Columbia Banking System Earnings 2019-06-30

COLB 10Q Quarterly Report

Balance Sheet	Income Statement	Cash Flow

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

________________________________________________________

FORM 10-Q

_____________________________________________

(Mark One)



☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019.



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 0-20288

_________________________________________________________________________

COLUMBIA BANKING SYSTEM, INC.

(Exact name of registrant as specified in its charter)

_______________________________________________________________



Washington			91-1422237
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

1301 A Street

Tacoma, Washington 98402-2156

(Address of principal executive offices and zip code)

(253) 305-1900

(Registrant’s telephone number, including area code)



Securities Registered Pursuant to Section 12(b) of the Act:
Common Stock, No Par Value	COLB	NASDAQ Global Select Market
(Title of each class)	(Trading symbol)	(Name of each exchange on which registered)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.




Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No x

The number of shares of common stock outstanding at July 29, 2019 was 72,939,361.

TABLE OF CONTENTS



		Page
	PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	Consolidated Balance Sheets - June 30, 2019 and December 31, 2018	2

	Consolidated Statements of Income - three and six months ended June 30, 2019 and 2018	3

	Consolidated Statements of Comprehensive Income - three and six months ended June 30, 2019 and 2018	4

	Consolidated Statements of Changes in Shareholders’ Equity - three and six months ended June 30, 2019 and 2018	5

	Consolidated Statements of Cash Flows - six months ended June 30, 2019 and 2018	7

	Notes to Unaudited Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	57

Item 4.	Controls and Procedures	57

	PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	58

Item 1A.	Risk Factors	58

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58

Item 3.	Defaults Upon Senior Securities	58

Item 4.	Mine Safety Disclosures	58

Item 5.	Other Information	58

Item 6.	Exhibits	59

	Signatures	60

Table of Contents

PART I - FINANCIAL INFORMATION

Glossary of Acronyms, Abbreviations, and Terms

The acronyms, abbreviations, and terms listed below are used in various sections of the Form 10-Q, including “Item 1. Financial Statements” and “Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations.”



ALLL	Allowance for loan and lease losses	FASB	Financial Accounting Standards Board
ASC	Accounting Standards Codification	FDIC	Federal Deposit Insurance Corporation
ASU	Accounting Standards Update	FHLB	Federal Home Loan Bank of Des Moines
ATM	Automated Teller Machine	FRB	Federal Reserve Bank
BOLI	Bank Owned Life Insurance	LIBOR	London Interbank Offering Rate
Basel III	A comprehensive capital framework and rules for U.S. banking organizations approved by the FRB and the FDIC in 2013	NIM	Net Interest Margin
B&O	Business and Occupation	OPPO	Other Personal Property Owned
CDI	Core Deposit Intangible	OREO	Other Real Estate Owned
CECL	Current Expected Credit Loss	Pacific Continental	Pacific Continental Corporation
CDARS^®	Certificate of Deposit Account Registry Service	PCI	Purchased Credit Impaired
CET1	Common Equity Tier 1	REASD	Real Estate Appraisal Services Department
CEO	Chief Executive Officer	SBA	Small Business Administration
CFO	Chief Financial Officer	SEC	Securities and Exchange Commission
Dodd-Frank Act	Dodd-Frank Wall Street Reform and Consumer Protection Act	TDRs	Troubled Debt Restructurings
EPS	Earnings Per Share	GAAP	Generally Accepted Accounting Principles

Table of Contents

Item 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

Columbia Banking System, Inc.

(Unaudited)



			June 30, 2019			December 31, 2018
ASSETS			(in thousands)
Cash and due from banks			$	224,327		$	260,180
Interest-earning deposits with banks			34,332			17,407
Total cash and cash equivalents			258,659			277,587
Debt securities available for sale at fair value			2,864,418			3,167,448
FHLB stock at cost			29,800			25,960
Loans held for sale			12,189			3,849
Loans, net of unearned income			8,646,990			8,391,511
Less: ALLL			80,517			83,369
Loans, net			8,566,473			8,308,142
Interest receivable			46,878			45,323
Premises and equipment, net			167,295			168,788
OREO			1,118			6,019
Goodwill			765,842			765,842
Other intangible assets, net			40,540			45,937
Other assets			337,596			280,250
Total assets			$	13,090,808		$	13,095,145
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Noninterest-bearing			$	5,082,219		$	5,227,216
Interest-bearing			5,129,380			5,230,910
Total deposits			10,211,599			10,458,126
FHLB advances			495,496			399,523
Securities sold under agreements to repurchase			50,226			61,094
Subordinated debentures			35,370			35,462
Other liabilities			164,479			107,291
Total liabilities			10,957,170			11,061,496
Commitments and contingent liabilities (Note 11)
Shareholders’ equity:
	June 30, 2019	December 31, 2018
	(in thousands)
Preferred stock (no par value)
Authorized shares	2,000	2,000
Common stock (no par value)
Authorized shares	115,000	115,000
Issued	73,548	73,249	1,644,922			1,642,246
Outstanding	72,924	73,249
Retained earnings			463,429			426,708
Accumulated other comprehensive income (loss)			47,150			(35,305		)
Treasury stock at cost	624	—	(21,863		)	—
Total shareholders’ equity			2,133,638			2,033,649
Total liabilities and shareholders’ equity			$	13,090,808		$	13,095,145

See accompanying Notes to unaudited Consolidated Financial Statements.

Table of Contents

CONSOLIDATED STATEMENTS OF INCOME

Columbia Banking System, Inc.

(Unaudited)



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
	(in thousands except per share amounts)
Interest Income
Loans	$	116,585		$	105,412		$	225,001		$	208,439
Taxable securities	15,918			11,923			33,333			24,631
Tax-exempt securities	2,712			3,063			5,681			6,127
Deposits in banks	207			151			295			496
Total interest income	135,422			120,549			264,310			239,693
Interest Expense
Deposits	4,976			2,572			9,474			5,081
FHLB advances	4,708			815			7,393			1,385
Subordinated debentures	468			468			936			936
Other borrowings	154			20			369			136
Total interest expense	10,306			3,875			18,172			7,538
Net Interest Income	125,116			116,674			246,138			232,155
Provision for loan and lease losses	218			3,975			1,580			9,827
Net interest income after provision for loan and lease losses	124,898			112,699			244,558			222,328
Noninterest Income
Deposit account and treasury management fees	9,035			8,683			18,015			17,423
Card revenue	3,763			6,616			7,425			12,429
Financial services and trust revenue	3,425			3,219			6,382			5,949
Loan revenue	3,596			3,054			5,985			6,240
Bank owned life insurance	1,597			1,712			3,116			3,138
Investment securities gains (losses), net	285			(33		)	2,132			(11		)
Other	3,947			441			4,289			1,667
Total noninterest income	25,648			23,692			47,344			46,835
Noninterest Expense
Compensation and employee benefits	52,015			48,949			104,100			99,519
Occupancy	8,712			9,276			17,521			19,397
Data processing	4,601			5,221			9,270			10,491
Legal and professional fees	6,554			4,171			11,127			7,408
Amortization of intangibles	2,649			3,088			5,397			6,276
B&O taxes (1)	1,411			1,459			3,287			2,776
Advertising and promotion	870			1,622			1,844			3,051
Regulatory premiums	956			937			1,940			1,874
Net cost (benefit) of operation of OREO	(705		)	758			(592		)	759
Other (1)	9,665			9,162			17,534			19,079

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$37.20	74	$2,740

10-Q	2019-06-30	Quarter: 2019-06-30
10-Q	2019-03-31	Quarter: 2019-03-31
10-K	2018-12-31	Annual: 2018-12-31
10-Q	2018-09-30	Quarter: 2018-09-30
10-Q	2018-06-30	Quarter: 2018-06-30
10-Q	2018-03-31	Quarter: 2018-03-31
10-K	2017-12-31	Annual: 2017-12-31
10-Q	2017-09-30	Quarter: 2017-09-30
10-Q	2017-06-30	Quarter: 2017-06-30
10-Q	2017-03-31	Quarter: 2017-03-31
10-K	2016-12-31	Annual: 2016-12-31
10-Q	2016-09-30	Quarter: 2016-09-30
10-Q	2016-06-30	Quarter: 2016-06-30
10-Q	2016-03-31	Quarter: 2016-03-31
10-K	2015-12-31	Annual: 2015-12-31
10-Q	2015-09-30	Quarter: 2015-09-30
10-Q	2015-06-30	Quarter: 2015-06-30
10-Q	2015-03-31	Quarter: 2015-03-31
10-K	2014-12-31	Annual: 2014-12-31
10-Q	2014-09-30	Quarter: 2014-09-30
10-Q	2014-06-30	Quarter: 2014-06-30
10-Q	2014-03-31	Quarter: 2014-03-31
10-K	2013-12-31	Annual: 2013-12-31

8-K	2019-07-25	Earnings, Other Events, Exhibits
8-K	2019-05-22	Officers, Shareholder Vote
8-K	2019-04-25	Earnings, Other Events, Exhibits
8-K	2019-01-24	Earnings, Other Events, Exhibits
8-K	2019-01-24	Earnings, Other Events, Exhibits
8-K	2018-12-11	Officers
8-K	2018-10-25	Earnings, Other Events, Exhibits
8-K	2018-07-26	Earnings, Other Events, Exhibits
8-K	2018-07-25	Officers
8-K	2018-06-04	Officers
8-K	2018-05-23	Shareholder Vote
8-K	2018-05-02	Officers, Exhibits
8-K	2018-04-26	Earnings, Other Events, Exhibits
8-K	2018-01-24	Officers, Exhibits
8-K	2018-01-19	Other Events, Exhibits

IR	Ingersoll-Rand	29,310
DO	Diamond Offshore Drilling	1,290
TCBK	Trico Bancshares	1,220
MCRN	Milacron Holdings	987
EPE	EP Energy	64
CDTX	Cidara Therapeutics	57
WCFB	WCF Bancorp	20
BZYR	Burzynski Research Institute	0
VBIO	Vitality Biopharma	0
ELJ	Entergy Louisiana Holdings	0

EX-10.1	colb2q2019ex101changei.htm
EX-10.2	colb2q2019ex102seconda.htm
EX-10.3	colb2q2019ex103seconda.htm
EX-10.4	colb2q2019ex104thirdam.htm
EX-31.1	colb2q2019ex311.htm
EX-31.2	colb2q2019ex312.htm
EX-32	colb2q2019ex32.htm