Columbia Banking System Announces Fourth Quarter and Full Year 2015 Earnings

Highlights

- Record fourth quarter net income of $26.7 million with diluted earnings per share of $0.46

- Record full year 2015 net income of $98.8 million with diluted earnings per share of $1.71

- New loan production for the quarter of $272 million and record full year loan production of $1.12 billion

- Solid deposit growth of $124 million, or 2% for the quarter and $514 million, or 7% for the year

- Nonperforming assets to period end assets reduced to 0.39%, a decrease of 5 basis points from September 30, 2015 and a decrease of 23 basis points from year end 2014

28 Jan, 2016, 08:00 ET from Columbia Banking System, Inc.

TACOMA, Wash., Jan. 28, 2016 /PRNewswire/ -- Melanie Dressel, President and Chief Executive Officer of Columbia Banking System and Columbia Bank (NASDAQ: COLB) ("Columbia"), said today upon the release of Columbia's fourth quarter 2015 earnings, "Our record earnings for the fourth quarter and full year were the result of several positive trends that continued to build throughout 2015. We are proud of our record loan production of $1.1 billion for the year." Ms. Dressel continued, "Our operating leverage continues to improve as we experienced growth in non-interest income and a lower expense to asset ratio. Asset quality improved further with our nonperforming assets to total assets declining to 0.39%. However, the future is not without challenges as we continue to experience intense pricing competition and the increasing probability of a lower interest rate environment for a longer period of time."

Balance Sheet

Loans were $5.82 billion at December 31, 2015, up $68.5 million from September 30, 2015 due to substantial loan originations during the current quarter. Compared to the prior year end, loans increased $369.6 million, or 7%, during 2015. Securities were $2.17 billion at December 31, 2015, an increase of $132.8 million, or 7% from $2.04 billion at September 30, 2015 due primarily to purchases of securities resulting from deposits growing in excess of loans. Total deposits at December 31, 2015 were $7.44 billion, an increase of $124.0 million from $7.31 billion at September 30, 2015. Core deposits comprised 96% of total deposits and were $7.13 billion at December 31, 2015, an increase of $141.7 million from September 30, 2015. The average rate on interest-bearing deposits was 0.07%, down from 0.08% for the third quarter of 2015 and the average cost on all deposits was 0.04%, unchanged from the third quarter of 2015.

Income Statement

Net Interest Income

Net interest income for the fourth quarter of 2015 was $81.8 million, an increase of $125 thousand compared to the third quarter of 2015. This increase was primarily due to higher average loan and securities balances in the current quarter, which were largely offset by lower yields on loans, lower incremental accretion income and an increase in interest reversals on nonaccrual loans. Compared to the fourth quarter of 2014, net interest income increased by $3.1 million from $78.8 million. The increase from the prior year period was the result of organic loan growth, partially offset by a decline in incremental accretion income. For additional information regarding net interest income, see the "Average Balances and Rates" table.

Noninterest Income

Noninterest income was $24.7 million for the fourth quarter of 2015, an increase of $2.2 million compared to $22.5 million for the third quarter of 2015. The linked quarter increase was primarily due to the $3.1 million adjustment to the mortgage repurchase liability related to our acquisition of West Coast Bank recorded during the current quarter through other noninterest income. This increase was partially offset by lower service charge and merchant fee income, which were down $648 thousand and $249 thousand from the prior quarter, respectively. In addition, there were lower loan sale gains recorded in the current quarter, which were down $593 thousand from the prior quarter.

Compared to the fourth quarter of 2014, noninterest income increased by $9.6 million due to both the change in FDIC loss-sharing asset, which accounted for $4.3 million of the increase, and a $4.0 million increase in other noninterest income primarily due to the previously noted $3.1 million adjustment to the mortgage repurchase liability. Additional details of the components of the change in the FDIC loss-sharing asset are provided in tabular format below.

The change in the FDIC loss-sharing asset has been a significant component of noninterest income, but over time the significance has diminished. The following table reflects the income statement components of the change in the FDIC loss-sharing asset:

Three Months Ended

Twelve Months Ended

December 31,

December 31,

2015

2014

2015

2014

(in thousands)

Adjustments reflected in income

Amortization, net

(1,098)

(5,071)

(6,184)

(21,279)

Loan impairment (recapture)

855

(434)

2,268

2,301

Sale of other real estate

(484)

(75)

(1,237)

(2,179)

Write-downs of other real estate

10

206

1,158

1,065

Other

(314)

70

(15)

103

Change in FDIC loss-sharing asset

$

(1,031)

$

(5,304)

$

(4,010)

$

(19,989)

Noninterest Expense

Total noninterest expense for the fourth quarter of 2015 was $66.9 million, an increase of $2.8 million compared to $64.1 million for the third quarter of 2015. This increase was driven by higher acquisition-related expenses in the current quarter of $1.9 million compared to $428 thousand in the linked quarter. After removing the effect of the acquisition-related expenses, noninterest expense for the current quarter was $1.4 million higher than the third quarter of 2015 on the same basis. This increase was due to $852 thousand in higher occupancy costs related to the write-down of land pending sale as well as higher expense related to the FDIC clawback liability of $813 thousand during the current quarter compared to $174 thousand in the prior quarter. These increases were partially offset by lower fraud losses of $209 thousand in the current quarter compared to $834 thousand during the third quarter of 2015.

Compared to the fourth quarter of 2014, noninterest expense increased $2.7 million, or 4%, from $64.2 million. The primary drivers of the increase were higher expenses resulting from the Intermountain Community Bancorp acquisition, which occurred during the fourth quarter of 2014 as well as higher clawback liability expense and occupancy expense as noted above. Also contributing to the increase was our fourth quarter 2014 adoption of Accounting Standards Update 2014-01, which reclassified approximately $800 thousand in affordable housing projects expense from noninterest expense to tax expense. These increases were partially offset by a decrease of $2.7 million in acquisition-related expenses.

Net Interest Margin ("NIM")

Columbia's net interest margin (tax equivalent) of 4.25% for the fourth quarter of 2015 decreased 12 basis points from 4.37% for the third quarter of 2015 due to lower yields on loans, lower incremental accretion on acquired loans and an increase in securities as a percentage of earning assets. Compared to the fourth quarter of 2014, Columbia's net interest margin decreased 25 basis points from 4.50%, because of both lower yields on loans and lower incremental accretion on acquired loans, which was $8.8 million for the prior year quarter, compared to $6.0 million for the current quarter. Columbia's operating net interest margin (tax equivalent)(1) was 4.09% for the fourth quarter of 2015, a decrease of 9 basis points from 4.18% for the third quarter of 2015 and down 8 basis points compared to 4.17% for the fourth quarter of 2014 as a result of the continuing low interest rate environment.

The following table shows the impact to interest income resulting from accretion of income on acquired loan portfolios as well as the net interest margin and operating net interest margin:

Three Months Ended

Twelve Months Ended

December 31, 2015

December 31, 2014

December 31, 2015

December 31, 2014

(dollars in thousands)

Incremental accretion income due to:

FDIC purchased credit impaired loans

$

2,200

$

3,796

$

9,096

$

20,224

Other FDIC acquired loans

68

10

234

484

Other acquired loans

3,746

4,957

17,862

21,093

Incremental accretion income

$

6,014

$

8,763

$

27,192

$

41,801

Net interest margin (tax equivalent)

4.25

%

4.50

%

4.35

%

4.76

%

Operating net interest margin (tax equivalent) (1)

4.09

%

4.17

%

4.15

%

4.21

%

__________

(1)

Operating net interest margin (tax equivalent) is a non-GAAP financial measure. See the section titled "Non-GAAP Financial Measures" on the last pages of this earnings release for the reconciliation of operating net interest margin (tax equivalent) to net interest margin.

Asset Quality

At December 31, 2015, nonperforming assets to total assets were 0.39% compared to 0.44% at September 30, 2015. Total nonperforming assets decreased $3.4 million due to a $5.7 million reduction in other real estate owned resulting from sales activity during the current quarter, partially offset by an increase in nonaccrual loans.

The following table sets forth information regarding nonaccrual loans and total nonperforming assets:

December 31, 2015

September 30, 2015

December 31, 2014

(in thousands)

Nonaccrual loans:

Commercial business

$

9,437

$

10,150

$

16,799

Real estate:

One-to-four family residential

820

2,012

2,822

Commercial and multifamily residential

9,513

4,317

7,847

Total real estate

10,333

6,329

10,669

Real estate construction:

One-to-four family residential

928

1,472

465

Commercial and multifamily residential

470

480

Total real estate construction

928

1,942

945

Consumer

766

659

2,939

Total nonaccrual loans

21,464

19,080

31,352

Other real estate owned and other personal property owned

13,738

19,475

22,225

Total nonperforming assets

$

35,202

$

38,555

$

53,577

The following table provides an analysis of the Company's allowance for loan and lease losses:

Three Months Ended December 31,

Twelve Months Ended December 31,

2015

2014

2015

2014

(in thousands)

Beginning balance

$

69,049

$

67,871

$

69,569

$

72,454

Charge-offs:

Commercial business

(2,184)

(991)

(8,266)

(4,289)

One-to-four family residential real estate

(79)

(23)

(376)

(230)

Commercial and multifamily residential real estate

(264)

(505)

(2,993)

Consumer

(545)

(518)

(2,066)

(2,774)

Purchased credit impaired

(3,680)

(3,086)

(13,854)

(14,436)

Total charge-offs

(6,752)

(4,618)

(25,067)

(24,722)

Recoveries:

Commercial business

886

449

2,336

3,007

One-to-four family residential real estate

19

56

307

159

Commercial and multifamily residential real estate

277

224

3,975

940

One-to-four family residential real estate construction

52

1,426

193

1,930

Commercial and multifamily residential real estate construction

1

8

Consumer

224

422

931

1,353

Purchased credit impaired

2,067

2,031

7,329

7,721

Total recoveries

3,526

4,608

15,079

15,110

Net charge-offs

(3,226)

(10)

(9,988)

(9,612)

Provision for loan and lease losses

2,349

1,708

8,591

6,727

Ending balance

$

68,172

$

69,569

$

68,172

$

69,569

The allowance for loan losses to period end loans was 1.17% at December 31, 2015 compared to 1.20% at September 30, 2015. For the fourth quarter of 2015, Columbia recorded a net provision for loan and lease losses of $2.3 million compared to a net provision of $1.7 million for the comparable quarter last year.

Impact of FDIC Acquired Loan Accounting

While the significance of the FDIC Acquired Loan Accounting has diminished over time, the following table illustrates the impact to earnings associated with Columbia's FDIC acquired loan portfolios:

FDIC Acquired Loan Accounting

Three Months Ended

Twelve Months Ended

December 31, 2015

December 31, 2014

December 31, 2015

December 31, 2014

(in thousands)

Incremental accretion income on FDIC purchased credit impaired loans

$

2,200

$

3,796

$

9,096

$

20,224

Incremental accretion income on other FDIC acquired loans

68

10

234

484

Recapture (provision) for losses on FDIC purchased credit impaired loans

(1,349)

542

(3,915)

(2,877)

Change in FDIC loss-sharing asset

(1,031)

(5,304)

(4,010)

(19,989)

FDIC clawback liability recovery (expense)

(812)

8

(979)

(294)

Pre-tax earnings impact

$

(924)

$

(948)

$

426

$

(2,452)

The incremental accretion income on FDIC purchased credit impaired loans represents the amount of income recorded above the contractual rate stated in the individual loan notes. At December 31, 2015, the accretable yield on purchased credit impaired loans was $59.0 million. Accretable yield is subject to change based upon expected future loan cash flows, which are remeasured by Columbia on a quarterly basis.

The $1.0 million change in the FDIC loss-sharing asset in the current quarter reduced noninterest income and consisted primarily of $1.1 million in amortization expense. Additional details of the components of the change in the FDIC loss-sharing asset are provided in tabular format in the section titled "Noninterest Income" in the following pages.

Organizational Update

Ms. Dressel commented, "We were very pleased to be recognized again by Forbes on its 2016 list of "America's Best Banks", ranking 19th in the country. The rankings are based on asset quality, capital adequacy, net interest margin and profitability of the nation's 100 largest publicly traded banks and thrifts."

Ms. Dressel continued, "I am proud and delighted that Columbia Bank's "Warm Hearts Winter Drive" has so far raised over $150,000 in cash and almost 12,000 pieces of new cold weather items in response to the urgent need of people struggling with homelessness throughout our footprint. With the generous support of our employees and customers, we more than surpassed our goal, making a real difference in the lives of people in need across all the communities we serve."

Conference Call Information

Columbia's management will discuss the fourth quarter 2015 results on a conference call scheduled for Thursday, January 28, 2016 at 1:00 p.m. Pacific Standard Time (4:00 p.m. Eastern Standard Time). Interested parties may listen to this discussion by calling 1-866-378-3802; Conference ID code #22782080.

A conference call replay will be available from approximately 4:00 p.m. PST on January 28, 2016 through 9:00 p.m. PST on February 4, 2016. The conference call replay can be accessed by dialing 1-855-859-2056 and entering Conference ID code #22782080.

Annual Meeting of Shareholders

Columbia Banking System's Annual Meeting of Shareholders will be held at 1:00 PDT on Wednesday, April 27, 2016 at the Greater Tacoma Convention and Trade Center, 1500 Broadway, Tacoma, Washington 98402.  Directions and parking are available at http://gtctc.org/parking-directions.

About Columbia

Headquartered in Tacoma, Washington, Columbia Banking System, Inc. is the holding company of Columbia Bank, a Washington state-chartered full-service commercial bank, with locations throughout Washington, Oregon and Idaho. For the ninth consecutive year, the bank was named in 2015 as one of Puget Sound Business Journal's "Washington's Best Workplaces." Columbia ranked in the top 20 on the 2016 Forbes list of best banks in the country for the fifth year in a row.

More information about Columbia can be found on its website at www.columbiabank.com.

Note Regarding Forward-Looking Statements

This news release includes forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements include, but are not limited to, descriptions of Columbia's management's expectations regarding future events and developments such as future operating results, growth in loans and deposits, continued success of Columbia's style of banking and the strength of the local economy. The words "will," "believe," "expect," "intend," "should," and "anticipate" or the negative of these words or words of similar construction are intended in part to help identify forward looking statements. Future events are difficult to predict, and the expectations described above are necessarily subject to risks and uncertainties, many of which are outside our control, that may cause actual results to differ materially and adversely. In addition to discussions about risks and uncertainties set forth from time to time in Columbia's filings with the Securities and Exchange Commission, available at the SEC's website at www.sec.gov and the Company's website at www.columbiabank.com, including the "Risk Factors," "Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of our annual reports on Form 10-K and quarterly reports on Form 10-Q, (as applicable), factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following:  (1) local, national and international economic conditions may be less favorable than expected or have a more direct and pronounced effect on Columbia than expected and adversely affect Columbia's ability to continue its internal growth at historical rates and maintain the quality of its earning assets; (2) changes in interest rates could significantly reduce net interest income and negatively affect funding sources; (3) projected business increases following strategic expansion or opening or acquiring new branches may be lower than expected; (4) costs or difficulties related to the integration of acquisitions may be greater than expected; (5) competitive pressure among financial institutions may increase significantly; and (6) legislation or regulatory requirements or changes may adversely affect the businesses in which Columbia is engaged. We believe the expectations reflected in our forward-looking statements are reasonable, based on information available to us on the date hereof. However, given the described uncertainties and risks, we cannot guarantee our future performance or results of operations and you should not place undue reliance on these forward-looking statements which speak only as of the date hereof. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by the federal securities laws. The factors noted above and the risks and uncertainties described in our SEC filings should be considered when reading any forward-looking statements in this release.

Contacts:

Melanie J. Dressel,

President and

Chief Executive Officer

(253) 305-1911

Clint E. Stein,

Executive Vice President

and Chief Financial Officer

(253) 593-8304

 

 

FINANCIAL STATISTICS

Columbia Banking System, Inc.

Three Months Ended

Twelve Months Ended

Unaudited

December 31,

December 31,

2015

2014

2015

2014

Earnings

(dollars in thousands except per share amounts)

Net interest income

$

81,819

$

78,764

$

324,887

$

304,048

Provision for loan and lease losses

$

2,349

$

1,708

$

8,591

$

6,727

Noninterest income

$

24,745

$

15,185

$

91,473

$

59,750

Noninterest expense

$

66,877

$

64,154

$

266,149

$

239,286

Acquisition-related expense (included in noninterest expense)

$

1,872

$

4,556

$

10,917

$

9,432

Net income

$

26,740

$

18,920

$

98,827

$

81,574

Per Common Share

Earnings (basic)

$

0.46

$

0.34

$

1.71

$

1.53

Earnings (diluted)

$

0.46

$

0.34

$

1.71

$

1.52

Book value

$

21.48

$

21.34

$

21.48

$

21.34

Averages

Total assets

$

8,905,743

$

8,152,463

$

8,655,243

$

7,468,091

Interest-earning assets

$

7,937,308

$

7,199,443

$

7,685,734

$

6,561,047

Loans

$

5,762,048

$

5,168,761

$

5,609,261

$

4,782,369

Securities, including Federal Home Loan Bank stock

$

2,136,703

$

1,918,690

$

2,031,859

$

1,708,575

Deposits

$

7,440,628

$

6,759,259

$

7,146,828

$

6,187,342

Interest-bearing deposits

$

3,933,001

$

4,174,459

$

3,937,881

$

3,901,524

Interest-bearing liabilities

$

4,031,214

$

4,282,273

$

4,097,483

$

3,986,017

Noninterest-bearing deposits

$

3,507,627

$

2,584,800

$

3,208,947

$

2,285,818

Shareholders' equity

$

1,259,117

$

1,185,346

$

1,246,952

$

1,109,581

Financial Ratios

Return on average assets

1.20

%

0.93

%

1.14

%

1.09

%

Return on average common equity

8.50

%

6.39

%

7.93

%

7.36

%

Average equity to average assets

14.14

%

14.54

%

14.41

%

14.86

%

Net interest margin (tax equivalent)

4.25

%

4.50

%

4.35

%

4.76

%

Efficiency ratio (tax equivalent) (1)

60.99

%

66.30

%

62.12

%

63.97

%

Operating efficiency ratio (tax equivalent) (2)

60.53

%

60.82

%

60.78

%

63.33

%

December 31,

Period end

2015

2014

Total assets

$

8,954,382

$

8,578,846

Loans, net of unearned income

$

5,815,027

$

5,445,378

Allowance for loan and lease losses

$

68,172

$

69,569

Securities, including Federal Home Loan Bank stock

$

2,170,416

$

2,131,622

Deposits

$

7,438,829

$

6,924,722

Core deposits

$

7,127,866

$

6,619,944

Shareholders' equity

$

1,242,128

$

1,228,175

Nonperforming assets

Nonaccrual loans

$

21,464

$

31,352

Other real estate owned ("OREO") and other personal property owned ("OPPO")

13,738

22,225

Total nonperforming assets

$

35,202

$

53,577

Nonperforming loans to period-end loans

0.37

%

0.58

%

Nonperforming assets to period-end assets

0.39

%

0.62

%

Allowance for loan and lease losses to period-end loans

1.17

%

1.28

%

Net loan charge-offs

$

9,988

(3)

$

9,612

(4)

(1) Noninterest expense divided by the sum of net interest income on a tax equivalent basis and noninterest income on a tax equivalent basis.

(2) The operating efficiency ratio (tax equivalent) is a non-GAAP financial measure. See section titled "Non-GAAP Financial Measures" on the last pages of this earnings release for the reconciliation of the operating efficiency ratio (tax equivalent) to the efficiency ratio (tax equivalent).

(3) For the twelve months ended December 31, 2015.

(4) For the twelve months ended December 31, 2014.

 

FINANCIAL STATISTICS

Columbia Banking System, Inc.

Unaudited

December 31,

December 31,

2015

2014

Loan Portfolio Composition

(dollars in thousands)

Commercial business

$

2,362,575

40.6

%

$

2,119,565

38.9

%

Real estate:

One-to-four family residential

176,295

3.0

%

175,571

3.2

%

Commercial and multifamily residential

2,491,736

42.9

%

2,363,541

43.5

%

Total real estate

2,668,031

45.9

%

2,539,112

46.7

%

Real estate construction:

One-to-four family residential

135,874

2.3

%

116,866

2.1

%

Commercial and multifamily residential

167,413

2.9

%

134,443

2.5

%

Total real estate construction

303,287

5.2

%

251,309

4.6

%

Consumer

342,601

5.9

%

364,182

6.7

%

Purchased credit impaired

180,906

3.1

%

230,584

4.2

%

Subtotal loans

5,857,400

100.7

%

5,504,752

101.1

%

Less:  Net unearned income

(42,373)

(0.7)

%

(59,374)

(1.1)

%

Loans, net of unearned income

5,815,027

100.0

%

5,445,378

100.0

%

Less:  Allowance for loan and lease losses

(68,172)

(69,569)

Total loans, net

5,746,855

5,375,809

Loans held for sale

$

4,509

$

1,116

December 31,

December 31,

2015

2014

Deposit Composition

(dollars in thousands)

Core deposits:

Demand and other non-interest bearing

$

3,507,358

47.2

%

$

2,651,373

38.3

%

Interest bearing demand

925,909

12.4

%

1,304,258

18.8

%

Money market

1,788,552

24.0

%

1,760,331

25.4

%

Savings

657,016

8.8

%

615,721

8.9

%

Certificates of deposit less than $100,000

249,031

3.3

%

288,261

4.2

%

Total core deposits

7,127,866

95.7

%

6,619,944

95.6

%

Certificates of deposit greater than $100,000

182,973

2.5

%

202,014

2.9

%

Certificates of deposit insured by CDARS®

26,901

0.4

%

18,429

0.3

%

Brokered money market accounts

100,854

1.4

%

83,402

1.2

%

Subtotal

7,438,594

100.0

%

6,923,789

100.0

%

Premium resulting from acquisition date fair value adjustment

235

933

Total deposits

$

7,438,829

$

6,924,722

 

QUARTERLY FINANCIAL STATISTICS

Columbia Banking System, Inc.

Three Months Ended

Unaudited

December 31,

September 30,

June 30,

March 31,

December 31,

2015

2015

2015

2015

2014

(dollars in thousands except per share)

Earnings

Net interest income

$

81,819

$

81,694

$

81,010

$

80,364

$

78,764

Provision for loan and lease losses

$

2,349

$

2,831

$

2,202

$

1,209

$

1,708

Noninterest income

$

24,745

$

22,499

$

21,462

$

22,767

$

15,185

Noninterest expense

$

66,877

$

64,067

$

68,471

$

66,734

$

64,154

Acquisition-related expense (included in noninterest expense)

$

1,872

$

428

$

5,643

$

2,974

$

4,556

Net income

$

26,740

$

25,780

$

21,946

$

24,361

$

18,920

Per Common Share

Earnings (basic)

$

0.46

$

0.45

$

0.38

$

0.42

$

0.34

Earnings (diluted)

$

0.46

$

0.45

$

0.38

$

0.42

$

0.34

Book value

$

21.48

$

21.69

$

21.38

$

21.53

$

21.34

Averages

Total assets

$

8,905,743

$

8,672,692

$

8,532,173

$

8,505,776

$

8,152,463

Interest-earning assets

$

7,937,308

$

7,711,531

$

7,560,288

$

7,529,040

$

7,199,443

Loans

$

5,762,048

$

5,712,614

$

5,542,489

$

5,414,942

$

5,168,761

Securities, including Federal Home Loan Bank stock

$

2,136,703

$

1,945,174

$

1,976,959

$

2,068,806

$

1,918,690

Deposits

$

7,440,628

$

7,233,863

$

6,978,472

$

6,927,756

$

6,759,259

Interest-bearing deposits

$

3,933,001

$

3,910,695

$

3,753,101

$

4,157,491

$

4,174,459

Interest-bearing liabilities

$

4,031,214

$

4,007,198

$

3,961,013

$

4,395,502

$

4,282,273

Noninterest-bearing deposits

$

3,507,627

$

3,323,168

$

3,225,371

$

2,770,265

$

2,584,800

Shareholders' equity

$

1,259,117

$

1,239,830

$

1,247,887

$

1,240,853

$

1,185,346

Financial Ratios

Return on average assets

1.20

%

1.19

%

1.03

%

1.15

%

0.93

%

Return on average common equity

8.50

%

8.32

%

7.04

%

7.86

%

6.39

%

Average equity to average assets

14.14

%

14.30

%

14.63

%

14.59

%

14.54

%

Net interest margin (tax equivalent)

4.25

%

4.37

%

4.41

%

4.39

%

4.50

%

Period end

Total assets

$

8,954,382

$

8,755,984

$

8,518,019

$

8,552,902

$

8,578,846

Loans, net of unearned income

$

5,815,027

$

5,746,511

$

5,611,897

$

5,450,895

$

5,445,378

Allowance for loan and lease losses

$

68,172

$

69,049

$

69,257

$

70,234

$

69,569

Securities, including Federal Home Loan Bank stock

$

2,170,416

$

2,037,666

$

1,926,248

$

2,040,163

$

2,131,622

Deposits

$

7,438,829

$

7,314,805

$

7,044,373

$

7,074,965

$

6,924,722

Core deposits

$

7,127,866

$

6,986,206

$

6,737,969

$

6,771,755

$

6,619,944

Shareholders' equity

$

1,242,128

$

1,254,136

$

1,236,214

$

1,244,443

$

1,228,175

Nonperforming, assets

Nonaccrual loans

$

21,464

$

19,080

$

25,746

$

31,828

$

31,352

OREO and OPPO

13,738

19,475

20,665

23,347

22,225

Total nonperforming assets

$

35,202

$

38,555

$

46,411

$

55,175

$

53,577

Nonperforming loans to period-end loans

0.37

%

0.33

%

0.46

%

0.58

%

0.58

%

Nonperforming assets to period-end assets

0.39

%

0.44

%

0.54

%

0.65

%

0.62

%

Allowance for loan and lease losses to period-end loans

1.17

%

1.20

%

1.23

%

1.29

%

1.28

%

Net loan charge-offs

$

3,226

$

3,039

$

3,179

$

544

$

10

 

CONSOLIDATED STATEMENTS OF INCOME

Columbia Banking System, Inc.

Three Months Ended

Twelve Months Ended

Unaudited

December 31,

December 31,

2015

2014

2015

2014

(in thousands except per share)

Interest Income

Loans

$

71,358

$

69,831

$

286,166

$

268,279

Taxable securities

8,516

7,075

30,774

28,754

Tax-exempt securities

2,870

2,917

11,842

10,830

Deposits in banks

25

74

109

179

Total interest income

82,769

79,897

328,891

308,042

Interest Expense

Deposits

733

811

2,977

3,005

Federal Home Loan Bank advances

83

87

474

396

Other borrowings

134

235

553

593

Total interest expense

950

1,133

4,004

3,994

Net Interest Income

81,819

78,764

324,887

304,048

Provision for loan and lease losses

2,349

1,708

8,591

6,727

Net interest income after provision for loan and lease losses

79,470

77,056

316,296

297,321

Noninterest Income

Service charges and other fees

15,245

14,575

61,881

55,555

Merchant services fees

2,173

1,961

8,975

7,975

Investment securities gains, net

281

1,581

552

Bank owned life insurance

1,071

926

4,441

3,823

Change in FDIC loss-sharing asset

(1,031)

(5,304)

(4,010)

(19,989)

Other

7,006

3,027

18,605

11,834

Total noninterest income

24,745

15,185

91,473

59,750

Noninterest Expense

Compensation and employee benefits

36,689

35,903

149,410

130,864

Occupancy

10,037

8,024

34,818

32,300

Merchant processing

1,058

948

4,204

4,006

Advertising and promotion

1,233

1,218

4,713

3,964

Data processing

4,399

3,900

17,421

15,369

Legal and professional fees

2,081

4,012

9,608

11,389

Taxes, licenses and fees

1,392

1,165

5,395

4,552

Regulatory premiums

1,180

1,105

4,806

4,549

Net cost (benefit) of operation of other real estate owned

(60)

162

(1,629)

(1,045)

Amortization of intangibles

1,652

1,777

6,882

6,293

Other

7,216

5,940

30,521

27,045

Total noninterest expense

66,877

64,154

266,149

239,286

Income before income taxes

37,338

28,087

141,620

117,785

Provision for income taxes

10,598

9,167

42,793

36,211

Net Income

$

26,740

$

18,920

$

98,827

$

81,574

Earnings per common share

Basic

$

0.46

$

0.34

$

1.71

$

1.53

Diluted

$

0.46

$

0.34

$

1.71

$

1.52

Dividends paid per common share

$

0.36

$

0.30

$

1.34

$

0.94

Weighted average number of common shares outstanding

57,057

55,137

57,019

52,618

Weighted average number of diluted common shares outstanding

57,070

55,272

57,032

53,183

 

CONSOLIDATED BALANCE SHEETS

Columbia Banking System, Inc.

Unaudited

December 31,

December 31,

2015

2014

(in thousands)

ASSETS

Cash and due from banks

$

166,929

$

171,221

Interest-earning deposits with banks

8,373

16,949

Total cash and cash equivalents

175,302

188,170

Securities available for sale at fair value (amortized cost of $2,157,610 and $2,087,069, respectively)

2,157,694

2,098,257

Federal Home Loan Bank stock at cost

12,722

33,365

Loans held for sale

4,509

1,116

Loans, net of unearned income of ($42,373) and ($59,374), respectively

5,815,027

5,445,378

Less: allowance for loan and lease losses

68,172

69,569

Loans, net

5,746,855

5,375,809

FDIC loss-sharing asset

6,568

15,174

Interest receivable

27,877

27,802

Premises and equipment, net

164,239

172,090

Other real estate owned

13,738

22,190

Goodwill

382,762

382,537

Other intangible assets, net

23,577

30,459

Other assets

238,539

231,877

Total assets

$

8,954,382

$

8,578,846

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:

Noninterest-bearing

$

3,507,358

$

2,651,373

Interest-bearing

3,931,471

4,273,349

Total deposits

7,438,829

6,924,722

Federal Home Loan Bank advances

68,531

216,568

Securities sold under agreements to repurchase

99,699

105,080

Other borrowings

8,248

Other liabilities

105,195

96,053

Total liabilities

7,712,254

7,350,671

Commitments and contingent liabilities

December 31,

December 31,

2015

2014

Preferred stock (no par value)

(in thousands)

Authorized shares

2,000

2,000

Issued and outstanding

9

9

2,217

2,217

Common stock (no par value)

Authorized shares

115,000

63,033

Issued and outstanding

57,724

57,437

990,281

985,839

Retained earnings

255,925

234,498

Accumulated other comprehensive income (loss)

(6,295)

5,621

Total shareholders' equity

1,242,128

1,228,175

Total liabilities and shareholders' equity

$

8,954,382

$

8,578,846

 

 

AVERAGE BALANCES AND RATES

Columbia Banking System, Inc.

Unaudited

Three Months Ended December 31,

Three Months Ended December 31,

2015

2014

Average Balances

Interest Earned / Paid

Average Rate

Average Balances

Interest Earned / Paid

Average Rate

(dollars in thousands)

ASSETS

Loans, net (1)(2)

$

5,762,048

$

72,322

5.02

%

$

5,168,761

$

70,463

5.45

%

Taxable securities

1,686,594

8,516

2.02

%

1,491,931

7,075

1.90

%

Tax exempt securities (2)

450,109

4,417

3.93

%

426,759

4,577

4.29

%

Interest-earning deposits with banks

38,557

25

0.26

%

111,992

74

0.26

%

Total interest-earning assets

7,937,308

$

85,280

4.30

%

7,199,443

$

82,189

4.57

%

Other earning assets

153,298

140,135

Noninterest-earning assets

815,137

812,885

Total assets

$

8,905,743

$

8,152,463

LIABILITIES AND SHAREHOLDERS' EQUITY

Certificates of deposit

$

460,858

$

179

0.16

%

$

497,704

$

284

0.23

%

Savings accounts

653,738

17

0.01

%

591,137

18

0.01

%

Interest-bearing demand

920,021

161

0.07

%

1,260,231

138

0.04

%

Money market accounts

1,898,384

376

0.08

%

1,825,387

371

0.08

%

Total interest-bearing deposits

3,933,001

733

0.07

%

4,174,459

811

0.08

%

Federal Home Loan Bank advances

18,915

83

1.76

%

24,823

87

1.40

%

Other borrowings

79,298

134

0.68

%

82,991

235

1.13

%

Total interest-bearing liabilities

4,031,214

$

950

0.09

%

4,282,273

$

1,133

0.11

%

Noninterest-bearing deposits

3,507,627

2,584,800

Other noninterest-bearing liabilities

107,785

100,044

Shareholders' equity

1,259,117

1,185,346

Total liabilities & shareholders' equity

$

8,905,743

$

8,152,463

Net interest income (tax equivalent)

$

84,330

$

81,056

Net interest margin (tax equivalent)

4.25

%

4.50

%

(1)

Nonaccrual loans have been included in the tables as loans carrying a zero yield. Amortized net deferred loan fees and net unearned discounts on acquired loans were included in the interest income calculations. The amortization of net deferred loan fees was $1.1 million for the three months ended December 31, 2015 and $1.2 million for the three months ended December 31, 2014. The incremental accretion on acquired loans was $6.0 million and $8.8 million for the three months ended December 31, 2015 and 2014, respectively.

(2)

Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $964 thousand and $632 thousand for the three months ended December 31, 2015 and 2014, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.5 million and $1.7 million for the three months ended December 31, 2015 and 2014, respectively.

 

AVERAGE BALANCES AND RATES

Columbia Banking System, Inc.

Unaudited

Twelve Months Ended December 31,

Twelve Months Ended December 31,

2015

2014

Average Balances

Interest Earned / Paid

Average Rate

Average Balances

Interest Earned / Paid

Average Rate

(dollars in thousands)

ASSETS

Loans, net (1)(3)

$

5,609,261

$

289,450

5.16

%

$

4,782,369

$

270,210

5.65

%

Taxable securities (2)

1,577,711

30,774

1.95

%

1,332,144

28,754

2.16

%

Tax exempt securities (3)

454,148

18,219

4.01

%

376,431

16,997

4.52

%

Interest-earning deposits with banks

44,614

109

0.24

%

70,103

179

0.26

%

Total interest-earning assets

7,685,734

$

338,552

4.40

%

6,561,047

$

316,140

4.82

%

Other earning assets

149,476

132,419

Noninterest-earning assets

820,033

774,625

Total assets

$

8,655,243

$

7,468,091

LIABILITIES AND SHAREHOLDERS' EQUITY

Certificates of deposit

$

483,193

$

868

0.18

%

$

485,487

$

1,259

0.26

%

Savings accounts

637,464

70

0.01

%

543,303

60

0.01

%

Interest-bearing demand

982,491

612

0.06

%

1,204,584

478

0.04

%

Money market accounts

1,834,733

1,427

0.08

%

1,668,150

1,208

0.07

%

Total interest-bearing deposits

3,937,881

2,977

0.08

%

3,901,524

3,005

0.08

%

Federal Home Loan Bank advances

70,678

474

0.67

%

44,876

396

0.88

%

Other borrowings

88,924

553

0.62

%

39,617

593

1.50

%

Total interest-bearing liabilities

4,097,483

$

4,004

0.10

%

3,986,017

$

3,994

0.10

%

Noninterest-bearing deposits

3,208,947

2,285,818

Other noninterest-bearing liabilities

101,861

86,675

Shareholders' equity

1,246,952

1,109,581

Total liabilities & shareholders' equity

$

8,655,243

$

7,468,091

Net interest income (tax equivalent)

$

334,548

$

312,146

Net interest margin (tax equivalent)

4.35

%

4.76

%

(1)

Nonaccrual loans have been included in the table as loans carrying a zero yield. Amortized net deferred loan fees and net unearned discounts on acquired loans were included in the interest income calculations. The amortization of net deferred loan fees was $4.9 million and $4.5 million for the twelve months ended December 31, 2015 and 2014, respectively. The incremental accretion on acquired loans was $27.2 million and $41.8 million for the twelve months ended December 31, 2015 and 2014, respectively.

(2)

During the twelve months ended December 31, 2014 the Company recorded a $2.6 million reversal of premium amortization, which increased interest income on taxable securities.

(3)

Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $3.3 million and $1.9 million for the twelve months ended December 31, 2015 and 2014, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $6.4 million and $6.2 million for the twelve months ended December 31, 2015 and 2014, respectively.

Non-GAAP Financial Measures

The Company considers its operating net interest margin and operating efficiency ratios to be important measurements as they more closely reflect the ongoing operating performance of the Company. Despite the importance of the operating net interest margin and operating efficiency ratio to the Company, there are no standardized definitions for them and, as a result, the Company's calculations may not be comparable with other organizations. Also, there may be limits in the usefulness of these measures to investors. As a result, the Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.

The following tables reconcile the Company's calculation of the operating net interest margin and operating efficiency ratio:

Three Months Ended December 31,

Twelve Months Ended December 31,

2015

2014

2015

2014

Operating net interest margin non-GAAP reconciliation:

(dollars in thousands)

Net interest income (tax equivalent) (1)

$

84,330

$

81,056

$

334,548

$

312,146

Adjustments to arrive at operating net interest income (tax equivalent):

Incremental accretion income on FDIC purchased credit impaired loans

(2,200)

(3,796)

(9,096)

(20,224)

Incremental accretion income on other FDIC acquired loans

(68)

(10)

(234)

(484)

Incremental accretion income on other acquired loans

(3,746)

(4,957)

(17,862)

(21,093)

Premium amortization on acquired securities

2,253

2,490

10,217

7,123

Correction of immaterial error - securities premium amortization

(2,622)

Interest reversals on nonaccrual loans

582

189

1,713

1,291

Operating net interest income (tax equivalent) (1)

$

81,151

$

74,972

$

319,286

$

276,137

Average interest earning assets

$

7,937,308

$

7,199,443

$

7,685,734

$

6,561,047

Net interest margin (tax equivalent) (1)

4.25

%

4.50

%

4.35

%

4.76

%

Operating net interest margin (tax equivalent) (1)

4.09

%

4.17

%

4.15

%

4.21

%

 

Three Months Ended December 31,

Twelve Months Ended December 31,

2015

2014

2015

2014

Operating efficiency ratio non-GAAP reconciliation:

(dollars in thousands)

Noninterest expense (numerator A)

$

66,877

$

64,154

$

266,149

$

239,286

Adjustments to arrive at operating noninterest expense:

Acquisition-related expenses

(1,872)

(4,556)

(10,917)

(9,432)

Net benefit of operation of OREO and OPPO

150

(160)

1,724

1,182

FDIC clawback liability expense

(812)

8

(979)

(294)

Loss on asset disposals

(52)

(6)

(433)

(563)

State of Washington Business and Occupation ("B&O") taxes

(1,294)

(1,067)

(4,962)

(4,183)

Operating noninterest expense (numerator B)

$

62,997

$

58,373

$

250,582

$

225,996

Net interest income (tax equivalent) (1)

$

84,330

$

81,056

$

334,548

$

312,146

Noninterest income

24,745

15,185

91,473

59,750

Bank owned life insurance tax equivalent adjustment

576

528

2,391

2,177

Total revenue (tax equivalent) (denominator A)

$

109,651

$

96,769

$

428,412

$

374,073

Operating net interest income (tax equivalent) (1)

$

81,151

$

74,972

$

319,286

$

276,137

Adjustments to arrive at operating noninterest income (tax equivalent):

Investment securities gains, net

(281)

(1,581)

(552)

Gain on asset disposals

(4)

(8)

(129)

(86)

Gain related to branch sale deposit premium

(565)

Mortgage loan repurchase liability adjustment

(3,147)

(3,147)

Change in FDIC loss-sharing asset

1,031

5,304

4,010

19,989

Operating noninterest income (tax equivalent)

22,920

21,009

93,017

80,713

Total operating revenue (tax equivalent) (denominator B)

$

104,071

$

95,981

$

412,303

$

356,850

Efficiency ratio (tax equivalent) (numerator A/denominator A)

60.99

%

66.30

%

62.12

%

63.97

%

Operating efficiency ratio (tax equivalent) (numerator B/denominator B)

60.53

%

60.82

%

60.78

%

63.33

%

__________

(1)

 Tax-exempt interest income has been adjusted to a tax equivalent basis. The amount of such adjustment was an addition to net interest income of $2.5 million and $2.3 million for the three months ended December 31, 2015 and 2014, respectively, and an addition to net interest income of $9.7 million and $8.1 million for the twelve months ended December 31, 2015 and 2014, respectively.

 

Logo - http://photos.prnewswire.com/prnh/20130708/SF43770LOGO

 

 

 

SOURCE Columbia Banking System, Inc.



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http://www.columbiabank.com