COLB - Earnings call transcript Q1 2022 | Columbia Banking System, Inc.

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Operator

Good day and thank you for standing by. Welcome to the Columbia Banking System's First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to the speaker today, Clint Stein, President and Chief Executive Officer of Columbia Banking System. ahead. go Please

Clint Stein

investor Welcome for Catherine. review morning, and and everyone, first at Thank us and on you accompanying release earnings joining results. we are today's thank available quarter columbiabank.com. you, The good presentation call our as

quarter on outstanding. Net financial record. and $XX.X income the were was per $X.XX of share performance best first of million Our EPS first quarter

solid stellar delivered with loan and were bankers growth, remains and Our credit managed. expenses well deposit

the are a we Bank integration integration quarter, completed any very executives also has an that by acquisition our integration of from arise well. led Commerce the combination. and addressing done of challenges can During excellent activities combination sizable the Holdings with also The to seeking related job office and in bank Umpqua management Holdings proceeding out

teams As both [indiscernible] ensure come a to out approvals and have are to companies once timely received. close regulatory a smooth result, from

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

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

call. I the Before Aaron, that the we over I may turn make to during statements remind to forward-looking need call you

our For findings. comments, refer further earnings our please information or release, Aaron? to on website either our forward-looking SEC

Aaron Deer

Thank you, everyone. Clint and good morning to

costs, million, related merger rate partial This increased pre-tax, billion first the quarter the $XXX,XXX the an first of in interest PPNR for of million of XX% quarter increase recent and new decreased reset $X.X income decreased quarter earning higher as and by seasonal all with Linked by related we income from or feds pre-tax, pre-provision million with $X.XX quarter end related adjustments. over year the of the well spite earnings resulted of of as merit period. per $X.X acquisition. Bank XXXX, quarter share. $X.X payroll wage by of the in which expense benefit $XX.X March impact $X.XX more from increased assets million to the pre-provision annual were billion $X.XX Average taxes per adjusting Merchants earnings income net prior including increased merger combined by year highs First increase income $XX $XX.X costs, starting to due share partly at million and implemented costs of net in

prior related loan deposits addition, ended from In billion, normalized quarter million end. year was low quarter. $XXX at the the a an increase in level expenses which of $XX.X from Total

deposits in at Total $XX.X inflows the Money of remained quarter just Market low Sweep our our X time were our basis all cost quarter First predominantly product, points. billion. at of and ended loans

downs loans margin growth pay X.X% to X.X% Excluding $XXX PPP million, increased overall solid $XXX and propelled in line interest annualized. The lower by loan basis, utilization. from positive which net originations reducing had in quarter. still loan the premium by of Growth the points PPP yields points basis PPP linked higher but X.XX% to largely $XXX was annualized. by forgiveness securities and first six million million, $XXX a or million increase impact was mostly the X points down and and quarter due was amortization a loans X up on fourth basis quarter, in investment basis on a due that to modest on a balances was loan total new dampened growth portfolio.

see nonrecurring well New linked new all materialize the quarter items benefit increases across very acquired positioned PPP to during compares XXX, coupon Noninterest flat sale million. exploiting that Favorable Merchants high. remains footprint rate income included on loans loans, may respectively, average $XXX,XXX Account portfolio on for liquidity to Still, at from continue our competition Health the the and was of price balance relatively the sheet which quarter our tax of and remains intense of brought adjusted through Savings the industry very portfolio gains a rate of the on $XX.X loans in XXX. given overall Notably, an we expected were $XXX,XXX as basis the of at year. not Bank.

$X.X provision be The the off mid addition, closer on $XXX,XXX quarter a $XX.X saves Bank quarter Noninterest we of sale taxes the declines of one-time by basis the due $X.X attributed Merchants representing to expenses, increased cost increase by higher rise mostly $X.X drop $XX.X rate to over expenses ahead had to combination quarter, Umpqua. with I'll compensation These of run gain our noninterest in adjusting first quarter provision $X.X a as increased our well tax loan aforementioned the million rate. million increase mortgage items with effective in branch as vacant linked XXXX In expect The property. XX% realized we sheet for XX.X% call compensation the remain fourth XXs. And balance to Seasonally in costs offset expect that, linked the million merger for we million range And a quarter, rate Chris. increased elevated linked million million in turn a for million $XX to expense million to $XXX.X interest the our million. on in and expense and to and after a income offs rates in XX% the banking, liabilities. to costs related income of loan expenses environment. was $X.X the fully to and are related

Christopher Merrywell

in and positive results Thank you, investments teams. busy quarter a Aaron. It's are been production our support we and our seeing from

first PPP our best $XXX mentioned, on our heels ex-PPP the This and $XXX highest company million quarter of in record. fourth of million largest quarter of XXXX. history, on is the was the production As fourth quarter in non loan of Aaron

be Our business intensely winning successful the to of in an environment. competitive bankers new face continued in lending

relationships build economy appreciate in has all with our Umpqua value and of that bring. combination our the and the the will upcoming it expanded, and of bankers the footprint, producers new Both existing As our increased capabilities deepened reopened markets. clients across and the

during was footprint, normal quarter. X% resulting decrease anticipate construction by XX% our weather non-PPP overall XX% advances. crops agriculture. stands modestly We Our The XX% the this utilization warmer fixed, The spring full and than cold mix production drier for in returns. XX% Line plantings loans, was floating, in Across delayed seasonal satisfaction. in to a offset the the as floating, quarter now variable. variable. pipelines wet remain weaker XX%, the in portfolio at PPP reverse quarterly normal and the were many and Increases utilization has to line fixed, XX% second

at saw an of steady higher dropping annualized of our rate mix total materially. in business at stable from change warehouse drop loan during did not deposits The result was of X% million. a at interest to the quarter, of XX% rates, million months. sourcing during bearing mortgage the Overall, a XX Deposits with and grew portfolio and composition the $XX business XX% XX% the As were $XX the commercial. past the over we XX% Similarly, and noninterest bearing. [ph] XX% quarter fairly deposits of loans

have our considerations. financial clients construction to And trust goals achieve services, our Proctor in During These we financial including location. and in are begun a [ph] opening we in their Astoria, our hub new financial Tacoma on branch investments, be a helping will District July, Oregon. locations WA the financial hub comprehensive other moved and uniquely new full on financial service hub focused quarter

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

Andy McDonald

Thanks, Chris.

compared problem million compared reduces X.XX% allowance X% The to Problem as period was to quarter IHS To marked allowance. period total. of our a contributed on is from to Substandard declined lesser extent, around pre-pandemic of as million the X.XX% loans. loan of such of we total released charge or forecast loans. loss to decline modeling purposes, release rate our a declined not activity total loans low off the end rated now and quarter, $XX loans did for last This recent loans or due the level. a most mentioned in impact our to For our special in $X.X for percentage use the than level $XXX approaching Driving for quarter. loans the release. $XX $XX decline and around we million to to less a from pass also million end reserves have fairly X.XX% which stable total was Markit million loan modest loans a

we The XXXX the current pre-GAAP, remain For forecast last expectations XXXX or pre-pandemic. less end period. are the X.X% assumes assumes to growth of example, quarter, throughout GDP at compared that but so the material. rate expected at period. was and to at credit In also X.X% remain will forecast not we pre-pandemic summary, expectations previous enjoyed the X.X, metrics forecast The year X.X% quality near levels pre-pandemic throughout which current end full rate unemployment for levels similar of seeing unemployment XXXX and forecast below to

While we in of pleased current and the remain along this are we instability the at with Europe, home. performance, pressures environment global inflationary here cognizant with

are further near-term, we performance future look cautious portfolio for optimistic we we while remain the the So the of in down as road. the

Clint. to back Okay,

Clint Stein

Andy. Thanks

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

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

Aaron your a are to Andy, As with Chris and me answer reminder, questions.

for call will Now questions. Catherine, open the we

Operator

Rulis with comes D.A. Thank you. [Operator Davidson. Instructions] question Our Jeff first from

Your is line open.

Jeffrey Rulis

good Thanks, morning.

Clint Stein

morning, Good Jeff.

Jeffrey Rulis

then touched was up on questions line bit? touch the the that you think non-PPP that last pre-pays, million percent And in was over exactly what quarter Do what quarter? the payoffs was combined. on if of that loan I $XXX was you a was portfolio can you up figure Hey the -- little a a couple said and current have you utilization, it

Aaron Deer

something the think line like utilization up points. basis I Yes, XX was

Let me balances? to Yes, PPP you. And the rose see XX.X XX.X. was for the if question exact the it from number on I've what got

Jeffrey Rulis

those, in I million the a What was if quarter how little over the fourth was the In prepays… words, payoffs and to in combine think that payoffs $XXX pre-pays quarter? and current you compare it other does non-PPP,

Aaron Deer

PPP down they balances, yes, non were the sequentially. Oh

Jeffrey Rulis

that on just year? or a enough. your -- expectations a fair and production seasonal up just for Okay, the outlook expectation, either into strong I otherwise, quarter growth specific pretty wise, guess boiling rolling how growth loan

Clint Stein

you out a liquidity a and Jeff, know, lot I think lot of there's still that, there Yes of competition. there's

we've single You talking mid-to-high always know, think digits. I about been

think production we're talked to mid-to-high ramping some be. I to in going had start place we that's fair the that had the that a see people about, that that in out and team we'll joined other But things place that single us everything up right fourth that's given on some on We new project to well. as still from is the think market. quarter I digits working back

Jeffrey Rulis

did or that the gears linked to the down bit Okay. margin, quarter, little recapture amortization Switching in was flip premium expense a mentioned still that quarter? to you an

Aaron Deer

No million. run was an down sequentially, as expense, around that's probably but it still $X

Jeffrey Rulis

Got PPP it. And XX Aaron, to of margin as What the XXX. if points to XXX? impact you the average net margin, happened, March, on monthly compared linked at the look quarter basis up

Aaron Deer

the progression But flat. for loan pretty actually the kind the of out we sequential until in real didn't The when of of different the yields benefit quarter. noise the was you weeks last the month back couple all get

think XXX And I a going are to are But from was well so nice ex-PPP adjusted loan that's to just at what what look basis number was to here point XXX now continue that see lift that's tax very starting and forward. some up good to poised X obviously to coupon through. come and sequentially what

Jeffrey Rulis

thank Great, you.

Operator

you. Thank

comes from James. Feaster question next with Our David Raymond

Your line open. is

David Feaster

morning, Hey, good everybody.

Clint Stein

Good morning, David.

David Feaster

trending to Is to know, there's suspect it origination, you've a record pipeline the backdrop, I in of record like a think -- we've of it, get hires just talked the participations improved that quarter-over-quarter of a talked but I being want how thoughts combination the quarter. improved Less see just was just upstream, which the Is about but was what I then back great originations? another from lot And that, that? your all factors. about? and just that? it's full, just the driving mentioned sense economic originations, of you of pipeline curious composition the to to the on new wanted you what's is driving the light go you benefits just touch the moving I know

Christopher Merrywell

statistically, of all Yes is a our is clients, being our approach prospects. And couple time long the with would I of open, you're it coming been I that. mean, there ultimately combination Chris. that David, and say for But years right, last of over it's a of this for remaining

coming So the winning external bank we're that business new because from to of approach.

investments, in the bit and aspect things between the the think and own construction our are downstream in seeing bit true see, as bankers that do potential a just I a and for little honestly, opportunities of well, volume up front you the looking nature, new that balanced at front when people, fairly them, as then of Our our the But ag on little in far as have and well clients, approach, potentially been CRE not early. of space C&I strategic they're you in combination, in more but there. bankers, for of clients signing voting to at you and coming what's look see they trend our it's

a they're them know, a new the uptick and a also might And positive would that and just in that of on be that space, what regionally came process front again, their we'll about it's takes out the quarter, that some been, recognizing being and normal clients are teams nature. team some of well at mention that conversion there. we've opportunities. think seeing impact well. them end laid I we're of just of fourth start a time, of the through and And kind of see positive Some in as to starting strategy, the where always as us announced things little to and days healthcare you to for willing with go XX out well. then hit nationally, it The we from we've aspect both bodes I

David Feaster

that quarter, quarter, but And competitive front, on they to on helpful. couple production of might comparing up later trending? sense just pricing the the rate you how the the Okay, were in quarter points. basis a a that's wanted the just Obviously, rates, a yields today? thoughts have then in of following And new dynamics hike just came loan new maybe the get are pricing up and any then, market

Christopher Merrywell

fixed seeing really that competition We're of long-term, the changed away nature. Yes, think I rates, much. walk things from don't we're low has to where still some choosing things

the are seeing improvement in and the there. what the we're a some advice seeing table, to bringing We that clients value, little movement we're

You as are well. expect the rates We'll a rise I should road. anything the down just let a right, quarter. give the is see of takes competition is came little increase late that But pipe not place, this down the would us in little, what up, kind going in to pricing the looking but lift

David Feaster

gears side talking been on Okay, that makes just of mean, the to I the other sense. core And coin, then growth maybe deposits, the shifting deposit has phenomenal.

on portfolio, slow do with be just helpful. trends base, you you given on the would or flows able deposit growth You've to maybe how thoughts got book. a strength this within some the tremendous get even do of But low rising you cost would core have any outflows? of light sense mean, about pretty deposit deposit the how you're, I defensive of wanted Obviously, at you you to environment. in going -- you know, just the rate to least being your benefit Just maybe think deposit expect expect forward a migrate of or be deposits

Clint Stein

Clint. is This

Our growth continued a market crystal certain half some of just to case deposit in hasn't the if susceptible first growth has is in are think any deposit and And that quarter. growth we've our any taken year Historically, very fuzzy. and seasonal that deposits. is of that the ball last share fluctuations posted to very the of been less I strong in that first the some two areas little on three the obviously and been that years little

is advantage. few mix cycle million cycle CB have customers, we non-interest many with years saw towards in One us weighted $XXX been last of XX% was last commercial But balance and structural dollars ago, for pushed those sheet deposit off we rising that the of gives bearing a rate We the rate through heavily the Services Group. Financial a our the meaningful. things that several our during

cannibalizing structure still to our base. entire deposit able we're without so that the And client serve of cost

we on forward. And strategies that go will the so team we'll of some the implement be to Chris as be entire those and leaning

deposits, I'll some over so add. see turn attrition anything to to Chris to he we like declines in leaving probably necessarily than complete more he activities has if it if see expectation is that bank. related to it's So the my wants the

Christopher Merrywell

The growth base seen cost such. and a add of thing is mentioned, only that And of client the Clint those. our is seen really we've there the sensitive I at options would And The some as interest of I rate historic not think some performance yes, over organizations. already point looking you've we're time funds as it's that every up going I that of this bit think wrong. And we've I would we to the we be Clint to movement, said crystal at that's think talks say, little of the kind think offset that about enough but end I flat, ball, not and we've had. being

is So eye keep very and it's pinpoint trying But it closely I'm it. managing really say to keep close hard on we'll there. a to and what it

David Feaster

helpful. That's

Do have much versus one Just to clients clients that was quick on you new sense of existing you brought follow that. in? how from maybe a

Christopher Merrywell

No, I with right don't have that me. here

David Feaster

thank Okay, you.

Operator

from with question Thank our next And Mcgratty you. KBW. comes Chris

Your line open. is

Christopher Mcgratty

deal. the the Maybe environment on marks afternoon. merger forma? just question combination might be is hit the since And guess, from securities you. Thank guess more we've changing that to it's is, accretion when deal OCI. how two into with seen move questions. considered? was a held good first something pro I impact assumptions the two, to banks was the of marks might is one, capital and and the the being maturity announced, to We've the question changed on the Number avoid return announced that seen, how from Hey, the lot I a on

Clint Stein

we're marks, it we and turn I'll to I'll for. of high Clint. to value Aaron kind for impact of how combination, somewhat shared was that deal about we've at that level the vision. the start long-term vision. indifferent. I we that and excited substance The integration hasn't planning, timing combined changed. and long-term, The careers our really multiple And, And long-term Chris, the the think all that's I of about I'm and as we've this it. of into we've the more it's a that the through you're know looking say in exceeding then and the better just part through and been actual cycles. over just been to Relative vision that that am business is for that we the gotten this this go more organization, well, And, on executing rates something saw a going

here was or combination. a time the consider beat us it movement trying for objective to Our cycle, this time or to anything, wasn't business rate a right

But some teams modeling? in know, So noise work. what and Aaron amount I'll put let kind their that I creates both wanted really component analyzing that impact. our the have short-term a that of Ron as and just made. of it to is kind look what companies to at decision long-term a speak I the of I really and that into modeling tremendous Aaron frame the

Aaron Deer

on of out late as guess, that has point, about that and year, rates in give I a did, our protection patient last rate Clint what have staying move little to Yes fact, here, point good focused rising front maturity fundamentals. deal portfolio of said a to from But started held move. it's helped I echo the AFS and the and rates first into bit of us would a would we I that on impact

impacted, now to the But some income. at have that be net goodwill. been going us we'll a looking of indicated, to going to a but as coming premium that will to to that for expect hold at be Going Clint continuing in there'd forward, would certain faster the on I interest as that's come discount, that's the back good increase swinging much form would for the of categories amount there, marks they asset to deal, be of specific more rationale

rate So movements. by fundamentals changed accounting those interest an change. not net-net The it's are really

Christopher Mcgratty

Thanks That's great. Aaron.

Operator

conclude you. participating. for today's conference there call. And you no This are other Thank Thank does questions.

now great Everyone may disconnect. You day. have a

Columbia Banking System (COLB) 21 Apr 222022 Q1 Earnings call transcript