Exhibit 99.1

cbsystemsolidbuga06.jpg

FOR IMMEDIATE RELEASE

October 25, 2018

                        


Columbia Banking System Announces Third Quarter 2018 Results,
Quarterly Cash Dividend and Special Cash Dividend


Highlights

Record quarterly net income of $46.4 million; diluted earnings per share of $0.63, which included $0.02 per share negative impact from acquisition-related expenses
Net interest margin of 4.41%, up 12 basis points from linked quarter
Third quarter loan production of $408.9 million
Nonperforming assets to period end assets ratio decreased to 0.52%
Special cash dividend of $0.14 in addition to regular quarterly dividend


TACOMA, Washington, October 25, 2018 -- Hadley Robbins, President and Chief Executive Officer of Columbia Banking System and Columbia Bank (NASDAQ: COLB) (“Columbia”), said today upon the release of Columbia’s third quarter 2018 earnings, “We had a very successful quarter in generating a record level of loan production while continuing to work down nonperforming assets, as evidenced by the 9 basis point reduction compared to the prior quarter.” Mr. Robbins continued, “I am also pleased with the 12 basis point increase in our net interest margin, which was favorably impacted by higher loan and securities rates and a more favorable deposit mix driven by an increase in noninterest-bearing deposits.”

1



Balance Sheet
Total assets at September 30, 2018 were $12.96 billion, an increase of $328.0 million from June 30, 2018. Loans were $8.51 billion, up $60.2 million from June 30, 2018 as loan originations of $408.9 million were partially offset by payments and lower line utilization. Debt securities available for sale were $2.92 billion at September 30, 2018, an increase of $274.9 million, or 10% from $2.65 billion at June 30, 2018. Total deposits at September 30, 2018 were $10.60 billion, an increase of $220.0 million from June 30, 2018. Core deposits comprised 95% of total deposits and were $10.08 billion at September 30, 2018, an increase of $196.0 million from June 30, 2018. The average cost of total deposits for the quarter was 0.12%, an increase of 2 basis points from the second quarter of 2018.
Income Statement
Net Interest Income
Net interest income for the third quarter of 2018 was $122.8 million, an increase of $6.1 million from the linked quarter and an increase of $33.9 million from the prior year period. The increase from the linked quarter was due to a combination of higher rates on earning assets and higher volumes of loans and taxable securities. The increase from the prior year period was primarily due to income from earning assets acquired in the Pacific Continental acquisition, which closed on November 1, 2017, as well as higher rates on earning assets. For additional information regarding net interest income, see the “Net Interest Margin” section and the “Average Balances and Rates” table.
Noninterest Income
Noninterest income was $21.0 million for the third quarter of 2018, a decrease of $2.7 million from the second quarter of 2018. The linked quarter decrease was principally due to lower card revenue as we became subject to the interchange fee cap imposed under the Dodd-Frank Wall Street Reform and Consumer Protection Act as of July 1, 2018. Compared to the third quarter of 2017, noninterest income decreased by $16.0 million. The decrease was due to the $14.0 million one-time gain on the sale of our merchant card services portfolio in the prior year period as well as a decrease in card revenue during the current quarter as previously described. Also contributing to the decrease in noninterest income compared to the prior year period was our change to net presentation of interchange revenue pursuant to the adoption of new revenue recognition accounting guidance on January 1, 2018. Specifically, $1.3 million of payment card network expenses that would have historically been presented in other noninterest expense are now presented in card revenue.

2



Noninterest Expense
Total noninterest expense for the third quarter of 2018 was $82.8 million, a decrease of $1.8 million from the second quarter of 2018. After removing the effect of acquisition-related expenses of $1.1 million, noninterest expense for the current quarter was essentially flat from the linked quarter on the same basis as higher legal and professional fees and compensation and employee benefits were offset by lower occupancy and OREO expense. Compared to the third quarter of 2017, noninterest expense increased by $15.3 million. This increase was primarily driven by higher compensation and employee benefits and higher amortization of intangible assets, both resulting from our November 1, 2017 acquisition of Pacific Continental.
Provision for Income Taxes
Our effective tax rate for the current quarter was 19.7%, compared to 19.3% and 31.0% for the linked and prior year periods, respectively. The decrease from the prior year period was principally attributable to the enactment of the Tax Cuts and Jobs Act on December 22, 2017, which lowered the corporate tax rate to 21% from 35%. The prior year period’s effective tax rate reflected the then-enacted 35% corporate tax rate reduced by favorable tax attributes of certain earning assets and discrete tax benefits from share-based compensation.
Our effective tax rate remains below the statutory tax rate due to tax-exempt income from municipal securities, bank owned life insurance and certain loan receivables.
Net Interest Margin
Columbia’s net interest margin (tax equivalent) for the third quarter of 2018 was 4.41%, an increase of 12 basis points from the linked quarter and 21 basis points from the prior year period. Columbia’s operating net interest margin (tax equivalent)(1) was 4.38% for the third quarter of 2018, an increase of 11 basis points from the linked quarter and an increase of 23 basis points from the prior year period. All increases were due to higher rates on interest-earning assets, which more than offset the modest increase in rates on interest-bearing liabilities from the comparative periods.


3



The following table shows the impact to interest income resulting from income accretion on acquired loan portfolios as well as the net interest margin and operating net interest margin:
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
September 30,
 
September 30,
 
 
2018
 
2018
 
2018
 
2017
 
2017
 
2018
 
2017
 
 
(dollars in thousands)
Incremental accretion income due to:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
FDIC purchased credit impaired loans
 
$
585

 
$
326

 
$
329

 
$
265

 
$
972

 
$
1,240

 
$
3,842

Other acquired loans
 
2,643

 
2,690

 
3,370

 
2,482

 
1,903

 
8,703

 
6,207

Incremental accretion income
 
$
3,228

 
$
3,016

 
$
3,699

 
$
2,747

 
$
2,875

 
$
9,943

 
$
10,049

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest margin (tax equivalent)
 
4.41
%
 
4.29
%
 
4.22
%
 
4.20
%
 
4.20
%
 
4.31
%
 
4.17
%
Operating net interest margin (tax equivalent) (1)
 
4.38
%
 
4.27
%
 
4.18
%
 
4.25
%
 
4.15
%
 
4.27
%
 
4.11
%
__________
(1) Operating net interest margin (tax equivalent) is a non-GAAP financial measure. See the section titled “Non-GAAP Financial Measures” in this earnings release for the reconciliation of operating net interest margin (tax equivalent) to net interest margin.
Asset Quality
At September 30, 2018, nonperforming assets to total assets were 0.52% compared to 0.61% at June 30, 2018. Total nonperforming assets decreased $8.8 million from the linked quarter due to a $9.2 million decrease in nonaccrual loans, partially offset by an increase in other real estate owned.
Andy McDonald, Columbia’s Executive Vice President and Chief Credit Officer, commented, “This past quarter was very strong from a credit perspective as we enjoyed net recoveries, declines in nonperforming assets and recorded a modest provision as well. While we are pleased with these results, we do not believe they are indicative of the long run credit profile of our loan portfolio. As such, we would expect to see them move towards the norm in future quarters.”

4



The following table sets forth information regarding nonaccrual loans and total nonperforming assets:
 
 
September 30, 2018
 
June 30, 2018
 
December 31, 2017
 
 
(in thousands)
Nonaccrual loans:
 
 
 
 
 
 
Commercial business
 
$
45,753

 
$
52,036

 
$
45,460

Real estate:
 
 
 
 
 
 
One-to-four family residential
 
501

 
976

 
785

Commercial and multifamily residential
 
11,012

 
11,118

 
13,941

Total real estate
 
11,513

 
12,094

 
14,726

Real estate construction:
 
 
 
 
 
 
One-to-four family residential
 
318

 
389

 
1,854

Total real estate construction
 
318

 
389

 
1,854

Consumer
 
2,748

 
4,985

 
4,149

Total nonaccrual loans
 
60,332

 
69,504

 
66,189

Other real estate owned and other personal property owned
 
7,415

 
7,080

 
13,298

Total nonperforming assets
 
$
67,747

 
$
76,584

 
$
79,487


5



The following table provides an analysis of the Company’s allowance for loan and lease losses:
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30, 2018
 
June 30, 2018
 
September 30, 2017
 
September 30, 2018
 
September 30, 2017
 
 
(in thousands)
Beginning balance, loans excluding PCI loans
 
$
75,368

 
$
74,162

 
$
64,923

 
$
68,739

 
$
59,528

Beginning balance, PCI loans
 
4,782

 
5,665

 
8,061

 
6,907

 
10,515

Beginning balance
 
80,150

 
79,827

 
72,984

 
75,646

 
70,043

Charge-offs:
 
 
 
 
 
 
 
 
 
 
Commercial business
 
(606
)
 
(5,775
)
 
(1,362
)
 
(8,858
)
 
(6,089
)
One-to-four family residential real estate
 

 

 

 

 
(460
)
Commercial and multifamily residential real estate
 

 

 

 
(223
)
 

One-to-four family residential real estate construction
 

 

 

 

 
(14
)
Consumer
 
(277
)
 
(232
)
 
(263
)
 
(773
)
 
(1,156
)
Purchased credit impaired
 
(1,208
)
 
(1,235
)
 
(1,633
)
 
(3,786
)
 
(5,372
)
Total charge-offs
 
(2,091
)
 
(7,242
)
 
(3,258
)
 
(13,640
)
 
(13,091
)
Recoveries:
 
 
 
 
 
 
 
 
 
 
Commercial business
 
547

 
1,543

 
688

 
2,892

 
3,997

One-to-four family residential real estate
 
21

 
196

 
40

 
389

 
380

Commercial and multifamily residential real estate
 
213

 
640

 
58

 
1,012

 
263

One-to-four family residential real estate construction
 
583

 
14

 
20

 
616

 
107

Consumer
 
266

 
270

 
343

 
796

 
876

Purchased credit impaired
 
945

 
927

 
1,389

 
3,096

 
3,737

Total recoveries
 
2,575

 
3,590

 
2,538

 
8,801

 
9,360

Net recoveries (charge-offs)
 
484

 
(3,652
)
 
(720
)
 
(4,839
)
 
(3,731
)
Provision (recapture) for loan and lease losses, loans excluding PCI loans
 
3,655

 
4,550

 
(175
)
 
15,180

 
6,840

Recapture for loan and lease losses, PCI loans
 
(502
)
 
(575
)
 
(473
)
 
(2,200
)
 
(1,536
)
Provision (recapture) for loan and lease losses
 
3,153

 
3,975

 
(648
)
 
12,980

 
5,304

Ending balance, loans excluding PCI loans
 
79,770

 
75,368

 
64,272

 
79,770

 
64,272

Ending balance, PCI loans
 
4,017

 
4,782

 
7,344

 
4,017

 
7,344

Ending balance
 
$
83,787

 
$
80,150

 
$
71,616

 
$
83,787

 
$
71,616

The allowance for loan losses to period end loans was 0.98% at September 30, 2018 compared to 0.95% at June 30, 2018. For the third quarter of 2018, Columbia recorded a net provision for loan and lease losses of $3.2 million compared to a net provision of $4.0 million for the linked quarter and a net recapture of $648 thousand for the comparable quarter last year. The net provision for loan and lease losses recorded during the current quarter consisted of $3.7 million of provision expense for loans, excluding PCI loans and a recapture of $502 thousand for PCI loans.

6



Cash Dividend Announcement
Columbia will pay a regular cash dividend of $0.26 per common share and a special cash dividend of $0.14 per common share on November 21, 2018 to shareholders of record as of the close of business on November 7, 2018.
Conference Call Information
Columbia’s management will discuss the third quarter 2018 financial results on a conference call scheduled for Thursday, October 25, 2018 at 1:00 p.m. Pacific Time (4:00 p.m. ET). Interested parties may join the live-streamed event by using the site:
https://engage.vevent.com/rt/columbiabankingsysteminc~102518
The conference call can also be accessed on Thursday, October 25, 2018 at 1:00 p.m. Pacific Time (4:00 p.m. ET) by calling 866-904-0737; Conference ID: 1467307.
A replay of the call can be accessed beginning Friday, October 26, 2018 using the site:
https://engage.vevent.com/rt/columbiabankingsysteminc~102518
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 12th consecutive year, the bank was named in 2018 as one of Puget Sound Business Journal's “Washington’s Best Workplaces.” Columbia ranked 11th on the 2018 Forbes list of best banks.
More information about Columbia can be found on its website at www.columbiabank.com.

7



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


Contacts:
Hadley S. Robbins,
 
President and
 
Chief Executive Officer
 
 
 
Gregory A. Sigrist,
 
Executive Vice President and
 
Chief Financial Officer
 
 
 
Investor Relations
 
InvestorRelations@columbiabank.com
 
253-305-1921

8




CONSOLIDATED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
 
Columbia Banking System, Inc.
 
 
 
 
 
 
 
 
 
 
 
Unaudited
 
 
 
 
 
 
September 30,
 
June 30,
 
December 31,
 
 
 
 
 
 
 
2018
 
2018
 
2017
 
 
 
 
 
 
 
(in thousands)
ASSETS
 
 
Cash and due from banks
 
 
 
 
 
 
$
220,706

 
$
224,370

 
$
244,615

Interest-earning deposits with banks
 
 
 
 
 
 
21,456

 
39,169

 
97,918

Total cash and cash equivalents
 
 
 
 
 
 
242,162

 
263,539

 
342,533

Debt securities available for sale at fair value
 
 
 
 
 
2,921,114

 
2,646,208

 
2,737,751

Equity securities at fair value
 
 
 
 
 
 
4,901

 
4,963

 
5,080

Federal Home Loan Bank (“FHLB”) stock at cost
 
 
 
 
 
16,640

 
13,960

 
10,440

Loans held for sale
 
 
 
 
 
 
5,275

 
6,773

 
5,766

Loans, net of unearned income
 
 
 
 
 
 
8,514,317

 
8,454,107

 
8,358,657

Less: allowance for loan and lease losses
 
 
 
 
 
83,787

 
80,150

 
75,646

Loans, net
 
 
 
 
 
 
8,430,530

 
8,373,957

 
8,283,011

Interest receivable
 
 
 
 
 
 
48,476

 
43,105

 
40,881

Premises and equipment, net
 
 
 
 
 
 
169,681

 
168,315

 
169,490

Other real estate owned
 
 
 
 
 
 
7,331

 
7,080

 
13,298

Goodwill
 
 
 
 
 
 
765,842

 
765,842

 
765,842

Other intangible assets, net
 
 
 
 
 
 
48,827

 
51,897

 
58,173

Other assets
 
 
 
 
 
 
295,817

 
282,947

 
284,621

Total assets
 
 
 
 
 
 
$
12,956,596

 
$
12,628,586

 
$
12,716,886

LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing
 
 
 
 
 
 
$
5,250,222

 
$
4,953,993

 
$
5,081,901

Interest-bearing
 
 
 
 
 
 
5,353,735

 
5,430,011

 
5,450,184

Total deposits
 
 
 
 
 
 
10,603,957

 
10,384,004

 
10,532,085

FHLB advances
 
 
 
 
 
 
166,536

 
99,549

 
11,579

Securities sold under agreements to repurchase
 
 
 
 
 
62,197

 
46,229

 
79,059

Subordinated debentures
 
 
 
 
 
 
35,508

 
35,555

 
35,647

Junior subordinated debentures
 
 
 
 
 
 

 

 
8,248

Other liabilities
 
 
 
 
 
 
107,003

 
98,368

 
100,346

Total liabilities
 
 
 
 
 
 
10,975,201

 
10,663,705

 
10,766,964

Commitments and contingent liabilities
 
 
 
 
 
 
 
 
 
 
 
 
September 30,
 
June 30,
 
December 31,
 
 
 
 
 
 
 
2018
 
2018
 
2017
 
 
 
 
 
 
 
(in thousands)
 
 
 
 
 
 
Common stock (no par value)
 
 
 
 
 
 
 
 
 
 
 
Authorized shares
115,000

 
115,000

 
115,000

 
 
 
 
 
 
Issued and outstanding
73,260

 
73,245

 
73,020

 
1,640,140

 
1,636,903

 
1,634,705

Retained earnings
 
 
 
 
 
 
411,264

 
383,899

 
337,442

Accumulated other comprehensive loss
 
 
 
 
 
 
(70,009
)
 
(55,921
)
 
(22,225
)
Total shareholders’ equity
 
 
 
 
 
 
1,981,395

 
1,964,881

 
1,949,922

Total liabilities and shareholders’ equity
 
 
 
 
 
$
12,956,596

 
$
12,628,586

 
$
12,716,886



9



CONSOLIDATED STATEMENTS OF INCOME
 
 
 
 
 
 
 
 
 
 
Columbia Banking System, Inc.
 
Three Months Ended
 
Nine Months Ended
Unaudited
 
September 30,
 
June 30,
 
September 30,
 
September 30,
 
September 30,
 
 
2018
 
2018
 
2017
 
2018
 
2017
Interest Income
 
(in thousands except per share)
Loans
 
$
109,748

 
$
105,412

 
$
78,641

 
$
318,187

 
$
228,340

Taxable securities
 
14,654

 
11,923

 
8,718

 
39,285

 
29,172

Tax-exempt securities
 
3,069

 
3,063

 
2,718

 
9,196

 
8,125

Deposits in banks
 
104

 
151

 
226

 
600

 
268

Total interest income
 
127,575

 
120,549

 
90,303

 
367,268

 
265,905

Interest Expense
 
 
 
 
 
 
 
 
 
 
Deposits
 
3,193

 
2,572

 
1,083

 
8,274

 
2,778

FHLB advances
 
966

 
815

 
163

 
2,351

 
979

Subordinated debentures
 
468

 
468

 

 
1,404

 

Other borrowings
 
152

 
20

 
128

 
288

 
383

Total interest expense
 
4,779

 
3,875

 
1,374

 
12,317

 
4,140

Net Interest Income
 
122,796

 
116,674

 
88,929

 
354,951

 
261,765

Provision (recapture) for loan and lease losses
 
3,153

 
3,975

 
(648
)
 
12,980

 
5,304

Net interest income after provision (recapture) for loan and lease losses
 
119,643

 
112,699

 
89,577

 
341,971

 
256,461

Noninterest Income
 
 
 
 
 
 
 
 
 
 
Deposit account and treasury management fees
 
9,266

 
8,683

 
7,685

 
26,689

 
22,368

Card revenue
 
3,714

 
6,616

 
6,735

 
16,143

 
18,660

Financial services and trust revenue
 
2,975

 
3,219

 
2,645

 
8,924

 
8,520

Loan revenue
 
3,282

 
3,054

 
3,154

 
9,522

 
9,736

Merchant processing revenue
 

 

 

 

 
4,283

Bank owned life insurance
 
1,402

 
1,712

 
1,290

 
4,540

 
4,003

Investment securities losses, net
 
(62
)
 
(33
)
 

 
(73
)
 

Change in FDIC loss-sharing asset
 

 

 

 

 
(447
)
Gain on sale of merchant card services portfolio
 

 

 
14,000

 

 
14,000

Other
 
442

 
441

 
1,558

 
2,109

 
4,938

Total noninterest income
 
21,019

 
23,692

 
37,067

 
67,854

 
86,061

Noninterest Expense
 
 
 
 
 
 
 
 
 
 
Compensation and employee benefits
 
49,419

 
48,949

 
39,983

 
148,938

 
119,201

Occupancy
 
8,321

 
9,276

 
8,085

 
27,718

 
22,853

Merchant processing expense
 

 

 

 

 
2,196

Advertising and promotion
 
1,472

 
1,622

 
969

 
4,523

 
2,923

Data processing
 
4,466

 
5,221

 
4,122

 
14,957

 
13,071

Legal and professional fees
 
4,695

 
4,171

 
2,880

 
12,103

 
9,196

Taxes, licenses and fees
 
1,562

 
1,560

 
1,505

 
4,547

 
3,494

Regulatory premiums
 
904

 
937

 
782

 
2,778

 
2,299

Net cost of operation of other real estate owned
 
485

 
758

 
271

 
1,244

 
422

Amortization of intangibles
 
3,070

 
3,088

 
1,188

 
9,346

 
3,786

Other
 
8,447

 
9,061

 
7,752

 
27,317

 
25,949

Total noninterest expense
 
82,841

 
84,643

 
67,537

 
253,471

 
205,390

Income before income taxes
 
57,821

 
51,748

 
59,107

 
156,354

 
137,132

Provision for income taxes
 
11,406

 
9,999

 
18,338

 
28,220

 
40,032

Net Income
 
$
46,415

 
$
41,749

 
$
40,769

 
$
128,134

 
$
97,100

Earnings per common share
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.63

 
$
0.57

 
$
0.70

 
$
1.75

 
$
1.67

Diluted
 
$
0.63

 
$
0.57

 
$
0.70

 
$
1.75

 
$
1.67

Dividends declared per common share
 
$
0.26

 
$
0.26

 
$
0.22

 
$
0.74

 
$
0.66

Weighted average number of common shares outstanding
 
72,427

 
72,385

 
57,566

 
72,370

 
57,459

Weighted average number of diluted common shares outstanding
 
72,432

 
72,390

 
57,571

 
72,374

 
57,465


10



FINANCIAL STATISTICS
 
 
 
 
 
 
 
 
 
 
Columbia Banking System, Inc.
 
Three Months Ended
 
Nine Months Ended
Unaudited
 
September 30,
 
June 30,
 
September 30,
 
September 30,
 
September 30,
 
 
2018
 
2018
 
2017
 
2018
 
2017
Earnings
 
(dollars in thousands except per share amounts)
Net interest income
 
$
122,796

 
$
116,674

 
$
88,929

 
$
354,951

 
$
261,765

Provision (recapture) for loan and lease losses
 
$
3,153

 
$
3,975

 
$
(648
)
 
$
12,980

 
$
5,304

Noninterest income
 
$
21,019

 
$
23,692

 
$
37,067

 
$
67,854

 
$
86,061

Noninterest expense
 
$
82,841

 
$
84,643

 
$
67,537

 
$
253,471

 
$
205,390

Acquisition-related expense (included in noninterest expense)
 
$
1,081

 
$
2,822

 
$
1,171

 
$
8,168

 
$
3,558

Net income
 
$
46,415

 
$
41,749

 
$
40,769

 
$
128,134

 
$
97,100

Per Common Share
 
 
 
 
 
 
 
 
 
 
Earnings (basic)
 
$
0.63

 
$
0.57

 
$
0.70

 
$
1.75

 
$
1.67

Earnings (diluted)
 
$
0.63

 
$
0.57

 
$
0.70

 
$
1.75

 
$
1.67

Book value
 
$
27.05

 
$
26.83

 
$
22.76

 
$
27.05

 
$
22.76

Tangible book value per common share (1)
 
$
15.93

 
$
15.66

 
$
15.96

 
$
15.93

 
$
15.96

Averages
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
12,805,131

 
$
12,529,540

 
$
9,695,005

 
$
12,646,678

 
$
9,589,469

Interest-earning assets
 
$
11,326,629

 
$
11,052,807

 
$
8,750,561

 
$
11,168,143

 
$
8,641,706

Loans
 
$
8,456,632

 
$
8,389,230

 
$
6,441,537

 
$
8,398,596

 
$
6,322,629

Securities, including equity securities and FHLB stock
 
$
2,849,495

 
$
2,628,292

 
$
2,236,235

 
$
2,720,625

 
$
2,287,329

Deposits
 
$
10,478,800

 
$
10,264,822

 
$
8,187,337

 
$
10,359,896

 
$
8,036,805

Interest-bearing deposits
 
$
5,376,300

 
$
5,390,869

 
$
4,200,580

 
$
5,390,859

 
$
4,147,740

Interest-bearing liabilities
 
$
5,620,997

 
$
5,611,055

 
$
4,285,936

 
$
5,619,943

 
$
4,305,686

Noninterest-bearing deposits
 
$
5,102,500

 
$
4,873,953

 
$
3,986,757

 
$
4,969,037

 
$
3,889,065

Shareholders’ equity
 
$
1,983,317

 
$
1,954,552

 
$
1,323,794

 
$
1,962,506

 
$
1,293,898

Financial Ratios
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
1.45
%
 
1.33
%
 
1.68
%
 
1.35
%
 
1.35
%
Return on average common equity
 
9.36
%
 
8.54
%
 
12.32
%
 
8.71
%
 
10.01
%
Return on average tangible common equity (1)
 
16.74
%
 
15.57
%
 
17.93
%
 
15.80
%
 
14.83
%
Average equity to average assets
 
15.49
%
 
15.60
%
 
13.65
%
 
15.52
%
 
13.49
%
Shareholders equity to total assets
 
15.29
%
 
15.56
%
 
13.54
%
 
15.29
%
 
13.54
%
Tangible common shareholders’ equity to tangible assets (1)
 
9.61
%
 
9.71
%
 
9.89
%
 
9.61
%
 
9.89
%
Net interest margin (tax equivalent)
 
4.41
%
 
4.29
%
 
4.20
%
 
4.31
%
 
4.17
%
Efficiency ratio (tax equivalent) (2)
 
56.67
%
 
59.29
%
 
52.09
%
 
58.97
%
 
57.26
%
Operating efficiency ratio (tax equivalent) (1)
 
54.83
%
 
56.02
%
 
56.47
%
 
56.13
%
 
57.58
%
Noninterest expense ratio
 
2.59
%
 
2.70
%
 
2.79
%
 
2.67
%
 
2.86
%
Core noninterest expense ratio (1)
 
2.55
%
 
2.61
%
 
2.73
%
 
2.59
%
 
2.77
%
 
 
September 30,
 
June 30,
 
December 31,
 
 
 
 
Period end
 
2018
 
2018
 
2017
 
 
 
 
Total assets
 
$
12,956,596

 
$
12,628,586

 
$
12,716,886

 
 
 
 
Loans, net of unearned income
 
$
8,514,317

 
$
8,454,107

 
$
8,358,657

 
 
 
 
Allowance for loan and lease losses
 
$
83,787

 
$
80,150

 
$
75,646

 
 
 
 
Securities, including equity securities and FHLB stock
 
$
2,942,655

 
$
2,665,131

 
$
2,753,271

 
 
 
 
Deposits
 
$
10,603,957

 
$
10,384,004

 
$
10,532,085

 
 
 
 
Core deposits
 
$
10,084,687

 
$
9,888,696

 
$
10,039,557

 
 
 
 
Shareholders’ equity
 
$
1,981,395

 
$
1,964,881

 
$
1,949,922

 
 
 
 
Nonperforming assets
 
 
 
 
 
 
 
 
 
 
Nonaccrual loans
 
$
60,332

 
$
69,504

 
$
66,189

 
 
 
 
Other real estate owned (“OREO”) and other personal property owned (“OPPO”)
 
7,415

 
7,080

 
13,298

 
 
 
 
Total nonperforming assets
 
$
67,747

 
$
76,584

 
$
79,487

 
 
 
 
Nonperforming loans to period-end loans
 
0.71
%
 
0.82
%
 
0.79
%
 
 
 
 
Nonperforming assets to period-end assets
 
0.52
%
 
0.61
%
 
0.63
%
 
 
 
 
Allowance for loan and lease losses to period-end loans
 
0.98
%
 
0.95
%
 
0.91
%
 
 
 
 
Net loan charge-offs (recoveries) (3)
 
$
(484
)
 
$
3,652

 
$
(703
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) This is a non-GAAP measure. See section titled "Non-GAAP Financial Measures" on the last three pages of this earnings release for a reconciliation to the most comparable GAAP measure.
(2) Noninterest expense divided by the sum of net interest income on a tax equivalent basis and noninterest income on a tax equivalent basis.
(3) For the three months ended.

11



QUARTERLY FINANCIAL STATISTICS
 
 
 
 
 
 
 
 
 
 
Columbia Banking System, Inc.
 
Three Months Ended
Unaudited
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
 
2018
 
2018
 
2018
 
2017
 
2017
Earnings
 
(dollars in thousands except per share)
Net interest income
 
$
122,796

 
$
116,674

 
$
115,481

 
$
106,224

 
$
88,929

Provision (recapture) for loan and lease losses
 
$
3,153

 
$
3,975

 
$
5,852

 
$
3,327

 
$
(648
)
Noninterest income
 
$
21,019

 
$
23,692

 
$
23,143

 
$
23,581

 
$
37,067

Noninterest expense
 
$
82,841

 
$
84,643

 
$
85,987

 
$
85,627

 
$
67,537

Acquisition-related expense (included in noninterest expense)
 
$
1,081

 
$
2,822

 
$
4,265

 
$
13,638

 
$
1,171

Net income
 
$
46,415

 
$
41,749

 
$
39,970

 
$
15,728

 
$
40,769

Per Common Share
 
 
 
 
 
 
 
 
 
 
Earnings (basic)
 
$
0.63

 
$
0.57

 
$
0.55

 
$
0.23

 
$
0.70

Earnings (diluted)
 
$
0.63

 
$
0.57

 
$
0.55

 
$
0.23

 
$
0.70

Book value
 
$
27.05

 
$
26.83

 
$
26.60

 
$
26.70

 
$
22.76

Averages
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
12,805,131

 
$
12,529,540

 
$
12,603,144

 
$
11,751,049

 
$
9,695,005

Interest-earning assets
 
$
11,326,629

 
$
11,052,807

 
$
11,122,753

 
$
10,453,097

 
$
8,750,561

Loans
 
$
8,456,632

 
$
8,389,230

 
$
8,348,740

 
$
7,749,420

 
$
6,441,537

Securities, including equity securities and FHLB stock
 
$
2,849,495

 
$
2,628,292

 
$
2,682,250

 
$
2,539,321

 
$
2,236,235

Deposits
 
$
10,478,800

 
$
10,264,822

 
$
10,334,480

 
$
9,804,456

 
$
8,187,337

Interest-bearing deposits
 
$
5,376,300

 
$
5,390,869

 
$
5,405,730

 
$
5,033,980

 
$
4,200,580

Interest-bearing liabilities
 
$
5,620,997

 
$
5,611,055

 
$
5,627,853

 
$
5,127,100

 
$
4,285,936

Noninterest-bearing deposits
 
$
5,102,500

 
$
4,873,953

 
$
4,928,750

 
$
4,770,476

 
$
3,986,757

Shareholders’ equity
 
$
1,983,317

 
$
1,954,552

 
$
1,949,275

 
$
1,754,745

 
$
1,323,794

Financial Ratios
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
1.45
%
 
1.33
%
 
1.27
%
 
0.54
%
 
1.68
%
Return on average common equity
 
9.36
%
 
8.54
%
 
8.20
%
 
3.59
%
 
12.32
%
Average equity to average assets
 
15.49
%
 
15.60
%
 
15.47
%
 
14.93
%
 
13.65
%
Shareholders’ equity to total assets
 
15.29
%
 
15.56
%
 
15.55
%
 
15.33
%
 
13.54
%
Net interest margin (tax equivalent)
 
4.41
%
 
4.29
%
 
4.22
%
 
4.20
%
 
4.20
%
Period end
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
12,956,596

 
$
12,628,586

 
$
12,530,636

 
$
12,716,886

 
$
9,814,578

Loans, net of unearned income
 
$
8,514,317

 
$
8,454,107

 
$
8,339,631

 
$
8,358,657

 
$
6,512,006

Allowance for loan and lease losses
 
$
83,787

 
$
80,150

 
$
79,827

 
$
75,646

 
$
71,616

Securities, including equity securities and FHLB stock
 
$
2,942,655

 
$
2,665,131

 
$
2,640,685

 
$
2,753,271

 
$
2,218,113

Deposits
 
$
10,603,957

 
$
10,384,004

 
$
10,395,523

 
$
10,532,085

 
$
8,341,717

Core deposits
 
$
10,084,687

 
$
9,888,696

 
$
9,897,185

 
$
10,039,557

 
$
7,999,499

Shareholders’ equity
 
$
1,981,395

 
$
1,964,881

 
$
1,947,923

 
$
1,949,922

 
$
1,328,428

Goodwill
 
$
765,842

 
$
765,842

 
$
765,842

 
$
765,842

 
$
382,762

Other intangible assets, net
 
$
48,827

 
$
51,897

 
$
54,985

 
$
58,173

 
$
13,845

Nonperforming assets
 
 
 
 
 
 
 
 
 
 
Nonaccrual loans
 
$
60,332

 
$
69,504

 
$
78,464

 
$
66,189

 
$
40,317

OREO and OPPO
 
7,415

 
7,080

 
11,507

 
13,298

 
3,682

Total nonperforming assets
 
$
67,747

 
$
76,584

 
$
89,971

 
$
79,487

 
$
43,999

Nonperforming loans to period-end loans
 
0.71
%
 
0.82
%
 
0.94
%
 
0.79
%
 
0.62
%
Nonperforming assets to period-end assets
 
0.52
%
 
0.61
%
 
0.72
%
 
0.63
%
 
0.45
%
Allowance for loan and lease losses to period-end loans
 
0.98
%
 
0.95
%
 
0.96
%
 
0.91
%
 
1.10
%
Net loan charge-offs (recoveries)
 
$
(484
)
 
$
3,652

 
$
1,671

 
$
(703
)
 
$
720


12



LOAN PORTFOLIO COMPOSITION
 
 
 
 
 
 
 
 
 
 
Columbia Banking System, Inc.
 
 
 
 
 
 
 
 
 
 
Unaudited
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
 
2018
 
2018
 
2018
 
2017
 
2017
Loan Portfolio Composition - Dollars
 
(dollars in thousands)
Commercial business
 
$
3,554,147

 
$
3,538,492

 
$
3,402,162

 
$
3,377,324

 
$
2,735,206

Real estate:
 
 
 
 
 
 
 
 
 
 
One-to-four family residential
 
232,924

 
180,522

 
182,302

 
188,396

 
176,487

Commercial and multifamily residential
 
3,786,615

 
3,758,207

 
3,776,709

 
3,825,739

 
2,825,794

Total real estate
 
4,019,539

 
3,938,729

 
3,959,011

 
4,014,135

 
3,002,281

Real estate construction:
 
 
 
 
 
 
 
 
 
 
One-to-four family residential
 
211,629

 
206,181

 
208,441

 
200,518

 
145,419

Commercial and multifamily residential
 
349,328

 
387,951

 
385,339

 
371,931

 
213,939

Total real estate construction
 
560,957

 
594,132

 
593,780

 
572,449

 
359,358

Consumer
 
327,863

 
326,402

 
323,631

 
334,190

 
323,913

Purchased credit impaired
 
95,936

 
101,782

 
109,299

 
112,670

 
120,477

Subtotal loans
 
8,558,442

 
8,499,537

 
8,387,883

 
8,410,768

 
6,541,235

Less: Net unearned income
 
(44,125
)
 
(45,430
)
 
(48,252
)
 
(52,111
)
 
(29,229
)
Loans, net of unearned income
 
8,514,317

 
8,454,107

 
8,339,631

 
8,358,657

 
6,512,006

Less: Allowance for loan and lease losses
 
(83,787
)
 
(80,150
)
 
(79,827
)
 
(75,646
)
 
(71,616
)
Total loans, net
 
8,430,530

 
8,373,957

 
8,259,804

 
8,283,011

 
6,440,390

Loans held for sale
 
$
5,275

 
$
6,773

 
$
4,312

 
$
5,766

 
$
7,802


 
 
September 30,