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):
January 28, 2016
COLUMBIA BANKING SYSTEM, INC.
(Exact name of registrant as specified in its charter)
Washington
 
0-20288
 
91-1422237
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
 
 
 
 
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):
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
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 January 28, 2016, Columbia Banking System, Inc. issued a press release reporting its financial results for the quarter and year ended December 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 January 28, 2016, 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 $0.20 per common share and per share equivalent for holders of preferred stock. The dividends will be paid on February 24, 2016 to shareholders of record at the close of business on February 10, 2016. 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:
99.1
Press Release dated January 28, 2016 reporting the financial results of Columbia Banking System, Inc. for the quarter and year ended December 31, 2015.

99.2
Press Release dated January 28, 2016 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.
 
 
 
 
 
COLUMBIA BANKING SYSTEM, INC.
 
 
 
 
 
 
Date:
January 28, 2016
 
 
 
/s/ MELANIE J. DRESSEL
 
 
 
 
 
Melanie J. Dressel
 
 
 
 
 
President and Chief Executive Officer






EXHIBIT INDEX
99.1
Press Release dated January 28, 2016 reporting the financial results of Columbia Banking System, Inc. for the quarter and year ended December 31, 2015.

99.2
Press Release dated January 28, 2016 announcing a regular quarterly dividend and a special cash dividend.










Exhibit 99.1

FOR IMMEDIATE RELEASE
January 28, 2016

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 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

TACOMA, Washington, January 28, 2016 -- 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.”

1



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.

2



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.

3



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.


4



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



5



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.


6



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.”
    

7



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.
# # #


8



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.


9




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.
 
 
 
 
 
 
 
 

10



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

 
 



11



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


12



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



13



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




14



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.



15



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.


16



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.

17




Exhibit 99.2


FOR IMMEDIATE RELEASE
January 28, 2016

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 Regular Cash Dividend of $0.18
and Declares Special Cash Dividend of $0.20


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 February 24, 2016 to shareholders of record as of the close of business on February 10, 2016.

In addition, the Board of Directors declared a special cash dividend of $0.20 per common share, and per common share equivalent for holders of preferred stock, which will also be paid on February 24, 2016 to shareholders of record as of the close of business on February 10, 2016. This is an 11% increase from the $0.18 special cash dividend paid during the fourth quarter 2015.

Melanie Dressel, President and Chief Executive Officer noted, “We are pleased that our financial performance and our current capital position allow us to pay a special cash dividend for the eighth consecutive quarter. Along with our regular dividend, the special dividend constitutes a payout ratio of 83% for the quarter and a dividend yield of 5.3% based on our closing price on January 27, 2016.”








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.



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