. be X% the I know one picture to another there migrate level But were time? about. about just is would Is that stuff longer-term? for day I over a plenty this And was you then on concerned CECL, there's can bigger reserve guess, think to that I above But the right question. little you guys back of level, maybe

Andy McDonald

I think to where say that CECL, term. with difficult it's migrates that longer

going that little to where we'll with release behavior it's for year, I kind consistent the in is volatility our a as terms modest say think talked given bit what bounce think just a of it's going before around and difficult I about some new pretty move migrate this have long-term of continue to to to down. It we of forward. certainly is the see X% you're it I with forecast. really economic model

case, economic the Now, to stable more more as the extent, continue would get yes, we if this to quarters stable stable seeing have they and, have and one manner. And migrate ability in that in forecast. economic a to possibly are that slightly forecast you stable improving, behaves one the to to to we of you continue model are down that

Jon Arfstrom

Okay. Thanks All the for help. right.

Operator

KBW. question comes Bohlen next from with Jackie Our

open. line Your is

Jackie Bohlen

Hi, everyone. morning. Good

Clint Stein

Hey, Jackie.

Jackie Bohlen

about obviously have variable to really healthy levels - just used on to how do wanted a I Wanted capital, start you're get a thinking know you and the special so I refresher to dividend. on you

if comes just update an guessing I'm in great. and buybacks but conversations would up So lower that appetite for still, be

Aaron Deer

fleet the have expect be our us us - or that and what with conversations continue Directors, above over for to things there what that times regard. as those those regular think that our maintained stated we to those we closer a noted, opportunistic and we we've you on used view of do But tools many continue - Yeah. think levels. terms the through kind in has for And Board and are ratio things special - well you targets. many obviously to tool ship that what some ratios of long-term to start that we we've have We that those the know, changed have of of - been makes I build around and direction of some that flexibility sense on those us will horizon in XXXX, as is - progress we are to long-term in dividends terms to capital some of dividend, of available years the to TCE uses our of we'll giving the still kind haven't XX% years total our targets X%

to extent out. buybacks. I use have of authorization but - we so terms opportunistic rule Buybacks, we'll place, be that discretion in that in and And the wouldn't in an engage we

response question to my we know, our pick M&A there talked we at up in it year. that earlier is activity expect also coming around, region and some Jeff's will I as You and the in is think do comments point in

those guess I our long-winded that the saying knowing with uses know above a way it's traditional And are but of capital of on long-term what we today, table, being still targets. so comfortable we're

Jackie Bohlen

M&A, And we're a I lot thinking about just Okay. then, fluid I of like with feel environment really moving a pieces. in

how on refresh just you think be and terms geography, So a great. potential size about targets would in of

Clint Stein

playbook. going to But… No the you give not Jackie,

Jackie Bohlen

would playbook A great, that. [ph] be if do Clint, you could just

broadly, trying look would if obviously you when at than get you it, to something, larger Just much at I'm were deals you you the were, doing in past.

for to something extent available small. not needle the know, would And not so is trying strategic, target but the that you you to moves that if that you're take a there at get - at, really an you, look able to I'm

Clint Stein

talk And strategic more internally. it would - as rationale? we've year the it could to and last it easy just along that's outpaces this consider the we built not I horizon. that what little - sense? say, to my is, the time that terms to ago and be mean, over what that's certain How size about don't quarter could our short-sighted our M&A dilutive certain the did does just and larger does on tend always is deposits lines, would I and rationale the had I ask growth the us, to And a from and we move past tongue seen does have? we is think we of to institution target that even so a if being additive the equal, bring strategic our organic absolute exact whether or to it needlessly over we because Recession. there gather past it's when over and confines needle franchise it's in could do use strategic years? And whether there thinking platform, of - the rationale. that a minimum question for XX tech than growth is have it you've a us things it about the expertise is make it. opposed word niche pre-Great where There's size. XX it we But M&A take tip does we what's about to I That's the That's to it or it What a years things Yes, but that think say all those

kind know helpful think it. So don't of if for you, we I but about that's how that's

Jackie Bohlen

it helpful. Great. It's very No, Right. you. is. Thank

Clint Stein

Jackie. Thanks,

Operator

from with comes Stephens. Terrell question next Our Andrew

Your open. line is

Andrew Terrell

morning. good Hey,

Clint Stein

morning. Good

Andrew Terrell

Hey.

the So I wanted deposit to ask, just growth front. on

I a saw this any deposit still amount It's obviously was hoping mix we non-interest-bearing in impressive just to month to quarter. you could of of kind seeing the being trends past growth high. speak you're early So so tremendous of see April.

It slowing throughout feels thinking growth the how year? Just can on maybe you flows. in like terms update us deposit down, deposit the are of things less you're put and being just stimulus about into economy

Clint Stein

- And any little then, much fourth what backwards. the will occur little something let quarters. have this growth our deposit So, and the I the and I also guess sometimes talked to or In that and our that's typically very question deposit have or some utilization, deposit of given and we Chris actually portfolio. the growth go year, respect line in I'll of And the seasonality year Aaron we add half third then is first we in historically of about start seasonality comments. theme around in the day,

have I the to quarter And - quarter our anything I Aaron our expectations would ball when quarter. dramatic us and our we definitely for say departure Chris But with what if don't certainly first the And be after have can that quarter back first a what step be from in second I'll July. a performance that add. see talk past like historical this second we would or was is quarter an or we where here know that, have so historical necessarily definitely our like crystal seasonality experience. a to we'll last would to quarter for from had outlier

Chris Merrywell

in the what our investment teams record add consideration you to production investment with it growth quarter. take had first to lot And had our Andrew, moving you if of went There the teams deposit system. I even growth. still production of the again is, that in is money thought and take amount and that the in we then a Hey, into the throughout that,

And few of their is and PPP money There it's they to is think continue well. from of so a our as are deposit driven regions part and it. I then also obviously sources lot phenomenally within doing a that well businesses

out And I summer. picking quarter, starts pick second second of people think how through up, a travel moves we'll We've into up, hasn't the of start impact things kind major seen the in quarter, see the moving throughout as first nature. had travel that so that the quarter

see of some may being You start that liquidity deployed.

and in liquidity ends it of take our with our up liquidity, the but to may somebody seems what is typically deploy else's Now playing place one clients business client also accounts.

we're us, again, of tremendous first it that investment And little a the an half. a I hasn't But deployed ways things bit so around into how in more the leave especially abnormal you nature. trading bit and But a for be finding that had of year money yet. little seeing the impact system, of to until is hands it's think may be assets movement in and money liquidity this start

Andrew Terrell

the PPP very in is included the margin that's release. fee helpful. And then loan much income have the how the in Okay, that's disclosure bottom Aaron, in do of at you maybe, made detail

the was $X.X fee dollar think loan I total million?

Aaron Deer

had on million. had over we accelerated earned of and fees So program, little we $X our over million just of first million. - in quarter the of PPP a a little We shy $X $X had interest we fees

So, in X.XX. all the you're looking PPP was in, at loan yield the million and about quarter $X

Andrew Terrell

my Okay, that's helpful. questions. taking Thanks for

Clint Stein

Andrew. Thanks,

Operator

no proceed any closing questions. are further remarks. with There Please

Clint Stein

you results and for our quarter continuing throughout care. to Thank in quarter We forward the joining you look our reporting conversation to July. second Take second us. again

Operator

conclude conference. does this the Ladies and gentlemen,

great disconnect. You have may a Everyone, day. now

Columbia Banking System (COLB) 2 May 212021 Q1 Earnings call transcript