UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
April 22, 2015
COLUMBIA BANKING SYSTEM, INC.
(Exact name of registrant as specified in its charter)
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Washington | | 0-20288 | | 91-1422237 |
(State or other jurisdiction of incorporation) | | (Commission File Number) | | (IRS Employer Identification No.) |
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1301 A Street Tacoma, WA | | | | 98402 |
(Address of principal executive offices) | | | | (Zip Code) |
Registrant’s telephone number, including area code: (253) 305-1900
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Items to be Included in this Report
Item 2.02 Results of Operations and Financial Condition
On April 22, 2015, Columbia Banking System, Inc. issued a press release reporting its financial results for the quarter ended March 31, 2015. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 8.01 Other Events
On April 22, 2015, Columbia Banking System, Inc. issued a press release announcing a regular quarterly cash dividend of $0.18 per common share and per share equivalent for holders of preferred stock and a special dividend of $0.16 per common share and per share equivalent for holders of preferred stock. The dividends will be paid on May 20, 2015 to shareholders of record at the close of business on May 6, 2015. A copy of the press release is attached hereto as Exhibit 99.2 and is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
(d) The following exhibits are being furnished herewith:
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99.1 | Press Release dated April 22, 2015 reporting the financial results of Columbia Banking System, Inc. for the quarter ended March 31, 2015. |
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99.2 | Press Release dated April 22, 2015 announcing a regular quarterly dividend and a special cash dividend. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | | | COLUMBIA BANKING SYSTEM, INC. |
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Date: | April 22, 2015 | | | | /s/ MELANIE J. DRESSEL |
| | | | | Melanie J. Dressel |
| | | | | President and Chief Executive Officer |
EXHIBIT INDEX
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99.1 | Press Release dated April 22, 2015 reporting the financial results of Columbia Banking System, Inc. for the quarter ended March 31, 2015. |
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99.2 | Press Release dated April 22, 2015 announcing a regular quarterly dividend and a special cash dividend. |
Exhibit 99.1
FOR IMMEDIATE RELEASE
April 22, 2015
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
Columbia Banking System Announces First Quarter 2015 Earnings
Highlights
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• | Net income of $24.4 million with diluted earnings per share of $0.42, up from net income of $18.9 million and diluted earnings per share of $0.34 for the quarter ended December 31, 2014 |
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• | New loan production for the quarter of over $215 million |
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• | Core deposit growth of $152 million, or 9% annualized, during the quarter |
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• | Ranked #14 Best Performing Regional Bank 2014 in U.S. by SNL Financial |
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• | Named Top Place to Work by the Pierce County Business Examiner |
TACOMA, Washington, April 22, 2015 -- 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 first quarter 2015 earnings, “We are pleased with our financial performance for the quarter, especially in light of the after tax impact to earnings of $1.9 million, or $0.03 per diluted share, resulting from acquisition-related expenses and FDIC acquired loan accounting. We had good loan production, solid core deposit growth, increased quarter over quarter revenue, and the operating net interest margin continued to show great resiliency.”
Ms. Dressel continued, “The integration of our acquisition of Intermountain Community Bancorp remains on track. As expected, we plan to realize more of the operational synergies as the second and third quarters progress.”
Significant Influences on the Quarter Ended March 31, 2015
Balance Sheet
Loans were $5.45 billion at March 31, 2015, up $5.5 million from December 31, 2014. Securities were $2.04 billion at March 31, 2015, a decrease of $91.5 million, or 4% from $2.13 billion at December 31, 2014 primarily due to sales of investment securities. Total deposits at March 31, 2015 were $7.07 billion, an increase of $150.2 million, or 2% from $6.92 billion at December 31, 2014. Core deposits were $6.77 billion at March 31, 2015, an increase of $151.8 million from December 31, 2014. The average rate on interest-bearing deposits and total deposits for the quarter was 0.07% and 0.04%, respectively, compared to 0.08% and 0.05% for the fourth quarter of 2014.
Asset Quality
At March 31, 2015, nonperforming assets to total assets were 0.65% or $55.2 million, compared to 0.62%, or $53.6 million, at December 31, 2014. The $1.6 million increase was the result of a $476 thousand increase in nonaccrual loans and a $1.1 million increase in other real estate owned, most of which came from the purchased credit impaired loan portfolio.
The following table sets forth information regarding nonaccrual loans and total nonperforming assets:
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| | | | | | | | |
| | March 31, 2015 | | December 31, 2014 |
| | (in thousands) |
Nonaccrual loans: | | | | |
Commercial business | | $ | 17,429 |
| | $ | 16,799 |
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Real estate: | | | | |
One-to-four family residential | | 4,429 |
| | 2,822 |
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Commercial and multifamily residential | | 4,498 |
| | 7,847 |
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Total real estate | | 8,927 |
| | 10,669 |
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Real estate construction: | | | | |
One-to-four family residential | | 2,134 |
| | 465 |
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Commercial and multifamily residential | | 470 |
| | 480 |
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Total real estate construction | | 2,604 |
| | 945 |
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Consumer | | 2,868 |
| | 2,939 |
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Total nonaccrual loans | | 31,828 |
| | 31,352 |
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Other real estate owned and other personal property owned | | 23,347 |
| | 22,225 |
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Total nonperforming assets | | $ | 55,175 |
| | $ | 53,577 |
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The following table provides an analysis of the Company's allowance for loan and lease losses ("ALLL"):
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| | | | | | | | |
| | Three Months Ended March 31, |
| | 2015 | | 2014 (1) |
| | (in thousands) |
Beginning balance | | $ | 69,569 |
| | $ | 72,454 |
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Charge-offs: | | | | |
Commercial business | | (1,426 | ) | | (233 | ) |
One-to-four family residential real estate | | (8 | ) | | (207 | ) |
Commercial and multifamily residential real estate | | — |
| | (1,023 | ) |
Consumer | | (891 | ) | | (727 | ) |
Purchased credit impaired (1) | | (4,100 | ) | | (4,273 | ) |
Total charge-offs | | (6,425 | ) | | (6,463 | ) |
Recoveries: | | | | |
Commercial business | | 618 |
| | 490 |
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One-to-four family residential real estate | | 12 |
| | 28 |
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Commercial and multifamily residential real estate | | 3,261 |
| | 39 |
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One-to-four family residential real estate construction | | 28 |
| | 42 |
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Commercial and multifamily residential real estate construction | | 3 |
| | — |
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Consumer | | 273 |
| | 253 |
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Purchased credit impaired (1) | | 1,686 |
| | 1,806 |
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Total recoveries | | 5,881 |
| | 2,658 |
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Net charge-offs | | (544 | ) | | (3,805 | ) |
Provision for loan and lease losses (1) | | 1,209 |
| | 1,922 |
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Ending balance | | $ | 70,234 |
| | $ | 70,571 |
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__________
(1) Reclassified to conform to the current period’s presentation. The reclassification was limited to including charge-off, recovery, and provision activity related to the purchased credit impaired loan portfolio.
The allowance for loan losses to period end loans was 1.29% at March 31, 2015 compared to 1.28% at December 31, 2014. Excluding acquired loans, the allowance at March 31, 2015 represented 1.17% of originated loans, compared to 1.21% of originated loans at December 31, 2014. The decline reflects strong organic loan growth. The allowance to loans, excluding acquired loans, 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 the allowance for loan losses to period end loans, excluding acquired loans.
For the first quarter of 2015, Columbia recorded a net provision for loan and lease losses of $1.2 million compared to a net provision of $1.9 million for the comparable quarter last year. The net provision for loan and lease losses recorded during the current quarter was primarily driven by the purchased credit impaired (“PCI”) loan portfolio, for which Columbia recorded a provision of $2.6 million, which was partially offset by a provision recapture of $1.4 million related to loans, excluding PCI loans. The
provision recorded relating to PCI loans was due to the decrease in the present value of expected future cash flows as remeasured during the current quarter, compared to the present value of expected future cash flows during the fourth quarter of 2014. The $2.6 million provision related to PCI loans was partially offset by a $1.5 million favorable adjustment to the change in FDIC loss-sharing asset. The $1.4 million provision recapture related to loans, excluding PCI loans, was due to loan recovery activity during the current quarter and improvement in credit quality.
Net Interest Margin (“NIM”)
Columbia’s net interest margin (tax equivalent) of 4.39% for the first quarter of 2015 was down 11 basis points from 4.50% for the fourth quarter of 2014. The decrease was primarily due to fewer accruing days in the current quarter, which negatively impacted the net interest margin by 10 basis points. Compared to the first quarter of 2014, Columbia’s net interest margin decreased 46 basis points from 4.85%, due to lower incremental accretion on acquired loans, which was $12.3 million for the prior year quarter, and only $7.5 million for the current quarter.
Columbia’s operating net interest margin (tax equivalent)(1) increased to 4.18% for the first quarter of 2015, compared to 4.17% for the fourth quarter of 2014, despite the negative impact of fewer accruing days in the current quarter.
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:
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| | Three Months Ended |
| | March 31, 2015 | | March 31, 2014 |
| | (dollars in thousands) |
Incremental accretion income due to: | | | | |
FDIC purchased credit impaired loans | | $ | 2,447 |
| | $ | 6,489 |
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Other FDIC acquired loans | | 117 |
| | 204 |
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Other acquired loans | | 4,934 |
| | 5,615 |
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Incremental accretion income | | $ | 7,498 |
| | $ | 12,308 |
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| | | | |
Net interest margin (tax equivalent) | | 4.39 | % | | 4.85 | % |
Operating net interest margin (tax equivalent) (1) | | 4.18 | % | | 4.19 | % |
__________
(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.
Impact of FDIC Acquired Loan Accounting
The following table illustrates the impact to earnings associated with Columbia’s FDIC acquired loan portfolios:
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FDIC Acquired Loan Activity |
| | | | |
| | Three Months Ended |
| | March 31, 2015 | | March 31, 2014 |
| | (in thousands) |
Incremental accretion income on FDIC purchased credit impaired loans | | $ | 2,447 |
| | $ | 6,489 |
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Incremental accretion income on other FDIC acquired loans | | 117 |
| | 204 |
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Provision for losses on FDIC purchased credit impaired loans | | (2,609 | ) | | (2,422 | ) |
Change in FDIC loss-sharing asset | | 150 |
| | (4,819 | ) |
FDIC clawback liability expense | | (23 | ) | | (204 | ) |
Pre-tax earnings impact | | $ | 82 |
| | $ | (752 | ) |
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 and stems from the discount established at the time these loan portfolios were acquired. At March 31, 2015, the accretable yield on purchased credit impaired loans was $68.7 million. Accretable yield is subject to change based upon expected future loan cash flows, which are remeasured by Columbia on a quarterly basis.
The $150 thousand change in the FDIC loss-sharing asset in the current quarter added to noninterest income and consisted primarily of loan impairment of $1.5 million and write-downs on OREO of $1.1 million, partially offset by $2.3 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.
First Quarter 2015 Results
Net Interest Income
Net interest income for the first quarter of 2015 was $80.4 million, an increase of $1.6 million compared to the fourth quarter of 2014. This increase was primarily due to the acquired loans and securities from the Intermountain transaction. Compared to the first quarter of 2014, net interest income increased by $6.4 million from $73.9 million. The increase from the prior year period is due to the combination of acquired loans and securities from the acquisition of Intermountain and 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
Total noninterest income was $22.8 million for the first quarter of 2015, an increase of $7.6 million compared to $15.2 million for the fourth quarter of 2014. This increase was primarily due to a $5.5 million positive variance related to the change in FDIC loss-sharing asset. For the prior quarter, the change in FDIC loss-sharing asset was an expense of $5.3 million, compared to a net benefit in the current quarter of $150 thousand. The current period net benefit was driven by reduced amortization as well as increases in the asset resulting from loan impairment and covered asset write-downs. The decline in amortization resulted from the recent expiration of our two most significant FDIC loss-sharing agreements. Additional details of the components of the change in the FDIC loss-sharing asset are provided in tabular format on the following page. Also contributing to the linked quarter growth in noninterest income was an increase in investment securities gains of $721 thousand and an increase in other noninterest income of $882 thousand. The increase in other noninterest income was due to a gain on sale of loans in the current quarter of $923 thousand compared to only $286 thousand in the fourth quarter of 2014.
Compared to the first quarter of 2014, noninterest income increased by $8.8 million. The increase from the prior year period was primarily due to the change in FDIC loss-sharing asset, which, as previously mentioned was a benefit of $150 thousand in the current quarter, but was an expense of $4.8 million in the first quarter of 2014. Additional details of the components of the change in the FDIC loss-sharing asset are provided in tabular format on the following page. Also contributing to the increase compared to the first quarter of 2014 was an increase in service charges and other fees of $1.9 million resulting primarily from the increased customer base from the acquisition of Intermountain.
The change in the FDIC loss-sharing asset has been a significant component of noninterest income. The following table reflects the income statement components of the change in the FDIC loss-sharing asset:
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| | | | | | | | |
| | Three Months Ended |
| | March 31, |
| | 2015 | | 2014 |
| | (in thousands) |
Adjustments reflected in income | | | | |
Amortization, net | | (2,294 | ) | | (6,452 | ) |
Loan impairment | | 1,532 |
| | 1,938 |
|
Sale of other real estate | | (420 | ) | | (756 | ) |
Write-downs of other real estate | | 1,071 |
| | 516 |
|
Other | | 261 |
| | (65 | ) |
Change in FDIC loss-sharing asset | | $ | 150 |
| | $ | (4,819 | ) |
Noninterest Expense
Total noninterest expense for the first quarter of 2015 was $66.7 million, an increase of $2.6 million compared to $64.2 million for the fourth quarter of 2014. This increase was driven by higher compensation and benefit expenses due to including a full quarter of such expenses from the November 1, 2014 Intermountain acquisition. In addition, the current quarter included certain additional incentive and employee benefit expenses, typical in the first quarter. These expense increases were partially offset by a $1.4 million favorable change in OREO costs as well as a decrease of $1.6 million in acquisition-related expenses. Substantially all of the acquisition-related expenses recorded in the current quarter related to the recently completed Intermountain acquisition.
Compared to the first quarter of 2014, noninterest expense increased $9.3 million, or 16% from $57.4 million, due to the $2.0 million increase in acquisition-related expenses as well as additional ongoing expense resulting from the Intermountain acquisition, partially offset by the benefit recorded in the current quarter related to OREO.
Conference Call Information
Columbia’s management will discuss the first quarter 2015 results on a conference call scheduled for Thursday, April 23, 2015 at 1:00 p.m. PDT (4:00 pm EDT). Interested parties may listen to this discussion by calling 1-866-378-3802; Conference ID code #22782055.
A conference call replay will be available from approximately 4:00 p.m. PDT on April 23, 2015 through midnight PDT on April 30, 2015. The conference call replay can be accessed by dialing 1-855-859-2056 and entering Conference ID code #22782055.
Annual Meeting of Shareholders
Columbia Banking System’s Annual Meeting of Shareholders will be held at 1:00 PDT on April 22, 2015, at the William W. Philip Hall at the University of Washington Tacoma., 1900 Commerce Street, Tacoma, Washington 98402. The Hall is named in honor of William W. “Bill” Philip, who had a seminal role in establishing UW Tacoma, and was a co-founder of Columbia Bank.
Directions and parking information are available at www.tacoma.washington.edu/conference.
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 over 150 branches throughout Washington, Oregon and Idaho. For the eighth consecutive year, the bank was named in 2014 as one of Puget Sound Business Journal’s “Washington’s Best Workplaces.” Columbia ranked in the top 20 on the 2015 Forbes list of best banks in the country, as well as ranking the best in Washington and second in the Pacific Northwest for the fourth 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, which management believes are a benefit to shareholders. These forward looking statements describe 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” and 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 risk and uncertainty 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, 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 may reduce interest margins more than expected 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. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 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.
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FINANCIAL STATISTICS | | | | | | | |
Columbia Banking System, Inc. | | Three Months Ended | | | |
Unaudited | | March 31, | | | |
| | 2015 | | 2014 | | | |
Earnings | | (dollars in thousands except per share amounts) | | | |
Net interest income | | $ | 80,364 |
| | $ | 73,940 |
| | | |
Provision for loan and lease losses | | $ | 1,209 |
| | $ | 1,922 |
| | | |
Noninterest income | | $ | 22,767 |
| | $ | 14,008 |
| | | |
Noninterest expense | | $ | 66,734 |
| | $ | 57,386 |
| | | |
Acquisition-related expense (included in noninterest expense) | | $ | 2,974 |
| | $ | 966 |
| | | |
Net income | | $ | 24,361 |
| | $ | 19,844 |
| | | |
Per Common Share | | | | | | | |
Earnings (basic) | | $ | 0.42 |
| | $ | 0.38 |
| | | |
Earnings (diluted) | | $ | 0.42 |
| | $ | 0.37 |
| | | |
Book value | | $ | 21.53 |
| | $ | 20.39 |
| | | |
Averages | | | | | | | |
Total assets | | $ | 8,505,776 |
| | $ | 7,143,759 |
| | | |
Interest-earning assets | | $ | 7,529,040 |
| | $ | 6,244,692 |
| | | |
Loans | | $ | 5,414,942 |
| | $ | 4,537,107 |
| | | |
Securities, including Federal Home Loan Bank stock | | $ | 2,068,806 |
| | $ | 1,682,370 |
| | | |
Deposits | | $ | 6,927,756 |
| | $ | 5,901,838 |
| | | |
Interest-bearing deposits | | $ | 4,157,491 |
| | $ | 3,772,370 |
| | | |
Interest-bearing liabilities | | $ | 4,395,502 |
| | $ | 3,868,060 |
| | | |
Noninterest-bearing deposits | | $ | 2,770,265 |
| | $ | 2,129,468 |
| | | |
Shareholders' equity | | $ | 1,240,853 |
| | $ | 1,067,353 |
| | | |
Financial Ratios | | | | | | | |
Return on average assets | | 1.15 | % | | 1.11 | % | | | |
Return on average common equity | | 7.86 | % | | 7.45 | % | | | |
Average equity to average assets | | 14.59 | % | | 14.94 | % | | | |
Net interest margin (tax equivalent) | | 4.39 | % | | 4.85 | % | | | |
Efficiency ratio (tax equivalent) (1) | | 62.95 | % | | 63.52 | % | | | |
Operating efficiency ratio (tax equivalent) (2) | | 63.02 | % | | 65.20 | % | | | |
| | | | | | | |
| | March 31, | | December 31, | |
Period end | | 2015 | | 2014 | | 2014 | |
Total assets | | $ | 8,552,902 |
| | $ | 7,237,053 |
| | $ | 8,584,325 |
| |
Loans, net of unearned income | | $ | 5,450,895 |
| | $ | 4,577,363 |
| | $ | 5,445,378 |
| |
Allowance for loan and lease losses | | $ | 70,234 |
| | $ | 70,571 |
| | $ | 69,569 |
| |
Securities, including Federal Home Loan Bank stock | | $ | 2,040,163 |
| | $ | 1,671,594 |
| | $ | 2,131,622 |
| |
Deposits | | $ | 7,074,965 |
| | $ | 6,044,416 |
| | $ | 6,924,722 |
| |
Core deposits | | $ | 6,771,755 |
| | $ | 5,768,434 |
| | $ | 6,619,944 |
| |
Shareholders' equity | | $ | 1,244,443 |
| | $ | 1,074,491 |
| | $ | 1,228,175 |
| |
Nonperforming assets | | | | | | | |
Nonaccrual loans | | $ | 31,828 |
| | $ | 36,397 |
| | $ | 31,352 |
| |
Other real estate owned ("OREO") and other personal property owned ("OPPO") | | 23,347 |
| | 30,662 |
| | 22,225 |
| |
Total nonperforming assets | | $ | 55,175 |
| | $ | 67,059 |
| | $ | 53,577 |
| |
Nonperforming loans to period-end loans | | 0.58 | % | | 0.80 | % | | 0.58 | % | |
Nonperforming assets to period-end assets | | 0.65 | % | | 0.93 | % | | 0.62 | % | |
Allowance for loan and lease losses to period-end loans | | 1.29 | % | | 1.54 | % | | 1.28 | % | |
Net loan charge-offs | | $ | 544 |
| (3) | $ | 3,805 |
| (4) | $ | 9,612 |
| (5) |
| | | | | | | |
(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). During the second quarter of 2014, the methodology was changed to exclude Washington State Business and Occupation ("B&O") taxes. Amounts presented in prior periods have been adjusted to conform with the current methodology. |
(3) For the three months ended March 31, 2015. | | | | | | | |
(4) For the three months ended March 31, 2014. | | | | | | | |
(5) For the twelve months ended December 31, 2014. | | | | | | | |
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| | | | | | | | | | | | | | |
FINANCIAL STATISTICS | | | | | | | | |
Columbia Banking System, Inc. | | | | | | | | |
Unaudited | | March 31, | | December 31, |
| | 2015 | | 2014 |
Loan Portfolio Composition | | (dollars in thousands) |
Commercial business | | $ | 2,139,873 |
| | 39.3 | % | | $ | 2,119,565 |
| | 38.9 | % |
Real estate: | | | | | | | | |
One-to-four family residential | | 173,739 |
| | 3.2 | % | | 175,571 |
| | 3.2 | % |
Commercial and multifamily residential | | 2,374,454 |
| | 43.5 | % | | 2,363,541 |
| | 43.5 | % |
Total real estate | | 2,548,193 |
| | 46.7 | % | | 2,539,112 |
| | 46.7 | % |
Real estate construction: | | | | | | | | |
One-to-four family residential | | 124,017 |
| | 2.3 | % | | 116,866 |
| | 2.1 | % |
Commercial and multifamily residential | | 119,880 |
| | 2.2 | % | | 134,443 |
| | 2.5 | % |
Total real estate construction | | 243,897 |
| | 4.5 | % | | 251,309 |
| | 4.6 | % |
Consumer | | 352,960 |
| | 6.5 | % | | 364,182 |
| | 6.7 | % |
Purchased credit impaired | | 219,839 |
| | 4.0 | % | | 230,584 |
| | 4.2 | % |
Subtotal loans | | 5,504,762 |
| | 101.0 | % | | 5,504,752 |
| | 101.1 | % |
Less: Net unearned income | | (53,867 | ) | | (1.0 | )% | | (59,374 | ) | | (1.1 | )% |
Loans, net of unearned income | | 5,450,895 |
| | 100.0 | % | | 5,445,378 |
| | 100.0 | % |
Less: Allowance for loan and lease losses | | (70,234 | ) | | | | (69,569 | ) | | |
Total loans, net | | 5,380,661 |
| | | | 5,375,809 |
| | |
Loans held for sale | | $ | 3,545 |
| | | | $ | 1,116 |
| | |
| | | | | | | | |
| | March 31, | | December 31, |
| | 2015 | | 2014 |
Deposit Composition | | (dollars in thousands) |
Core deposits: | | | | | | | | |
Demand and other non-interest bearing | | $ | 3,260,376 |
| | 46.2 | % | | $ | 2,651,373 |
| | 38.3 | % |
Interest bearing demand | | 901,684 |
| | 12.7 | % | | 1,304,258 |
| | 18.8 | % |
Money market | | 1,700,014 |
| | 24.0 | % | | 1,760,331 |
| | 25.4 | % |
Savings | | 630,423 |
| | 8.9 | % | | 615,721 |
| | 8.9 | % |
Certificates of deposit less than $100,000 | | 279,258 |
| | 3.9 | % | | 288,261 |
| | 4.2 | % |
Total core deposits | | 6,771,755 |
| | 95.7 | % | | 6,619,944 |
| | 95.6 | % |
| | | | | | | | |
Certificates of deposit greater than $100,000 | | 199,728 |
| | 2.8 | % | | 202,014 |
| | 2.9 | % |
Certificates of deposit insured by CDARS® | | 18,430 |
| | 0.3 | % | | 18,429 |
| | 0.3 | % |
Brokered money market accounts | | 84,336 |
| | 1.2 | % | | 83,402 |
| | 1.2 | % |
Subtotal | | 7,074,249 |
| | 100.0 | % | | 6,923,789 |
| | 100.0 | % |
Premium resulting from acquisition date fair value adjustment | | 716 |
| | | | 933 |
| | |
Total deposits | | $ | 7,074,965 |
| | | | $ | 6,924,722 |
| | |
|
| | | | | | | | | | | | | | | | | | | | |
QUARTERLY FINANCIAL STATISTICS | | | | | | | | | | |
Columbia Banking System, Inc. | | Three Months Ended |
Unaudited | | March 31, | | December 31, | | September 30, | | June 30, | | March 31, |
| | 2015 | | 2014 | | 2014 | | 2014 | | 2014 |
| | (dollars in thousands except per share) |
Earnings | | |
Net interest income | | $ | 80,364 |
| | $ | 78,764 |
| | $ | 76,220 |
| | $ | 75,124 |
| | $ | 73,940 |
|
Provision for loan and lease losses | | $ | 1,209 |
| | $ | 1,708 |
| | $ | 980 |
| | $ | 2,117 |
| | $ | 1,922 |
|
Noninterest income | | $ | 22,767 |
| | $ | 15,185 |
| | $ | 15,930 |
| | $ | 14,627 |
| | $ | 14,008 |
|
Noninterest expense | | $ | 66,734 |
| | $ | 64,154 |
| | $ | 59,982 |
| | $ | 57,764 |
| | $ | 57,386 |
|
Acquisition-related expense (included in noninterest expense) | | $ | 2,974 |
| | $ | 4,556 |
| | $ | 3,238 |
| | $ | 672 |
| | $ | 966 |
|
Net income | | $ | 24,361 |
| | $ | 18,920 |
| | $ | 21,583 |
| | $ | 21,227 |
| | $ | 19,844 |
|
Per Common Share | | | | | | | | | | |
Earnings (basic) | | $ | 0.42 |
| | $ | 0.34 |
| | $ | 0.41 |
| | $ | 0.40 |
| | $ | 0.38 |
|
Earnings (diluted) | | $ | 0.42 |
| | $ | 0.34 |
| | $ | 0.41 |
| | $ | 0.40 |
| | $ | 0.37 |
|
Book value | | $ | 21.53 |
| | $ | 21.34 |
| | $ | 20.78 |
| | $ | 20.71 |
| | $ | 20.39 |
|
Averages | | | | | | | | | | |
Total assets | | $ | 8,505,776 |
| | $ | 8,152,463 |
| | $ | 7,337,306 |
| | $ | 7,229,187 |
| | $ | 7,143,759 |
|
Interest-earning assets | | $ | 7,529,040 |
| | $ | 7,199,443 |
| | $ | 6,451,660 |
| | $ | 6,339,102 |
| | $ | 6,244,692 |
|
Loans | | $ | 5,414,942 |
| | $ | 5,168,761 |
| | $ | 4,770,443 |
| | $ | 4,646,356 |
| | $ | 4,537,107 |
|
Securities, including Federal Home Loan Bank stock | | $ | 2,068,806 |
| | $ | 1,918,690 |
| | $ | 1,585,996 |
| | $ | 1,645,993 |
| | $ | 1,682,370 |
|
Deposits | | $ | 6,927,756 |
| | $ | 6,759,259 |
| | $ | 6,110,809 |
| | $ | 5,968,881 |
| | $ | 5,901,838 |
|
Interest-bearing deposits | | $ | 4,157,491 |
| | $ | 4,174,459 |
| | $ | 3,847,730 |
| | $ | 3,807,710 |
| | $ | 3,772,370 |
|
Interest-bearing liabilities | | $ | 4,395,502 |
| | $ | 4,282,273 |
| | $ | 3,889,233 |
| | $ | 3,901,016 |
| | $ | 3,868,060 |
|
Noninterest-bearing deposits | | $ | 2,770,265 |
| | $ | 2,584,800 |
| | $ | 2,263,079 |
| | $ | 2,161,171 |
| | $ | 2,129,468 |
|
Shareholders' equity | | $ | 1,240,853 |
| | $ | 1,185,346 |
| | $ | 1,099,512 |
| | $ | 1,084,927 |
| | $ | 1,067,353 |
|
Financial Ratios | | | | | | | | | | |
Return on average assets | | 1.15 | % | | 0.93 | % | | 1.18 | % | | 1.17 | % | | 1.11 | % |
Return on average common equity | | 7.86 | % | | 6.39 | % | | 7.86 | % | | 7.83 | % | | 7.45 | % |
Average equity to average assets | | 14.59 | % | | 14.54 | % | | 14.99 | % | | 15.01 | % | | 14.94 | % |
Net interest margin (tax equivalent) | | 4.39 | % | | 4.50 | % | | 4.85 | % | | 4.86 | % | | 4.85 | % |
Period end | | | | | | | | | | |
Total assets | | $ | 8,552,902 |
| | $ | 8,584,325 |
| | $ | 7,466,081 |
| | $ | 7,297,458 |
| | $ | 7,237,053 |
|
Loans, net of unearned income | | $ | 5,450,895 |
| | $ | 5,445,378 |
| | $ | 4,823,022 |
| | $ | 4,714,575 |
| | $ | 4,577,363 |
|
Allowance for loan and lease losses | | $ | 70,234 |
| | $ | 69,569 |
| | $ | 67,871 |
| | $ | 69,295 |
| | $ | 70,571 |
|
Securities, including Federal Home Loan Bank stock | | $ | 2,040,163 |
| | $ | 2,131,622 |
| | $ | 1,643,003 |
| | $ | 1,621,929 |
| | $ | 1,671,594 |
|
Deposits | | $ | 7,074,965 |
| | $ | 6,924,722 |
| | $ | 6,244,401 |
| | $ | 5,985,069 |
| | $ | 6,044,416 |
|
Core deposits | | $ | 6,771,755 |
| | $ | 6,619,944 |
| | $ | 5,990,118 |
| | $ | 5,735,047 |
| | $ | 5,768,434 |
|
Shareholders' equity | | $ | 1,244,443 |
| | $ | 1,228,175 |
| | $ | 1,096,211 |
| | $ | 1,092,151 |
| | $ | 1,074,491 |
|
Nonperforming, assets | | | | | | | | | | |
Nonaccrual loans | | $ | 31,828 |
| | $ | 31,352 |
| | $ | 27,998 |
| | $ | 30,613 |
| | $ | 36,397 |
|
OREO and OPPO | | 23,347 |
| | 22,225 |
| | 21,941 |
| | 28,254 |
| | 30,662 |
|
Total nonperforming assets | | $ | 55,175 |
| | $ | 53,577 |
| | $ | 49,939 |
| | $ | 58,867 |
| | $ | 67,059 |
|
Nonperforming loans to period-end loans | | 0.58 | % | | 0.58 | % | | 0.58 | % | | 0.65 | % | | 0.80 | % |
Nonperforming assets to period-end assets | | 0.65 | % | | 0.62 | % | | 0.67 | % | | 0.81 | % | | 0.93 | % |
Allowance for loan and lease losses to period-end loans | | 1.29 | % | | 1.28 | % | | 1.41 | % | | 1.47 | % | | 1.54 | % |
Net loan charge-offs | | $ | 544 |
| | $ | 10 |
| | $ | 2,404 |
| | $ | 3,393 |
| | $ | 3,805 |
|
|
| | | | | | | | |
CONSOLIDATED STATEMENTS OF INCOME | | |
Columbia Banking System, Inc. | | Three Months Ended |
Unaudited | | March 31, |
| | 2015 | | 2014 |
| | (in thousands except per share) |
Interest Income | | | | |
Loans | | $ | 70,822 |
| | $ | 65,541 |
|
Taxable securities | | 7,526 |
| | 6,752 |
|
Tax-exempt securities | | 3,042 |
| | 2,618 |
|
Deposits in banks | | 27 |
| | 14 |
|
Total interest income | | 81,417 |
| | 74,925 |
|
Interest Expense | | | | |
Deposits | | 748 |
| | 752 |
|
Federal Home Loan Bank advances | | 159 |
| | 114 |
|
Other borrowings | | 146 |
| | 119 |
|
Total interest expense | | 1,053 |
| | 985 |
|
Net Interest Income | | 80,364 |
| | 73,940 |
|
Provision for loan and lease losses | | 1,209 |
| | 1,922 |
|
Net interest income after provision for loan and lease losses | | 79,155 |
| | 72,018 |
|
Noninterest Income | | | | |
Service charges and other fees | | 14,869 |
| | 12,936 |
|
Merchant services fees | | 2,040 |
| | 1,870 |
|
Investment securities gains, net | | 721 |
| | 223 |
|
Bank owned life insurance | | 1,078 |
| | 965 |
|
Change in FDIC loss-sharing asset | | 150 |
| | (4,819 | ) |
Other | | 3,909 |
| | 2,833 |
|
Total noninterest income | | 22,767 |
| | 14,008 |
|
Noninterest Expense | | | | |
Compensation and employee benefits | | 39,100 |
| | 31,338 |
|
Occupancy | | 7,993 |
| | 8,244 |
|
Merchant processing | | 977 |
| | 980 |
|
Advertising and promotion | | 931 |
| | 769 |
|
Data processing and communications | | 4,984 |
| | 3,520 |
|
Legal and professional fees | | 2,507 |
| | 2,169 |
|
Taxes, licenses and fees | | 1,232 |
| | 1,180 |
|
Regulatory premiums | | 1,221 |
| | 1,176 |
|
Net cost (benefit) of operation of other real estate | | (1,246 | ) | | 146 |
|
Amortization of intangibles | | 1,817 |
| | 1,580 |
|
Other | | 7,218 |
| | 6,284 |
|
Total noninterest expense | | 66,734 |
| | 57,386 |
|
Income before income taxes | | 35,188 |
| | 28,640 |
|
Provision for income taxes | | 10,827 |
| | 8,796 |
|
Net Income | | $ | 24,361 |
| | $ | 19,844 |
|
Earnings per common share | | | | |
Basic | | $ | 0.42 |
| | $ | 0.38 |
|
Diluted | | $ | 0.42 |
| | $ | 0.37 |
|
Dividends paid per common share | | $ | 0.30 |
| | $ | 0.12 |
|
Weighted average number of common shares outstanding | | 56,965 |
| | 51,097 |
|
Weighted average number of diluted common shares outstanding | | 56,978 |
| | 52,433 |
|
|
| | | | | | | | | | | | | |
CONSOLIDATED BALANCE SHEETS | | | | | | | |
Columbia Banking System, Inc. | | | | | | | |
Unaudited | | | | | March 31, | | December 31, |
| | | | | 2015 | | 2014 |
| | | | | (in thousands) |
ASSETS | | |
Cash and due from banks | | $ | 177,026 |
| | $ | 171,221 |
|
Interest-earning deposits with banks | | 71,575 |
| | 16,949 |
|
Total cash and cash equivalents | | 248,601 |
| | 188,170 |
|
Securities available for sale at fair value (amortized cost of $1,981,977 and $2,087,069, respectively) | | 2,007,159 |
| | 2,098,257 |
|
Federal Home Loan Bank stock at cost | | 33,004 |
| | 33,365 |
|
Loans held for sale | | 3,545 |
| | 1,116 |
|
Loans, net of unearned income of ($53,867) and ($59,374), respectively | | 5,450,895 |
| | 5,445,378 |
|
Less: allowance for loan and lease losses | | 70,234 |
| | 69,569 |
|
Loans, net | | 5,380,661 |
| | 5,375,809 |
|
FDIC loss-sharing asset | | 14,644 |
| | 15,174 |
|
Interest receivable | | 29,088 |
| | 27,802 |
|
Premises and equipment, net | | 172,958 |
| | 172,090 |
|
Other real estate owned | | 23,299 |
| | 22,190 |
|
Goodwill | | 382,537 |
| | 382,537 |
|
Other intangible assets, net | | 28,642 |
| | 30,459 |
|
Other assets | | 228,764 |
| | 231,877 |
|
Total assets | | $ | 8,552,902 |
| | $ | 8,578,846 |
|
LIABILITIES AND SHAREHOLDERS' EQUITY | | | | |
Deposits: | | | | |
Noninterest-bearing | | $ | 3,260,376 |
| | $ | 2,651,373 |
|
Interest-bearing | | 3,814,589 |
| | 4,273,349 |
|
Total deposits | | 7,074,965 |
| | 6,924,722 |
|
Federal Home Loan Bank advances | | 36,559 |
| | 216,568 |
|
Securities sold under agreements to repurchase | | 96,852 |
| | 105,080 |
|
Other borrowings | | | | | — |
| | 8,248 |
|
Other liabilities | | 100,083 |
| | 96,053 |
|
Total liabilities | | 7,308,459 |
| | 7,350,671 |
|
Commitments and contingent liabilities | | | | | | | |
| March 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 | 63,033 |
| | 63,033 |
| | | | |
Issued and outstanding | 57,699 |
| | 57,437 |
| | 986,348 |
| | 985,839 |
|
Retained earnings | | 241,592 |
| | 234,498 |
|
Accumulated other comprehensive income | | 14,286 |
| | 5,621 |
|
Total shareholders' equity | | 1,244,443 |
| | 1,228,175 |
|
Total liabilities and shareholders' equity | | $ | 8,552,902 |
| | $ | 8,578,846 |
|
|
| | | | | | | | | | | | | | | | | | | | | | |
AVERAGE BALANCES AND RATES | | | | | | | | | | |
Columbia Banking System, Inc. | | | | | | | | | | |
Unaudited | | | | | | | | | | | | |
| | Three Months Ended March 31, | | Three Months Ended March 31, |
| | 2015 | | 2014 (1) |
| | Average
Balances | | Interest
Earned / Paid | | Average
Rate | | Average
Balances | | Interest
Earned / Paid | | Average
Rate |
| | (dollars in thousands) |
ASSETS | | | | | | | | | | | | |
Loans, net (1)(2)(3) | | $ | 5,414,942 |
| | $ | 71,487 |
| | 5.28 | % | | $ | 4,537,107 |
| | $ | 65,898 |
| | 5.81 | % |
Taxable securities | | 1,609,323 |
| | 7,526 |
| | 1.87 | % | | 1,329,679 |
| | 6,752 |
| | 2.03 | % |
Tax exempt securities (3) | | 459,483 |
| | 4,680 |
| | 4.07 | % | | 352,691 |
| | 4,109 |
| | 4.66 | % |
Interest-earning deposits with banks | | 45,292 |
| | 27 |
| | 0.24 | % | | 25,215 |
| | 14 |
| | 0.23 | % |
Total interest-earning assets | | 7,529,040 |
| | $ | 83,720 |
| | 4.45 | % | | 6,244,692 |
| | $ | 76,773 |
| | 4.92 | % |
Other earning assets | | 146,055 |
| | | | | | 126,924 |
| | | | |
Noninterest-earning assets | | 830,681 |
| | | | | | 772,143 |
| | | | |
Total assets | | $ | 8,505,776 |
| | | | | | $ | 7,143,759 |
| | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY |
Certificates of deposit | | $ | 502,287 |
| | $ | 240 |
| | 0.19 | % | | $ | 503,129 |
| | $ | 362 |
| | 0.29 | % |
Savings accounts | | 625,132 |
| | 19 |
| | 0.01 | % | | 513,911 |
| | 13 |
| | 0.01 | % |
Interest-bearing demand | | 1,214,149 |
| | 138 |
| | 0.05 | % | | 1,168,708 |
| | 109 |
| | 0.04 | % |
Money market accounts | | 1,815,923 |
| | 351 |
| | 0.08 | % | | 1,586,622 |
| | 268 |
| | 0.07 | % |
Total interest-bearing deposits | | 4,157,491 |
| | 748 |
| | 0.07 | % | | 3,772,370 |
| | 752 |
| | 0.08 | % |
Federal Home Loan Bank advances | | 129,841 |
| | 159 |
| | 0.49 | % | | 70,690 |
| | 114 |
| | 0.65 | % |
Other borrowings | | 108,170 |
| | 146 |
| | 0.54 | % | | 25,000 |
| | 119 |
| | 1.90 | % |
Total interest-bearing liabilities | | 4,395,502 |
| | $ | 1,053 |
| | 0.10 | % | | 3,868,060 |
| | $ | 985 |
| | 0.10 | % |
Noninterest-bearing deposits | | 2,770,265 |
| | | | | | 2,129,468 |
| | | | |
Other noninterest-bearing liabilities | | 99,156 |
| | | | | | 78,878 |
| | | | |
Shareholders’ equity | | 1,240,853 |
| | | | | | 1,067,353 |
| | | | |
Total liabilities & shareholders’ equity | | $ | 8,505,776 |
| | | | | | $ | 7,143,759 |
| | | | |
Net interest income (tax equivalent) | | $ | 82,667 |
| | | | | | $ | 75,788 |
| | |
Net interest margin (tax equivalent) | | 4.39 | % | | | | | | 4.85 | % |
| |
(1) | Adjusted to conform to the current period presentation. The adjustment was limited to including amounts historically disclosed as “Covered loans” in “Loans, net”. |
| |
(2) | Nonaccrual loans have been included in the tables as loans carrying a zero yield. Amortized net deferred loan fees and net unearned discounts on certain acquired loans were included in the interest income calculations. The amortization of net deferred loan fees was $1.1 million and $983 thousand for the three months ended March 31, 2015 and 2014, respectively. The incremental accretion on acquired loans was $7.5 million and $12.3 million for the three months ended March 31, 2015 and 2014, respectively. |
| |
(3) | Yields on a fully tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $665 thousand and $357 thousand for the three months ended March 31, 2015 and 2014, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $1.6 million and $1.5 million for the three months ended March 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 measure 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 March 31, |
| | 2015 | | 2014 |
Operating net interest margin non-GAAP reconciliation: | | (dollars in thousands) |
Net interest income (tax equivalent) (1) | | $ | 82,667 |
| | $ | 75,788 |
|
Adjustments to arrive at operating net interest income (tax equivalent): | | | | |
Incremental accretion income on FDIC purchased credit impaired loans | | (2,447 | ) | | (6,489 | ) |
Incremental accretion income on other FDIC acquired loans | | (117 | ) | | (204 | ) |
Incremental accretion income on other acquired loans | | (4,934 | ) | | (5,615 | ) |
Premium amortization on acquired securities | | 2,861 |
| | 1,625 |
|
Interest reversals on nonaccrual loans | | 650 |
| | 287 |
|
Operating net interest income (tax equivalent) (1) | | $ | 78,680 |
| | $ | 65,392 |
|
Average interest earning assets | | $ | 7,529,040 |
| | $ | 6,244,692 |
|
Net interest margin (tax equivalent) (1) | | 4.39 | % | | 4.85 | % |
Operating net interest margin (tax equivalent) (1) | | 4.18 | % | | 4.19 | % |
|
| | | | | | | | |
| | Three Months Ended March 31, |
| | 2015 | | 2014 |
Operating efficiency ratio non-GAAP reconciliation: | | (dollars in thousands) |
Noninterest expense (numerator A) | | $ | 66,734 |
| | $ | 57,386 |
|
Adjustments to arrive at operating noninterest expense: | | | | |
Acquisition-related expenses | | (2,974 | ) | | (966 | ) |
Net benefit (cost) of operation of OREO and OPPO | | 1,241 |
| | (22 | ) |
FDIC clawback liability expense | | (23 | ) | | (204 | ) |
Loss on asset disposals | | (96 | ) | | (20 | ) |
State of Washington Business and Occupation ("B&O") taxes | | (1,129 | ) | | (1,075 | ) |
Operating noninterest expense (numerator B) | | $ | 63,753 |
| | $ | 55,099 |
|
| | | | |
Net interest income (tax equivalent) (1) | | $ | 82,667 |
| | $ | 75,788 |
|
Noninterest income | | 22,767 |
| | 14,008 |
|
Bank owned life insurance tax equivalent adjustment | | 581 |
| | 550 |
|
Total revenue (tax equivalent) (denominator A) | | $ | 106,015 |
| | $ | 90,346 |
|
| | | | |
Operating net interest income (tax equivalent) (1) | | $ | 78,680 |
| | $ | 65,392 |
|
Adjustments to arrive at operating noninterest income (tax equivalent): | | | | |
Investment securities gains, net | | (721 | ) | | (223 | ) |
Gain on asset disposals | | — |
| | (32 | ) |
Change in FDIC loss-sharing asset | | (150 | ) | | 4,819 |
|
Operating noninterest income (tax equivalent) | | 22,477 |
| | 19,122 |
|
Total operating revenue (tax equivalent) (denominator B) | | $ | 101,157 |
| | $ | 84,514 |
|
Efficiency ratio (tax equivalent) (numerator A/denominator A) | | 62.95 | % | | 63.52 | % |
Operating efficiency ratio (tax equivalent) (numerator B/denominator B) | | 63.02 | % | | 65.20 | % |
__________
(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 $2.3 million and $1.8 million for the three months ended March 31, 2015 and 2014, respectively.
Non-GAAP Financial Measures - Continued
The Company considers its ratio of allowance for loan and lease losses to period-end loans, excluding acquired loans to be an important measurement because it more closely reflects the ongoing allowance coverage and provides a ratio that is more comparable to other bank holding companies that have not had similar acquisitions. Despite the importance of this ratio to the Company, there are no standardized definitions for it and, as a result, the Company’s calculations may not be comparable with other organizations. Also, there may be limits in the usefulness of this measure 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 table reconciles the Company’s calculation of the allowance for loan and lease losses to period-end loans, excluding acquired loans:
|
| | | | | | | | |
| | March 31, | | December 31, |
| | 2015 | | 2014 |
| | (dollars in thousands) |
Allowance for loan and lease losses (numerator A) | | $ | 70,234 |
| | $ | 69,569 |
|
Less: Allowance for loan and lease losses attributable to acquired loans | | (24,100 | ) | | (23,212 | ) |
Equals: Allowance for loan and lease losses, excluding acquired loans (numerator B) | | $ | 46,134 |
| | 46,357 |
|
| | | | |
Loans, net of unearned income (denominator A) | | $ | 5,450,895 |
| | $ | 5,445,378 |
|
Less: acquired loans, net | | (1,519,334 | ) | | (1,615,496 | ) |
Equals: Loans, excluding acquired loans, net of unearned income (denominator B) | | $ | 3,931,561 |
| | $ | 3,829,882 |
|
| | | | |
Allowance for loan and lease losses to period-end loans (numerator A/denominator A) | | 1.29 | % | | 1.28 | % |
Allowance for loan and lease losses to period-end loans, excluding acquired loans (numerator B/denominator B) | | 1.17 | % | | 1.21 | % |
Exhibit 99.2
FOR IMMEDIATE RELEASE
April 22, 2015
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
Columbia Banking System Announces Increased Regular Cash Dividend of $0.18
and Declares Special Cash Dividend of $0.16
TACOMA, Washington--- Columbia Banking System, Inc. (NASDAQ: COLB) announced today that a quarterly cash dividend of $0.18 per common share and per common share equivalent for holders of preferred stock, will be paid on May 20, 2015 to shareholders of record as of the close of business on May 6, 2015. This is a 13% increase from the $0.16 cash dividend paid for the prior quarter.
In addition, the Board of Directors declared a special cash dividend of $0.16 per common share, and per common share equivalent for holders of preferred stock, which will also be paid on May 20, 2015 to shareholders of record as of the close of business on May 6, 2015.
Melanie Dressel, President and Chief Executive Officer noted, “As always, we are committed to actively managing our capital position. We are pleased to pay a special cash dividend for the fifth consecutive quarter. Along with our regular dividend, the special dividend constitutes a payout ratio of 81% for the quarter and a dividend yield of 4.7% based on the closing price on April 21, 2015.”
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 over 150 branches
throughout Washington, Oregon and Idaho. For the eighth consecutive year, the bank was named in 2014 as one of Puget Sound Business Journal’s “Washington’s Best Workplaces.” Columbia ranked in the top 20 on the 2015 Forbes list of best banks in the country, as well as ranking the best in Washington and second in the Pacific Northwest for the fourth 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, which management believes are a benefit to shareholders. These forward looking statements describe 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” and 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 risk and uncertainty 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, 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 may reduce interest margins more than expected 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. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 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.
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