PR Newswire | Apr 29, 2021 09:02AM EDT

Dividend

04/29 08:00 CDT

Columbia Banking System Announces First Quarter 2021 Results and Quarterly Cash Dividend TACOMA, Wash., April 29, 2021

TACOMA, Wash., April 29, 2021 /PRNewswire/ --

Notable Items for First Quarter 2021

* Quarterly net income of $51.9 million and diluted earnings per share of $0.73 * Net loans increased $248.7 million, or 3%, during the first quarter of 2021 * Deposits increased $897.6 million, or 6%, during the first quarter of 2021 * Net interest margin of 3.31%, a decrease of 21 basis points from the linked quarter * Nonperforming assets to period-end assets ratio decreased to 0.20% * Loan balances subject to deferral were down 51% from December 31, 2020 * Regular cash dividend declared of $0.28 per share

Clint Stein, President and Chief Executive Officer of Columbia Banking System, Inc. and Columbia Bank (NASDAQ: COLB) ("Columbia"), said today upon the release of Columbia's first quarter 2021 earnings, "The momentum gained by our bankers at the end of 2020 accelerated during the quarter, resulting in record first-quarter, non-PPP loan production, exceptional deposit inflows, and record performance for the financial services group. Creating this momentum was intentional. Throughout the pandemic we remained forward-looking and focused on keeping our operations open safely while supporting the unique needs of both existing and new clients."

Mr. Stein continued, "I cannot be more proud of our team's efforts. Every one of our employees has helped our clients and communities weather the difficulties of an unprecedented year. During the quarter, we handled a higher number of PPP loan applications in the second round than we did in the first round, supporting existing and gaining new clients, and we handled the forgiveness process for first round PPP clients. Those not directly involved in the PPP program focused on growing our business. As the pandemic eases and communities fully reopen, we are well-positioned to take advantage of new opportunities."

Balance Sheet

Total assets at March 31, 2021 were $17.34 billion, an increase of $750.3 million from the linked quarter. Loans were $9.68 billion, up $248.7 million from December 31, 2020 as loan originations of $894.6 million were partially offset by loan payments and a decrease in loan utilization. Total Paycheck Protection Program ("PPP") loans increased from $651.6 million at December 31, 2020 to $894.1 million at March 31, 2021, which includes $399.3 million from the first round of PPP loans from 2020 and $494.8 million from the more recent round of PPP loans in 2021. Interest-earning deposits with banks were $706.4 million, an increase of $271.5 million from the linked quarter. Debt securities available for sale were $5.50 billion at March 31, 2021, an increase of $286.2 million from $5.21 billion at December 31, 2020 as a result of purchases during the quarter partially offset by principal pay downs and a decline in unrealized gains. Total deposits at March 31, 2021 were $14.77 billion, an increase of $897.6 million from December 31, 2020 largely due to an increase in demand and other noninterest-bearing deposits. The deposit mix remained fairly consistent from December 31, 2020 with 50% noninterest-bearing and 50% interest-bearing.

Income Statement

Net Interest Income

Net interest income for the first quarter of 2021 was $124.0 million, a decrease of $7.1 million from the linked quarter and an increase of $1.6 million from the prior-year period. The decrease from the linked quarter is primarily due to interest income from loans, which decreased mainly due to lower average rates. In addition, the linked quarter included a $1.7 million recovery of interest related to a nonaccrual loan that paid off during the fourth quarter of 2020. The increase in net interest income from the prior year period was primarily a result of a reduction in interest expense on Federal Home Loan Bank ("FHLB") advances and deposits, partially offset by a decline in interest income on loans. The decrease in interest expense was due to lower average balances of FHLB advances and lower rates on deposits. The decline in interest income from loans was mainly due to lower average rates. For additional information regarding net interest income, see the "Net Interest Margin" section and the "Average Balances and Rates" tables.

Provision for Credit Losses

The Bank recorded a net provision recovery for credit losses for the first quarter of 2021 of $800 thousand compared to a net provision recovery of $4.7 million for the linked quarter and a net provision of $41.5 million for the comparable quarter in 2020.

Andy McDonald, Columbia's Executive Vice President and Chief Credit Officer, commented, "Overall credit metrics for the quarter were relatively stable. There were no material changes in our nonaccruals or nonperforming assets or within the loan portfolio, and we saw a modest release from the provision stemming from the improving economic forecast. We are seeing positive signs that the economy is recovering from the pandemic, and our focus with our clients has shifted to their longer-term cash flow needs."

Noninterest Income

Noninterest income was $23.2 million for the first quarter of 2021, a decrease of $396 thousand from the linked quarter and an increase of $2.0 million from the first quarter of 2020. The decrease compared to the linked quarter was principally due to lower loan revenue. The increase in noninterest income during the first quarter of 2021 compared to the same quarter in 2020 was principally due to an increase in loan revenue partially offset by a decrease in deposit account and treasury management fees. The increase in loan revenue compared to the first quarter of 2020 was due to mortgage banking revenue, which increased $3.4 million due to higher loan volume and increased premium per loan on sold loans. The decrease in deposit account and treasury management fees was driven by a decrease in overdraft fees of $988 thousand compared to the same quarter in 2020 due to an overall decrease in the number of transactions amidst the pandemic as well as clients generally carrying higher cash balances in their deposit accounts.

Chris Merrywell, Columbia's Executive Vice President and Chief Operating Officer, stated, "Our bankers have been busy delivering products and services that our clients value as we exit the pandemic. Our approach of staying open while maintaining the health and safety of our clients and our employees during the past year has resulted in expanded relationships and solid fee income. Mortgage volumes and sale executions continued to be very strong during the quarter, and our investment professional teams' performance was the best in our history."

Noninterest Expense

Total noninterest expense for the first quarter of 2021 was $83.6 million, a decrease of $741 thousand compared to the fourth quarter of 2020, principally due to a decrease in compensation and employee benefits expense partially offset by an increase in data processing and software expense. The decrease in compensation and employee benefits expense was mostly attributable to labor costs related to the origination of PPP loans. These labor costs are capitalized and amortized as a reduction to interest income over the life of the loan. The increase in data processing and software expense was driven by additional data processing expense associated with PPP loans.

Compared to the first quarter of 2020, noninterest expense decreased $712 thousand, principally due to a decrease in compensation and employee benefits expense partially offset by increases in data processing and software expense and regulatory premiums. The decrease in compensation and employee benefits expense and the increase in data processing and software expense are due to the items described in the preceding paragraph. The increase in regulatory premiums was the result of the Bank utilizing a portion of its Small Bank Assessment Credit during the first quarter of 2020 to pay for Federal Deposit Insurance Corporation ("FDIC") deposit insurance premiums. The final portion of the credit was utilized during the second quarter of 2020.

The provision for unfunded loan commitments, a component of other noninterest expense, for the periods indicated are as follows:

Three Months Ended

March 31, 2021December 31, 2020March 31, 2020

(in thousands)

Provision (recapture) for unfunded loan commitments$1,500 $ (1,300) $1,000



Net Interest Margin

Columbia's net interest margin (tax equivalent) for the first quarter of 2021 was 3.31%, a decrease of 21 basis points and 69 basis points from the linked quarter and prior-year period, respectively. The decrease in the net interest margin (tax equivalent) compared to the linked quarter was due to a decrease in interest income from loans as result of the lower rate environment, as well as the linked quarter including additional interest income related to a nonaccrual loan that was paid off during the quarter. Notably, the average cost of total deposits for the quarter was 4 basis points, a decrease of 1 basis point from the fourth quarter of 2020. The decrease in the net interest margin (tax equivalent) compared to the prior-year period was driven by higher average interest-earning deposits with banks at an average rate of 10 basis points as well as lower rates on the loan and securities portfolios. For additional information regarding net interest margin, see the "Average Balances and Rates" tables.

Columbia's operating net interest margin (tax equivalent)1 was 3.30% for the first quarter of 2021, which decreased 21 basis points compared to the linked quarter and decreased 72 basis points compared to the prior-year period. The decrease in the operating net interest margin for the first quarter of 2021 compared to the linked quarter and the decrease compared to the prior-year period were due to the items noted in the preceding paragraph.

The following table highlights the yield on our PPP loans for the periods indicated:

Three Months Ended

March 31, 2021 December 31, 2020

Paycheck Protection Program loans(dollars in thousands)

Interest income $ 9,097 $9,218

Average balance $ 828,051 $822,970

Yield 4.46 % 4.46 %

Aaron James Deer, Columbia's Executive Vice President and Chief Financial Officer, stated, "While we are very encouraged by the strengthening economic outlook and steepening yield curve, our net interest margin may remain under modest pressure over the near term with some volatility stemming from PPP forgiveness. Longer term, we expect the margin to stabilize and ultimately expand as the rate environment improves and earning asset growth shifts back toward loans."

Asset Quality

At March 31, 2021, nonperforming assets to total assets decreased to 0.20% compared to 0.21% at December 31, 2020. Total nonperforming assets decreased $1.3 million from the linked quarter, primarily due to a decrease in agriculture nonaccrual loans.

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

March 31, 2021December 31, 2020

(in thousands)

Nonaccrual loans:

Commercial loans:

Commercial real estate $7,317 $ 7,712

Commercial business 13,551 13,222

Agriculture 10,629 11,614

Construction 191 217

Consumer loans:

One-to-four family residential real estate1,751 2,001

Other consumer 142 40

Total nonaccrual loans 33,581 34,806

OREO and other personal property owned 521 553

Total nonperforming assets $34,102 $ 35,359

Nonperforming assets to total loans was 0.35% at March 31, 2021 compared to 0.37% at December 31, 2020.

The following table provides an analysis of the Company's allowance for credit losses:

Three Months Ended

March 31, 2021December 31, 2020March 31, 2020

(in thousands)

Beginning balance $ 149,140 $156,968 $ 83,968

Impact of adopting ASC 326 - - 1,632

Charge-offs:

Commercial loans:

Commercial real estate - (1,318) (101)

Commercial business (3,339) (2,106) (1,684)

Agriculture - (432) (4,726)

Consumer loans:

One-to-four family residential real estate- (58) (10)

Other consumer (127) (167) (268)

Total charge-offs (3,466) (4,081) (6,789)

Recoveries:

Commercial loans:

Commercial real estate 36 39 14

Commercial business 3,214 643 860

Agriculture 12 103 41

Construction 46 21 442

Consumer loans:

One-to-four family residential real estate51 78 282

Other consumer 61 69 124

Total recoveries 3,420 953 1,763

Net charge-offs (46) (3,128) (5,026)

Provision (recapture) for credit losses (800) (4,700) 41,500

Ending balance $ 148,294 $149,140 $ 122,074

The allowance for credit losses to period-end loans was 1.53% at March 31, 2021 compared to 1.58% at December 31, 2020. Excluding PPP loans, the allowance for credit losses to period-end loans2 was 1.69% at March 31, 2021 compared to 1.70% at December 31, 2020.

Loan Deferrals

The following table shows the loan balances subject to deferral for the periods indicated:

March 31, 2021December 31, 2020

(in thousands)

Loan balances subject to deferral$ 71,426 $146,725



Organizational Update

COVID-19 Update

Columbia continues to adapt to evolving COVID-19 guidance from federal, state and local healthcare officials as the availability of vaccines increases throughout the Northwest. Throughout the quarter, we periodically updated team members on vaccination information, directing them to government and local resources for appointment instructions, efficacy and safety information. All social distancing, cleaning protocols and other safety measures taken by Columbia remain in place and the Bank's branch lobbies continue to serve clients in accordance with local guidance.

Cash Dividend Announcement

Columbia will pay a regular cash dividend of $0.28 per common share on May 26, 2021 to shareholders of record as of the close of business on May 12, 2021.

Conference Call Information

Columbia's management will discuss the first quarter 2021 financial results on a conference call scheduled for Thursday, April 29, 2021 at 10:00 a.m. Pacific Time (1:00 p.m. ET). Interested parties may join the live-streamed event by using the site: https://edge.media-server.com/mmc/p/bqd4pgqe

The conference call can also be accessed on Thursday, April 29, 2021 at 10:00 a.m. Pacific Time (1:00 p.m. ET) by calling 833-301-1160; Conference ID password: 2249249.

A replay of the call will be accessible beginning Friday, April 30, 2021 using the link below: https://edge.media-server.com/mmc/p/bqd4pgqe

About Columbia

Headquartered in Tacoma, Washington, Columbia Banking System, Inc. (NASDAQ: COLB) is the holding company of Columbia Bank, a Washington state-chartered full-service commercial bank with locations throughout Washington, Oregon and Idaho. The bank has been named one of Puget Sound Business Journal's"Washington's Best Workplaces," more than 10 times and was ranked #1 in Customer Satisfaction with Retail Banking in the Northwest region by J.D. Power3in the 2020 U.S. Retail Banking Satisfaction Study. Columbia was named the #1 bank in the Northwest on the Forbes 2020 list of "America's Best Banks" marking nearly 10 consecutive years on the publication's list of top financial institutions.

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

______________________________

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.

2 Allowance for credit losses to period-end loans, excluding PPP is a non-GAAP financial measure. See the section titled "Non-GAAP Financial Measures" in this earnings release for the reconciliation of allowance for credit losses to period-end loans to allowance for credit losses to period-end loans, excluding PPP loans.

3 Columbia Bank received the highest score in the Northwest region of the J.D. Power 2020 U.S. Retail Banking Satisfaction Study of customer satisfaction with their own retail bank. Visit jdpower.com/awards.

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 as well as the potential effects of the COVID-19 pandemic on Columbia's business, operations, financial performance and prospects. 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 U.S. Securities and Exchange Commission's (the "SEC") 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:

* national and global economic conditions could be less favorable than expected or could have a more direct and pronounced effect on us than expected and adversely affect our ability to continue internal growth and maintain the quality of our earning assets; * the markets where we operate and make loans could face challenges; * the risks presented by the economy, which could adversely affect credit quality, collateral values, including real estate collateral, investment values, liquidity and loan originations and loan portfolio delinquency rates; * the efficiencies and enhanced financial and operating performance we expect to realize from investments in personnel, acquisitions and infrastructure may not be realized; * interest rate changes could significantly reduce net interest income and negatively affect asset yields and funding sources; * the effect of the discontinuation or replacement of LIBOR; * results of operations following strategic expansion, including the impact of acquired loans on our earnings, could differ from expectations; * changes in the scope and cost of FDIC insurance and other coverages; * changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies could materially affect our financial statements and how we report those results, and expectations and preliminary analysis relating to how such changes will affect our financial results could prove incorrect; * changes in laws and regulations affecting our businesses, including changes in the enforcement and interpretation of such laws and regulations by applicable governmental and regulatory agencies; * increased competition among financial institutions and nontraditional providers of financial services; * continued consolidation in the Northwest financial services industry resulting in the creation of larger financial institutions that have greater resources could change the competitive landscape; * the goodwill we have recorded in connection with acquisitions could become impaired, which may have an adverse impact on our earnings and capital; * our ability to identify and address cyber-security risks, including security breaches, "denial of service attacks," "hacking" and identity theft; * any material failure or interruption of our information and communications systems; * inability to keep pace with technological changes; * our ability to effectively manage credit risk, interest rate risk, market risk, operational risk, legal risk, liquidity risk and regulatory and compliance risk; * failure to maintain effective internal control over financial reporting or disclosure controls and procedures; * the effect of geopolitical instability, including wars, conflicts and terrorist attacks; * our profitability measures could be adversely affected if we are unable to effectively manage our capital; * natural disasters, including earthquakes, tsunamis, flooding, fires and other unexpected events; * the effect of COVID-19 and other infectious illness outbreaks that may arise in the future, which has created significant impacts and uncertainties in U.S. and global markets; * changes in governmental policy and regulation, including measures taken in response to economic, business, political and social conditions, including with regard to COVID-19; and * the effects of any damage to our reputation resulting from developments related to any of the items identified above.

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:Clint Stein, Aaron James Deer,

President and Executive Vice President and

Chief Executive Officer Chief Financial Officer



Investor Relations

InvestorRelations@columbiabank.com

253-471-4065

(COLB-ER)

CONSOLIDATED BALANCE SHEETS

Columbia Banking System, Inc.

Unaudited March 31, December 31,

2021 2020

(in thousands)

ASSETS

Cash and due from banks $178,096 $218,899

Interest-earning deposits with banks 706,389 434,867

Total cash and cash equivalents 884,485 653,766

Debt securities available for sale at fair value (amortized cost of $5,417,373 5,496,290 5,210,134 and $4,997,529, respectively)

Equity securities 13,425 13,425

Federal Home Loan Bank ("FHLB") stock at cost 10,280 10,280

Loans held for sale 26,176 26,481

Loans, net of unearned income 9,676,318 9,427,660

Less: Allowance for credit losses 148,294 149,140

Loans, net 9,528,024 9,278,520

Interest receivable 52,667 54,831

Premises and equipment, net 160,179 162,059

Other real estate owned 521 553

Goodwill 765,842 765,842

Other intangible assets, net 24,810 26,734

Other assets 372,417 382,154

Total assets $17,335,116$16,584,779

LIABILITIES AND SHAREHOLDERS' EQUITY

Deposits:

Noninterest-bearing $7,424,472 $6,913,214

Interest-bearing 7,342,994 6,956,648

Total deposits 14,767,466 13,869,862

FHLB advances 7,400 7,414

Securities sold under agreements to repurchase 38,624 73,859

Subordinated debentures 35,046 35,092

Other liabilities 211,517 250,945

Total liabilities 15,060,053 14,237,172

Commitments and contingent liabilities

Shareholders' equity:

March 31, December 31,

2021 2020

(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 73,923 73,782 1,661,129 1,660,998

Outstanding 71,739 71,598

Retained earnings 607,040 575,248

Accumulated other comprehensive income 77,728 182,195

Treasury stock at cost 2,184 2,184 (70,834) (70,834)

Total shareholders' equity 2,275,063 2,347,607

Total liabilities and shareholders' equity $17,335,116$16,584,779

CONSOLIDATED STATEMENTS OF INCOME

Columbia Banking System, Inc. Three Months Ended

Unaudited March 31, December 31,March 31,

2021 2020 2020

Interest Income (in thousands except per share amounts)

Loans $ 100,315 $107,402 $ 107,366

Taxable securities 22,816 23,045 21,088

Tax-exempt securities 2,759 2,668 2,302

Deposits in banks 152 181 141

Total interest income 126,042 133,296 130,897

Interest Expense

Deposits 1,485 1,626 3,642

FHLB advances and Federal Reserve Bank ("FRB") borrowings 72 73 4,229

Subordinated debentures 468 467 468

Other borrowings 23 18 136

Total interest expense 2,048 2,184 8,475

Net Interest Income 123,994 131,112 122,422

Provision (recapture) for credit losses (800) (4,700) 41,500

Net interest income after provision (recapture) for credit losses124,794 135,812 80,922

Noninterest Income

Deposit account and treasury management fees 6,358 6,481 7,788

Card revenue 3,733 3,497 3,518

Financial services and trust revenue 3,381 3,349 3,065

Loan revenue 7,369 7,960 4,590

Bank owned life insurance 1,560 1,619 1,596

Investment securities gains, net - 36 249

Other 765 620 401

Total noninterest income 23,166 23,562 21,207

Noninterest Expense

Compensation and employee benefits 51,736 53,704 54,842

Occupancy 9,006 9,270 9,197

Data processing and software (1) 8,451 7,274 7,099

Legal and professional fees 2,815 3,573 2,102

Amortization of intangibles 1,924 2,011 2,310

Business and Occupation ("B&O") taxes 1,259 1,543 624

Advertising and promotion 760 1,644 1,305

Regulatory premiums 1,105 1,062 34

Net cost (benefit) of operation of other real estate owned (63) 33 12

Other (1) 6,566 4,186 6,746

Total noninterest expense 83,559 84,300 84,271

Income before income taxes 64,401 75,074 17,858

Provision for income taxes 12,548 16,774 3,230

Net Income $ 51,853 $58,300 $ 14,628

Earnings per common share

Basic $ 0.73 $0.82 $ 0.20

Diluted $ 0.73 $0.82 $ 0.20

Dividends declared per common share - regular $ 0.28 $0.28 $ 0.28

Dividends declared per common share - special - - 0.22

Dividends declared per common share - total $ 0.28 $0.28 $ 0.50

Weighted average number of common shares outstanding 70,869 70,732 71,206

Weighted average number of diluted common shares outstanding 71,109 70,838 71,264

__________

(1) Prior periods adjusted to conform to current period presentation.

FINANCIAL STATISTICS

Columbia Banking System, Inc. Three Months Ended

Unaudited March 31, December 31, March 31,

2021 2020 2020

Earnings (dollars in thousands except per share amounts)

Net interest income $123,994 $131,112 $122,422

Provision (recapture) for credit losses $(800) $(4,700) $41,500

Noninterest income $23,166 $23,562 $21,207

Noninterest expense $83,559 $84,300 $84,271

Net income $51,853 $58,300 $14,628

Per Common Share

Earnings (basic) $0.73 $0.82 $0.20

Earnings (diluted) $0.73 $0.82 $0.20

Book value $31.71 $32.79 $30.93

Tangible book value per common share (1) $20.69 $21.72 $19.76

Averages

Total assets $16,891,682 $16,477,246 $13,995,632

Interest-earning assets $15,419,371 $15,010,392 $12,487,550

Loans $9,586,984 $9,533,655 $8,815,755

Securities, including equity securities and FHLB stock $5,230,304 $4,765,158 $3,618,567

Deposits $14,212,616 $13,864,027 $10,622,379

Interest-bearing deposits $7,121,300 $6,873,405 $5,383,203

Interest-bearing liabilities $7,217,471 $6,954,287 $6,375,931

Noninterest-bearing deposits $7,091,316 $6,990,622 $5,239,176

Shareholders' equity $2,346,593 $2,311,070 $2,193,051

Financial Ratios

Return on average assets 1.23 %1.42 %0.42 %

Return on average common equity 8.84 %10.09 %2.67 %

Return on average tangible common equity (1) 13.73 %15.79 %4.72 %

Average equity to average assets 13.89 %14.03 %15.67 %

Shareholders' equity to total assets 13.12 %14.16 %15.77 %

Tangible common shareholders' equity to tangible assets (1) 8.97 %9.85 %10.68 %

Net interest margin (tax equivalent) 3.31 %3.52 %4.00 %

Efficiency ratio (tax equivalent) (2) 55.90 %53.70 %57.73 %

Operating efficiency ratio (tax equivalent) (1) 55.30 %53.03 %57.24 %

Noninterest expense ratio 1.98 %2.05 %2.41 %



March 31, December 31,

Period-end 2021 2020

Total assets $17,335,116 $16,584,779

Loans, net of unearned income $9,676,318 $9,427,660

Allowance for credit losses $148,294 $149,140

Securities, including equity securities and FHLB stock $5,519,995 $5,233,839

Deposits $14,767,466 $13,869,862

Shareholders' equity $2,275,063 $2,347,607

Nonperforming assets

Nonaccrual loans $33,581 $34,806

Other real estate owned ("OREO") and other personal property owned ("OPPO") 521 553

Total nonperforming assets $34,102 $35,359

Nonperforming loans to period-end loans 0.35 %0.37 %

Nonperforming assets to period-end assets 0.20 %0.21 %

Allowance for credit losses to period-end loans 1.53 %1.58 %

Net loan charge-offs (for the three months ended) $46 $3,128

__________

(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.

QUARTERLY FINANCIAL STATISTICS

Columbia Banking System, Inc. Three Months Ended

Unaudited March 31, December 31, September 30, June 30, March 31,

2021 2020 2020 2020 2020

Earnings (dollars in thousands except per share amounts)

Net interest income $123,994 $131,112 $124,726 $121,851 $122,422

Provision (recapture) for credit losses $(800) $(4,700) $7,400 $33,500 $41,500

Noninterest income $23,166 $23,562 $22,472 $37,259 $21,207

Noninterest expense $83,559 $84,300 $85,115 $80,833 $84,271

Net income $51,853 $58,300 $44,734 $36,582 $14,628

Per Common Share

Earnings (basic) $0.73 $0.82 $0.63 $0.52 $0.20

Earnings (diluted) $0.73 $0.82 $0.63 $0.52 $0.20

Book value $31.71 $32.79 $32.14 $31.80 $30.93

Averages

Total assets $16,891,682 $16,477,246 $15,965,485 $15,148,488 $13,995,632

Interest-earning assets $15,419,371 $15,010,392 $14,492,435 $13,657,719 $12,487,550

Loans $9,586,984 $9,533,655 $9,744,336 $9,546,099 $8,815,755

Securities, including equity securities and FHLB stock$5,230,304 $4,765,158 $3,948,041 $3,591,693 $3,618,567

Deposits $14,212,616 $13,864,027 $13,318,485 $12,220,415 $10,622,379

Interest-bearing deposits $7,121,300 $6,873,405 $6,527,695 $6,037,107 $5,383,203

Interest-bearing liabilities $7,217,471 $6,954,287 $6,659,119 $6,514,012 $6,375,931

Noninterest-bearing deposits $7,091,316 $6,990,622 $6,790,790 $6,183,308 $5,239,176

Shareholders' equity $2,346,593 $2,311,070 $2,293,771 $2,254,349 $2,193,051

Financial Ratios

Return on average assets 1.23 %1.42 %1.12 %0.97 %0.42 %

Return on average common equity 8.84 %10.09 %7.80 %6.49 %2.67 %

Average equity to average assets 13.89 %14.03 %14.37 %14.88 %15.67 %

Shareholders' equity to total assets 13.12 %14.16 %14.18 %14.30 %15.77 %

Net interest margin (tax equivalent) 3.31 %3.52 %3.47 %3.64 %4.00 %

Period-end

Total assets $17,335,116 $16,584,779 $16,233,424 $15,920,944 $14,038,503

Loans, net of unearned income $9,676,318 $9,427,660 $9,688,947 $9,771,898 $8,933,321

Allowance for credit losses $148,294 $149,140 $156,968 $151,546 $122,074

Securities, including equity securities and FHLB stock$5,519,995 $5,233,839 $4,305,425 $3,723,492 $3,591,408

Deposits $14,767,466 $13,869,862 $13,600,260 $13,131,477 $10,812,756

Shareholders' equity $2,275,063 $2,347,607 $2,301,981 $2,276,755 $2,213,602

Goodwill $765,842 $765,842 $765,842 $765,842 $765,842

Other intangible assets, net $24,810 $26,734 $28,745 $30,938 $33,148

Nonperforming assets

Nonaccrual loans $33,581 $34,806 $47,231 $53,732 $47,647

OREO and OPPO 521 553 623 747 510

Total nonperforming assets $34,102 $35,359 $47,854 $54,479 $48,157

Nonperforming loans to period-end loans 0.35 %0.37 %0.49 %0.55 %0.53 %

Nonperforming assets to period-end assets 0.20 %0.21 %0.29 %0.34 %0.34 %

Allowance for credit losses to period-end loans 1.53 %1.58 %1.62 %1.55 %1.37 %

Net loan charge-offs $46 $3,128 $1,978 $4,028 $5,026

LOAN PORTFOLIO COMPOSITION

Columbia Banking System, Inc.

Unaudited March 31, December 31, September 30,June 30, March 31,

2021 2020 2020 2020 2020

Loan Portfolio Composition - Dollars (dollars in thousands)

Commercial loans:

Commercial real estate $4,081,915 $4,062,313 $4,027,035 $4,032,643 $3,969,974

Commercial business 3,792,813 3,597,968 3,836,009 3,859,513 3,169,668

Agriculture 751,800 779,627 850,290 845,950 754,491

Construction 282,534 268,663 273,176 304,015 308,186

Consumer loans:

One-to-four family residential real estate735,314 683,570 665,432 692,837 690,506

Other consumer 31,942 35,519 37,005 36,940 40,496

Total loans 9,676,318 9,427,660 9,688,947 9,771,898 8,933,321

Less: Allowance for credit losses (148,294) (149,140) (156,968) (151,546) (122,074)

Total loans, net $9,528,024 $9,278,520 $9,531,979 $9,620,352 $8,811,247

Loans held for sale $26,176 $26,481 $24,407 $28,803 $9,701





March 31, December 31, September 30,June 30, March 31,

Loan Portfolio Composition - Percentages 2021 2020 2020 2020 2020

Commercial loans:

Commercial real estate 42.2 %43.0 %41.5 %41.2 %44.5 %

Commercial business 39.2 %38.2 %39.6 %39.5 %35.5 %

Agriculture 7.8 %8.3 %8.8 %8.7 %8.4 %

Construction 2.9 %2.8 %2.8 %3.1 %3.4 %

Consumer loans:

One-to-four family residential real estate7.6 %7.3 %6.9 %7.1 %7.7 %

Other consumer 0.3 %0.4 %0.4 %0.4 %0.5 %

Total loans 100.0 %100.0 %100.0 %100.0 %100.0 %

DEPOSIT COMPOSITION

Columbia Banking System, Inc.

Unaudited

March 31, December 31, September 30,June 30, March 31,

2021 2020 2020 2020 2020

Deposit Composition - Dollars (dollars in thousands)

Demand and other noninterest-bearing $7,424,472 $6,913,214 $6,897,054 $6,719,437 $5,323,908

Money market 2,913,689 2,780,922 2,708,949 2,586,376 2,313,717

Interest-bearing demand 1,512,808 1,433,083 1,322,618 1,274,058 1,131,874

Savings 1,282,151 1,169,721 1,109,155 1,035,723 905,931

Interest-bearing public funds, other than certificates of662,461 656,273 635,980 623,496 405,810 deposit

Certificates of deposit, less than $250,000 198,568 201,805 204,578 210,357 214,449

Certificates of deposit, $250,000 or more 107,421 108,935 105,041 104,330 109,659

Certificates of deposit insured by the CD Option of 25,929 23,105 22,609 17,078 17,171 IntraFi Network Deposits

Brokered certificates of deposit 5,000 5,000 5,000 8,427 12,259

Reciprocal money market accounts 634,967 577,804 589,276 552,195 377,980

Subtotal 14,767,466 13,869,862 13,600,260 13,131,477 10,812,758

Valuation adjustment resulting from acquisition - - - - (2) accounting

Total deposits $14,767,466$13,869,862$13,600,260$13,131,477$10,812,756

March 31,December 31,September 30,June 30,March 31,

Deposit Composition - Percentages 2021 2020 2020 2020 2020

Demand and other noninterest-bearing 50.4 % 49.8 % 50.7 % 51.2 % 49.2 %

Money market 19.7 % 20.1 % 19.9 % 19.7 % 21.4 %

Interest-bearing demand 10.2 % 10.3 % 9.7 % 9.7 % 10.5 %

Savings 8.7 % 8.4 % 8.2 % 7.9 % 8.4 %

Interest-bearing public funds, other than certificates of4.5 % 4.7 % 4.7 % 4.7 % 3.8 % deposit

Certificates of deposit, less than $250,000 1.3 % 1.5 % 1.5 % 1.6 % 2.0 %

Certificates of deposit, $250,000 or more 0.7 % 0.8 % 0.8 % 0.8 % 1.0 %

Certificates of deposit insured by the CD Option of 0.2 % 0.2 % 0.2 % 0.1 % 0.2 % IntraFi Network Deposits

Brokered certificates of deposit - % - % - % 0.1 % 0.1 %

Reciprocal money market accounts 4.3 % 4.2 % 4.3 % 4.2 % 3.4 %

Total 100.0 % 100.0 % 100.0 % 100.0% 100.0 %

AVERAGE BALANCES AND RATES

Columbia Banking System, Inc.

Unaudited

Three Months Ended Three Months Ended

March 31, 2021 March 31, 2020

Average Interest Average Average Interest Average Balances Earned / PaidRate Balances Earned / PaidRate

(dollars in thousands)

ASSETS

Loans, net (1)(2) $9,586,984 $101,477 4.29 %$8,815,755 $108,665 4.96 %

Taxable securities 4,624,175 22,816 2.00 %3,209,110 21,088 2.64 %

Tax exempt securities (2) 606,129 3,492 2.34 %409,457 2,914 2.86 %

Interest-earning deposits with banks 602,083 152 0.10 %53,228 141 1.07 %

Total interest-earning assets 15,419,371 127,937 3.36 %12,487,550 132,808 4.28 %

Other earning assets 242,684 232,361

Noninterest-earning assets 1,229,627 1,275,721

Total assets $16,891,682 $13,995,632

LIABILITIES AND SHAREHOLDERS' EQUITY

Money market accounts $3,450,750 $699 0.08 %$2,633,931 $1,728 0.26 %

Interest-bearing demand 1,449,642 265 0.07 %1,125,691 484 0.17 %

Savings accounts 1,221,431 40 0.01 %897,276 43 0.02 %

Interest-bearing public funds, other than 663,158 276 0.17 %355,401 903 1.02 % certificates of deposit

Certificates of deposit 336,319 205 0.25 %370,904 484 0.52 %

Total interest-bearing deposits 7,121,300 1,485 0.08 %5,383,203 3,642 0.27 %

FHLB advances and FRB borrowings 7,408 72 3.94 %909,110 4,229 1.87 %

Subordinated debentures 35,072 468 5.41 %35,253 468 5.34 %

Other borrowings and interest-bearing 53,691 23 0.17 %48,365 136 1.13 % liabilities

Total interest-bearing liabilities 7,217,471 2,048 0.12 %6,375,931 8,475 0.53 %

Noninterest-bearing deposits 7,091,316 5,239,176

Other noninterest-bearing liabilities 236,302 187,474

Shareholders' equity 2,346,593 2,193,051

Total liabilities & shareholders' $16,891,682 $13,995,632 equity

Net interest income (tax equivalent) $125,889 $124,333

Net interest margin (tax equivalent) 3.31 % 4.00 %

__________

(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 $8.3 million and $2.4 million for the three months ended March 31, 2021 and 2020, respectively. The incremental accretion income on acquired loans was $1.1 million and $1.5 million for the three months ended March 31, 2021 and 2020, respectively.

(2) Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $1.2 million and $1.3 million for the three months ended March 31, 2021 and 2020, respectively. The tax equivalent yield adjustment to interest earned on tax exempt securities was $733 thousand and $612 thousand for the three months ended March 31, 2021 and 2020, respectively.

AVERAGE BALANCES AND RATES

Columbia Banking System, Inc.

Unaudited

Three Months Ended Three Months Ended

March 31, 2021 December 31, 2020

Average Interest AverageAverage Interest Average Balances Earned / PaidRate Balances Earned / PaidRate

(dollars in thousands)

ASSETS

Loans, net (1)(2) $9,586,984 $101,477 4.29 %$9,533,655 $108,576 4.53 %

Taxable securities 4,624,175 22,816 2.00 %4,207,607 23,045 2.18 %

Tax exempt securities (2) 606,129 3,492 2.34 %557,551 3,377 2.41 %

Interest-earning deposits with banks 602,083 152 0.10 %711,579 181 0.10 %

Total interest-earning assets 15,419,371 127,937 3.36 %15,010,392 135,179 3.58 %

Other earning assets 242,684 239,798

Noninterest-earning assets 1,229,627 1,227,056

Total assets $16,891,682 $16,477,246

LIABILITIES AND SHAREHOLDERS' EQUITY

Money market accounts $3,450,750 $699 0.08 %$3,395,343 $732 0.09 %

Interest-bearing demand 1,449,642 265 0.07 %1,359,222 293 0.09 %

Savings accounts 1,221,431 40 0.01 %1,141,165 36 0.01 %

Interest-bearing public funds, other than certificates of deposit663,158 276 0.17 %638,107 310 0.19 %

Certificates of deposit 336,319 205 0.25 %339,568 255 0.30 %

Total interest-bearing deposits 7,121,300 1,485 0.08 %6,873,405 1,626 0.09 %

FHLB advances and FRB borrowings 7,408 72 3.94 %7,420 73 3.91 %

Subordinated debentures 35,072 468 5.41 %35,115 467 5.29 %

Other borrowings and interest-bearing liabilities 53,691 23 0.17 %38,347 18 0.19 %

Total interest-bearing liabilities 7,217,471 2,048 0.12 %6,954,287 2,184 0.12 %

Noninterest-bearing deposits 7,091,316 6,990,622

Other noninterest-bearing liabilities 236,302 221,267

Shareholders' equity 2,346,593 2,311,070

Total liabilities & shareholders' equity $16,891,682 $16,477,246

Net interest income (tax equivalent) $125,889 $132,995

Net interest margin (tax equivalent) 3.31 % 3.52 %

__________

(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 $8.3 million and $9.1 million for the three months ended March 31, 2021 and December 31, 2020, respectively. The incremental accretion income on acquired loans was $1.1 million and $1.3 million the three months ended March 31, 2021 and December 31, 2020, respectively.

(2) Tax-exempt income is calculated on a tax equivalent basis. The tax equivalent yield adjustment to interest earned on loans was $1.2 million for both the three months ended March 31, 2021 and December 31, 2020. The tax equivalent yield adjustment to interest earned on tax exempt securities was $733 thousand and $709 thousand for the three months ended March 31, 2021 and December 31, 2020, respectively.

Non-GAAP Financial Measures

The Company considers its operating net interest margin (tax equivalent) and operating efficiency ratios to be useful measurements as they more closely reflect the ongoing operating performance of the Company. Despite the usefulness of the operating net interest margin (tax equivalent) and operating efficiency ratio to the Company, there are no standardized definitions for them. As a result, the Company's calculations may not be comparable with other organizations. 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 (tax equivalent) and operating efficiency ratio:

Three Months Ended

March 31, December 31, March 31,

2021 2020 2020

Operating net interest margin non-GAAP reconciliation: (dollars in thousands)

Net interest income (tax equivalent) (1) $125,889 $132,995 $124,333

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

Incremental accretion income on acquired loans (1,055) (1,323) (1,491)

Premium amortization on acquired securities 520 606 1,127

Interest reversals on nonaccrual loans (2) - 146 788

Operating net interest income (tax equivalent) (1) $125,354 $132,424 $124,757

Average interest earning assets $15,419,371 $15,010,392 $12,487,550

Net interest margin (tax equivalent) (1) 3.31 %3.52 %4.00 %

Operating net interest margin (tax equivalent) (1) 3.30 %3.51 %4.02 %





Three Months Ended

March 31, December 31, March 31,

2021 2020 2020

Operating efficiency ratio non-GAAP reconciliation: (dollars in thousands)

Noninterest expense (numerator A) $83,559 $84,300 $84,271

Adjustments to arrive at operating noninterest expense:

Net benefit (cost) of operation of OREO and OPPO 73 (32) (4)

Loss on asset disposals (6) - (4)

Business and Occupation ("B&O") taxes (1,259) (1,543) (624)

Operating noninterest expense (numerator B) $82,367 $82,725 $83,639



Net interest income (tax equivalent) (1) $125,889 $132,995 $124,333

Noninterest income 23,166 23,562 21,207

Bank owned life insurance tax equivalent adjustment 415 430 424

Total revenue (tax equivalent) (denominator A) $149,470 $156,987 $145,964



Operating net interest income (tax equivalent) (1) $125,354 $132,424 $124,757

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

Investment securities gain, net - (36) (249)

Gain on asset disposals - (381) (21)

Operating noninterest income (tax equivalent) 23,581 23,575 21,361

Total operating revenue (tax equivalent) (denominator B) $148,935 $155,999 $146,118

Efficiency ratio (tax equivalent) (numerator A/denominator A) 55.90 %53.70 %57.73 %

Operating efficiency ratio (tax equivalent) (numerator B/denominator B) 55.30 %53.03 %57.24 %

__________

(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 $1.9 million for each of the three months ended March 31, 2021, December 31, 2020 and March 31, 2020.

(2) Beginning January 2021, interest reversals on nonaccrual loans is no longer a component of these non-GAAP financial measures.

Non-GAAP Financial Measures - Continued

The Company considers its pre-tax, pre-provision income to be a useful measurement in evaluating the earnings of the Company as it provides a method to assess income. Despite the usefulness of this measure to the Company, there is not a standardized definition for it. As a result, the Company's calculation may not always be comparable with other organizations. The Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.

The following table reconciles the Company's calculation of the pre-tax, pre-provision income:

Three Months Ended

March 31,December 31,March 31,

2021 2020 2020

Pre-tax, pre-provision income: (in thousands)

Income before income taxes $64,401$75,074 $17,858

Provision (recapture) for credit losses(800) (4,700) 41,500

Pre-tax, pre-provision income $63,601$70,374 $59,358

The Company considers its tangible common equity ratio and tangible book value per share ratio to be useful measurements in evaluating the capital adequacy of the Company as they provide a method to assess management's success in utilizing our tangible capital. Despite the usefulness of these ratios to the Company, there is not a standardized definition for them. As a result, the Company's calculation may not always be comparable with other organizations. 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 tangible common equity ratio:

March 31, December 31, March 31,

2021 2020 2020

Tangible common equity ratio and tangible book value per common share non-GAAP (dollars in thousands except per share amounts) reconciliation:

Shareholders' equity (numerator A) $2,275,063 $2,347,607 $2,213,602

Adjustments to arrive at tangible common equity:

Goodwill (765,842) (765,842) (765,842)

Other intangible assets, net (24,810) (26,734) (33,148)

Tangible common equity (numerator B) $1,484,411 $1,555,031 $1,414,612

Total assets (denominator A) $17,335,116 $16,584,779 $14,038,503

Adjustments to arrive at tangible assets:

Goodwill (765,842) (765,842) (765,842)

Other intangible assets, net (24,810) (26,734) (33,148)

Tangible assets (denominator B) $16,544,464 $15,792,203 $13,239,513

Shareholders' equity to total assets (numerator A/denominator A) 13.12 %14.16 %15.77 %

Tangible common shareholders' equity to tangible assets (numerator B/ 8.97 %9.85 %10.68 % denominator B)

Common shares outstanding (denominator C) 71,739 71,598 71,575

Book value per common share (numerator A/denominator C) $31.71 $32.79 $30.93

Tangible book value per common share (numerator B/denominator C) $20.69 $21.72 $19.76

Non-GAAP Financial Measures - Continued

The Company considers its ratio of allowance for credit losses to period-end loans, excluding PPP loans, to be a useful measurement in evaluating the adequacy of the amount of allowance for credit losses to loans of the Company as PPP loans are guaranteed by the U.S. Small Business Administration and thus do not require the same amount of reserve for credit losses as do other loans. Despite the usefulness of this ratio to the Company, there is not a standardized definition for it. As a result, the Company's calculation may not always be comparable with other organizations. The Company encourages readers to consider its consolidated financial statements in their entirety and not to rely on any single financial measure.

The following table reconciles the Company's calculation of the allowance for credit losses to period-end loans:

March 31, December 31,

2021 2020

Allowance coverage ratio non-GAAP reconciliation: (dollars in thousands)

Allowance for credit losses ("ACL") (numerator) $148,294 $149,140



Total loans (denominator A) 9,676,318 9,427,660

Less: PPP loans (0% Allowance) 894,080 651,585

Total loans, net of PPP loans (denominator B) $8,782,238 $8,776,075



ACL to period end loans (numerator / denominator A) 1.53 %1.58 %

ACL to period end loans, excluding PPP loans (numerator / denominator B)1.69 %1.70 %

The Company also considers its return on average tangible common equity ratio to be a useful measurement as it evaluates the Company's ongoing ability to generate returns for its common shareholders. By removing the impact of intangible assets and their related amortization and tax effects, the performance of the business can be evaluated, whether acquired or developed internally. Despite the usefulness of this ratio to the Company, there is not a standardized definition for it. As a result, the Company's calculation may not always be comparable with other organizations. 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 return on average tangible common shareholders' equity ratio:

Three Months Ended

March 31, December 31, March 31,

2021 2020 2020

Return on average tangible common equity non-GAAP reconciliation: (dollars in thousands)

Net income (numerator A) $51,853 $58,300 $14,628

Adjustments to arrive at tangible income applicable to common shareholders:

Amortization of intangibles 1,924 2,011 2,310

Tax effect on intangible amortization (404) (422) (485)

Tangible income applicable to common shareholders (numerator B) $53,373 $59,889 $16,453

Average shareholders' equity (denominator A) $2,346,593 $2,311,070 $2,193,051

Adjustments to arrive at average tangible common equity:

Average intangibles (791,714) (793,510) (800,079)

Average tangible common equity (denominator B) $1,554,879 $1,517,560 $1,392,972

Return on average common equity (numerator A/denominator A) (1) 8.84 %10.09 %2.67 %

Return on average tangible common equity (numerator B/denominator B) (2) 13.73 %15.79 %4.72 %

__________

(1) For the purpose of this ratio, interim net income has been annualized.

(2) For the purpose of this ratio, interim tangible income applicable to common shareholders has been annualized.

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SOURCE Columbia Banking System